[PRCo] Re: Lease back financing

[John Swindler]

yes - both
 
plus new york> Date: Sat, 13 Dec 2008 09:36:54 -0500> From: allmanr at verizon.net> Subject: [PRCo] Re: Lease back financing> To: pittsburgh-railways at dementia.org> > MARTA for sure. Possibly WMATA> > ----- Original Message ----- > From: "Phillip Clark Campbell" <pcc_sr at yahoo.com>> To: <pittsburgh-railways at dementia.org>> Sent: Saturday, December 13, 2008 12:58 AM> Subject: [PRCo] Lease back financing> > > > To PRC group;> >> >> > About Thanksgiving it was mentioned that transit agencies were involved in> > lease back arrangements with their equipment - BART in San Francisco as> > well as Sacramento.> >> > I wrote the following:> >> > In another post you [Mr.Schneider] mentioned Sacramento> > being caught up in the AIG fiasco. BART has to come> > up with $40-million fast for the same reason - AIG.> > Another news item said that SF Bay Area transit> > systems have 'several hundred' of such lease back loans.> > What other systems are involved? I haven't heard more.> > Here are two quotes from the URL below:> >> > "San Francisco made several hundred millions of> > dollars worth of deals,..."> >> > "Transit agencies, then, are like crack addicts,> > addicted to the quick benefits of loans, leases, and> > other poorly considered deals.."> >> > http://thetransportpolitic.wordpress.com/2008/10/26/short-term-thinking/> > I received an URL via email today which addresses the other systems > > involved> > in the SF-bay (the whole article is enclosed below:)> >> > http://tinyurl.com/5bezxv> >> > Here are some quotes from this article:> >> > "Muni: Sold and leased back 151 light-rail vehicles" Maybe the repo man > > will confiscate them in the middle of the night.> >> > "Should the deal sour, Muni could owe as much as $140 million —> > or> > nearly 20 percent of its annual operating budget — ..."> >> > "The American Public Transportation Administration, or APTA,> > said it’s> > confident transit agencies won’t have to fork over the hefty sums,> > saying the federal government encouraged the deals."> >> >> > Now this is leadership isn't it. The article makes plain that transit > > agencies across> > the nation are affected.> >> >> > Phil> >> >> >> >> > Muni, BART may pay for poor past financial deals> > By Mike Aldax> > Examiner Staff Writer 12/10/08> > Pretty penny: The San Francisco Municipal Transportation Agency may> > owe> > banks $130 million from risky past investments.> >> > SAN FRANCISCO – As the economy worsens, financial deals made in> > the> > past 20 years by public transit agencies nationwide — including in> > the> > Bay Area — may have crippling results that would likely impact service.> >> > More than 30 transit agencies, including BART and the San Francisco> > Municipal> > Transportation Agency, are asking the federal government for> > protection against> > risky financial deals made from 1989 through 2003.> >> > As part of the deals, the transit agencies sold rolling assets, such as> > buses,> > rail cars and equipment, to bankers for a quick infusion of> > cash.> > The bankers, who benefited from a tax shelter in such deals,> > would then lease the assets back to the agencies at a discount,> > according to the Tax Foundation, a nonprofit tax-research group> > based> > in Washington, D.C.> >> > The penalties for terminating the deals involved steep fines for> > transit agencies.> > And as the companies guaranteeing the deals fall> > victim to the global credit> > crunch, transit agencies across the nation> > are facing millions of dollars in> > payments to bankers.> >> > At its regular board meeting last week, Muni chief Nathaniel Ford> > expressed> > concern about the sale-out, lease-in deal the transit agency> > made with> > investors in 2002.> >> > Should the deal sour, Muni could owe as much as $140 million —> > or> > nearly 20 percent of its annual operating budget —> > according to> > spokesman Judson True.> >> > The transit agency’s deals would “technically” default should the> > guarantor> > of the agreement, Financial Security Assurance Inc., or FSA,> > endure> > another credit-rating downgrade, as it has in recent months.> > Another> > rating hit is possible, as FSA’s parent company, Belgian-French> > financial services group Dexia SA, works to sell the company to> > Assured> > Guaranty, a Bermuda-based holding company facing its> > own financial> > challenges, True said.> >> > “We’re working collaboratively with our elected representatives and> > other agencies to find a solution so that this problem won’t affect> > service to our customers,” he said.> >> > Transit agencies across the U.S. have banded together to ask> > the> > federal government for a bailout.> >> > The American Public Transportation Administration, or APTA,> > said it’s> > confident transit agencies won’t have to fork over the hefty sums,> > saying the federal government encouraged the deals.> >> > “There are discussions going on in Congress as well as with the> > Treasury Department,” said Mantill Williams, APTA spokesman.> >> > Beverly Scott, APTA chairwoman, said public transit users will> > be the> > victims of any financial losses.> >> > “The innocent victims will be the millions of riders who rely on> > public> > transit every day,” Scott said.> >> > maldax at sfexaminer.com> >> > Coming back to haunt them> >> > A sale-in, lease-out crisis is affecting transit agencies in the Bay> > Area and nationwide.> >> > Muni: Sold and leased back 151 light-rail vehicles> > Guarantor: Financial Security Assurance Inc. (FSA)> > Concern: Should Moody’s downgrade FSA’s current credit rating of Aa3,> > Muni could owe as much as $130 million to banks. If completed,> > the sale> > of FSA to Assured Guaranty Ltd. could downgrade the> > credit rating to> > Aa2.> >> > BART: Sold and leased back rail equipment for $230 million> > Guarantor: American International Group Inc. (AIG)> > Concern: Should AIG’s credit rating drop below B-triple plus,> > BART> > could owe as much as $40 million to banks.> >> > Sources: SFMTA, BART> >> >> >> >> >> >> >> > > > 
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