The US Department of Transportation has awarded a $17 million grant to the Port of Long Beach to help fund a rail track improvement project that’s expected to allow for a shift of cargo carriage to trains from trucks.
As part of the $66 million Green Port Gateway, which is slated to begin construction in 2012, 16,400 new feet of track would be laid to relieve a rail chokepoint at the Ocean Boulevard overcrossing near the 710 Freeway, according to the port.
“This project will not only bring jobs, which are critical during these tough economic times, but also enhance both our region’s and the nation’s long-term economic competitiveness by improving the port’s rail system,” POLB Executive Director Chris Lytle said.
The gateway’s expected to eliminate about 2.3 million truck trips by 2035 from local roadways by improving rail transportation in and out of the port complex. The reduced truck trips would theoretically help alleviate traffic congestion and cut air pollution.
The project’s part of the larger San Pedro Bay Ports Rail Enhancement Program, which involves several inter-related projects by the ports of Long Beach and Los Angeles and the Alameda Corridor Transportation Authority.
Showing posts with label Alameda Corridor. Show all posts
Showing posts with label Alameda Corridor. Show all posts
Tuesday, December 20, 2011
Thursday, October 13, 2011
Alameda Corridor Asks SoCal Ports for $6M Support
The agency operating the Alameda Corridor in Southern California has officially requested almost $6 million from the ports of Long Beach and Los Angeles to cover corridor revenue shortfalls in the current fiscal year.
The official notification follows on a request made nearly two-months ago to the two ports made by the Alameda Corridor Transportation Authority (ACTA), which operates the 20-mile-long Alameda Corridor cargo rail line servicing the ports. ACTA told the two ports in August that that the authority required $2.95 million from the port in FY2012 to cover a debt service shortfall on the $2.4 billion corridor, which opened in 2002.
At the time, the request came as a bit of a bittersweet pill because in March, ACTA had told the ports that it would need $9 million in shortfall coverage from each port.
ACTA has stated that increased traffic on the corridor since March has revised the shortfall coverage projection downward to the $2.95 million from each port.
The official notification follows on a request made nearly two-months ago to the two ports made by the Alameda Corridor Transportation Authority (ACTA), which operates the 20-mile-long Alameda Corridor cargo rail line servicing the ports. ACTA told the two ports in August that that the authority required $2.95 million from the port in FY2012 to cover a debt service shortfall on the $2.4 billion corridor, which opened in 2002.
At the time, the request came as a bit of a bittersweet pill because in March, ACTA had told the ports that it would need $9 million in shortfall coverage from each port.
ACTA has stated that increased traffic on the corridor since March has revised the shortfall coverage projection downward to the $2.95 million from each port.
Thursday, February 10, 2011
Alameda Corridor Receives Fed Loan to Bolster Revenue Shortfalls
The Southern California ports may be temporarily off the hook when it comes to using port reserves to cover the Alameda Corridor's debt service.
The Federal Rail Administration has approved an $83.7 million loan to the Alameda Corridor Transportation Authority that should forestall the need for the ports to cover ACTA's debt service until at least October 2012.
Opened in April 2002 at a cost of $2.4 billion, the Alameda Corridor is a 20-mile-long freight rail expressway that currently shuttles approximately 35 percent of the cargo containers moving through the Southern California ports to a transcontinental railroad yard near downtown Los Angeles.
The construction cost of the corridor was financed by the issuance of just over $1.7 billion in corridor revenue-backed bonds, $400 million from the ports of Long Beach and Los Angeles, and funding from various other government sources. Corridor revenues are generated by fees charged on containers using the corridor.
Until the global economic meltdown that sent cargo volumes at the two ports into a nearly 30 percent tailspin starting in 2007, ACTA had been generating enough revenue to cover its healthy debt service. However, the drop in cargo volumes dramatically reduced ACTA's revenues.
Last year, ACTA sought relief by applying for a $533 million loan from a Department of Transportation railroad loan program. In December, 2010, the three major bond rating agencies all took action on ACTA's outstanding bonds, either downgrading ACTA's bond ratings or issuing a negative outlook regarding the financial future of the corridor. In January, ACTA revised their request to $83.7 million after the DOT pointed out that the original loan request was more than double the amount ever requested of the federal agency.
Under the corridor operating agreement, the ports of Long Beach and Los Angeles are responsible for up to 40 percent of ACTA debt service in the event of corridor revenue shortfalls. Concerns have been raised in the industry that a long-term reliance on the two ports for corridor debt service could drain the ports of much-needed cash reserves.
Credit ratings agency Fitch estimated the two ports' total gross liability for corridor debt service "at $60 million to $150 million spread over the years 2012-2020 [and] depending on the severity of the stress assumptions."
All three ratings agencies have pointed out that while both ports have an adequate amount of unrestricted cash to meet any near-term shortfall payments without having to adjust their rates or tariffs, any sizable draw down of port cash reserves could reflect on the ports' own ratings.
According to Fitch, as of Sept. 30, 2010, the Port of Los Angeles had $311 million in unrestricted cash and the Port of Long Beach had $403 million in unrestricted cash.
The Federal Rail Administration has approved an $83.7 million loan to the Alameda Corridor Transportation Authority that should forestall the need for the ports to cover ACTA's debt service until at least October 2012.
Opened in April 2002 at a cost of $2.4 billion, the Alameda Corridor is a 20-mile-long freight rail expressway that currently shuttles approximately 35 percent of the cargo containers moving through the Southern California ports to a transcontinental railroad yard near downtown Los Angeles.
The construction cost of the corridor was financed by the issuance of just over $1.7 billion in corridor revenue-backed bonds, $400 million from the ports of Long Beach and Los Angeles, and funding from various other government sources. Corridor revenues are generated by fees charged on containers using the corridor.
Until the global economic meltdown that sent cargo volumes at the two ports into a nearly 30 percent tailspin starting in 2007, ACTA had been generating enough revenue to cover its healthy debt service. However, the drop in cargo volumes dramatically reduced ACTA's revenues.
Last year, ACTA sought relief by applying for a $533 million loan from a Department of Transportation railroad loan program. In December, 2010, the three major bond rating agencies all took action on ACTA's outstanding bonds, either downgrading ACTA's bond ratings or issuing a negative outlook regarding the financial future of the corridor. In January, ACTA revised their request to $83.7 million after the DOT pointed out that the original loan request was more than double the amount ever requested of the federal agency.
Under the corridor operating agreement, the ports of Long Beach and Los Angeles are responsible for up to 40 percent of ACTA debt service in the event of corridor revenue shortfalls. Concerns have been raised in the industry that a long-term reliance on the two ports for corridor debt service could drain the ports of much-needed cash reserves.
Credit ratings agency Fitch estimated the two ports' total gross liability for corridor debt service "at $60 million to $150 million spread over the years 2012-2020 [and] depending on the severity of the stress assumptions."
All three ratings agencies have pointed out that while both ports have an adequate amount of unrestricted cash to meet any near-term shortfall payments without having to adjust their rates or tariffs, any sizable draw down of port cash reserves could reflect on the ports' own ratings.
According to Fitch, as of Sept. 30, 2010, the Port of Los Angeles had $311 million in unrestricted cash and the Port of Long Beach had $403 million in unrestricted cash.
Tuesday, December 28, 2010
Alameda Corridor Hit With Bond Rating Downgrade
Bond rating agency Moody’s has downgraded a major portion of Alameda Corridor debt, becoming the third major rating agency in December to either downgrade the corridor's bond ratings or issue a negative outlook regarding the financial future of the Southern California rail expressway.
Moody’s downgraded $737 million in corridor subordinate debt from Baa2 to Baa1, or one step above non-investment grade. The agency did affirm its previous rating of A3, or one step above Baa1, on $966 million in corridor senior debt. Moody’s also changed the outlook for the corridor to negative.
Less than a week ago, the Alameda Corridor Transportation Authority, or ACTA, received a negative ratings outlook from ratings agency Fitch. At the time, Fitch also affirmed medium grade ratings for both the senior and subordinate debt.
In April, Standard and Poor’s was the first agency to issue a negative outlook for ACTA. This was a downgrade from the stable outlook S&P issued to ACTA just six months earlier in October 2009. S&P also reaffirmed the negative outlook for ACTA in a review issued last week.
Opened in April 2002 at a cost of $2.4 billion, the Alameda Corridor is a 20-mile-long freight rail expressway that currently shuttles approximately 35 percent of the cargo containers moving through the Southern California ports to a transcontinental railroad yard near downtown Los Angeles.
The construction cost of the corridor was financed by the issuance of just over $1.7 billion in corridor revenue-backed bonds, $400 million from the ports of Long Beach and Los Angeles, and funding from various other government sources. Corridor revenues are generated by fees charged on containers using the corridor.
Bond ratings, such as those issued by Fitch, offer a guide to the level of risk associated with a particular debt issuer--in this case ACTA. Moody’s is one of the three most recognized bond rating agencies along with Fitch and Standards & Poors and one of only ten such agencies recognized by the Securities and Exchange Commission.
Higher ratings, such as "Aaa" or "Aa1" in Moody's case, generally open more financial resources up to an issuer and often at much more favorable terms. Low ratings can mean a significant increase in what a debt issuer has to pay--through higher interest rates or stricter terms--when looking to issue new debt. Low ratings can also prevent an issuer from being able to renegotiate or restructure an existing issuance at more favorable terms.
According to Moody’s, the ACTA downgrade reflects what the agency sees as less than sufficient ability by the corridor to generate enough revenues to cover both consolidated $1.7 billion in senior and subordinate debt.
“The negative outlook reflects the expectation that container growth will remain somewhat sluggish after an initial strong increase,” said Moody’s, “therefore key liquidity may weaken as reserves are utilized to pay for operations and consolidated debt service coverage will likely remain below one times given the current escalating debt service schedule.“
“The downgrade and negative outlook also incorporate the delays in the implementation of a debt restructuring plan that is necessary for coverage relief, and the short timeline remaining to successfully implement a plan before ACTA's target of the October 1, 2011 debt service payment date.”
A fallback measure if refinancing was not available would be the ports of Long Beach and Los Angeles which under the corridor operating agreement are responsible for up to 40 percent of ACTA debt service in the event of shortfalls. A long term reliance on the two ports for corridor debt service could drain the ports of much-needed cash reserves.
Fitch estimated the two ports' total gross liability for corridor debt service "at $60 million to $150 million spread over the years 2012-2020 [and] depending on the severity of the stress assumptions."
All three agencies have pointed out that both ports have an adequate amount of unrestricted cash to meet any near-term shortfall payments without having to adjust their rates or tariffs, any sizable draw down of port cash reserves could reflect on the ports' own ratings.
According to Fitch, as of Sept. 30, 2010, the Port of Los Angeles had $311 million in unrestricted cash and the Port of Long Beach had $403 million in unrestricted cash.
Moody’s downgraded $737 million in corridor subordinate debt from Baa2 to Baa1, or one step above non-investment grade. The agency did affirm its previous rating of A3, or one step above Baa1, on $966 million in corridor senior debt. Moody’s also changed the outlook for the corridor to negative.
Less than a week ago, the Alameda Corridor Transportation Authority, or ACTA, received a negative ratings outlook from ratings agency Fitch. At the time, Fitch also affirmed medium grade ratings for both the senior and subordinate debt.
In April, Standard and Poor’s was the first agency to issue a negative outlook for ACTA. This was a downgrade from the stable outlook S&P issued to ACTA just six months earlier in October 2009. S&P also reaffirmed the negative outlook for ACTA in a review issued last week.
Opened in April 2002 at a cost of $2.4 billion, the Alameda Corridor is a 20-mile-long freight rail expressway that currently shuttles approximately 35 percent of the cargo containers moving through the Southern California ports to a transcontinental railroad yard near downtown Los Angeles.
The construction cost of the corridor was financed by the issuance of just over $1.7 billion in corridor revenue-backed bonds, $400 million from the ports of Long Beach and Los Angeles, and funding from various other government sources. Corridor revenues are generated by fees charged on containers using the corridor.
Bond ratings, such as those issued by Fitch, offer a guide to the level of risk associated with a particular debt issuer--in this case ACTA. Moody’s is one of the three most recognized bond rating agencies along with Fitch and Standards & Poors and one of only ten such agencies recognized by the Securities and Exchange Commission.
Higher ratings, such as "Aaa" or "Aa1" in Moody's case, generally open more financial resources up to an issuer and often at much more favorable terms. Low ratings can mean a significant increase in what a debt issuer has to pay--through higher interest rates or stricter terms--when looking to issue new debt. Low ratings can also prevent an issuer from being able to renegotiate or restructure an existing issuance at more favorable terms.
According to Moody’s, the ACTA downgrade reflects what the agency sees as less than sufficient ability by the corridor to generate enough revenues to cover both consolidated $1.7 billion in senior and subordinate debt.
“The negative outlook reflects the expectation that container growth will remain somewhat sluggish after an initial strong increase,” said Moody’s, “therefore key liquidity may weaken as reserves are utilized to pay for operations and consolidated debt service coverage will likely remain below one times given the current escalating debt service schedule.“
“The downgrade and negative outlook also incorporate the delays in the implementation of a debt restructuring plan that is necessary for coverage relief, and the short timeline remaining to successfully implement a plan before ACTA's target of the October 1, 2011 debt service payment date.”
A fallback measure if refinancing was not available would be the ports of Long Beach and Los Angeles which under the corridor operating agreement are responsible for up to 40 percent of ACTA debt service in the event of shortfalls. A long term reliance on the two ports for corridor debt service could drain the ports of much-needed cash reserves.
Fitch estimated the two ports' total gross liability for corridor debt service "at $60 million to $150 million spread over the years 2012-2020 [and] depending on the severity of the stress assumptions."
All three agencies have pointed out that both ports have an adequate amount of unrestricted cash to meet any near-term shortfall payments without having to adjust their rates or tariffs, any sizable draw down of port cash reserves could reflect on the ports' own ratings.
According to Fitch, as of Sept. 30, 2010, the Port of Los Angeles had $311 million in unrestricted cash and the Port of Long Beach had $403 million in unrestricted cash.
Tuesday, December 21, 2010
Alameda Corridor Receives Negative Outlook From Fitch
Bond rating agency Fitch on Friday affirmed "high" and "good" level ratings on $1.7 billion in Alameda Corridor bond debt, while at the same time issuing a negative ratings outlook for the bonds.
Opened in April 2002, the $2.4 billion Alameda Corridor is a 20-mile-long freight rail expressway that currently shuttles approximately 35 percent of the cargo containers moving through the Southern California ports to a transcontinental railroad yard near downtown Los Angeles.
The $2.4 billion cost of the corridor was financed by the issuance of just over $1.7 billion in corridor revenue-backed bonds, $400 million from the ports of Long Beach and Los Angeles, and various other government sources. Corridor revenues are generated by fees charged on containers using the corridor.
On Friday, Fitch issued an "A" rating, labeled as upper medium grade, on $966 million in bonds issued by the corridor's governing authority in 1999. The agency also issued a "BBB+" rating, labeled as lower medium grade, on $737 million in subordinate issuances from 1999 and 2004.
Both of these ratings, while nowhere near as high as the "AA" ratings held by the two ports, remain in fairly positive territory. The "BBB+" rating is still two full ratings levels above non-investment grade bonds.
Bond ratings, such as those issued by Fitch, offer a guide to the level of risk associated with a particular debt issuer, in this case the Alameda Corridor. Fitch is one of the three most recognized bond rating agencies along with Moody's and Standards & Poors and one of only ten such agencies recognized by the Securities and Exchange Commission.
Higher ratings, such as "AAA," generally open more financial resources up to an issuer and often at much more favorable terms. Low ratings can mean a significant increase in what a debt issuer has to pay--through higher interest rates or stricter terms--when looking to issue new debt. Low ratings can also prevent an issuer from being able to renegotiate or restructure an existing issuance at more favorable terms.
More worrisome for the corridor than the bong ratings, however, is the ratings outlook issued by Fitch. The corridor had held a "ratings watch negative," which is issued when Fitch sees a heightened probability of a downward rating change. On Friday, Fitch changed this to a "negative ratings outlook," a more concrete assertion applied when Fitch believes that the issuer's rating is likely to move downward over a one- to two-year period.
In issuing the ratings and outlook, Fitch pointed out that although the corridor saw dramatic downturns in cargo volumes in 2008 and 2009, container volumes moved along the corridor in 2010 have show a 14 percent increase compared to the first 10 months of 2009.
"This indicates that volume is recovering somewhat," said a Fitch statement, "however, the volume setback incurred in 2008 and 2009 combined with the corridor's escalating debt service profile mean that action is still needed to meet the authority's debt service obligations."
Fitch pointed out that there are several options available for the corridor to address the anticipated shortfall in revenues, including refinancing a portion of outstanding debt via the Railroad Rehabilitation and Improvement Financing, or RRIF, offered through the United States Department of Transportation's Federal Rail Administration. The RRIF provides direct federal loans and loan guarantees to finance development of railroad infrastructure. ACTA applied for a RRIF loan in March 2010 to restructure the $737 million in subordinate bonds, and expects a decision on its application in early 2011.
"Another option would be to refinance a portion of existing debt with a traditional municipal finance issuance, utilizing the existing senior and subordinate liens," said Fitch. "In both these cases, ACTA would seek to reduce annual debt service requirements and backload debt, while substantially reducing or eliminating the need for port shortfall advance payments to fund a portion of debt service in future years."
The real concern would be if the corridor could not meet its debt service. The ports of Long Beach and Los Angeles are legally committed under the corridor operating agreement to cover up to 40 percent of the corridor's annual debt service payment in the event of shortfalls.
While on the one hand this provides the corridor with a backstop that improves its credit standing, such a drain on port revenue, especially if the shortfalls continue for a long period of time, could significantly impact the two ports' cash flow situations.
Fitch estimates "the ports' gross joint liability for corridor debt service at $60 million to $150 million spread over the years 2012-2020 depending on the severity of the stress assumptions."
While Fitch points out that both ports have an adequate amount of unrestricted cash to meet any near-term shortfall payments without having to adjust their rates or tariffs, any sizable draw down of port cash reserves could reflect on the ports' own ratings.
According to Fitch, as of Sept. 30, 2010, the Port of Los Angeles had $311 million in unrestricted cash and the Port of Long Beach had $403 million in unrestricted cash.
Opened in April 2002, the $2.4 billion Alameda Corridor is a 20-mile-long freight rail expressway that currently shuttles approximately 35 percent of the cargo containers moving through the Southern California ports to a transcontinental railroad yard near downtown Los Angeles.
The $2.4 billion cost of the corridor was financed by the issuance of just over $1.7 billion in corridor revenue-backed bonds, $400 million from the ports of Long Beach and Los Angeles, and various other government sources. Corridor revenues are generated by fees charged on containers using the corridor.
On Friday, Fitch issued an "A" rating, labeled as upper medium grade, on $966 million in bonds issued by the corridor's governing authority in 1999. The agency also issued a "BBB+" rating, labeled as lower medium grade, on $737 million in subordinate issuances from 1999 and 2004.
Both of these ratings, while nowhere near as high as the "AA" ratings held by the two ports, remain in fairly positive territory. The "BBB+" rating is still two full ratings levels above non-investment grade bonds.
Bond ratings, such as those issued by Fitch, offer a guide to the level of risk associated with a particular debt issuer, in this case the Alameda Corridor. Fitch is one of the three most recognized bond rating agencies along with Moody's and Standards & Poors and one of only ten such agencies recognized by the Securities and Exchange Commission.
Higher ratings, such as "AAA," generally open more financial resources up to an issuer and often at much more favorable terms. Low ratings can mean a significant increase in what a debt issuer has to pay--through higher interest rates or stricter terms--when looking to issue new debt. Low ratings can also prevent an issuer from being able to renegotiate or restructure an existing issuance at more favorable terms.
More worrisome for the corridor than the bong ratings, however, is the ratings outlook issued by Fitch. The corridor had held a "ratings watch negative," which is issued when Fitch sees a heightened probability of a downward rating change. On Friday, Fitch changed this to a "negative ratings outlook," a more concrete assertion applied when Fitch believes that the issuer's rating is likely to move downward over a one- to two-year period.
In issuing the ratings and outlook, Fitch pointed out that although the corridor saw dramatic downturns in cargo volumes in 2008 and 2009, container volumes moved along the corridor in 2010 have show a 14 percent increase compared to the first 10 months of 2009.
"This indicates that volume is recovering somewhat," said a Fitch statement, "however, the volume setback incurred in 2008 and 2009 combined with the corridor's escalating debt service profile mean that action is still needed to meet the authority's debt service obligations."
Fitch pointed out that there are several options available for the corridor to address the anticipated shortfall in revenues, including refinancing a portion of outstanding debt via the Railroad Rehabilitation and Improvement Financing, or RRIF, offered through the United States Department of Transportation's Federal Rail Administration. The RRIF provides direct federal loans and loan guarantees to finance development of railroad infrastructure. ACTA applied for a RRIF loan in March 2010 to restructure the $737 million in subordinate bonds, and expects a decision on its application in early 2011.
"Another option would be to refinance a portion of existing debt with a traditional municipal finance issuance, utilizing the existing senior and subordinate liens," said Fitch. "In both these cases, ACTA would seek to reduce annual debt service requirements and backload debt, while substantially reducing or eliminating the need for port shortfall advance payments to fund a portion of debt service in future years."
The real concern would be if the corridor could not meet its debt service. The ports of Long Beach and Los Angeles are legally committed under the corridor operating agreement to cover up to 40 percent of the corridor's annual debt service payment in the event of shortfalls.
While on the one hand this provides the corridor with a backstop that improves its credit standing, such a drain on port revenue, especially if the shortfalls continue for a long period of time, could significantly impact the two ports' cash flow situations.
Fitch estimates "the ports' gross joint liability for corridor debt service at $60 million to $150 million spread over the years 2012-2020 depending on the severity of the stress assumptions."
While Fitch points out that both ports have an adequate amount of unrestricted cash to meet any near-term shortfall payments without having to adjust their rates or tariffs, any sizable draw down of port cash reserves could reflect on the ports' own ratings.
According to Fitch, as of Sept. 30, 2010, the Port of Los Angeles had $311 million in unrestricted cash and the Port of Long Beach had $403 million in unrestricted cash.
