The CTA and Metra quickly shot down a proposal Monday to consolidate all borrowing authority for Chicago-area mass transit projects and equipment under their parent agency, the latest salvo in a fight over control of billions of regional transportation dollars.
The two agencies and Pace would cede their power to seek loans through the sale of bonds under the proposal, the latest such move made by Regional Transportation Authority Chairman John Gates Jr. in the name of reining in what the RTA considers to be excessive, high-interest CTA borrowing.
Gates, whose agency the CTA and the Emanuel administration have made no secret about wanting to abolish, is also seeking to greatly expand the RTA's borrowing limits, from $800 million currently on long-term borrowing for equipment and projects to $5 billion.
CTA President Forrest Claypool has said that earlier RTA efforts to reduce the CTA's borrowing authority were nonstarters, and an agency spokesman said Monday that stripping the CTA of its ability to independently borrow money is out of the question.
"Decisions by the RTA will directly threaten the scarce funding that the CTA, Metra and Pace use to provide service," CTA spokesman Brian Steele said. "This idea is simply the latest in a series of attempted power grabs that would hurt service, make it harder to reinvest in the system and make the RTA answerable to no one."
Metra also rejected Gates' bid. Metra believes that talks involving borrowing strategies should not occur until a reliable funding source to pay for capital projects has been secured, Metra spokesman Michael Gillis said.
Centralizing borrowing authority under the RTA would require state legislation. RTA chief of staff Jordan Matyas said the agency has no immediate plans to go that route.
But Matyas said the RTA "should be the only agency to borrow for the region, because we have the best resources and we get the best interest rates through a much more competitive process than the CTA follows."
Matyas pointed to a downgrade Friday of CTA sales tax-backed debt as evidence of the bond market's concern about excessive agency borrowing and its recent history of making payments on interest but not principal. Moody's Investors Service lowered the CTA's $2.9 billion outstanding sales tax revenue bonds to A1 from Aa3 and revised the outlook to negative from stable.
The CTA countered that Moody's own analysis noted that the RTA has stricter limits on additional debt than does the CTA. That means the RTA cannot issue the large amounts it is proposing on behalf of the three transit agencies without dramatically exceeding those limits.
"Once they do that, the basis for their supposedly superior rating disappears," Steele said.
The CTA currently has unlimited borrowing authority under the Metropolitan Transit Act.
Metra has not exercised the right it has had since 2008 to issue up to $1 billion in bonds, relying instead on the RTA. Pace was recently authorized to issue up to $100 million in bonds for specific projects.
Gates' proposals to change the region's transit system come in the aftermath of recent scandals at Metra — the 2010 suicide of the commuter railroad's executive director, Phil Pagano, amid an investigation into unauthorized payments he received; the Metra board's ouster of Pagano's successor, Alex Clifford; and the controversy over a severance worth up to $871,000 that Clifford received.
A state task force is holding hearings aimed at improving mass transit, in part by ending turf wars between the agencies and appointing more qualified people to their boards of directors.