Comprehensive Annual Financial Report - Metro Transit

Bi-State Development Agency of theMissouri-Illinois Metropolitan DistrictManagement’s Discussion and AnalysisJune 30, 2011 and 2010Included in the FY 2009 ending balance of $1.22 billion are assets having a cost of $12.4million and a net book value of $0.3 million that were available for sale at June 30, 2009.There were no such assets available for sale as of June 30, 2010 and 2011.Major capital asset additions during the current fiscal year included the following:• St. Louis Downtown Airport Fire House of $5.4 million• St. Louis Downtown Airport Runway extension of $1.7 million• Metro Bus vehicles of $7.6 million• North Hanley Parking Lot and Bus Loop of $1.5 million• Remaining interest in Meridian Garage of $5.9 millionLease TransactionsMultiple events have occurred between 2009 and 2011 as it relates to leases. In FY2010,Metro early terminated its 1997 Facilities Lease\Leaseback and one tranche (F1) of its 2001Railcar Lease\Leaseback. These leases were in technical default due to credit downgradesof two insurance companies that provided payment guaranties in the transaction. Metro madea termination payment to the lease investor to close the transactions. At June 30, 2010,Metro reached a tentative agreement with the lease investor to cure the lease defaultpertaining to the remaining tranches (C1, C2) of the 2001 LRV Lease. The transactionclosed in February 2011, at which time Metro purchased the collateral, in the form of U.S.Treasury securities, in the agreed upon par amount of $8.7 million. The St. Clair CountyTransit District, which participated in the lease, paid for approximately 75% of the collateral.In November 2010 Metro made an offer to the 1995 LRV lease investor to early terminatethe transaction for the market value of securities in the Lease Investment Account(approximately $20 million), plus an additional payment of approximately $2 million, to bringthe total offer to $22 million. The investor accepted the offer and the transaction closed onNovember 30. Metro’s out of pocket termination expense, including the termination paymentand fees were approximately $2.2 million. Metro also recognized a loss on a previouslyreported market gain of the securities of $6.5 million. Metro no longer has any exposurerelated to lease transactions. Additional information on Metro’s leases can be found inFootnote 9 on page 35.Long-term DebtBetween FY2009 several events related to long-term debt have occurred. In October 2009,Metro terminated the swap by making a net termination payment of $9.9 million. InNovember 2009, Metro issued $97.2 million Series 2009 Mass Transit Sales TaxAppropriation Bonds to refund the $75 million Series 2002 A variable rate bonds, terminatetwo interest rate swaps, create a DSRF of $9.1 million and purchase a bond insurance policyand pay costs of issuance for the bonds. In October 2010, Metro refunded the $150 millionSeries 2005 Bonds through a $145.2 million plus (premium of $4.7 million) issue of MassTransit Sales Tax Appropriation Bonds. Significant details of debt can be found in Footnote10 page 37.9