NJ TRANSIT Weighs Taking Out $300 Million Line Of Credit
NEWARK, N.J. (CBSNewYork/AP) -- NJ TRANSIT is considering taking out a $300 million line of credit with a Canadian bank, in order to cover expenses as the state awaits federal funding.
NJ TRANSIT unveiled the proposal on Friday, four days after the agency proposed a roughly 9 percent fare hike to help close a $60 million budget gap.
An NJ TRANSIT spokeswoman said the proposed loan from Royal Bank of Canada was chosen after a competitive process and the funds would be used as ``cash flow management tool.''
The agency incurs expenses throughout the fiscal year but receives federal funds at the end of it.
The agency took out a $241.5 million loan last year from the transportation trust fund to cover costs, and is paying back that amount this year, according to Christie administration documents. The trust fund itself is expected to go broke on July 1, 2016, according to Transportation Commissioner Jamie Fox.
The cost of the loan would include a $900,000 payment to reimburse the bank for reserving the funds. The actual interest cost will depend on the amount NJ TRANSIT taps and on interest rates at the time.
The board is set to consider the loan in May. If it approves the measure, NJ TRANSIT expects it would close on the transaction in June.
The fare hike plan unveiled Monday would also eliminate two late night Hoboken trains and make cuts to six bus routes. It would also be the first time in five years the agency has increased fares.
NJ TRANSIT officials say the proposal follows several cost-cutting measures, including a hiring freeze, increased vehicle efficiency and overtime reductions, but that simply wasn't enough.
NJ TRANSIT has announced it will hold nine scheduled public hearings and one information session on the issue beginning Saturday, May 16, before the Board of Directors considers the proposal July 8.
If approved, the proposed service cuts would go into effect in September and fare increases would take effect in October.
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