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By BOB NORBERG
THE PRESS DEMOCRAT
Model of a SMART train. (PD FILE)
Bonds sold by the Sonoma-Marin commute rail agency are rated by financial analysts as stable investments, but still are graded below other Bay Area rail systems because the trains are not yet running.
Fitch on Monday rated the Sonoma-Marin Area Rail Transit District at A and Standard and Poor’s on Tuesday gave SMART a rating of AA.
In comparison, Fitch gave AA ratings to the Bay Area Rapid Transit District (BART) and to the Santa Clara Valley Transit Authority.
“They are more established systems,” said Scott Monroe, an analyst for Fitch in San Francisco. “Since SMART is new, and has yet to construct the system, SMART took a conservative approach to cost, tax revenues, ridership and farebox revenues,” Monroe said.
However, Fitch is also taking into consideration what it considers some negatives, such as a low percentage of ridership compared to the number of workers in Sonoma and Marin counties and a low farebox recovery ratio.
SMART told analysts that it expects to carry 3,000 riders a day and that farebox revenue is forecast to be 22.9 percent of operating costs.
In San Diego, the Coaster rail system had a farebox recovery of 39.6 percent, but the Sprinter had 21 percent for the six months ending in January. The Santa Clara Valley Transit Authority had a farebox recovery rate of 15.7 percent in 2011.
SMART is developing a fare schedule that is based on the length of the trip. In it’s 2009 strategic plan, SMART estimated that the average one-way fare would be $4.50.
SMART General Manager Farhad Mansourian said forecasts provided to analysts are purposefully conservative and have been reviewed by the Metropolitan Transportation Commission.
Standard and Poor’s analysts give SMART bonds a AA rating, based on the strength of the quarter-cent sales tax that will be used to repay the bonds.
“The stable outlook reflects our opinion of the strong and diverse tax base and good coverage of annual debt service with projected long-term growth in sales tax,” according to a summary by the rating service.
Standard and Poor’s rated both BART and the Santa Clara authority at a higher level, AAA.
Standard and Poor’s notes that sales tax revenues grew strongly between 1990 and 2007, fell 19.2 percent from 2007 to 2009, but increased 11.6 percent in 2010-2011 and are up for the first three quarters of 2011-2012.
SMART is scheduled to convert $190 million in construction bonds the week of April 16 to fixed rates that are expected to be between 4 and 5 percent, Mansourian said.
The bonds were previously sold at a variable interest rate of 1 percent and the funds that were raised, $171 million, put into escrow because of the threat of a ballot measure seeking to overturn SMART’s sales tax, the major source of funding.
Those funds were released from escrow after SMART opponents, RepealSMART, were unable to gather enough signatures to put a measure on the November ballot in an attempt to overturn the SMART sales tax.
The $171 million is almost half the cost, $366 million, of building the initial segment of the line, 38.5 miles from Guerneville Road in Santa Rosa to downtown San Rafael.
Service is scheduled to begin in late 2015 or early 2016.
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The reason people like John Reed are so successful in advancing the Socialist agenda is because they have perfected the art of playing on people’s greed, laziness and jealousy.
Aspects of human nature as primal and difficult to control as fear, hate & love.
Aside from being a very despicable way to advance your agenda, it’s very telling that one must resort to such lows to do so.
If your ideas are better they stand on their own merits without using these tactics.
But since they aren’t and can’t, you must use words like “fair” and “deserve” to play on people’s greed, laziness and jealousy.
There isn’t anything “fair” about someone working hard to create wealth where none existed before & having it taken from them to give to someone who didn’t.
That doesn’t mean “you shouldn’t have to pay taxes to support community services”!
But “community services” that exist solely for the purpose of redistributing wealth are a perversion of the term “community services”, as are community services that cost multiples of what they should.
If you have worked hard & failed to earn or accumulate wealth you are “unlucky” not “deserving”.
If you made bad decisions or in many cases, none at all… nobody owes you anything.
But we are Americans and we don’t just turn our backs on the needy despite what Liberals and Socialists will have you believe… but of all the organizations on the planet, the LAST one we need coordinating “help for the needy” is the Government.
The Liberal, Socialist agenda offers nothing “new” under the sun. And when I say “new” I don’t mean “in the last several years” but rather “the last several thousand years”.
Conservatives offer something new, tested & proven.
The Constitution of the United States of America.
…and when I say “Conservatives” I don’t mean “Republicans”! I mean ALL of us fiscally conservative Americans, Republican, Democrat or whatever.
Personally, I think the SMART train could be a reasonable “community service” someday in the distant future. And planning should be underway on a small scale.
But we don’t need this right now and we can’t afford this right now.
Good old John, always the socialist thinking about redistribution of our wealth. I and many others don’t want our tax money spent on a little used train for the few tourists who might stumble onto it.
We need our roads and highways maintained and new ones built so we can acturally get to places we need to go, like our jobs.
I worked very hard for what I have and I don’t want you John and your like taxing it away from me and my children for toys like this little needless train.
By the unsmart bureaucrats own numbers, less than 21% of the cost of this boondoggle will be paid by fares. The taxes that the rest of us pay for this this welfare program are outrageous.
It is no wonder California and Sonoma County are bankrupt. Tax and spenders in the state legislature, governors office and local offices are directly responsible for the sad shape the economy is in.
Sugar coating the costs of this $1.5 billion + dollar waste will not make it O.K. or acceptable.
The taxpayers will be paying for this long after the luster of a train in the wrong location going to the wrong locations and using the wrong fuel has worn off. Buyer remorse will leave those stuck with paying the bills wondering, what were they thinking?
Back in the day, someone would buy an engine and a few cars to see if there could be a dmand. It worked well for San Fran folks going to resorts up here, and forest and quarry products south.
Now, we have to sink 1/2 a BILLION into a boondoggle.
That doesn’t even count that Cotati wants to spend money on a station. This scam is railway robbery !
John Reed, you sound like you are in the 18th or 19th centuries yourself with your reduction of America to classes. America though is about the right of every *individual* to have the freedom to make something of their lives; we are free persons, not just a faceless part of some group or class. Also, when you talk about Smart Growth and Shared Prosperity you are really talking about top-down controlled growth/non-growth (depending upon the location) and about forced redistribution of wealth. Let’s just be clear about that.
And you repeat the tired catch phrases of Pres. Obama (social darwinism) which actually can apply much better to his policies than to any of conservatives.
Furthermore, you repeat SMART nonsense about RepealSMART being responsible for added costs for the bonds. This is not true, as has been noted many times. But apparently you haven’t absorbed that.
More generally, this article does say very clearly, “The $171 million is almost half the cost, $366 million, of building the initial segment of the line, 38.5 miles from Guerneville Road in Santa Rosa to downtown San Rafael.” That is true, and it is one of the fundamental reasons RepealSMART wanted to put Measure Q back on the ballot in November. We’re stuck now with paying a tax that was supposed to build the entire line, but now (and NOT just because of the below-par economy) will not. Those who put Measure Q on the ballot made rosy promises and we unfortunately swallowed those. Since not enough voters signed the RepealSMART petitions, those who made those misleading promises in Measure Q and its additional political literature will get away, for the time being, with their misleading actions. But to build the remainder of the line, those supporters will have to come back and ask for more tax money. And they will also have to come and ask for more tax money just t run the train in coming years. Will the voters be willing — or in any position — then to pass those taxes? We’ll see.
SMART is still what it has always been. We of of this area (even some of us who strongly supported or worked for RepealSMART) wanted to believe it was a viable project. And some people still fool themselves and claim that it is. But it isn’t. The ridership will be minuscule as a percentage of drivers in Sonoma/Marin and will neither reduce congestion or emissions to any notable extent.
SMART is also part of the Smart Growth plan (just as John Reed admitted) which wants to build stack ‘n pack along the narrow commuter corridor and then wants to, by various means, concentrate the population in that corridor. That doesn’t appeal to me. I wonder if “Mr. Reed” will live in those tightly planned, controlled communities?
The train may be coming, but whether it will be anything more than an expensive toy for a few riders is highly questionable.
Meanwhile the “planners” who who have pushed it so vigorously have other items on their Smart Growth agenda, and we voters will have to be on our toes to prevent them from instituting, through non-elected agencies and through seemingly benign local ordinances, those items that have further reaching consequences than we even fully comprehend yet.
“…make sure all classes of society share in the prosperity…” Is that what you mean?
Or do you mean all classes of society will have the opportunity to share in the prosperity. There is a big difference between the two.
To add to John Reed’s last sentence:
…and Shared Continually Growing Crushing Debt.
Someone has to cut up governments’ credit cards…we need an intervention.
We can’t do the “must do” stuff for crying out loud…like maintaining existing infrastructure.
But the trains a’coming; who knows, it could be the monumental panacea proponents say it will be.
Thankfully, the SMART project is moving ahead, despite a concerted effort to derail it. The taxpayers are on the hook for substantially higher bond costs due to the repeal campaign. The conflict over SMART is a reflection of the debilitating gridlock that America is in on every level. We are in transition, and there is a bare-knuckled battle for power, based on two very different operating systems on how this country functions. Are we going to be social democratic state that seeks to preserve the common good and look to make sure that all classes of society share in the prosperity or will we revert to a 19th century social darwinist plutocracy? That’s the fundamental question. I, and my colleagues, will work tirelessly to enact the vision of Smart Growth and Shared Prosperity.