By Edward Krudy
NEW YORK (Reuters) - New York's Metropolitan Transportation Authority, operator of one of the world's largest public transportation networks, said ahead of a board meeting on Wednesday that it is facing a $15.2 billion shortfall for its infrastructure needs.
In a document posted on its website the MTA said it will "work with its funding partners to identify the additional resources needed to achieve full funding." It said alternatives include reducing the size of the capital program or increasing fares and tolls.
But the MTA said reducing investment would jeopardize safety and hinder its ability to serve one of the most densely populated areas of the United States, according to the document that will be presented to MTA's board.
The document said that "A reduced program will not keep pace with state of good repair renewal needs" and will effect the MTA's ability "to continue delivering safe and reliable service at current levels."
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The MTA is updating its five-year capital program for 2015 to 2019. The program envisions $32 billion in investments for projects such as replacing subway, bus, and commuter railroad fleets, and a major $10 billion project to enhance access to east Manhattan.
The MTA is a major borrower in the municipal bond market, with more than $34 billion in debt. As well as tapping the market to fund its capital plan, it could also tap state, city and federal funds for important infrastructure projects.
Joseph Pezzimenti, an analyst at Standard & Poor's who follows the MTA's finances, said the MTA has previously released 5-year capital plans that have not been fully funded and adjusted the plan in later years.
"They did something similar with the current plan they're in," said Pezzimenti. "They first made sure they identified funding sources in the first few years of that program and then they were able at a later date to identify the funding sources for the remainder part of the program."
Still, the size of the shortfall highlights massive capital investment the MTA needs to maintain and upgrade its aging infrastructure. It is also points to the difficulty of securing funds for major public projects at a time when government spending, both locally and nationally, is under scrutiny.
Despite its heavy debt load and extensive capital needs, MTA is in a favorable position, said Pezzimenti, enjoying a near monopoly position in a service area that has a population of more than 15 million.
In 2013 the MTA's farebox recovery ratio, the percentage of operating expenses it recovers through fares and tolls, was 66 percent, one of the highest of the mass transportation networks covered by Standard & Poor's, Pezzimenti said.
Standard & Poor's rates MTA's debt as AA-minus, the fourth highest investment grade, and says its outlook is stable.
(Reporting by Edward Krudy; Editing by Grant McCool)