SEPTA gets smart card assist from PIDC
The first death knell sounded for the era of the token this afternoon, as the SEPTA Board approved an innovative financing plan that would pay for a new smart card fare collection system.
SEPTA will borrow up to $175 million from the Philadelphia Industrial Development Corp., the city’s economic development arm, at the low interest rate of 1.75 percent.
The money will be used to pay a contractor to build the system — which is expected to cost about $100 million — and to cover other costs related to modernizing infrastructure for the fare card.
The long-delayed project has stalled since state infrastructure funding was cut last year, leaving SEPTA scrambling to find another way of paying for the project, which is one of general manager Joe Casey’s top priorities.
SEPTA had also vied for a federal stimulus grant and was investigating the possibility of vendor financing.
This is only the first step of what promises to be a long process.
With the money in hand, Casey said, in a press conference, that the authority would probably select a vendor in May or June. He wants the smart card system up and running two to three years after that — though most other transit agencies have taken between three and five years to get their systems up and running.
When in place, the smart card system will replace tokens and allow swipe-less fare payment. SEPTA wants to build an “open” system that will allow other transit agencies’ smart cards, and other devices like cell phones, to be used as fare instruments.
Crucial decisions on how regional rail would function under the new system would be decided in a public process after the contract with the vendor is awarded in consultation with stakeholders and after public meetings, Casey said.
Transit advocates have decried one option SEPTA is exploring, which would involve gating Center City stations and having riders only pay for outbound trips.
Three companies are bidding for the contract: ACS Transport Solutions Group, Scheidt and Bachmann USA Inc. and Cubic Transportation Systems Inc.
They’re scheduled to meet with SEPTA in two weeks to get answers to questions about their bid proposals.
The PIDC assist comes from a loan arranged through the Immigrant Investor Program’s Welcome Fund, which essentially allows foreign investors to buy permanent residency in the United States in exchange for investing in economic development projects that produce a certain number of jobs.
In this case, 350 investors have pooled their money together to create about 3,500 jobs — directly and indirectly — from the smart card project over two years.
PIDC is in charge of making sure the project achieves that goal.
The program was last used to provide financing for the Pennsylvania Convention Center — though that plan initially ran into opposition from the convention center board — and has been used to finance the construction of the Comcast Center and for projects at the Temple University Health System.
Over its 20-year life, PIDC president Peter Longstreth said the program has made 30 different loans totaling $320 million. This project would breach the half-billion-dollar mark.
Mayor Nutter, whose approval was required for PIDC to lend to money, praised the project in a statement, saying that the smart card system “will serve Philadelphia residents and fundamentally transform regional transit access.”
The loan will come in three different tranches, with the first having a five-year term and the rest being paid back over 5.5 years.
The first tranche of $35 million is scheduled to be available Dec. 1, with the second round of $75 million to SEPTA Sept. 1, 2012, and the remaining $65 million July 1, 2013.
The loan will be completely repaid Dec. 1, 2019.
SEPTA CFO and treasurer Rich Burnfield said that $20 million — or two years’ worth of debt service — had already been set aside. The authority will redirect money from other projects to pay the outlying years if additional funding isn’t found.
Combined with SEPTA’s decision to borrow to pay for the new Silverliner V railcars and the reconstruction of the Wayne Junction regional rail station, this loan marks the biggest increase in the authority’s debt ever, coming in at up to $425 million.
Casey said that he preferred to avoid taking on debt but said that the borrowing was sustainable and the smart card project was too important to fail and explained that “you play the cards you’re dealt with.”
Contact the reporter at acampisi@planphilly.com
The first death knell sounded for the era of the token this afternoon, as the SEPTA Board approved an innovative financing plan that would pay for a new smart card fare collection system.
SEPTA will borrow up to $175 million from the Philadelphia Industrial Development Corp., the city’s economic development arm, at the low interest rate of 1.75 percent.
The money will be used to pay a contractor to build the system — which is expected to cost about $100 million — and to cover other costs related to modernizing infrastructure for the fare card.
The long-delayed project has stalled since state infrastructure funding was cut last year, leaving SEPTA scrambling to find another way of paying for the project, which is one of general manager Joe Casey’s top priorities.
SEPTA had also vied for a federal stimulus grant and was investigating the possibility of vendor financing.
This is only the first step of what promises to be a long process.
With the money in hand, Casey said, in a press conference, that the authority would probably select a vendor in May or June. He wants the smart card system up and running two to three years after that — though most other transit agencies have taken between three and five years to get their systems up and running.
When in place, the smart card system will replace tokens and allow swipe-less fare payment. SEPTA wants to build an “open” system that will allow other transit agencies’ smart cards, and other devices like cell phones, to be used as fare instruments.
Crucial decisions on how regional rail would function under the new system would be decided in a public process after the contract with the vendor is awarded in consultation with stakeholders and after public meetings, Casey said.
Transit advocates have decried one option SEPTA is exploring, which would involve gating Center City stations and having riders only pay for outbound trips.
Three companies are bidding for the contract: ACS Transport Solutions Group, Scheidt and Bachmann USA Inc. and Cubic Transportation Systems Inc.
They’re scheduled to meet with SEPTA in two weeks to get answers to questions about their bid proposals.
The PIDC assist comes from a loan arranged through the Immigrant Investor Program’s Welcome Fund, which essentially allows foreign investors to buy permanent residency in the United States in exchange for investing in economic development projects that produce a certain number of jobs.
In this case, 350 investors have pooled their money together to create about 3,500 jobs — directly and indirectly — from the smart card project over two years.
PIDC is in charge of making sure the project achieves that goal.
The program was last used to provide financing for the Pennsylvania Convention Center — though that plan initially ran into opposition from the convention center board — and has been used to finance the construction of the Comcast Center and for projects at the Temple University Health System.
Over its 20-year life, PIDC president Peter Longstreth said the program has made 30 different loans totaling $320 million. This project would breach the half-billion-dollar mark.
Mayor Nutter, whose approval was required for PIDC to lend to money, praised the project in a statement, saying that the smart card system “will serve Philadelphia residents and fundamentally transform regional transit access.”
The loan will come in three different tranches, with the first having a five-year term and the rest being paid back over 5.5 years.
The first tranche of $35 million is scheduled to be available Dec. 1, with the second round of $75 million to SEPTA Sept. 1, 2012, and the remaining $65 million July 1, 2013.
The loan will be completely repaid Dec. 1, 2019.
SEPTA CFO and treasurer Rich Burnfield said that $20 million — or two years’ worth of debt service — had already been set aside. The authority will redirect money from other projects to pay the outlying years if additional funding isn’t found.
Combined with SEPTA’s decision to borrow to pay for the new Silverliner V railcars and the reconstruction of the Wayne Junction regional rail station, this loan marks the biggest increase in the authority’s debt ever, coming in at up to $425 million.
Casey said that he preferred to avoid taking on debt but said that the borrowing was sustainable and the smart card project was too important to fail and explained that “you play the cards you’re dealt with.”
WHYY is your source for fact-based, in-depth journalism and information. As a nonprofit organization, we rely on financial support from readers like you. Please give today.
Brought to you by PlanPhilly
PlanPhilly
In-depth, original reporting on housing, transportation, and development.