$165,000,000 Massachusetts Bay Transportation Authority 1998 series A notes : dated February 27, 1998, due February 26, 1999

132 Pages·1998·7 MB·English

by  Massachusetts Bay Transportation Authority

n
UMASS/AMHEFIST | / /
3l20bb UC°=> _.^TAND OFFICIAL'NOTICE OF SALE DATED FEBRUARY 17, 1998
.5 ~-A
i theopinion ofBondCounsel, underexistinglaw, assumingcontinuedcompliance with certainprovisionsofthe
venue Codeof1986, asamended, intereston theNotes willnot beincludedin thegross incomeofholdersofthe
"3'g,^ j„. federal income tax purposes. Interest on the Notes will not constitute a preference itemfor the purposes of
%^ a computation ofthealternativeminimum taximposedon certain individualsandcorporations, although interest on theNotes
§| J will be taken into account in computing the alternative minimum tax applicable to certain corporations. In thefurther
!= = a opinion ofBond Counsel, interest on the Notes, and anyprofit made on the sale thereof, are exemptfrom Massachusetts
3 / personalincometaxesandtheNotesareexemptfromMassachusettspersonalpropertytaxes. See "TaxExemption"herein.
®
$165,000,000
c o c
o =
5 2 = Massachusetts Bay Transportation Authority
OJ•— o
A
1998 Series Notes
111 Dated: February 27, 1998 Due: February 26, 1999
%
Interest Rate
:
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as* The Notes will be issued by means ofa book-entry system evidencing ownership in principal
amounts of$5,000 or integral multiples thereofand transfer thereofon the records ofThe Depository
Trust Company and its participants. Details ofpayment ofthe Notes are more fully described in this
ev- Official Statement and Official Notice of Sale dated February 17, 1998. Interest will be payable at
maturity calculated on the basis of the actual number of days and a 365-day year (364/365). The
au—S_su Notes shall benon-redeemable prior to maturity.
8*8 5
O -
c_u o
= M = The Notes are being issued by the Massachusetts Bay Transportation Authority pursuant to
Chapter 161A ofthe General Laws ofthe Commonwealth ofMassachusetts and will constitute direct
>>.y
S>"5 5 and general obligations ofthe Authority.
3£S j
o= o In addition, among the security provisions for the payment ofthe Notes is the provision of
i,g = Chapter 161A ofthe General Laws of the Commonwealth of Massachusetts that if at any time the
Authority lacks funds to pay a bond or note issued or assumed by it, the Authority shall requisition
c o : the required amount from the Commonwealth. In the opinion ofBond Counsel and Co-Bond Counsel,
V5£Z.§c the obligation of the Commonwealth to pay the required amount to the Authority is a general
f o"
obligation ofthe Commonwealth and the full faith and credit of the Commonwealth are pledged to
| ©.= make suchpayment. See "Security forand Payment ofNotes — State Payments to the Authority."
5 § >,
1:1 ?
11 I The Notes are offered when, as and if issued and received by the original purchasers,
!ss5 subject to the unqualified approving opinions as to legality of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., Boston, Massachusetts, Bond Counsel to the Authority, and of Krokidas &
Bluestein, Boston, Massachusetts, Co-Bond Counsel to the Authority. For information relating to the
reoffering of the Notes, see "Competitive Sale of the Notes." It is expected that settlement of this
S a | issue will occur atThe Depository Trust Company inNew York, New York, on February 27, 1998.
H § z Sealedbids fortheNotewillbereceivedbyWesleyG. Wallace,Jr., Treasurer-Controller ofthe
Authority,athisofficesat 10 ParkPlaza, 8thFloor,Room 8450, Boston,Massachusettsuntil 1 1:00a.m.
j g.1 (Bostontime)onTuesday,February24, 1998,pursuantto the OfficialNoticeofSaledatedFebruary 17,
|l|
1998.
February_, 1998
5 1
No dealer, broker, salesperson or other person has been authorized by the Authority, the Commonwealth of
Massachusetts or the original purchasers ofthe Notes to give any information or to make any representations, other
thanthose contained inthis Official Statement, and ifgiven ormade, suchother informationorrepresentationsmust
notbe reliedupon ashaving been authorizedby any ofthe foregoing. This Official Statement does not constitute an
offerto sell or a solicitation ofan offerto buy nor shall there be any sale ofthe Notes offered hereby by anyperson
in anyjurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information
and expressions of opinion herein are subject to change without notice and neither the delivery of this Official
Statementnorany sale madehereundershall, underany circumstances, create any implicationthatthere hasbeenno
change in the affairs of the Authority, or of the Commonwealth, or its agencies, authorities and political
subdivisions, since the date hereof, exceptas expresslysetforthherein.
TABLE OF
PAGE PAGE
FloodDisaster 21
INTRODUCTION
1 FederalOperatingAssistance 21
AUTHORIZATIONANDPURPOSE 1 LEGALITY OFNOTES FORINVESTMENT 21
APPLICATIONOF PROCEEDS 1 NO LITIGATIONCERTIFICATE 21
SECURITYFORANDPAYMENTOFNOTES 1 TAX EXEMPTION 21
DirectandGeneralObligationsofthe
CONTINUINGDISCLOSURE 22
Authority
1
StatePaymentstotheAuthority 1 LEGALMATTERS 23
AuthorizationsforTemporaryBorrowing.3
OtherFactors 3 RATINGS 23
BOOK-ENTRY ONLY SYSTEM 4
COMPETITIVE SALE OFNOTES 23
THEAUTHORITY 5
ADDITIONAL INFORMATION 24
Management 5
TheTransportationSystem 7
DISCLOSURE CERTIFICATES 24
BudgetaryMatters 7
FareIncreases 12
AssessmentsonCitiesandTowns 12 AppendixA. Commonwealth
StateContractAssistance 14
Information Statement A-l
FinancingPractice 14
AppendixB. AuditedFinancial
AuthorizedandOutstandingDebt
1 Statements oftheAuthority B-l
Long-TermLeases 16
Appendix C. ProposedFormofOpinion
FinancialStatements 16
ofBondCounsel C-l
RetirementPlan 16
AppendixD. ProposedFormofOpinion
EmployeeRelations 18
ofCo-BondCounsel D-l
Litigation 19
Legislation 19 Appendix E. OfficialNotice ofSale E-
CompetitiveContractingInitiatives 20
OFFICIAL STATEMENT
$165,000,000
MASSACHUSETTS BAY TRANSPORTATION AUTHORITY
A
1998 Series Notes
Dated: February 27, 1998 Due: February 26, 1999
INTRODUCTION
The purpose ofthis Official Statement is to furnish certain information about the $165,000,000 1998
Series A Notes ofthe Massachusetts Bay Transportation Authority (the "Authority" or "MBTA") dated
February 27, 1998 andpayable February 26, 1999 (the "Notes").
AUTHORIZATION AND PURPOSE
The Notes are being issued by the Authority pursuant to Chapter 161A ofthe Massachusetts General
Laws, as amended (the "Act"), on account of the Authority's Net Cost of Service (as defined below)
relating to the 1998 calendar year pending payment of such Net Cost of Service by the Treasurer and
Receiver-General (the "State Treasurer") of the Commonwealth of Massachusetts (the
"Commonwealth").
APPLICATION OF PROCEEDS
The proceeds ofthe sale ofthe Notes will be used by the Authority to finance its current expenses
(including the payment ofnotes ofthe Authority, when due) and to pay costs ofissuance.
SECURITY FORAND PAYMENT OF NOTES
Direct and General Obligations ofthe Authority
The Notes are direct and general obligations ofthe Authority, and its full faith and credit are pledged
to the payment of the principal of and interest on the Notes. The Authority is subject to suit, but its
property is not generally subject to attachment or levy to pay ajudgment on its bonds or notes. Provision
is made, however, in Section 13 ofthe Act (as discussed below) for court-ordered payments of unpaid
notes, including the Notes, from moneys received for such purpose by the Authority from the
Commonwealth ofMassachusetts (the "Commonwealth").
State Payments to the Authority
Section 13 ofthe Act provides that ifat any time the Authority lacks funds to pay the principal ofor
interest due on a bond or note issued or assumed by it, the Authority shall requisition the required
amount from the Commonwealth. In the opinion ofBond Counsel and Co-Bond Counsel, the obligation
of the Commonwealth to pay the required amount to the Authority is a general obligation of the
Commonwealth and the full faith and credit ofthe Commonwealth are pledged to make such payment. It
should be noted, however, that Chapter 62F of the Massachusetts General Laws establishes a
state tax revenue growth limit and does not exclude payment ofsuch amounts from the scope of
the limit. Section 13 further provides that the Authority or any holder ofany such unpaid bond or note,
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acting in the name and on behalfofthe Authority, shall have the right to require the Commonwealth to
pay the Authority the amount remaining unpaid, which right shall be enforceable as a claim against the
Commonwealth. Thepertinentprovision ofSection 13 is as follows:
"Ifat any time any pnncipal or interest is due or about to come due on any bond or note issued or
assumed by the authority, other than any principal or interest on any bond anticipation note
guaranteed by the commonwealth, and funds to pay the same are not available, the directors shall
certify to the state treasurer the amount required to meet such obligations and the commonwealth
shall thereupon pay over to the authority the amount so certified. If the commonwealth shall not
make such payment within a reasonable time or shall not pay when required any applicable contract
assistance under section twenty eight, the authority or any holder ofan unpaidbond ornote issued or
assumed by the authority, acting in the name and on behalfofthe authority, shall have the right to
require the commonwealth to pay the authority the amount remaining unpaid, which right shall be
enforceable as a claim against the commonwealth. The authority or any such holder of an unpaid
bond or note may file a petition in the superior court for Suffolk county to enforce such claim or
intervene in any such proceeding already commenced and the provisions ofchapter two hundred and
fifty-eight shall apply to such petition in so far as it relates to the enforcement ofa claim against the
commonwealth. Any such holder who shall have filed such a petition may apply for an order ofsaid
court requiring the authority to apply funds received by the authority on its claim against the
commonwealth to the payment ofthe petitioner's unpaid bond ornote, and said court ifit finds such
amount tobe due him shall issue such an order."
Withrespectto saidprovision, the Massachusetts Supreme Judicial Courthas stated:
"Section 13, as noted above, imposes an obligation on the Commonwealth to make advances to the
Authority at any time when required to put it in funds to meet its obligations. There are in §13
specific provisions to assure lenders the aid ofthe courts to require that the advances needed to pay
them are made. This is a 'right' enforceable against the Commonwealth." Massachusetts Bay
TransportationAuthority v. Boston SafeDeposit and Trust Company, 348 Mass. 538, 555 (1965).
Section 12 ofthe Act provides for the Authority to requisition from the State Treasurer and for the
State Treasurer to pay to the Authority annually the Net Cost of Service incurred by the Authority in
providing its mass transportation services. The Net Cost ofService is defined in the Act as the difference
between (a) all income received by the Authority, including but not limited to revenues from the
operations of the transit system, advertising, parking, sale of capital assets in the ordinary course of
business, and gifts and grants for currentpurposes, and (b) all current expenses, including but not limited
to expenses for operations, wages, contracts for service by others, maintenance, debt service, taxes and
rentals.
Section 13 of the Act, in a separate provision from the provision discussed above pertaining to
payments by the Commonwealth iffunds are lacking to pay a bond or note, provides that the Authority
may require the Commonwealth to pay to it an amount not exceeding its estimated Net Cost of Service
forthatyear to date at any time the Authority lacks sufficient cash to make the payments required ofit in
the course ofits duties.
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Authorizations for Temporary Borrowing
Section 12 of the Act also provides that pending any payment from the State Treasurer to the
Authority and at any other time when the Authority, in the opinion ofits directors, has not sufficient cash
to make the payments required of it in the course of its duties as such payments become due (which
would include payment ofAuthoritybonds andnotes), the Authority may temporarily borrow money and
issue notes ofthe Authority therefor. The Notes are being issuedpursuant to said Section 12.
Section 12A ofthe Act provides that the Authority may secure its notes by a pledge ofassessments
and other moneys provided in lieu thereof or in reduction thereof. To the extent, however, that the
assessments ofany yearrepresent outstanding notes ofthe Commonwealth issued pursuant to Section 12
or unreimbursed interest or other charges incurred by the Commonwealth in issuing such notes, a
proportionate amount ofeach annual assessment, and ofeach payment thereof, shall not be included in
such pledge. The Authority has to date issued no notes secured by such pledge. Section 12A also
authorizes the Authority to issue notes secured by such pledge in exchange for notes issued by the
Commonwealthpursuant to Section 12.
In order to make the payments required of the Commonwealth by Sections 12 and 13, the State
Treasurer is authorized by Section 12 to issue general obligation temporary notes ofthe Commonwealth
in an amount sufficient to make such payments, to pay interest on the notes and to pay costs ofissuance.
The proceeds of such notes will, however, be general funds of the Commonwealth until paid to the
Authority, and no lien has been created thereon in the hands ofthe Commonwealth to secure payment of
the Notes at maturity in priority to other claims against the Commonwealth then or theretofore coming
due.
The Commonwealth has waived its sovereign immunity and consented to be sued on contractual
obligations, which term would include notes of the Commonwealth issued under Section 12, but the
property ofthe Commonwealth is not subject to attachment or levy to pay ajudgment.
Other Factors
The payment by the Commonwealth of an amount required to be paid by Sections 12 and 13, the
payment ofajudgment obtained against the Commonwealth under Section 13 and the ability ofthe State
Treasurer to issue notes of the Commonwealth to make such payments may be subject to legislative
appropriation ofthe necessary funds.
With respect to any Net Cost of Service paid by the Commonwealth to the Authority, the Act
provides for the Commonwealth to make assessments against the cities and towns in the Authority's
territory. Pursuant to Chapter 580 ofthe Acts of 1980, as amended ("Proposition 214"), the total amount
of these assessments in a given year may not exceed by more than 2.5% the total amount of the prior
year's assessments. The obligation of the Commonwealth to make payments to the Authority under
Sections 12 and 13 of the Act is not, however, in any way conditional upon the payment of such
assessments by the cities and towns. See "The Authority — Assessments on Cities and Towns" and "The
—
Authority State Contract Assistance."
Enforcement of a claim for payment of principal of or interest on notes of the Authority or the
Commonwealth and enforcement ofthe "right" against the Commonwealth described in "State Payments
to the Authority" above would be subject to the applicable provisions of Federal or Commonwealth
statutes, if any, hereafter enacted extending the time for payment or imposing other constraints upon
enforcement, insofar as the same may be constitutionally applied.
3
The ability ofthe Commonwealth or the Authority to issue notes in the future will depend upon the
financial condition ofthe Commonwealth and the Authority at the time such notes are to be issued and,
in particular, upon the marketability at that time ofdebt instruments to be issued by the Commonwealth
or the Authority. Certain information regarding the economic and financial condition of the
Commonwealth is set out in Appendix A hereto, but other factors which may affect the marketability of
Commonwealth and Authority debt in the future cannotnowbe foreseen.
BOOK-ENTRY ONLY SYSTEM
The Notes will be issued by a book-entry only system, evidencing ownership of the Notes in
principal amounts of$5,000 or integral multiples thereof, with no physical distribution ofNotes made to
the public. The Depository Trust Company ("DTC"), New York, New York, will act as Depository for
the Notes, which will be immobilized in its custody. The Notes will be registered in the name ofCede &
Co., as nominee for DTC. DTC is a limited-purpose trust company organized under the laws ofthe State
ofNew York, a member ofthe Federal Reserve system, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions
ofSection 17A ofthe Securities Exchange Act of 1934, as amended. DTC was created to hold securities
of its participants ("DTC Participants") and to facilitate the clearance and settlement of securities
transactions among DTC Participants in such securities through electronic book-entry changes in
accounts of DTC Participants, thereby eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations, some of whom (and/or their representatives) own DTC.
Access to the DTC system is also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a DTC Participant, either directly or
indirectly (the "IndirectParticipants").
Purchases ofthe Notes under the book-entry only system may be made through brokers and dealers
who are, or act through, DTC Participants. DTC Participants shall receive a credit balance in the records
ofDTC. The ownership interest ofthe actual purchaser ofeach Note (the "Beneficial Owner") will be
recorded through the records ofthe applicable DTC Participant. Beneficial Owners will receive a written
confirmation oftheir purchase providing details ofthe Notes acquired. Transfers ofownership interests
in theNotes will be accomplishedby book entries made by DTC and by the DTC Participants who act on
behalf of Beneficial Owners. Beneficial Owners will not receive Notes representing their ownership
interest in theNotes. Interest and principal will be paid to DTC, or its nominee, and then paid by DTC to
the DTC Participants and thereafterpaidby the DTC Participants to the Beneficial Owners when due.
THE AUTHORITY WILL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO SUCH
DTC PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH
RESPECT TO THE PAYMENTS TO DTC PARTICIPANTS OR INDIRECT PARTICIPANTS OR
BENEFICIAL OWNERS.
Beneficial Owners ofthe Notes will notreceive orhave the right toreceive physical delivery ofsuch
&
Notes, and will not be or be considered to be owners thereof. So long as Cede Co. is the registered
owner of the Notes, as nominee of DTC, references herein to the holders or registered owners of the
Notes shall mean Cede & Co. and shall not mean the Beneficial Owners ofthe Notes.
For every transfer or exchange of any of the Notes, the Beneficial Owner may be charged a sum
sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto.
DTC may determine to discontinue providing its service with respect to the Notes at any time by
giving notice to the Authority and discharging its responsibilities with respect thereto under applicable
4
law. Under such circumstances, unless a substitute Note Depository is retained by the Authority, Notes
will be delivered and registered as designated by the Beneficial Owners. The Beneficial Owner, upon
registration ofNotes held in the Beneficial Owner's name, will become the Noteholder.
The Authority may determine that continuation ofthe system ofbook-entry transfers through DTC
(or a successor Note Depository) is not in the best interests of the Beneficial Owners. In such event,
Notes will be delivered andregistered as designated by the Beneficial Owners.
When reference is made to any action which is required or permitted to be taken by the Beneficial
Owners, such reference shall onlyrelate to action by such Beneficial Owner or those permitted to act (by
statute, regulation or otherwise) on behalfof such Beneficial Owners for such purposes. When notices
are given, they shall be sent to DTC only.
The principal ofand interest on the Notes will be paid, in immediately available funds, to DTC or its
nominee, Cede & Co., as registered owner ofthe Notes. DTC's practice is to credit DTC Participants'
accounts on the payable date in accordance with their respective holdings shown on the records ofDTC
unless DTC has reason to believe that it will not receive payment on the payable date. Payments by DTC
Participants and Indirect Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is now the case with municipal securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of such DTC Participant or
Indirect Participant and not of DTC or the Authority, subject to any statutory and regulatory
requirements as may be in effect from time to time.
The Authority cannot and does not give any assurances that DTC, DTC Participants or others will
distribute payments of principal of and interest on the Notes paid to DTC or its nominee, as the
registered owner, to the Beneficial Owners, or that they will do so on a timely basis or that DTC will
serve and act in a manner described in this Official Statement.
THE AUTHORITY
The Authority was created in 1964 by the Act and is a body politic and corporate and a political
subdivision ofthe Commonwealth. The territorial area ofthe Authority consists of78 cities and towns in
the greater Boston metropolitan area. The Authority finances and operates mass transportation facilities
within its territory and to a limited extent outside its territory and is authorized to enter into agreements
forproviding mass transportation service byprivate companies, including railroads.
Management
The affairs ofthe Authority are managed by a board ofseven directors (the "Board ofDirectors" or
"Board"). The State Secretary of the Executive Office of Transportation and Construction of the
Commonwealth (hereinafter called the "Secretary") serves ex officio as the Chairman ofthe Board. The
other six directors are appointedby the Governor ofthe Commonwealth to serve terms coterminous with
the Governor. The Board has the power to appoint and employ a General Manager, subject to the
approval of an advisory board (the "Advisory Board"). The Act provides that the Advisory Board,
consisting ofarepresentative ofeach ofthe cities and towns constituting the Authority, shall have certain
specified powers, including the power to approve the Authority's budget or subject it to itemized
reductions.
5
The Authority's directors andprincipal officers are:
PATRICKJ. MOYNIHAN, Chairman,Natick,Massachusetts
Former General Manager, MBTA; formerUndersecretaryand General Counsel, Executive Office of
Transportation and Construction; former Deputy Commissioner and Chief Counsel, Massachusetts
HighwayDepartment;formerAssistantAttorneyGeneraland BudgetDirector,Officeofthe Attorney
General, CommonwealthofMassachusetts; former Division Director, Massachusetts State Auditor's
Office; formerTownAdministrator,TownofNorthbridge,Massachusetts.
GILBERTS. HOLLAND,Director,Longmeadow,Massachusetts
Member Massachusetts Republican State Committee; former Chairman of U.S. Small Business
AdministrationAdvisory Board of Massachusetts and Chairman of Combined Boards-Region One;
pastownerandoperatorofrealestaterentalproperties-commercial andresidential.
JANICELOUX,Director,Boston,Massachusetts
PresidentofGreaterBostonHotel EmployeesLocal 26 Union; Treasurerofthe Local 26 Trust Funds;
formerVice-PresidentandBenefitsOfficerofLocal26.
OLIVERC. MITCHELL, Jr.,Director,Milton,Massachusetts
MemberofGoldstein& Manello,P.C.; formerFirstAssistantDistrictAttorneyforHampdenCounty;
formerAssistantUnitedStatesAttorneyforMassachusetts.
MARYJ. NOONAN,Director,Amesbury,Massachusetts
StaffNurse,AnnaJaquesHospital,Newburyport,Massachusetts;activehealthcareprofessional.
JAMESA. RADLEY,Director,Dedham,Massachusetts
President,A.I.M.Insurance;PresidentofFalmouthMarine,Inc.
BOYCESLAYMAN,Director,Roxbury,Massachusetts
Former Executive Director, Massachusetts Council of Human Service Providers; former Executive
Director, Human Resources Center; former President, Boyce Slayman & Associates; former Senior
Associate/Manager,MarkBattleAssociates;formerStoreManager,The Stop& ShopCompanies.
ROBERT H. PRINCE, GeneralManager
Former Chief of Staff, MBTA, former Chief Operating Officer, MBTA; former Assistant General
Manager for Subway Operations, MBTA; former Assistant General Manager for Human Resources,
MBTA; formerSpecialAssistanttotheGeneralManager,MBTA.
PHILIPPUCCIAIII,DeputyGeneralManager
Former Chief of Staff, MBTA, former Special Assistant to Secretary of Transportation, Executive
Office of Transportation and Construction; former Assistant to the Commissioner of the
Massachusetts Highway Department; former Director of Communications for the Massachusetts
RepublicanStateCommittee.
C. MlKELOGLESBY, Chief.ofStaff
Former Section Chief of Administration and Finance, MBTA; former Project Manager of Human
Resource Information System, MBTA; former Special Assistant to the General Manager's Office,
MBTA; formerSeniorManagerofBudget,MBTA.
JonathanR. Davis, ChiefFinancialOfficer
Former Budget Director, MBTA; former Vice-President and Controller, H.P. Hood Company.
6
WESLEYG. WALLACE, JR., Treasurer-Controller
FormerDeputyTreasurer-Controller,MBTA; formerConsultantto ConstructionDepartment,MBTA;
formerAssistantGeneralManager,RegionalTransitAuthority,NewOrleans.
WILLIAMA. MITCHELL, JR., GeneralCounsel
FormerMemberofCosgrove,Eisenbergand Kiley, P.C.; formerChiefofthe Civil Bureau, Office of
the Attorney General, CommonwealthofMassachusetts; former Chiefofthe Building Construction
Unit, Office of the Attorney General, Commonwealth of Massachusetts; former Chairman,
ContributoryRetirementAppealBoard.
The Transportation System
The Authority operates rapid transit rail service, bus service and commuter rail service (through
arrangements with Amtrak) for an area of eastern Massachusetts with a population of more than
1.7 million people. An estimated 632,000 passengers are served every business day on the transit and bus
services, and an additional estimated 98,000 passengers perweekday on the commuterrail system.
Rapid Transit Rail Service. The Authority operates over 46 miles ofrapid transit rail routes. Three
separate rapid transitrail lines (the Red, Orange and Blue Lines), whichnow serve 53 stations, are served
with heavy rail rapid transit equipment. Services are also provided by streetcars and light rail vehicles on
35 miles ofadditional rail routes (the Green Line and the Mattapan Line) serving 78 fixed stations and
additional demand trolley stops.
Bus Service. The Authority owns more than 1,000 buses, which operate on 159 bus routes over a
total route mileage of approximately 710 miles. In addition to local services, the Authority operates a
frequent schedule ofexpress buses to and from downtown Boston and surrounding communities on the
Massachusetts Turnpike and U.S. Interstate 93. In addition, the Authority monitors six local service
subsidy programs whichprovide intracommunity and feeder services.
Commuter Rail Service. The Authority operates over 400 units of passenger rail equipment
(including locomotives and cars) providing commuterpassenger operations which provide service to and
from 117 outlyingrail stations and downtown Boston.
Other Services. A special program, "The Ride," operates 155 vans and 100 sedans which serve the
elderly and handicapped with approximately 100,000 trips per month for work, medical treatment,
shopping and social functions.
Since 1964, when the Authority assumed control of the properties of its predecessor, the
Metropolitan Transit Authority ("MTA"), the Authority has engaged in a major program of capital
improvements to modernize its equipment, improve its physical plant, and relocate and extend its rapid
transit and commuter rail lines. The Program is financed in principal part through federal aid and the
proceeds ofbonds issued by the Authority.
Budgetary Matters
The Actrequires that expenses ofthe Authority shall be in accordance with an itemized budget. The
Actprovides for the Authority to submit each year its projectedbudget to the Secretary and the Advisory
Board. The Secretary is required to review and make recommendations regarding the budget. The
Advisory Board is required to approve the budget as submitted or subject it to itemized reductions. The
Act provides that the budget governs the current expenses ofthe Authority during the year and no such
expenses may be incurred in excess ofthose shown in the budget. The budget may from time to time be
amended by the preparation and submission by the Authority to the Secretary and the Advisory Board of
supplemental budgets, which the Secretary is required to review, and the Advisory Board is required
either to approve as submitted or subject some supplemental budgets to itemized reductions.
Fiscal Year Change
From 1971 until 1983, all fiscal arrangements ofthe Authority were on a calendar year basis. Under
this arrangement the Authority's budget was adopted for the calendar year and the Net Cost of Service,
after computation and certification to the Commonwealth on a calendar year basis, was funded by
appropriations by the Commonwealth and assessments on the cities and towns which were made in the
fiscal year commencing each July 1 following the applicable calendar year ofthe Authority. Legislation
enacted in 1980, however, stipulated that as ofJuly 1, 1983 the Authority's fiscal year change from the
calendaryearto a July 1-June 30 fiscal yearto coincide with the fiscal year ofthe Commonwealth and its
cities and towns.
As a result, the Authority's budgetary procedures are now conducted on a fiscal year basis. Under
other specific provisions ofthe Act, however, the Authority continues to certify the Net Cost ofService
on a calendaryearbasis as was done in thepast.
The 1980 legislation requiring the fiscal year change did not change the provisions of Sections 12
and 13 ofthe Act, which provide forpayments to the Authority by the Commonwealth and authorize the
Authority and the Commonwealth to borrow money temporarily to finance, respectively, the Authority's
costs ofoperation and the Commonwealth's payments to the Authority on a calendaryearbasis.
RecentBudgets
The first ofthe following tables shows the Authority's calendar year 1993, 1994, 1995, 1996, 1997
and 1998 income and expenses, the calculation of the Net Cost of Service and the net amount of the
assessments on the cities and towns relating to those years. The 1998 figures are based on the Authority's
projected income and expenses for the 1998 calendar year, such expenses reflecting the last six months
ofthe Authority's fiscal year 1998 actual operations and the estimated first six months ofthe Authority's
1999 fiscal year.
The second table shows the Authority's fiscal year 1994, 1995, 1996, 1997 and 1998 income and
expenses. The first four columns are based on the Authority's actual income and expense figures for its
1994, 1995, 1996 and 1997 fiscal years. The Authority's initial fiscal year 1998 approved budget was
$838.2 million, but the Board approved a supplemental budget request on December 12, 1997 for an
additional $16.2 million. The $16.2 million supplemental budget funds three initiatives: $3.9 million for
the implementation of the requirements of the Attorney General's agreement and FTA's Equal
Employment Opportunity Compliance Review; $3.1 million for the move of the commuter rail interim
maintenance operation to the new Boston Engine Terminal; and $9.2 million to cover operating savings
in fiscal year 1998 for the Authority's delayed bus outsourcing initiative. The Advisory Board approved
the supplemental budgetrequest on January 8, 1998. The Authority's fiscal year 1999 budget is currently
being developed and mustbe approved by the Board and Advisory Board ofthe Authority.
The amounts shown in the following tables reflect the accounting procedures required by the Act to
determine the Authority's Net Cost of Service. Since these procedures differ in certain respects from
generally accepted accounting principles, the amounts shown for income and expense items may differ
from the corresponding items in the Authority's audited financial statements. See Appendix B.
The third table represents the Authority's cash flowprojections forcalendaryear 1998.
8