Citing anticipated low interest rates, the Capital District Transportation Authority has decided to borrow $6.9 million to pay for its next round of bus purchases.
The CDTA board decided Wednesday to borrow the money in 2014 to pay for 15 new buses it is now ordering for delivery a year from now.
It is the second year in a row CDTA has borrowed for buses, rather than pay cash as it did for many years. Officials said borrowing will allow the authority to keep building its cash reserves, so it may be able to pay cash again in 2015.
“We could pay for buses with our own money, but then we’d have very little left over for other things,” said CDTA CEO Carm Basile.
Last year, the authority was able to borrow $8 million for its bus purchases, with Bank of America providing a 10-year loan at 2.83 percent interest. Those 20 buses now are being delivered, because buses are ordered nearly a year in advance.
Officials hope for a similarly low interest rate this time.
“As I view it, interest rates are still at historic lows,” said board Chairman David Stackrow of Rensselaer County.
The authority, which provides mass transit service in Schenectady, Albany, Saratoga and Rensselaer counties, decided to borrow last year because of financial strains that authority officials blamed on the recession and federal and state cuts to transportation funding.
This year, however, the authority is seeing higher revenue from its share of the state mortgage recording tax, as well as increased revenue from ridership growth.
“I’m going to be optimistic that at some point the state and federal government situations will improve,” Stackrow said at the board’s monthly meeting at the Rensselaer rail station.
With the funds that will be kept in reserve because of the borrowing, Basile said CDTA could look at starting a new bus rapid transit route linking Cohoes, Troy and Albany.
The route would be based on how the authority has developed BusPlus, the limited-stop premium service between Schenectady and Albany that has drawn new riders to the bus system.
BusPlus has been successful enough that CDTA is looking at starting two similar routes, including the “River Corridor” route through the Hudson River communities.
The other rapid-transit route would run between downtown Albany, the University at Albany and Crossgates Mall. Basile said that proposal was recently added to the regional transportation improvement list, indicating it could receive federal funding at some point in the next five years.
“It’s to the point where we nearly have enough information and details to make an announcement,” he said.