The MTA 2007 PROGRESS REPORT TO...

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The MTA2007PROGRESS REPORTTO INVESTORS

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State of New York

347 Madison AvenueNew York, NY 10017-3739

MTA Investor Contact

Lara C. MuldoonAssistant Director of Finance

Tel: 212-878-7278Fax: [email protected]

Kenneth C. LindActing Director of Finance

Vinay T. DayalDeputy Director of Finance

Patrick B. IsomManager, Financial Analyst

Additional information can be found under“Financial Information” at www.mta.info.To receive additional copies of this report or acopy of the MTA Annual Report, and to beplaced on the mailing list for periodic updates,please call MTA Finance at 212-878-7363.

© 2007 Metropolitan Transportation Authority

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In This Report2006 Consolidated Financial Highlights

Assets and Liabilities 2

Income and Expenses 2

MTA at a GlanceMTA Agencies 3

Organization and Agencies 3

Funding and Capital Programs 3

Letter to Investors 4

2006 Financial Results and BudgetBudget Overview 6

Current Operating Budgets 6

2006 Operating Revenues

Revenues and Ridership 7

Real Estate and Advertising Revenues 8

Budget Closing Cash Balances and Future Deficits 8

2006 City, State, and Federal Funding 8

Capital Program Overview 9

Finance and BondingOverview 10

2006 Bond Issues 11

Debt Profile 12

2005-2009 Capital Program UpdateOverview 14

2006 Investments and Completions 15

MTA New York City Transit 15

MTA Long Island Rail Road 16

MTA Metro-North Railroad 16

MTA Bridges and Tunnels 17

MTA Capital Construction 17

MTA Bus Company 17

Bond Statements 18

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The MTA2007

PROGRESS REPORT TO INVESTORS

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2006 Consolidated Financial Highlights

Assets $50,085 100.00%

Capital assets, net 38,307 76.48%

Other assets 11,778 23.52

Liabilities and Net Assets $50,085 100.00%

Current liabilities $3,073 6.14%

Long-term liabilities 27,649 55.20

Net assets 19,363 38.66

Income

Fares and operating revenues, $4,246 40.74%

except tolls

Tolls 1,241 11.91

State subsidies 206 1.98

Local subsidies 325 3.12

Other subsidies 53 0.51

State/regional taxes 3,725 35.74

Other 626 6.01

Total $10,422 100.00%

Expenses

NYC buses and subways $5,840 56.04%

Commuter rail, suburban buses, 3,083 29.58

Staten Island Railway, MTA Bus, and

MTA headquarters

Bridges and tunnels 407 3.91

Interest expense and other 1,092 10.48

Total $10,422 100.00%

Assets and Liabilities($ millions)

Income and Expenses($ millions)

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MTA AgenciesMTA New York City Transit operates subways in fourcity boroughs, buses in five boroughs, and the StatenIsland Railway. The subway system includes 26 lines,468 stations, and 6,241 subway cars. The bus systemincludes 243 bus routes and 4,518 buses. Staten IslandRailway is a single line with 22 stations and 64 subwaycars. NYC Transit’s 2007 operating budget is $6.46 bil-lion. Total annual ridership in 2006 was 2.25 billion;average weekday ridership was 7.26 million.

MTA Long Island Rail Road is the largest commuterrailroad in North America, with 1,153 rail cars and 124rail stations on 11 rail lines with 594 miles of track. Its2007 operating budget is $1.39 billion. Total ridershipin 2006 was 82.0 million; average weekday ridershipwas 289,586.

MTA Long Island Bus operates 417 buses on 54 routescovering 954 route miles, the largest clean-fuel CNG busfleet in North America. Its 2007 operating budget is$121.1 million. Total ridership in 2006 was 32.6 million;average weekday ridership was 109,302.

MTA Metro-North Railroad includes five commuterrail lines with 775 track miles and 120 stations. It owns1,188 rail cars. Total ridership in 2006 was 76.9 million;average weekday ridership was 265,949. Its 2007 oper-ating budget is $1.08 billion.

MTA Bridges and Tunnels operates two tunnels andseven bridges. Its 2007 operating budget is $464.3 mil-lion. Total vehicle crossings in 2006 were 302.1 million,with average weekday crossings at 854,443. MTABridges and Tunnels’ total support to the transit and com-muter systems in 2006 was $759 million, of which $426million was in support of operations.

MTA Capital Construction coordinates all MTA’s majorconstruction projects, including the three major expan-sion projects (East Side Access, the Second AvenueSubway, and the 7 Line Extension); the Lower Manhattanimprovement projects (Fulton Street Transit Center andSouth Ferry Terminal); and system-wide security projects.Its 2007 operating budget is $34.1 million.

MTA Bus finalized its consolidation of seven privatelyowned New York City bus companies in February 2006to become the nation’s eleventh largest bus companybased on estimated ridership. The new agency now oper-ates 1,267 buses on 81 local and express routes. Its2007 operating budget is $412.1 million. Total ridershipin 2006 was 99.3 million; average weekday ridershipwas 330,739.

Organization and AgenciesThe Metropolitan Transportation Authority is North America’s largesttransportation network, serving over 14.7 million people across a 5,000-square-mile area in one of the world’s busiest economic regions. MTA isgoverned by a 17-member board nominated by the Governor and con-firmed by the State Senate, and has the responsibility for developing andimplementing a unified mass transportation policy for the City of NewYork and seven surrounding counties. MTA carries out these responsibil-ities directly and through its six subsidiaries and two affiliates. MTA’ssubsidiaries are: The Long Island Rail Road, Long Island Bus, Metro-North Railroad, Staten Island Railway, Capital Construction, and MTABus. MTA’s two affiliates are Bridges and Tunnels (which issuesTriborough Bridge and Tunnel Authority [TBTA] bonds) and New YorkCity Transit and its subsidiary, the Manhattan and Bronx SurfaceTransit Operating System. MTA also includes First MutualTransportation Assurance Company.

More than eight million people ride on MTA buses, trains, andsubways each weekday – over 2.5 billion riders each year. MTABridges and Tunnels facilities carry over 300 million vehicles annually– more than any other bridge and tunnel authority in the country.

Funding and Capital ProgramsMTA operations are funded through a combination of operating

revenues and government subsidies. Operating revenues include faresand tolls, as well as property leases, advertising, and other income.MTA’s regular operating subsidies include dedicated shares of certainstate and local taxes. MTA Bridges and Tunnels operates as a self-funded authority, with surplus toll revenues used to subsidize transitand commuter operations and capital funding.

In addition to preparing a four-year financial plan, which includesthe current year’s adopted budget, relating to operations, the MTAalso carries out Capital Programs. Each five-year Capital Program,which is approved by the state Capital Program Review Board(CPRB), outlines MTA’s plan to repair, improve, and expand its infra-structure, rolling stock, and other capital assets. The CPRB consists ofrepresentatives of the Governor, the State Assembly, and the StateSenate, and, in the case of transit projects, New York City. The 2005-2009 Capital Program is funded through bond issues, federal, state,and local grants, and additional sources.

To fund the approved projects in the MTA Capital Programs,MTA issues bonds under four principal credits: MTA TransportationRevenue Bonds and Dedicated Tax Fund Bonds and TBTA GeneralRevenue and Subordinate Revenue Bonds.

MTA at a Glance


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Letter to Investors

I am honored to have beenappointed by GovernorSpitzer to run the nation’slargest regional transporta-tion system. One of my firstacts as Executive Directorand Chief Executive Officerwas to take a “walkingtour” of the MTA system. Imet dozens of MTA work-

ers, engineers, managers, and other staff, all ofwhom impressed me tremendously. I got a first-hand look at our transit facilities, rolling stock,bridges and tunnels, and commuter stations, aswell as the immense “backstage” infrastructurethat keeps the MTA network running safely andsmoothly 24 hours a day. I even had a chance tostep into a subway booth and sell my firstMetroCard to one of our 8 million weekday cus-tomers. I got to experience first hand what ourcustomers see each day – a transportation agencythat has made great progress over the years inmoving more people over more reliable systems.

Over the last decade, the MTA has boostedridership by 38 percent, providing over 690 mil-lion more trips per year than we did in 1997.And those trips are cleaner, safer, and more reli-able than ever. The customer injury rate has fall-en 25 percent, the staff injury rate is down 57percent. Transportation reliability, as measured in“mean distance between failures,” is up 103 per-cent for MTA New York City Transit subwaysand 100 percent for Transit buses, 78 percent forMTA Metro-North Railroad, and 80 percent forMTA Long Island Rail Road – a remarkableimprovement I’ve seen first hand in my own daily commute.

Equally impressive is the public-private con-sensus we have built over the last decade forMTA’s Capital Program, including the first systemexpansions in over half a century. The SecondAvenue Subway, East Side Access, and 7 LineExtension are now firmly embedded in our $22.6billion Capital Program. While our first prioritywill always be maintenance of our core assets,these important projects must be seen as part ofthat commitment. They will further invigorate the

regional economy, boost our revenue capacity,and lead us into the next growth cycle. Thisgrowth-oriented plan commands a broad consen-sus among our funding partners, as evidenced byour high bond ratings, ballot approvals, and cru-cial city, state, and federal commitments.

In spite of all the progress, however, consid-erable challenges remain. First, to our operatingbudget. As reported in our 2007 budget, webegan this year with a $937 million cash balancecarried over from 2006. This cash balance wasdue largely to unabated strength in the local realestate market, which continued to bolster MTA’sreal estate tax subsidies. The record-breaking saleof Stuyvesant Town and Peter Cooper Villagealone netted the MTA some $79 million in 2006in real estate-related tax subsidies. We have allo-cated most of this cash balance to security pro-grams, “new needs” within agencies, and set-asides to reduce outstanding pension liabilities.Yet the crucial point is this. Three consecutiveyears of cash balances must not distract us fromthe looming gaps in MTA operating budgetsbeginning in 2008.

As a result of the cash rollover, the 2007operating budget also projects a cash balance. Itassumes $9.95 billion in operating expenses. Weexpect to cover $5.0 billion of that amount,

Executive Director and Chief Executive Officer Sander meets with MTA employeesduring walking tour of the system.

May 1, 2007


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about 50 percent, through 2007 tolls and fares.In addition, 35 percent of our funds will comefrom dedicated state subsidies and 7 percent fromlocal subsidies and the state general fund. Addingin the remainder of the 2006 balance, this leavesa projected $270 million cash balance at the endof 2007. Thereafter, however, we project a deficitof $799 million in 2008, which grows to $1.78billion by 2010.

Why these rising deficits? They are drivenchiefly by structural factors outside of MTA oper-ational controls. These include the same increasesin debt service, pension costs, and health andwelfare benefit costs that are affecting so manysectors of the economy, both public and private.At the same time, we anticipate a natural flatten-ing of farebox revenues, while realty-based subsi-dies, which have risen at disproportionate levelsover the last decade, level off. Such rates ofincrease cannot be assumed for future projec-tions. At the same time, we foresee increaseddemands on our system due to demographic pressures. In other words, we must abate these deficits while building capacity to capturefuture growth.

While we continue to press for cost savingsat all agencies, one of my priorities will be tonegotiate lasting solutions to these structural gapsin MTA operating budgets. For starters, we must

seek a realistic balance between economicgrowth, system demands, and fare adjustments,which have not paralleled capital improvementsover the last decade. We will be working on theseissues with the new administration in Albany,which has already signaled a strong commitmentto mass transportation, as well as a willingness toconsider new dedicated subsidies in lieu of 2007fare adjustments.

Fiscal challenges also confront the 2005-2009 Capital Program, where our main concernis escalating construction costs, which have beenaccelerated beyond normal inflation by theregional building boom. One of my first actionsas executive director was to convene a blue rib-bon panel of construction industry experts topartner with the chief engineers at MTA agenciesand prepare recommendations for containingcosts. We will continue to press our contractorsfor commitments within budget before greenlight-ing slated projects.

On both the capital and operating sides, ourbudget challenges are serious. But I am confidentthat we can arrive at long-term solutions. Overthe last decade, MTA has proven beyond a doubtthe enormous economic value of mass transporta-tion. We have established a solid record of con-sensus building and a high level of confidenceamong voters, legislators, and the capital mar-kets. Now is the time to sit down at the tablewith our funding partners and work out a planthat will secure these gains, once and for all,against recurring deficit threats and expand ourcapacity through another decade of growth.

Elliot G. SanderExecutive Director andChief Executive Officer


Budget Overview MTA regularly updates its four-year financialplan, which includes the current year’s budget.Each July, MTA prepares a preliminary budgetfor the following year and a four-year financialplan for public review and comment. InNovember, a proposed final budget and revisedfinancial plan is submitted to the MTA Board forits review. The Board approves the final budget inDecember. In February, the MTA publishes theadopted budget and financial plan that wasapproved by the Board at its prior Decembermeeting. The 2007 budget for the first timeincluded MTA Bus, which completed the consoli-dation and operation of seven formerly privatebus lines in February 2006.

Additionally, the MTA publishes monthlyfinancial information that includes year-to-datecomparisons with the adopted budget, quarterlyconsolidated unaudited financial statements, andmonthly budget watch updates. Investors canaccess all MTA financial reports and information,such as the MTA Budget and Financial Plan,Combined Annual Continuing Disclosure Filings,and Comprehensive Annual Financial Reportdirectly from the MTA website (www.mta.info).The MTA also provides monthly updates of keyfinancial and operating statistics under the links“Financial Indicators,” “Performance Indicators,”and “BudgetWatch.”

Current Operating BudgetsIn February, MTA adopted the 2007-2010

Financial Plan, which includes the 2007 budgetand the financial plan for years 2008 through2010. The 2007 budget outlines the nearly $10billion operating budget and provides forwardprojections for the operating budgets for 2008through 2010. MTA is also in the middle of oneof the largest public capital programs in theUnited States. The 2005-2009 MTA CapitalProgram provides a comprehensive plan of ongo-ing maintenance, needed system improvements,security enhancements, and system expansion.The debt service projections set forth in the 2007-2010 Financial Plan are consistent with the bondissue projections supporting the $22.6 billion

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2006 FinancialResults and Budget


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Capital Program. (The Capital Program budgetand allocations reported in this publication arebased on a plan amendment approved by theMTA Board, as more fully described under theheading “2005-2009 Capital Program.”)

On April 26, 2007, the MTA released its2006 actual financial results. After policy andgap-closing actions, the MTA’s cash balance atyear-end was $937 million. The principal reasonfor this positive net cash balance was that realestate tax receipts exceeded the projections fromthe 2006 adopted budget. The gross cash receiptsfrom real-estate related taxes (both urban taxesand mortgage recording taxes) exceeded the pro-jections in the 2006 adopted budget by about$684 million or 91.5 percent.

The 2006 final results reported $5.1 billionin fare and toll revenues; $467 million in otherrevenues; and $4.2 billion in dedicated taxes andstate and local subsidies. MTA had $7.8 billion in2006 total operating expenses before depreciationand debt service. The $937 million operatingcash balance was applied to the 2007 budget.

The 2007 adopted budget projects that theMTA will end the year with a $270 million cashsurplus. The 2007 final budget projects $5.1 bil-lion in fare and toll revenues; $423 million inother revenues; and $4.0 billion in dedicatedtaxes and state and local subsidies. MTA projects$8.6 billion in 2007 total operating expensesbefore depreciation and debt service.

2006 Operating RevenuesRevenues and Ridership

MTA continued to set record highs for fareand toll revenue as well as ridership. In 2006,MTA’s year-end actual results reported combinedoperating revenues totaling $5.5 billion. Fare rev-enue from MTA subways, buses, and commutertrains totaled $3.8 billion. MTA Bridges andTunnels revenues were $1.2 billion for 2006.Other revenue, including real estate and advertis-ing, was $467 million for the year.

While growth has slowed following therecord gains of the past decade, MTA agencies allshowed ridership increases in 2006. System-wide,

MTA ridership increased by 160.2 million paidrides in 2006 over 2005, an increase of 6.7 per-cent. (MTA Bus ridership, included for the firsttime, was 99.3 million. Excluding MTA Bus,total ridership grew by 60.9 million, or 2.56 per-cent.) Overall, New York City Transit ridershiphas increased 55.3 million (2.5 percent) with sub-way rides up 49.8 million (3.4 percent) and busrides up 4.9 million (0.7 percent). Both LongIsland Rail Road and Metro-North Railroadshowed gains, with LIRR up by 1.9 million (2.4percent) and MNR up by 2.3 million rides (3.1percent). LI Bus ridership increased by 1.1 million(3.4 percent) and Staten Island Railway was up0.3 million (9.4 percent). MTA Bridges andTunnels traffic increased by 1.7 million crossings

Passenger Volume/Vehicle Crossings(millions)

NYC Transit – Subway 1,449.1 1,498.9 3.4%NYC Transit – Bus 736.5 741.4 0.7Staten Island Railway 3.5 3.8 9.4Long Island Rail Road 80.1 82.0 2.4Long Island Bus 31.5 32.6 3.4Metro-North Railroad 74.5 76.9 3.1Bridges and Tunnels 300.4 302.1 0.6MTA Bus N/A 99.3 N/AMTA Total 2,379.9 2,540.0 6.6%

2005 2006 % change

Notes: MTA Total includes ridership of Access-A-Ride, New York City Transit’s paratransit service. Ridership for Able-Ride, the paratransit service of LI Bus, is included in LI Bus ridership. MTA Total excludes Bridges and Tunnels crossings.Percentage increase in MTA ridership reflects inclusion of MTA Bus. Excluding MTA Bus ridership, total MTA ridership increased 2.6 percent.

Notes: During 2005, MTA Bus took over the operations of three of New York City’s private bus companies, including one take-over that occurred in mid-December. In 2006, MTA took over the operations of the remaining four private companies, which was completed in mid-February. Because of this timing, revenue figures for 2006 and 2005 are not directly comparable.

Fare and Toll Revenue($ millions)

NYC Transit $2,643.0 $2,758.9 4.4%Staten Island Railway 3.3 3.6 13.3Long Island Rail Road 442.3 457.4 3.4Long Island Bus 39.1 40.4 2.6Metro-North Railroad 437.7 454.4 4.3Bridges and Tunnels 1,204.9 1,241.6 3.1MTA Bus 40.8 125.1 N.A.Total $4,881.1 $5,081.3 5.6%

2005 2006 % Increase


in 2008. MTA has many challenges in the upcom-ing years. In order to meet these challenges, MTAhas worked to strengthen its organization, man-agement, and leadership. It has conducted a thor-ough organizational assessment to identify itsstrengths and weaknesses. One of the concerns ofthe MTA is a significant increase in constructioncosts in the region. In order to address this issue,the MTA established a blue ribbon panel on con-struction costs. MTA has also recognized that itsworkforce is one of its best assets. In order torecruit, maintain, and develop that workforce, theMTA has established a second blue ribbon panelfor workforce development and is actively pursu-ing improved relations with organized labor,which represents approximately 59,000 employeesor 86 percent of the MTA’s employees. Finally,building on the knowledge and successes of thepast is crucial to MTA’s continued success in thefuture. To accomplish this goal, the MTA hasformed regional transit advisory groups and atransportation subcabinet composed of civic andbusiness leaders, academic experts, former MTAchairmen and agency presidents, and foundations.All of these efforts will help the MTA assess theoperational, financial, and organizational chal-lenges and plan for the future. In July, the MTAwill release its 2008 Preliminary Budget and2009-2011 Financial Plan, which will providemore detail on the specific measures MTA willtake to address out-year budget gaps.

As one way to address budget gaps, the MTAhas made its program to eliminate the gap (PEG)a standard part of agency reporting. In 2006,PEG measures totaling $39 million were imple-mented in order to achieve programmatic, admin-istrative, and operational efficiencies withoutadversely impacting customer service, safety, orsecurity. The PEGs outlined in the 2007 budgetare projected to generate savings of $40 millionin 2007, $38 million in 2008, $39 million in2009, and $39 million in 2010.

2006 City, State, and FederalFunding

In addition to farebox and toll receipts, theMTA receives operational funding from New

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2006 Financial Results and Budget

over 2005 (a gain of 0.6 percent). The solidgrowth in ridership and crossings was mainly dueto continued regional economic strength andsteady job growth.

Real Estate and Advertising Revenues

In addition to fares and tolls, MTA collectsrevenue from advertising placements, brandlicensing, and leases on its valuable real estateholdings. Because New York is one of the world’stop destination cities, MTA-sponsored joint pro-motions are rapidly increasing their contributionsto the bottom line. In 2006, NYC Transit part-nered with corporations and events promoters on28 major campaigns, producing over $800,000 inad revenue. MTA also pioneered barters with anumber of New York organizations involving dis-counts and tie-ins. At LIRR, promotions with theNew York Mets, Broadway theaters, and otherattractions generated revenue of $1.4 million. AtMetro-North, promotions tied to the U.S. OpenGolf Championship and other functions generat-ed 132,000 rides and $580,000 in net revenues,while MTA brand licensing earned $265,000 inroyalties on $2.3 million in sales in 2006. MTAreal estate, including such prime venues as GrandCentral Terminal, generates rental revenues fromlarge and small vendors. Rental income broughtin $73.5 million in 2006.

Budget Closing Cash Balancesand Future Deficits

The MTA ended 2006 with a cash balance of$937 million — the third consecutive year thatthe MTA has closed with a cash balance — as inpast years due largely to a stronger than expectedlocal real estate market. This produced higherthan anticipated revenues from MTA’s dedicatedsubsidies through the mortgage recording tax andreal estate property transfer tax. While MTA hasadjusted its 2007 real-estate subsidy projectionsslightly upward, future budgets continue to proj-ect a cooling real estate market and leveling ofrelated tax revenues.

Although the MTA has benefited from recentcash balances, it remains focused on addressingthe budget gaps in its operating budget beginning


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York State and New York City in the form ofdedicated taxes and state and local subsidies andCapital Program funding from bond financing,the federal government, New York City, assetsales, program income, and amounts carried overfrom previous capital programs. There were nonew revenue sources added in the 2006-2007New York State budget.

On an accrual basis, in 2006, dedicated taxesand fees totaled $3.4 billion, state and local sub-sidies totaled $594 million, and interagency sub-sidy transfers totaled $461 million. MTA’s dedi-cated taxes include Metropolitan MassTransportation Operating Assistance Trust Fund(MMTOA) revenues of $1.3 billion, petroleumbusiness tax receipts, $612.7 million, certainmortgage recording taxes, $759.8 million, andurban real property transfer taxes, $704.7 mil-lion. Additionally, MTA earned $162.8 millionon its investment portfolio in 2006. Not includedin these figures is $200 million in operating subsi-dies from New York City for MTA Bus.

In December 2006, MTA entered into a FullFunding Grant Agreement (FFGA) with the U.S.Department of Transportation’s Federal TransitAdministration (FTA) which will provide up to$2.6 billion for the East Side Access project, sub-ject to subsequent federal appropriations. InSeptember, the MTA and New York City enteredinto a Memorandum of Understanding (MOU)outlining the 7 Line Extension project. The basicagreement is for the city to fund the cost of theproject and for the MTA to manage the designand construction. As a part of this agreement, thecity’s Hudson Yards Infrastructure Corporationissued $2.0 billion in bonds in December, a por-

Forecasted Sources of Revenue($ millions)4,0003,5003,0002,5002,0001,5001,000 500 0

2006(Actual)

2005(Actual)

2007 2008 2009 2010

Farebox Revenue Dedicated Taxes and Subsidies Toll Revenue Other Revenue

tion of which will fund first stages of the exten-sion. In January 2007, the FTA also approved a$693 million Early System Work Agreement(ESWA) for the first construction contract ofPhase I of the Second Avenue Subway, whichbroke ground on April 12, 2007.

Capital Program OverviewThe MTA 2005-2009 Capital Program,

described in greater detail in the 2005-2009Capital Program section of this report, expects toinvest a record $22.6 billion over five years tomaintain and improve the system’s core, as wellas begin the first major expansions of the systemin over fifty years. This is the largest capitalinvestment in MTA history. The 2005-2009Capital Program is funded by MTA bond issues,federal grants, local funding, and other sources.Bonds issued by MTA and MTA Bridges andTunnels will contribute $9.4 billion in funding tothis Capital Program.

The 2005-2009 Capital Program continues tofocus on core assets, which include major rehabili-tations of subway and commuter rail stations;purchase of new subway cars, rail cars, locomo-tives, and fuel-efficient buses; modernization ofpump stations, generators, maintenance shops,and other infrastructure units; the installation ofnew high-tech security and communications sys-tems; and extensive refurbishing of tunnels andbridges. Investments in the core account for about70 percent of Capital Program expenditures

The 2005-2009 Capital Program alsoincludes the MTA’s first major expansion of thesystem in over half a century, with constructionunderway for East Side Access in bothManhattan and Queens, the groundbreaking forthe Second Avenue Subway held in April 2007,and work on the 7 Line Extension about tobegin. The MTA is also completing work on theFulton Street Transit Center and the South FerryTerminal, near the World Trade Center site; bothprojects were amendments to the 2000-2004Capital Program and are funded primarily by federal grants.


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Finance and Bonding

$887,000. In December 2006, the MTA negotiat-ed an increase in the letter of credit securing itscommercial paper program, enabling MTA toissue $750 million of commercial paper inFebruary 2007. The MTA also terminated twointerest rate hedges in 2006 that were bid com-petitively in 2005, resulting in net payments tothe MTA of $41.6 million.

All MTA and TBTA bonds continue to retaintheir strong ratings. In September 2006, Standard& Poor’s issued a solid endorsement of MTA’stax-backed securities, upgrading its rating onMTA’s unenhanced Dedicated Tax Fund Bondsfrom AA- to AA.

OverviewDuring 2006, MTA issued five bond series total-ing $2.15 billion and one series of commercialpaper for $450 million. Four of the bond serieswere new money issues used to finance existingapproved Capital Program projects. In theremaining bond series, the net bond proceedswere used to pay off previously issued commer-cial paper and to advance refund certain priordebt. The refunding resulted in a total savings of$23 million, for an average annual savings of

2006 Bond Issues by Resolution

Transportation Revenue* $1,192,730,000Triborough Bridge and Tunnel Authority 200,000,000Dedicated Tax Fund 760,000,0002006 Bond Issues by Type of Debt Long-term fixed rate bonds* 2,152,730,0002006 Bond Issues by Type of BorrowingNew Money bonds 1,435,000,000Refunding 717,730,000

* $450 million of commercial paper, which was issued in March 2006, was paid off with part of the proceeds from the MTA Transportation Revenue Bonds, Series 2006B, issued in December 2006.

MTA Transportation Revenue A2 A AMTA Dedicated Tax Fund NAF AA A+TBTA – General Resolution Aa2 AA- AATBTA – Subordinate Resolution Aa3 A+ AA-MTA State Service Contract NAF AA- A+

Credit Moody’s S & P’s Fitch


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$450,000,000 Metropolitan TransportationAuthority Transportation Revenue BondAnticipation Notes, Series CP-1 Credit Enhanced

Issue Date: March 24

Purpose: New Money for Transit andCommuter Capital projects

Ratings: P-1/A-1+/F1+ (LoC)

Senior Manager: Bear, Stearns & Co. Inc. andMorgan Stanley

Insurance: None

Letter of Credit: ABN AMRO Bank N.V.

(Principal paid by MTA Transportation Revenue Bonds,Series 2006B)

$350,000,000 Metropolitan TransportationAuthority Dedicated Tax Fund Bonds, Series2006A

Issue Date: June 21


Ratings: AA-/A+ (uninsured)

AAA/AAA (insured)

Senior Manager: Lehman Brothers and First AlbanyCapital, Inc.

Insurance: MBIA

$200,000,000 Triborough Bridge and TunnelAuthority (MTA Bridges and Tunnels) GeneralRevenue Bonds, Series 2006A

Issue Date: June 22

Purpose: New Money for Triborough Bridgeand Tunnel Authority’s bridge andtunnel projects

Ratings: Aa2/AA-/AA (uninsured)

Senior Manager: UBS Investment Bank and Bear,Stearns & Co. Inc.

Insurance: None

$475,000,000 Metropolitan TransportationAuthority Transportation Revenue Bonds, Series2006A

Issue Date: July 20


Ratings: A2/A/A (uninsured)

Senior Manager: Bear, Stearns & Co. Inc., Citigroupand JP Morgan

Insurance: None

$410,000,000 Metropolitan TransportationAuthority Dedicated Tax Fund Bonds, Series2006B

Issue Date: November 9

Purpose: New Money for Transit andCommuter Capital Projects

Ratings: AA/A+ (uninsured)

AAA/AAA (insured)

Senior Manager: Citigroup, JP Morgan and LehmanBrothers

Insurance: MBIA

$717,730,000 Metropolitan TransportationAuthority Transportation Revenue Bonds, Series2006B

Issue Date: December 20

Purpose: To pay the principal portion ofMTA’s outstanding commercialpaper notes and refunding of cer-tain MTA Transportation RevenueBonds

Ratings: A2/A/A (uninsured)Aaa/AAA/AAA (insured)

Senior Manager: JP Morgan, Lehman Brothers andUBS Investment Bank

Insurance: FSA

Summary:

Total Bonds Issued: $2,152,730,000New Money: $1,435,000,000Refunding: $ 717,730,000

2006 Bond Isues


About 20 percent, or $4.3 billion, of the aggre-gate principal amount of all MTA debt outstand-ing is unhedged variable-rate debt which is diver-sified across product type. Another $3.5 billion,or 16 percent, of the outstanding debt was issuedas variable-rate bonds that are combined withswaps to achieve “synthetic fixed-rate debt” or“hedged variable-rate debt.” The foregoing num-bers do not include the fixed-rate State ServiceContract bonds.

Variable-Rate Profile

MTA issues both hedged (or synthetic fixed-rate) and unhedged variable-rate bonds. Inunhedged bonds, MTA pays the actual variablerate to bondholders. MTA has a formal policy oflimiting its unhedged variable-rate debt to nomore than 25 percent of outstanding bonds.MTA continues to actively monitor market condi-tions to ensure that the unhedged variable-ratedebt portion of overall outstanding MTA debtmeets the guidelines established by the MTA. In2006, MTA did not issue any variable-rate debt;however, by having issued unhedged variable-ratedebt previously, MTA saved an estimated $60million in interest payments compared to issuing

12

Finance and Bonding

Debt ProfileAs of April 30, MTA’s current outstanding debt,excluding State Service Contract Bonds, totals$22.1 billion. The debt is diversified by resolu-tion, product type, and swap counterparty.

Debt by Resolution

MTA’s debt is diversified across bond resolu-tions. The Transportation Revenue Resolution,which is backed by fares from the transit andcommuter systems, and state and local govern-mental operating subsidies, has $10.7 billion or48 percent of total outstanding debt. (For pur-poses of Transportation Revenue Bonds, MTABus is treated as part of the transit system.) MTABridges and Tunnels General and SubordinateResolutions, which are backed by the tolls fromMTA Bridges and Tunnels’ two tunnels and sevenbridges, have $7.0 billion or 32 percent of totaloutstanding debt. MTA Dedicated Tax FundBonds, which are secured by and payable frompetroleum business tax revenues and certain otherState special tax-supported subsidies levied by theState, account for $4.0 billion, or 18 percent, oftotal outstanding debt. MTA Certificates ofParticipation (COPs), which are secured by rentalpayments made by MTA agencies, account for$422 million or 2 percent of total outstandingdebt.

Additionally, MTA has $2.3 billion in MTAState Service Contract Bonds outstanding. Debtservice on these bonds is paid by the State ofNew York.

Debt by Type

Currently, MTA has $14.3 billion or 64 per-cent of total debt outstanding as fixed-rate debt.

Debt by Resolution

Transportation Revenue 48%

Dedicated Tax Fund 18%

MTA Bridges and Tunnels 32%

MTA COPS 2%

Debt by Type

Fixed-Rate Debt 64%

Variable-Rate Debt 20%

Synthetic Fixed-Rate Debt 16%

Unhedged Variable Rate DebtCommercial Paper 17%

Daily 6%

Weekly 49%

7-Day Auction 18%

28-Day Auction 7%

35-Day Auction 3%


13

MTA Variable-Rate Debt PolicyThe following variable-rate debtpolicy was formally established byMTA in May 2005.

The MTA desires to achieve thelowest possible interest cost on itsdebt and maintain a prudent levelof interest-rate risk. Therefore, thefollowing policy shall apply to theissuance of variable-rate debt.

The MTA may issue variable-ratedebt in such amounts as deemednecessary and/or beneficial by staffto provide funding for approvedCapital Programs or to refund exist-ing obligations of the MTA. Uponsuch issuance, the principal amountof variable-rate debt outstandingshall not exceed 25 percent of theaggregate principal amount of alloutstanding obligations of the MTA(in both cases, including outstand-ing MTA and MTA Bridges andTunnels obligations but excludingState Service Contract Bonds orother bonds not payable from MTAfunds).

as fixed-rate debt, inclusive of fees. MTA hassaved an estimated total of $223 million since2004.

In 2002, MTA’s Board adopted guidelines forthe use of derivatives such as swaps or interestrate locks provided these transactions meet cer-tain investment objectives. Currently, about 16percent of the aggregate principal amount of allMTA debt outstanding is swapped to syntheticfixed-rate debt. In synthetic fixed-rate debt, MTAenters into an agreement with a counterparty toswap interest rate payments on the underlyingdebt issued. In this case, MTA pays to the interestrate swap provider a fixed rate that is lower thanthe rate at which MTA could issue fixed-ratebonds. The underlying variable rate can behedged with a cost-of-funds swap or an index-based swap.

MTA currently has $3.5 billion of syntheticfixed-rate bonds that are distributed among theMTA credits and are diversified by swap coun-terparty. Of the current MTA debt outstandingin the synthetic fixed-rate mode, there are threeTransportation Revenue Bond series with anotional amount of $700 million, nine TBTABond series with a notional amount of $1.7 bil-lion, two Dedicated Tax Fund Bond series with anotional amount of $787 million, and one 2Broadway Certificates of Participation (COPs)with a notional amount of $356 million. In 2006,synthetic fixed-rate bonds resulted in an estimat-ed savings to MTA of $11.8 million compared tothe cost of issuing the same debt in the traditionalfixed-rate mode.

To provide additional security for variable-rate bonds, MTA may provide additional credit

Variable Rate DebtCommercial Paper 10%

Daily 3%

Weekly 61%

7-Day Auction 16%

28-Day Auction 4%

35-Day Auction 6%

and/or liquidity enhancement. For variable-ratebonds with liquidity support totaling $6.1 billion,the MTA has entered into credit facilities with 16providers, 23 standby bond purchase agreements,and three letters of credit; there is one letter ofcredit for MTA’s commercial paper program.MTA has issued $2 billion of bonds in auction-rate mode which are remarketed in either weekly,28-day, or 35-day maturities. All MTA and MTABridges and Tunnels auction-rate bonds havebeen issued with insurance. MTA has also issued$5.1 billion of bonds as variable-rate demandobligations which reset either daily or weekly.


14

2005–2009 Capital Program Update

(Note: All 2005-2009 Capital Program figuresare based on amendments approved by the MTABoard.)

Overview The 2005-2009 Capital Program is the largest ofthe MTA capital programs initiated since 1982.Each five-year program is proposed by MTA,approved by the CPRB, and funded through amix of government subsidies, bond sales, andother sources. Since 1982, Capital Programinvestments of $77 billion have thoroughlytransformed the MTA system, replacing virtuallyits entire fleet of subways, trains, and buses;rehabilitating hundreds of stations; upgradingsecurity and communications; renovating bridgesand tunnels; modernizing the vast operationalinfrastructure; and constructing dozens of newfacilities, including some of the largest publicworks in the nation. According to estimates,MTA’s 2000-2004 Capital Program generatedbetween 16,000 and 35,000 private sector jobsannually, as well as $25.3 billion in outside salesand economic activity.

The 2005-2009 Capital Program, the mostambitious yet, oversees a planned investment of$22.6 billion, of which nearly $9.44 billion is

2005-2009 Capital Program Allocations

Core Capital ProgramsNew York City Transit $11,220Long Island Rail Road 2,170Metro-North Railroad 1,376Core Program 14,765Security Program 495Interagency 155Core Security and Interagency Subtotal 15,415Expansion Projects 3,730(East Side Access, Second Avenue Subway, JFK Rail Link)

Total 2005-2009 Program 19,1457 Line Extension (Funded by NYC) 2,100Bridges and Tunnels 1,202MTA Bus 138Total 2005-2009 Capital Program $22,586

($ millions)

Note: Column may not add due to rounding.


15

2006 Investments andCompletionsMTA New York City Transit

NYC Transit made slight adjustments to itsCapital Program in December 2006, refocusingits budget on a system-wide “state of good repair.”In 2006, the agency completed 12 major stationrehabilitations, including projects at the TimesSquare Complex ($123 million), 86th Street onthe Lexington Avenue line ($30 million), and four stations on the Canarsie line ($47 million).The system’s state-of-the-art Rail Control Centerwent into operation in 2006, and the CoronaYard Maintenance Shop ($208 million) was

being raised through new bond issues. In additionto major upgrades, maintenance, and replace-ments, the program includes the first MTA sys-tem expansions in over half a century: the SecondAvenue Subway, East Side Access, and the 7 LineExtension, as well as the construction of theFulton Street Transit Center and the South FerryTerminal. It also includes an extensive restorationof the Triborough Bridge, the largest capital project in the recent history of MTA Bridges andTunnels. As of December 2006, the MTA hasawarded more than $6 billion of new work andcompleted close to $700 million worth of proj-ects in its 2005-2009 Capital Program.

2005-2009 Capital Program Funding Sources($ millions)

MTA Bonds (including TBTA) $4,341MTA Bonds New Source 5,100MTA Share of NYS Transportation Bond Act 1,450Federal Formula and Flexible Funding 5,234Federal New Start Funding 2,255Federal Security Funding 354NY City Funding 401NY City Funding of 7 Line Extension 2,100NYC Match for MTA Bus 28Asset Sales, Program Income, Carryover 1,274Operating to Capital 11Other 40Total 2005-2009 Capital Program $22,586

Note: Column may not add due to rounding.

New York City Transit 2005-2009Capital Program Allocations($ millions)

Subway Cars $1,805Buses 847Passenger Stations 1,667Track 1,156Line Equipment 925Line Structures 622Signals and Communications 1,738Power 503Shops 306Other 1,568Staten Island Railway 85Total $11,220

2005-2009 Capital Program Allocations($ millions)

New York City Transit $3,938 $5,869 $1,104 — $308 $11,220Long Island Rail Road 176 1,410 423 — 161 2,170Metro-North Railroad 493 747 65 — 70 1,376Bridges and Tunnels — 1,121 47 — 34 1,202MTA Bus 116 — 12 — 10 138Core Program Subtotal $4,724 $9,148 $1,651 — $583 $16,105Percent of Total 29% 57% 10% — 4% 100%Security and Interagency — 8.1 638 — 4 650Expansion Projects — — — 5,830 — 5,830Total 2005–2009 Capital Program $4,724 $9,156 $2,290 $5,830 $587 $22,586Percent of Total 21% 41% 10% 26% 3% 100%

State ofGood Repair

NormalReplacement

SystemImprovement

Network Expansion OtherAgency Total

Note: Columns may not add due to rounding.


16

2005–2009 Capital Program Update

Long Island Bus. LIRR committed $290 millionin capital funds in 2006, which brings its totalcommitments thus far to $899 million, or 41 per-cent of its $2.17 billion Capital Program budget.

MTA Metro-North Railroad

Metro-North made several adjustments to itsCapital Program allocations in 2006. Theseincluded full funding for the Croton-HarmonShop Master Plan and a $100 million allocationto the joint procurement with Connecticut DOTof 300 M-8 rail cars. Hudson Line stationimprovements will continue, though now on aphased basis. In 2006, Metro-North received thefinal 76 M-7 rail cars to complete a fleet of 336.The agency also began the overhaul of its loco-motive fleets and awarded a contract for newswitch/shuffle locomotives. Station completions in2006 included Larchmont ($12.7 million) andseven stations on the lower Harlem Line ($15.8million), as well as five parking lot expansions.Upper Hudson and Poughkeepsie Station projectsneared 90 percent completion by year’s end.Grand Central Terminal’s exterior refurbishingwas completed, along with portions of the trainshed rehabilitation, a $17 million project. Workbegan on Phase III of the Harmon ShopReplacement effort ($325 million). Project com-pletions in 2006 totaled $324 million, or 90 per-cent of the planned schedule; project commit-ments for the year totaled $617 million, repre-senting 87 percent of the original plan.

Metro-North Railroad 2005-2009Capital Program Allocations($ millions)

Rolling Stock $252Stations 236Track and Structures 245Communications and Signals 75Power 103Shops and Yards 378Miscellaneous 87Total $1,376

completed in the final quarter of the year. Thetrack division rehabilitated 10.6 miles of mainlinetrack, replaced 30 switches, installed 23,000track feet of continuously welded rail, and continued its modernization of subway signals by installing communications-based train controlon the Canarsie line, a $296 million project. The subway system also took delivery of 71 newR-160 subway cars in 2006, rolled 20 cars intoservice, and closed out its $695 million purchasecontract of 520 “A Division” R-142 subway cars.The NYCT Bus Division received 97 hybrid busesin 2006. In total, NYC Transit committed $1.6 billion in capital funds in 2006, which brings theagency’s commitments thus far to $3.2 billion, or 29 percent of its $11.2 billion 2005-09 Capital Program.

MTA Long Island Rail Road

Long Island Rail Road took delivery of 244new M-7 rail cars in 2006, making a total of 804M-7 cars received, of which 794 have beenplaced into service. The LIRR completed sevenmajor station rehabilitations during the year,including the Jamaica Station, a $215 millionproject that has transformed the 94-year-old sta-tion into a modern transit hub linking LIRR withNYC Transit and the JFK AirTrain. Other facilityrehabs completed in 2006 include the East RiverTunnel repairs ($33 million), the installation of asignaling system from Patchogue to Speonk ($34million), the annual track program ($56 million),and the Mineola Intermodal Center ($45 million),which provides a new transportation hub for

Long Island Rail Road 2005-2009Capital Program Allocations($ millions)

Rolling Stock $371Passenger Stations 105Track 561Line Structures 283Communications and Signals 349Shops and Yards 169Power 146Miscellaneous 187Total $2,170


17

the existing Broadway line at 63rd Street.

MTA and the City of New York entered intoa Memorandum of Understanding (MOU)regarding the 7 Line Extension. Under theMOU, the City has agreed to fund the cost ofconstruction and the real estate acquisition andMTA has agreed to manage the design and con-struction of this project. The budget for the 7Line Extension is $2 billion, which New YorkCity’s Hudson Yards Infrastructure Corporationwill fund through bond issuance. Design workfor this project is substantially complete.

In other projects, Capital Construction movedcloser to its 2008 ribbon cutting for the $489 mil-lion South Ferry Terminal, completing the majorfoundation work and awarding the last significantconstruction contract. Work also advanced onconstruction of the Fulton Street Transit Center. Inaddition, Capital Construction oversaw furtherinstallation of system-wide security cameras in2006 and progressed on other security contracts.

MTA Bus Company

MTA Bus completed its phased acquisitionof seven privately owned bus lines into the MTAnetwork by February 2006, creating a fleet ofover 1,200 buses with 81 local and expressroutes. Earlier in the year, the new bus companyreceived $138 million in federal and matchingfunds. MTA Bus is scheduled to execute anoption order for 105 new hybrid buses in thethird quarter of 2007.

MTA Bridges and Tunnels

Bridges and Tunnels continued work on itsextensive bridge rehabilitations during 2006,which included a $40 million property purchaseon Randalls Island as part of the more than $400million modernization of the 70-year-oldTriborough Bridge. Redecking of spans on theBronx-Whitestone Bridge neared completion,allowing all six traffic lanes to reopen by LaborDay 2006. Also completed in 2006 were rehabili-tation projects at the Brooklyn-Battery Tunnel($82.6 million), and the tunnel’s service building($5.2 million). The agency also initiated its mod-ernization of the E-ZPass® toll system andexpanded its Video Incident Protection Systemwith installations on the Throgs Neck Bridge, aswell as test installations on other bridges. Bridgesand Tunnels completed a total of $112 million incapital projects during 2006, which represents 94percent of projects scheduled. The agency closedout projects worth $248 million during the year,and committed $304 million, or 105 percent ofits capital plan for the period.

MTA Capital Construction

In December 2006, MTA executed a FullFunding Grant Agreement with the FTA for fund-ing for the East Side Access project, which willprovide up to $2.6 billion in federal funding.Tunneling is underway in both Manhattan andQueens on this project.

In January 2007, the FTA approved an EarlySystem Work Agreement for the Second AvenueSubway for $693 million, and construction beganin April. The first phase of the Second AvenueSubway will run from 96th Street and connect to

Bridges and Tunnels 2005-2009Capital Program Allocations($ millions)

Structures $177Roadways and Decks 745Toll Plazas 73Utilities 38Buildings and Sites 147Miscellaneous 22Total $1,202

Capital Construction 2005-2009 Capital Program Allocations($ millions)East Side Access $2,405Second Avenue Subway 1,150JFK Link 1007 Line Extension 2,100Administration 75Security Program 495Total $6,325

MTA Bus 2005-2009 Capital Program Allocations($ millions)Facilities and Vehicles $138Total $138


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Bond Statements

Notes to Credit SummariesDebt Outstanding refers to bonds that have been issued but not yetmatured, redeemed, or defeased.Pledged Revenues are computed pursuant to the applicable bond resolution.

Bond CounselHawkins Delafield & Wood LLP and Nixon Peabody LLP are bond coun-sel to the MTA.

Financial AdvisorGoldman Sachs & Co. serves as financial advisor to the MTA.

A Note on Legal Names

Although the MTA operating agencies adopted new popular names in 1993,the legal names remain unchanged and continue to be used in contracts,financial statements, legislation, and bond documents.

Legal Name Popular Name

New York City Transit Authority MTA New York City Transit

Staten Island Rapid Transit Operating Authority MTA Staten Island Railway

The Long Island Rail Road Company MTA Long Island Rail Road

Metropolitan Suburban Bus Authority MTA Long Island Bus

Metro-North Commuter Railroad Company MTA Metro-North Railroad

Triborough Bridge and Tunnel Authority MTA Bridges and Tunnels

MTA Capital Construction Company MTA Capital Construction

MTA Bus Company MTA Bus

The Metropolitan Transportation Authority issues debt as efficiently as pos-sible to provide the optimum economic benefit to the Capital Program andthe riding public. Achieving this goal requires a strong legal framework anda commitment to the investment community. MTA bond resolutions providebondholders with security in the form of a gross lien on transit and com-muter railroad revenues under the Transportation Revenue Bond credit, agross lien on certain taxes committed to the Dedicated Tax Fund credit, anda gross lien on state appropriations for the State Service Contract credit. Inaddition, the MTA Bridges and Tunnels resolution provides bondholderswith a net lien on revenues of the bridges and tunnels before surplus trans-fers are made to the transit and commuter systems.


19

Transportation Revenue Bonds

Resolution DatedMarch 26, 2002

Uninsured RatingsMoody’s: A2Standard & Poor’s: AFitch Ratings: A

Bonds Outstanding as of May 15, 2007Series Par Structure Final Maturity Insurance2002A $ 2,780,180,000 Fixed Rate Nov. 15, 2032 Partially insured2002B 210,500,000 Auction Rate (7- and 28-Day) Nov. 1, 2022 Fully insured2002D 400,000,000 Variable Rate (Weekly) Nov. 1, 2032 Fully insured2002E 370,195,000 Fixed Rate Nov. 15, 2031 Partially insured2002F 319,390,000 Fixed Rate Nov. 15, 2031 Partially insured2002G 400,000,000 Variable Rate (Weekly) Nov. 1, 2026 Fully insured2003A 426,550,000 Fixed Rate Nov. 15, 2032 Partially insured2003B 502,835,000 Fixed Rate Nov. 15, 2032 Partially insured2004A 481,810,000 Variable Rate (Weekly) Nov. 1, 2034 Fully insured2005A 640,755,000 Fixed Rate Nov. 15, 2035 Partially insured2005B 737,860,000 Fixed Rate Nov. 15, 2035 Partially insured2005C 138,750,000 Fixed Rate Nov. 15, 2016 None2005D 250,000,000 Auction Rate (7-Day) Nov. 1, 2035 Fully insured2005E 250,000,000 Variable Rate (Weekly) Nov. 1, 2035 None (LoC)2005F 457,360,000 Fixed Rate Nov. 15, 2035 None2005G 250,000,000 Variable Rate (Daily) Nov. 1, 2026 None (LoC)2005H 153,800,000 Fixed Rate Nov. 15, 2012 None2006A 452,605,000 Fixed Rate Nov. 15, 2035 None2006B 717,730,000 Fixed Rate Nov. 15, 2036 Partially insuredCP-1 750,000,000 Commercial Paper 270 day maximum None (LoC)Total $10,690,320,000

PurposeTo finance certain capital costs to rehabilitate and improve transportation facilitiesof the MTA transit and commuter systems, which include the New York CityTransit Authority, Long Island Rail Road, Metro-North Commuter RailroadCompany, Manhattan and Bronx Surface Transit Operating Authority, the StatenIsland Rapid Transit Operating Authority, and MTA Bus.

SecurityMTA Transportation Revenue Bonds are MTA special obligations payable as toprincipal (including sinking fund installments), redemption premium, if any, andinterest, from the security, sources of payment, and funds specified in theTransportation Resolution. Revenues securing the Transportation Revenue Bondsinclude fares from the transit and commuter systems, including MTA Bus, andstate and local governmental operating subsidies.

Future Bond IssuanceThe MTA is permitted to issue additional Transportation Revenue Bonds as longas it continues to meet the rate covenant contained in the resolution. The ratecovenant stipulates that the MTA must fix the transit and commuter fares andother charges and fees to be sufficient, together with other money legally availableor expected to be available, including from government subsidies, to pay the debtservice on all the Transportation Revenue Bonds; any parity debt; any subordinat-ed indebtedness and amounts due on any subordinated contract obligations; andwhen due, all operating and maintenance expenses and other obligations of itstransit and commuter affiliates and subsidiaries, including MTA Bus.

Trustee and Paying AgentThe Bank of New York


20

Triborough Bridge and Tunnel Authority (General Resolution)


Uninsured RatingsMoody’s: Aa2Standard & Poor’s: AA-Fitch Ratings: AA

Bonds Outstanding as of May 15, 2007Series Par Structure Final Maturity InsuranceEFC1996A $ 17,895,000 Fixed Rate Jan. 1, 2018 None2001A 504,930,000 Fixed Rate Jan. 1, 2028 None2001B 148,200,000 Variable Rate (Weekly) Jan. 1, 2032 Fully insured2001C 148,200,000 Variable Rate (Weekly) Jan. 1, 2032 Fully insured2002A 171,765,000 Fixed Rate Jan. 1, 2027 None2002B 1,972,800,000 Fixed Rate Nov. 15, 2032 None2002C 103,305,000 Variable Rate (Weekly) Jan. 1, 2033 Fully insured2002F 246,480,000 Variable Rate (Weekly) Nov. 1, 2032 None2003B 235,155,000 Variable Rate (Weekly) Jan. 1, 2033 None2005A 147,415,000 Variable Rate (Weekly) Nov. 1, 2035 None2005B 797,200,000 Variable Rate (Weekly) Jan. 1, 2032 Fully insured2006A 198,635,000 Fixed Nov. 15, 2035 NoneTotal $4,691,980,000

PurposeTo fund the capital needs of the Triborough Bridge and Tunnel Authority (TBTA).In addition, TBTA securities may be issued for the purpose of financing capitalprojects of the MTA’s transit or commuter rail systems.

SecurityTBTA General Revenue Bonds are general obligations of TBTA payable solely fromthe trust estate pledged for the payment of the Bonds and Parity Debt pursuant tothe terms of the TBTA Resolution, after the payment of operating expenses. Thetrust estate consists of facility revenues, proceeds from the sale of bonds, and allfunds, accounts, and subaccounts established by the TBTA Resolution (exceptthose established by a supplemental obligation resolution for variable interest rateobligations, put obligations, parity debt, subordinated contract obligations, or sub-ordinated debt). TBTA receives its revenues from all tolls, rates, fees, charges, rents,proceeds of use, and occupancy insurance on any portion of its two tunnels, sevenbridges, and other facilities, including the net revenues of the Battery ParkingGarage, and TBTA’s receipts from those sources, after payment of TBTA’s operatingexpenses is pledged to the holders of the bonds for payment.

Future Bond IssuanceTBTA may issue additional bonds without satisfying any earnings or coverage testfor the purpose of providing capital costs relating to TBTA facilities for the pur-pose of keeping such TBTA facilities in good operating condition or preventing aloss of revenue after payment of operating expenses.

TBTA may also, upon satisfaction of the additional bonds test, issue additionalbonds to pay or provide for the payment of all or part of capital costs relating toany of the following purposes:

• TBTA transit and commuter project,• any additional TBTA projects (that do not become a TBTA facility), or• any TBTA facilities other than for the purposes set forth in the preceding

paragraph.

Trustee and Paying AgentU.S. Bank Trust National Association


21

Triborough Bridge and Tunnel Authority (Subordinate Resolution)


Uninsured RatingsMoody’s: Aa3Standard & Poor’s: A+Fitch Ratings: AA-

Bonds Outstanding as of May 15, 2007Series Par Structure Final Maturity Insurance2000A $ 143,700,000 Variable Rate (Weekly) Jan. 1, 2031 Fully insured2000B 57,420,000 Variable Rate (Weekly) Jan. 1, 2031 Fully insured2000C 124,710,000 Variable Rate (Weekly) Jan. 1, 2031 Fully insured2000D 76,370,000 Variable Rate (Weekly) Jan. 1, 2031 Fully insured2002D 261,700,000 Auction Rate (7- and 35-Day) Nov. 1, 2032 Fully insured2002E 756,095,000 Fixed Rate Nov. 15, 2032 Fully insured2002G 181,025,000 Auction Rate (35-Day) Nov. 1, 2032 Fully insured2003A 459,170,000 Fixed Rate Nov. 15, 2032 Partially insured2004A 241,025,000 Auction Rate (7-Day) Nov. 1, 2034 Fully insuredTotal $2,301,215,000

PurposeTo fund the capital needs of the Triborough Bridge and Tunnel Authority’s(TBTA) facilities for its capital programs. In addition, TBTA securities may beissued for the purpose of financing capital projects of the MTA’s transit or com-muter rail systems.

SecurityTBTA Subordinate Revenue Bonds are special obligations of TBTA payable solelyfrom the trust estate pledged for the payment of such debt after the payment ofoperating expenses and after the payment of debt service as required by TBTA’ssenior resolution. The trust estate consists of facility revenues, proceeds from thesale of bonds, and all funds, accounts, and subaccounts established by the TBTAResolution (except those established by a supplemental obligation resolution forvariable interest rate obligations, put obligations, parity debt, subordinated con-tract obligations, or subordinated debt). TBTA receives its revenues from all tolls,rates, fees, charges, rents, proceeds of use, and occupancy insurance on any por-tion of its two tunnels, seven bridges, and other facilities, including the net rev-enues of the Battery Parking Garage, and TBTA’s receipts from those sources, afterpayment of TBTA’s operating expenses is pledged to the holders of the bonds forpayment.

Future Bond IssuanceTBTA may issue additional subordinate bonds to pay or provide for the paymentof all or part of capital costs relating to any of the following purposes:

• TBTA facilities,• TBTA transit and commuter project, or• any additional subordinate TBTA project.

In addition to meeting certain other conditions, the issuance of additional TBTAsubordinate indebtedness requires that the twelve-month period net revenues areat least equal to 1.1 times the combined maximum annual calculated debt servicefor all subordinate revenue obligations, parity debt, senior obligations, and seniorparity debt.



22

MTA Dedicated Tax Fund


Uninsured RatingsStandard & Poor’s: AAFitch Ratings: A+

Bonds Outstanding as of May 15, 2007Series Par Structure Final Maturity Insurance2001A $ 190,445,000 Fixed Rate Nov. 15, 2021 Remaining Fully insured2002A 1,130,040,000 Fixed Rate Nov. 15, 2032 Partially insured2002B 440,000,000 Variable Rate (Weekly) Nov. 1, 2022 Fully insured2004A 221,885,000 Fixed Rate Nov. 15, 2018 Partially insured2004B 500,000,000 Auction Rate (7- and 28-Day) Nov. 1, 2033 Fully insured2004C 105,545,000 Fixed Rate Nov. 15, 2018 Partially insured2004D 280,000,000 Variable Rate (Weekly) Nov. 1, 2034 Fully insured2005A 346,555,000 Variable Rate (Weekly) Nov. 1, 2031 Fully insured2006A 347,620,000 Fixed Nov. 15, 2035 Partially insured2006B 410,000,000 Fixed Nov. 15, 2036 Partially insuredTotal $3,972,090,000

PurposeTo finance capital projects for the subway and bus operations of the New YorkCity Transit Authority, the Manhattan and Bronx Surface Transit OperatingAuthority, the Staten Island Rapid Transit Operating Authority (SIRTOA), andthe commuter railroad operations of the Long Island Rail Road Company and theMetro-North Commuter Railroad Company.

SecurityThe Dedicated Tax Fund Bonds are MTA special obligations payable as to princi-pal, redemption premium, if any, and interest solely from the security, sources ofpayment and funds specified in the MTA’s “Dedicated Tax Fund ObligationResolution,” which includes the Standard Resolution Provisions, adopted onMarch 26, 2002. Payment of principal of or interest on the bonds may not beaccelerated in the event of a default.

Bonds are secured by and payable from (1) Petroleum Business Tax revenues(PBT) and (2) certain other state special tax-supported subsidies levied by theState of New York and deposited to the MTA Dedicated Tax Fund. Such pay-ments are first deposited in the Pledged Amounts Account to meet the require-ments of the resolution. Thereafter, such payments are available to pay debt service on the MTA Transportation Revenue Bonds, and then any remainingamounts are available to be used to meet operating costs of the transit system, thecommuter system, and SIRTOA.

Future Bond IssuanceThe MTA may issue additional DTF bonds for the payment of capital costs, pro-vided, in addition to satisfying certain other requirements, the MTA delivers a cer-tificate that evidences the MTA’s compliance with the additional bonds test setforth in the DTF Resolution.



23

Certificates of Participation (2 Broadway)

Certificate Trust Agreement DatedJune 1999

RatingsMoody’s: Aaa (insured)Standard & Poor’s: AAA (insured)Fitch AAA (insured)Note: All of the certificates are insured by AMBAC, which provides a

“Aaa/AAA” (Moody’s/S&P) rating.

Certificates Outstanding as of May 15, 2007Series Par Structure Final Maturity Insurance1999A $ 48,265,000 Fixed Rate Jan. 1, 2013 Fully insured2000A 18,335,000 Fixed Rate Jan. 1, 2014 Fully insured2004A 355,525,000 Auction Rate (7- and 35-Day) Jan. 1, 2030 Fully insuredTotal $422,125,000

PurposeTo finance certain building and tenant improvements to an office building occu-pied by the New York City Transit Authority, Long Island Rail Road Company,Metro-North Commuter Railroad Company, and/or Triborough Bridge andTunnel Authority located at 2 Broadway in New York City.

SecurityThe Certificates are several, but not joint, special obligations of the New YorkCity Transit Authority, the Metropolitan Transportation Authority (on behalf ofLong Island Rail Road Company and Metro-North Commuter RailroadCompany) and Triborough Bridge and Tunnel Authority in their respective BaseRent Proportionate Shares. The obligations of the New York City TransitAuthority and the Metropolitan Transportation Authority to pay their respectiveBase Rent Proportionate Shares are special obligations payable as operating andmaintenance expenses from revenues subordinated to the payment of other obliga-tions. The obligation of TBTA to pay its Base Rent Proportionate Share is a spe-cial obligation payable as a subordinated operating and maintenance expense ofTBTA solely from revenues subordinated by agreement, to the payment of otheroperating and maintenance expenses and other obligations.

ReservesA balance equal to one-half of the maximum Base Rent payable in the current orany future annual period must be maintained in the reserve fund.

Future Certificate IssuanceNone currently contemplated or authorized, other than for refunding purposes ifinterest rates accommodate.



24

MTA State Service Contract Obligation Bonds


Uninsured RatingsStandard & Poor’s: AA-Fitch Ratings: A+

Bonds Outstanding as of May 15, 2007Series Par Structure Final Maturity Insurance2002A $1,668,305,000 Fixed Rate July 1, 2031 Partially insured2002B 597,650,000 Fixed Rate July 1, 2031 Partially insuredTotal $2,265,955,000

PurposeMTA has entered into a service contract, called the “State Service Contract,” withthe State of New York. Under the State Service Contract, in consideration ofMTA’s undertaking various transportation projects for the benefit of the people ofthe state, the state agrees to make annual payments to MTA over a period ofyears, with the obligation of the state subject in each year to the making of annualappropriations by the State Legislature. State Service Contract Bonds may be usedto finance and refinance transportation projects, to refund obligations issued bythe MTA or any affiliate, and to refund obligations secured in whole or in part byany or all of the prior state service contracts authorized by the State ServiceContract Legislation.

SecurityBonds are secured by a service contract dated as of May 15, 2002 between theMTA and the State of New York, pursuant to State Service Contract Legislation,comprised of Section 16 of Chapter 314 of the Laws of 1981, Section 42 ofChapter 929 of the Laws of 1986, and Section 34 of Part O of Chapter 61 of theLaws of 2000.

Future Bond IssuanceThe MTA may only issue State Service Contract Bonds subject to the followingconditions and limitations:

• No State Service Contract Bond shall mature later than the expiration dateof the State Service Contract, currently July 1, 2031;

• The aggregate amount of debt service on all State Service Contract Bonds(plus debt service amounts on all Old State Service Contract Bonds) shallnot exceed, in any State fiscal year, $165,000,000; and

• No State Service Contract Bond (other than a refunding bond) shall beissued after March 31, 2003.



25

Convention Center Project Bonds

Resolution DatedJuly 1980

Uninsured RatingsMoody’s: A2Standard & Poor’s: AA-

Debt Outstanding as of May 15, 2007Series E $184,445,000

PurposeTo provide funds to finance and refinance the acquisition and construction of theJacob K. Javits Convention Center of New York City.

SecurityBonds are secured by annual New York State General Fund appropriations. TheTriborough Bridge and Tunnel Authority has leased the Convention Center to thestate at rentals sufficient to pay debt service. The bonds are secured and payablesolely from the states’ rental payments; neither the TBTA’s nor the ConventionCenter’s operating revenues are pledged for debt service.

ReservesA balance equal to one-half of the maximum debt service payable in the currentor any future year must be maintained in the debt service reserve fund. JPMorganChase Bank has issued a letter of credit for deposit in the reserve fund to meet itsrequirements. Such facility has been extended and now expires in January 2009unless terminated or extended by the bank.

Future Bond IssuanceNone currently contemplated or authorized.

Trustee and Paying AgentDeutsche Bank


The MTA 2007 PROGRESS REPORT TO...

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