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SANDAG Closes on Short-Term Notes for Trolley Project

Low Rate to Save Taxpayer Dollars on Major Construction Project

May 10, 2018-- SANDAG completed the process of issuing a large short-term note last month to help finance the construction of the Mid-Coast Trolley Extension, providing a very low borrowing cost that will save taxpayer dollars in building the largest transit project in the region’s history.

In June 2017, SANDAG closed on a 25-year, 2.72 percent fixed-rate loan of up to $537.48 million through a highly competitive application process from the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which is administered by the Build America Bureau within the U.S. Department of Transportation. The TIFIA Program offers opportunities to support and facilitate the financing of large and complex transportation projects. It provides federal credit assistance for qualified projects of national and regional significance, and typically provides more advantageous terms than can be obtained in the traditional financial markets. 

In April of this year, SANDAG issued the Series 2018A short-term notes with a total par amount of $537.48 million. The notes mature in 2021 and have an all-in borrowing cost of 1.85 percent. Interest on the notes will be repaid from TransNet revenues, while the principal is expected to be repaid by drawing on the TIFIA loan. The notes will serve as interim financing for the Mid-Coast Transit project, allowing SANDAG to fund ongoing capital expenses at a borrowing cost even lower than the TIFIA loan’s already favorable 2.72 percent.
SANDAG currently maintains strong senior lien credit ratings: AAA from Standard & Poor’s and AAA from Fitch Ratings.  The notes were issued on a subordinate lien and received “AA” ratings from S&P and Fitch.

When the notes were sold last month, with Citigroup acting as the lead underwriter, investor interest was strong. The notes were sold to 24 different investors, which enabled SANDAG to reduce the cost of borrowing from the initial pre-marketing levels.

The Mid-Coast Transit project, which is currently under construction, will add nine new stations and extend San Diego Trolley service for 11 miles from Old Town up to UC San Diego and University City. It is expected to begin service in 2021.

The cost of the $2.1 billion project is being split between the Federal New Starts Program, which has committed $1.04 billion, and the region’s TransNet program, the local half-cent sales tax for transportation administered by SANDAG. In order to finance large-scale critical transportation projects, SANDAG sells bonds against future TransNet revenues. The TIFIA loan provides lower rates and more flexibility in that process.

Project Manager(s)

For media inquiries, please contact the SANDAG Public Information Office at (619) 699-1950 or