Cap Metro board OKs plan to pay back $51 million owed to city

The Capital Metro Board of Directors approved a plan Thursday to begin reimbursing the city $51.1 million it owes in back payments. Board members approved an amendment to an interlocal agreement with Austin to repay the balance of a one-quarter-cent sales tax commitment initially made in 2001.

 

The agreement was made after Capital Metro had saved more than $175 million in sales tax revenue originally slated for light rail. When voters rejected the light rail plan in 2000, critics and city and local government officials demanded the transit agency pay the city and surrounding areas in its service area back the money from raised sales tax rates. That’s when Cap Metro made the agreement to dispense all proceeds from a quarter-cent of its one-cent tax revenue to the governments in its service area.

 

The transit agency has paid back $62.4 million thus far.

 

Cap Metro stopped making payments on the debt in 2009 when sales taxes dropped dramatically and the agency was facing a severe budget crunch. The current unpaid amount on the Cap Metro balance sheet is $7 million, which includes $2 million that has accumulated since the end of FY 2009.

 

Under the terms of the amended agreement, the city will receive 35 percent of Cap Metro’s annual sales tax revenue that exceeds a “threshold amount” for a particular year. The threshold amount for FY2010 will be $134.1 million, with the amount to increase annually by 3.3 percent.

 

Capital Metro Chief Financial Officer Randy Hume told board members that Cap Metro staff projects that the city will receive $1 million in FY 2011 and that the transit agency will have paid off the entire $51.1 million debt by 2019.

 

Any over-threshold sales tax revenue Cap Metro has after paying the city that 35 percent can be used as the board sees fit, for building reserves or for capital projects, etc.

 

The board voted unanimously in favor of the amendment, 6-0, with City Council Members Mike Martinez and Chris Riley recusing themselves. Council will take up the resolution at its meeting on April 22.

 

A second interlocal agreement amendment with the city, which would define the administrative process for the distribution of remaining funds in the Build Greater Austin/Build Central Texas Program, also passed but with a friendly amendment attached that will allow board members to take a closer look at the resolution before it goes to City Council next Thursday. Under the terms of that agreement, Cap Metro owes the city $7.3 million.