Triborough Bridge and
Tunnel Authority
Financial Statements as of and for the
Years Ended December 31, 2013 and 2012,
Required Supplementary Information, and
Independent Auditor’s Report
TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR’S REPORT
1–2
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
3–13
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
DECEMBER 31, 2013 AND 2012:
Statements of Net Position
Statements of Revenues, Expenses, and Changes in Net Position
14–15
16
Statements of Cash Flows
17–18
Notes to Financial Statements
19–60
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED):
Schedule of Funding Progress — Postemployment Healthcare Plan
62
Deloitte & Touche LLP
30 Rockefeller Plaza
New York, NY 10112-0015
USA
Tel: +1 212 492 4000
Fax: +1 212 492 5000
www.deloitte.com
INDEPENDENT AUDITOR’S REPORT
To the Members of the Board of
Metropolitan Transportation Authority
Report on the Financial Statements
We have audited the accompanying statements of net position of the Triborough Bridge and Tunnel
Authority (the “Authority”), a public benefit corporation which is part of the related financial reporting
group of Metropolitan Transportation Authority (“MTA”), as of December 31, 2013 and 2012, and the
related statements of revenues, expenses, and changes in net position and cash flows for the years then
ended, and the related notes to the financial statements, which collectively comprise the Authority’s
financial statements as listed in the table of contents.
Managements’ Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of the financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the Authority’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of
the Authority’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Member of
Deloitte Touche Tohmatsu
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the net
position of the Authority as of December 31, 2013 and 2012, and the respective changes in net position
and cash flows thereof for the years then ended in accordance with accounting principles generally
accepted in the United States of America.
Emphasis of a Matter
As described in Note 2 to the financial statements, in 2013 the Authority adopted Governmental
Accounting Standards Board (“GASB”) Statement No. 65, Items Previously Reported as Assets and
Liabilities. Our opinion is not modified with respect to this matter.
Other Matters
Accounting principles generally accepted in the United States of America require that the Management’s
Discussion and Analysis on pages 3 through 13 and the Schedule of Funding Progress-Postemployment
Healthcare Plan on page 62 be presented to supplement the financial statements. Such information,
although not a part of the financial statements, is required by the Governmental Accounting Standards
Board who considers it to be an essential part of financial reporting for placing the financial statements in
an appropriate operational, economic, or historical context. We have applied certain limited procedures
to the required supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management’s responses to our
inquiries, the financial statements, and other knowledge we obtained during our audits of the financial
statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
April 30, 2014
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TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
YEARS ENDED DECEMBER 31, 2013 AND 2012
(In thousands)
1. OVERVIEW OF THE FINANCIAL STATEMENTS
Introduction
The following is a narrative overview and analysis of the financial activities of Triborough Bridge and
Tunnel Authority (“MTA Bridges and Tunnels”) for the years ended December 31, 2013 and 2012. This
discussion and analysis is intended to serve as an introduction to MTA Bridges and Tunnels’ financial
statements which have the following components: (1) Management’s Discussion and Analysis
(“MD&A”), (2) Financial Statements and (3) Notes to the Financial Statements.
Management’s Discussion and Analysis
This MD&A provides an assessment of how MTA Bridges and Tunnels’ position has improved or
deteriorated and identifies the factors that, in management’s view, significantly affected MTA Bridges
and Tunnels’ overall financial position. It may contain opinions, assumptions, or conclusions by MTA
Bridges and Tunnels’ management that should not be considered a replacement for and must be read in
conjunction with the financial statements.
The Financial Statements Include
The Statements of Net Position provide information about the nature and amounts of resources with
present service capacity that the MTA Bridges and Tunnels presently controls (assets), consumption of
net assets by the MTA Bridges and Tunnels that is applicable to a future reporting period (deferred
outflow of resources), present obligations to sacrifice resources that the MTA Bridges and Tunnels has
little or no discretion to avoid (liabilities), and acquisition of net assets by the MTA Bridges and Tunnels
that is applicable to a future reporting period (deferred inflow of resources) with the difference between
assets/deferred outflows of resources and liabilities/deferred inflows of resources being reported as net
position.
The Statements of Revenues, Expenses and Changes in Net Position show how MTA Bridges and
Tunnels’ net position changed during each year and accounts for all of the current and prior year’s
revenues and expenses, measure the success of MTA Bridges and Tunnels’ operations over the twelve
months and can be used to determine how MTA Bridges and Tunnels has funded its costs.
The Statements of Cash Flows provide information about MTA Bridges and Tunnels’ cash receipts, cash
payments, and net changes in cash resulting from operations, noncapital financing, capital and related
financing, and investing activities.
The Notes to the Financial Statements Provide
Information that is essential to understanding the financial statements, such as MTA Bridges and Tunnels’
basis of presentation, and significant accounting policies, details of cash and investments, capital assets,
employee benefits, long-term debt, lease transactions, future commitments and contingencies, and
subsequent events of MTA Bridges and Tunnels.
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The notes to the financial statements also describe any other events or developing situations that could
materially affect MTA Bridges and Tunnels’ financial position.
Required Supplementary Information:
The Required Supplementary Information provides information concerning MTA Bridges and Tunnels’
progress in funding its obligation to provide other postemployment benefits to its employees.
2.
FINANCIAL REPORTING ENTITY
Triborough Bridge and Tunnel Authority is a public benefit corporation, separate and apart from the State
of New York, without any power of taxation. Triborough Bridge and Tunnel Authority is empowered to
operate and maintain nine toll bridges and tunnels and the Battery-Parking Garage, all located in New
York City. The board members of the Metropolitan Transportation Authority (“MTA”) also serve as the
Board of Triborough Bridge and Tunnel Authority. Triborough Bridge and Tunnel Authority operates
under the name of MTA Bridges and Tunnels. The MTA is a component unit of the State of New York.
MTA Bridges and Tunnels’ operations and capital costs (debt obligations) for its bridges and tunnels are
paid by the revenues it generates from its facilities. MTA Bridges and Tunnels’ surplus amounts are used
to fund transit and commuter operations and finance capital projects for the transit and commuter systems
operated by other affiliates and subsidiaries of the MTA.
3.
CONDENSED FINANCIAL INFORMATION
The following sections will discuss the significant changes in MTA Bridges and Tunnels’ financial
position for the years ended December 31, 2013 and 2012. Additionally, an examination of major
economic factors and industry trends that have contributed to these changes is provided. It should be
noted that for purposes of the MD&A, summaries of the financial statements and the various exhibits
presented are in conformity with MTA Bridges and Tunnels’ financial statements, which are presented in
accordance with accounting principles generally accepted in the United States of America.
(In thousands)
As of December 31,
ASSETS AND
DEFERRED
OUTFLOWS OF
RESOURCES
Current Assets
Noncurrent Assets
Deferred Outflows of
Resources
Total Assets and
Deferred Outflows of
Resources
2013
2012
Increase/(Decrease)
2011
2013 - 2012
2012 - 2011
$ (119,900)
$ 573,435
$ 652,314
$ 772,214
$ 198,779
4,443,358
4,383,088
4,762,335
60,270
(379,247)
323,463
195,745
264,090
127,718
(68,345)
$ 5,419,135
$ 5,351,047
$ 5,225,204
-4-
$
68,088
$ 125,843
Significant Changes in Assets and Deferred Outflows of Resources:
December 31, 2013 versus 2012:
Total Assets increased by $68,088 for the year ended December 31, 2013.
Current assets decreased by $119,900 for the year ended December 31, 2013. The decrease was primarily
due to a decrease in accounts receivable, net of allowance of $134,067 due to estimated and probable
insurance recoveries of $126,325 recorded as non-current which are not expected to be collected within
one year of December 31, 2013. As of December 31, 2012, estimated and probable insurance recoveries
were expected to be collected within one year, however as the claim has evolved and better information
has become available from the third party reinsurance companies, this is no longer likely. In addition,
there was a decrease in restricted short-term investments by MTA Treasury of $44,487. These decreases
were offset by an increase in unrestricted short-term investments by MTA Treasury of $50,837.
Noncurrent assets increased by $60,270 for the year ended December 31, 2013. Two factors were
primarily responsible for this change. First, there was an increase in capital assets, net of accumulated
depreciation of $231,735. Second, there was an increase in accounts receivable primarily due to
estimated and probable insurance recoveries of $126,325 recorded as non-current which are not expected
to be collected within one year of December 31, 2013. As of December 31, 2012, estimated and probable
insurance recoveries were expected to be collected within one year, however as the claim has evolved and
better information has become available from the third party reinsurance companies, this is no longer
likely. These increases were offset by a decrease in unamortized bond issuance costs of $304,782 due to
an accounting change required by the adoption of GASB Statement No. 65 which required that
unamortized losses on refunding of debt be shown as deferred outflow of resources and bond issuance
costs are expensed immediately when incurred.
There was an increase in deferred outflows of resources of $127,718 due to an accounting change
required by the adoption of GASB Statement No. 65 which required that unamortized losses on refunding
of debt be shown as deferred outflow of resources. At December 31, 2013, $229,217 of unamortized
losses on debt refunding are now reflected as deferred outflows of resources. Offsetting this accounting
change was a decrease in the change in fair market value of derivative instruments of $101,499.
December 31, 2012 versus 2011:
Total Assets increased by $125,843 for the year ended December 31, 2012.
Current assets increased by $573,435 for the year ended December 31, 2012. The increase was primarily
due to an increase in restricted short-term investments by MTA Treasury of $422,410. In addition, there
was an increase in accounts receivable, net of allowance of $134,622 primarily due to the recognition of
estimated and probable insurance recoveries of $126,325. There was also an increase in unrestricted
short-term investments by MTA Treasury of $21,693. These increases were offset by decreases in cash of
$4,543 and due from MTA of $3,771.
Noncurrent assets decreased by $379,247 for the year ended December 31, 2012. Three factors were
primarily responsible for this change. First, there was a decrease in restricted long-term investments by
MTA Treasury of $340,045. In addition, there were decreases in unrestricted long-term investments of
$32,298 and in bond issuance costs of $24,360. These decreases were offset by an increase in capital
assets, net of accumulated depreciation of $15,317.
There was a decrease in deferred outflows from derivative instruments of $68,345 resulting from changes
in the fair market value of the derivative instruments classified as effective’s hedges.
-5-
(In thousands)
TOTAL LIABILITIES
Current Liabilities
Noncurrent Liabilities
Total Liabilities
2013
$
734,541
As of December 31,
2012
$
2011
705,998
$ 632,680
9,295,459
9,309,251
9,275,617
$ 10,030,000
$ 10,015,249
$ 9,908,297
Increase/(Decrease)
2013 - 2012
2012 - 2011
$
28,543
(13,792)
$
14,751
$
73,318
33,634
$ 106,952
Significant Changes in Liabilities:
December 31, 2013 versus 2012:
Total Liabilities increased by $14,751 for the year ended December 31, 2013.
Current liabilities increased by $28,543 for the year ended December 31, 2013. There was an increase in
the current portion of long-term debt of $27,455. In addition, there were increases in prepaid tolls revenue
of $15,196, accrued salaries of $14,010, and the current portion of estimated liability arising from injuries
to persons of $10,114. These increases were offset by a decrease in the amount payable to NYCTA of
$29,980, resulting from MTA Bridges and Tunnels’ repayment for the execution of swap termination
transactions with Citigroup Financial Products Inc. (See Note 20). Also, there was a decrease in accounts
payable of $17,371.
Noncurrent liabilities decreased by $13,792 for the year ended December 31, 2013. Three factors were
primarily responsible for this change. First, there was a decrease in derivative liabilities of $96,138. This
decrease was offset by increases in the liability for other postemployment benefits other than pensions of
$59,267 and in long-term debt of $30,733, net of bond redemptions. See debt footnote 11 for further
details.
December 31, 2012 versus 2011:
Total Liabilities increased by $106,952 for the year ended December 31, 2012.
Current liabilities increased by $73,318 for the year ended December 31, 2012. There was an increase in
the amount due the NYCTA of $25,787, primarily as a result of MTA Bridges and Tunnels’ execution of
swap termination transactions with Citigroup Financial Products Inc. (See Note 20). In addition, there was
an increase in prepaid tolls revenue of $20,531. Also, there were increases in accounts payable of
$18,253, current portion of long-term debt of $9,989 and accrued salaries of $9,367. These increases were
offset by a decrease in the amount due the MTA of $7,003.
Noncurrent liabilities increased by $33,634 for the year ended December 31, 2012. Four factors were
primarily responsible for this change. There was an increase in the liability for other postemployment
benefits other than pensions of $73,654 and an increase in long-term debt of $22,911, net of bond
redemptions. See long term debt footnotes for further details. These increases were offset by decreases in
derivative liabilities of $55,484 and derivative liabilities-off market elements of $10,978 primarily as a
result of MTA Bridges and Tunnels’ execution of swap termination transactions with Citigroup Financial
Products Inc. (See Note 20).
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(In thousands)
TOTAL NET POSITION
2013
Net investment in
capital assets
Restricted
Unrestricted
Total net position
$
693,234
569,603
(5,873,702)
$ (4,610,865)
As of December 31,
2012
$
532,002
612,438
(5,808,642)
$ (4,664,202)
2011
$
Increase/(Decrease)
2013 - 2012
2012 - 2011
967,403
530,073
(6,180,569)
$
$
161,232
(42,835)
(65,060)
$ (4,683,093)
$
53,337
$ (435,401)
82,365
371,927
$
18,891
The negative net position has resulted from assets transferred to MTA and TA, on prior years’ debt
financing incurred on their behalf.
Significant Changes in Net Position:
December 31, 2013 versus 2012:
In 2013, the total net position increase of $53,337 is comprised of operating income of $1,125,904, less
nonoperating expenses of $338,054, less transfers out (net) of $614,046 (principally operating surplus)
and less a restatement of beginning net position for 120,467 as a result of adopting GASB Statement No.
65.
December 31, 2012 versus 2011:
In 2012, the total net position increase of $18,891 is comprised of operating income of $920,349, less
nonoperating expenses of $404,368 and less transfers out (net) of $497,090 (principally operating
surplus).
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Condensed Statements of Revenues, Expenses, and Changes in Net Position
(In thousands)
2013
OPERATING REVENUES
OPERATING EXPENSES
OPERATING INCOME
TOTAL NET
NONOPERATING EXPENSES:
INCOME BEFORE
CONTRIBUTIONS AND
TRANSFERS
TRANSFERS IN - MTA
TRANSFERS OUT
CHANGES IN NET POSITION
NET
POSITION - BEGINNING
RESTATEMENT OF
BEGINNING NET POSITION
NET
POSITION - ENDING
Years Ended December 31,
2012
2011
$ 1,663,553
(537,649)
$ 1,508,661
(588,312)
1,125,904
920,349
Increase/(Decrease)
2013 - 2012
2012 - 2011
$ 1,516,523
$
(512,069)
1,004,454
154,892
$
(7,862)
50,663
(76,243)
205,555
(84,105)
(338,054)
(404,368)
(384,594)
66,314
(19,774)
787,850
515,981
619,860
271,869
(103,879)
164
553
4,086
(389)
(3,533)
(614,210)
(497,643)
(527,658)
(116,567)
30,015
173,804
18,891
96,288
154,913
(77,397)
18,891
96,288
(4,664,202)
(4,683,093)
-
(120,467)
$ (4,610,865)
$ (4,664,202)
(4,779,381)
-
$ (4,683,093)
(120,467)
$
53,337
-
$
18,891
Operating Revenues
For the year ended December 31, 2013, the operating revenues increased by $154,892 as compared to
December 31, 2012. This increase can be primarily attributed to an increase in toll revenue of $154,211.
See “Overall Financial Position and Results of Operations and Important Economic Conditions” below.
For the year ended December 31, 2012, the operating revenues decreased by $7,862 as compared to
December 31, 2011. This decrease can be primarily attributed to a decrease in toll revenue of $10,607.
See “Overall Financial Position and Results of Operations and Important Economic Conditions” below.
Revenue by Major Source
MTA Bridges and Tunnels tolls accounted for 98.9% and 98.8% of operating revenues in 2013 and 2012,
respectively. The remaining revenue primarily represented income from parking fees (net of operating
expenses) collected at the Battery Parking Garage and fees collected from E-ZPass customers.
Toll revenues were $1,645,193 and $1,490,982 for the years ended December 31, 2013 and December 31,
2012, respectively.
-8-
Operating Expenses
Operating expenses, including depreciation, decreased for the year ended December 31, 2013, as
compared to the prior year by $50,663. The decrease was primarily due to asset impairments and related
expenses of $57,603. In addition, there was a decrease in retirement and other employee benefits by
$15,125, principally related to postemployment benefits other than pensions. The decreases were offset by
increases in maintenance and other operating contracts of $10,073 and depreciation expense of $9,503.
Operating expenses, including depreciation, increased for the year ended December 31, 2012, as
compared to the prior year by $76,243. The increase was primarily due to asset impairments and related
expenses of $181,747, net of estimated and probable insurance recoveries of $126,325 as a direct result of
MTA Bridges and Tunnels’ infrastructure losses from Tropical Storm Sandy (See Note 10). Also, there
was an increase in other business expenses of $22,151 and an increase in pension costs of $8,513. These
increases were offset by decreases in maintenance and other operating contracts of $24,141 and materials
and supplies of $17,792.
Nonoperating Revenues (Expenses)
Nonoperating expenses decreased by $66,314 for the year ended December 31, 2013. This decrease was
primarily due to a decrease in interest expense on the debt base of $62,989 primarily due to 2013 bond
refundings.
Nonoperating expenses increased by $19,774 for the year ended December 31, 2012. During 2012, MTA
Bridges and Tunnels executed its right to terminate four swap transactions with Citigroup Financial
Products Inc. (See Note 20) and recorded losses on swap terminations of $45,166. This increase was
offset by a decrease in interest expense on the debt base of $28,343 primarily due to 2012 bond
refundings as compared to the prior year.
4.
OVERALL FINANCIAL POSITION AND RESULTS OF OPERATIONS AND IMPORTANT
ECONOMIC CONDITIONS
Economic Conditions/Results of Operations
Two key economic factors that have statistically significant relationships to changes in traffic volumes are
regional non-farm employment and inflation (CPI-U). Based on preliminary data from the U.S. Bureau of
Labor Statistics, regional employment grew by 1.8% in 2013, which was the same growth rate seen in
2012. Inflation was 1.7% in 2013 and 2.0% in 2012.
In 2013, total paid traffic was 284.5 million vehicles, which was 1.8 million, or 0.6% above volume in
2012. In October and November 2013, traffic was a combined 4.3 million vehicles, or 9.7% greater than
the same period in 2012 due to the unfavorable impacts of Tropical Storm Sandy. These gains were
partially offset by year-to-year declines during most of the other months, resulting primarily from harsher
winter weather, the toll increase implemented in March 2013, and one less day in 2013 due to the 2012
leap year. Total snowfall in 2013 was 28.0 inches compared to only 4.0 inches in 2012. As a result, total
volume over the winter months in 2013 was 1.9 million vehicles, or 2.0% below the same months in
2012. Traffic over the remaining months in 2013 showed a year-to-year decline of just 0.4% on average.
Toll revenue reached $1,645.2 million in 2013, which was $154.2 million, or 10.3% above the 2012 level
of $1,491.0 million. The March 2013 toll increase was the primary driver of the additional revenue.
Paid MTA Bridges and Tunnels traffic in 2012 totaled 282.7 million vehicles, which was 0.8 million
vehicles, or 0.3% less than total volume in 2011. In 2012, snowfall was unusually low, with total
accumulations reaching only 4.0 inches over 3 days, while in 2011, 39.3 inches fell over 23 days. Year-9-
to-year rainfall was also considerably lower, with 35.6 inches falling over 124 days this year compared to
65.2 inches over 121 days last year. These favorable weather impacts, along with an additional day due
to the leap year, contributed toward overall traffic growth of 1.4% through October 26. However, a state
of emergency was declared on October 27 as Tropical Strom Sandy approached the New York City area,
and the storm hit on October 29, which had unfavorable impacts lasting through the end of the year.
Traffic from October 27 through December was down 1.9%. Toll revenue reached $1,491.0 million in
2012, which was $10.6 million, or 0.7% below the 2011 level of $1,501.6 million.
The E-ZPass electronic toll collection system continued to facilitate management of high traffic volumes.
All categories grew on a year-to-year basis in both 2013 and 2012. Total market share was up 2.4
percentage points in 2013 and then rose by another 1.6 points in 2012:
Total
Average Weekday
Passenger Vehicles
Commercial Vehicles
Average Weekend
2013
2012
2011
83.3%
85.0%
84.3%
92.0%
79.2%
81.0%
82.8%
82.1%
90.8%
76.5%
79.4%
81.3%
80.5%
90.4%
74.6%
5. SIGNIFICANT CAPITAL ASSET ACTIVITY
Capital Program
MTA Bridge and Tunnels’ facilities are all in a state of good repair. MTA Bridge and Tunnels’ portion of
the MTA’s Capital Program for 2010-2014 totals $2,078,355 for normal replacement and system
improvement projects. The commitments made during 2013 were $226,642 bringing the total commitment
under the five-year plan to $1,210,997.
MTA Bridge and Tunnels’ portion of the Capital Program for 2005-2009 totals $1,194,690 for normal
replacement and system improvement projects. The commitments made during 2013 were $2,545,
bringing the total commitments under the five-year plan to $1,132,003.
MTA Bridge and Tunnels’ portion of the MTA’s Capital Program for 2000-2004 totals $981,594 bringing
the total commitments under the five-year plan is $963,777.
Approximately 65.5% of the projected expenditures in the 2010-2014 Capital Program will be incurred at
three facilities: the Robert F. Kennedy Bridge, the Bronx-Whitestone Bridge, and the Verrazano-Narrows
Bridge. Other major projects in the 2010-2014 Plan include the rehabilitation of tunnel walls, roadway
drainage and firelines and ceiling repairs (Phase II) and replacement of electrical switchgear and power
distribution equipment at the Brooklyn-Battery Tunnel, upper and lower level toll plazas deck
rehabilitation at the Henry Hudson Bridge and a facility-wide electrical upgrade, vent building switchgear
and motor control center replacement at the Queens Midtown Tunnel.
Approximately 60.0% of the expenditures in the 2005-2009 Capital Program have been incurred at four
facilities: the Verrazano-Narrows Bridge, the Robert F. Kennedy Bridge, the Bronx-Whitestone Bridge,
and the Throgs Neck Bridge.
Approximately 50.0% of the expenditures in the 2000-2004 Capital Program have been incurred at two
facilities: the Robert F. Kennedy Bridge and the Bronx-Whitestone Bridge. Other major projects included
roadway and drainage system rehabilitation at the Brooklyn-Battery Tunnel, rehabilitation of electrical
system on suspension spans at the Verrazano-Narrows Bridge, and the replacement of all exhaust fans at
the Queens Midtown Tunnel.
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6. CURRENTLY KNOWN FACTS, DECISIONS, OR CONDITIONS
MTA Bridges and Tunnels Infrastructure Losses from Sandy
Based on preliminary assessments by MTA Bridges and Tunnels staff and independent engineers, the
estimated capital cost of repairs, mostly for damage to the tunnels, is $778 million. The cost of
infrastructure repairs is expected to be covered by a combination of insurance, FEMA, MTA Bridges
and Tunnel resources, including its necessary reconstruction reserve, and, if necessary, interim external
borrowings. Any such interim borrowings are currently expected to be structured as bond anticipation
notes under the MTA Bridges and Tunnels Senior Resolution, including the Series 2014A Notes, and
amounts of such borrowings not reimbursed by the federal government or from insurance coverage are
expected to be paid from the proceeds of bonds issued under the MTA Bridges and Tunnels Senior
Resolution.
E-ZPass Initiatives
In 2013, a number of initiatives to encourage E-ZPass participation were introduced or expanded:
•
•
•
•
MTA Bridges and Tunnels began selling E-ZPass “On the Go” pre-paid tags in the cash toll lanes
at each facility in 2012. Through December 2013, more than 266,000 tags have been sold.
MTA Bridges and Tunnels introduced the MTA Reload Card in February 2012, an initiative
which makes it easier for customers to replenish their E-ZPass account with cash. Through
December 2013, more than 78,408 cards have been issued to customers and approximately 13%
of total cash replenishments were made using the cards.
Spanish language versions of the E-ZPass application, interactive website, and the customer
service telephone voice response system were introduced in January 2012.
In November 2012, MTA Bridges and Tunnels introduced E-ZPass “Pay per Trip,” which enables
customers to set up an E-ZPass account without a pre-paid balance. Those interested in this
program pay for their tolls each day through an Automated Clearinghouse (ACH) deduction from
their checking account. To date, over 18,000 account holders have signed up for this initiative.
The most potentially far reaching MTA Bridges and Tunnels initiative is the pilot project at the Henry
Hudson Bridge to test All Electronic Toll (AET) collection operations. The implementation of cashless
tolling at the facility began on November 10, 2012. All motorists are now able to use any lane to drive
through the toll plaza without stopping. There is no change for drivers who use E-ZPass. For customers
without an E-ZPass tag, an image is taken of their license plate and the registered driver receives a bill in
the mail. For the year-to-date through December, 94% of weekday crossings were E-ZPass and 6.0%
were “Tolls by Mail” transactions. Thus far, the equipment and technology have met expectations, with
the readable photo image rate at nearly 100%. The revenue collection rate is also nearly 100%, through a
combination of tolls collected through the billing process and fees assessed and collected for late
payment.
Verrazano-Narrows Bridge Rebate Programs
On February 26, 2014, the MTA and MTA Bridges and Tunnels Boards authorized MTA and MTA
Bridges and Tunnels to take such actions as may be necessary or appropriate in connection with toll
rebate programs proposed by the Governor and legislative leaders at the Verrazano-Narrows Bridge
(VNB), in connection with which the Governor recently announced an agreement with Legislative leaders
to provide funding support (the VNB Rebate Programs). Such actions include conducting such
environmental review of the VNB Rebate Programs as may be required by the State Environmental
Quality Review Act prior to making a determination to implement such programs.
- 11 -
The VNB Rebate Programs are for: (i) Staten Island residents eligible for the Staten Island Resident
(SIR) E-ZPass rate (the VNB SIR Rebate Program); and (ii) trucks and other commercial vehicles which
have New York Customer Service Center (NYCSC) E-ZPass Accounts with more than ten (10) trips per
month across the VNB (the VNB Commercial Rebate Program). Tolls on the VNB are collected only in
the Staten Island-bound direction in accordance with federal law. The VNB Rebate Programs are
expected to require several months to implement; it is expected that the VNB Rebate Programs would be
effective as of April 1, 2014.
VNB SIR Rebate Program. Under the VNB SIR Rebate Program, the MTA would rebate $0.50 of the
$6.00 SIR VNB E-ZPass toll paid by Staten Island residents with three or more trips per month across the
VNB, where tolls are collected only in the Staten Island-bound direction in accordance with federal law,
and would rebate $0.86 of the $6.36 SIR VNB E-ZPass toll paid by Staten Island residents with one or
two trips per month across the VNB. As a result of the MTA rebates, Staten Island residents would pay
$5.50 per trip across the VNB.
VNB Commercial Rebate Program. Under the VNB Commercial Rebate Program, the MTA
would rebate 20% of the VNB E-ZPass toll for trucks and other commercial vehicles, using the
same NYCSC E-ZPass account, with more than ten (10) trips per month across the VNB, where
tolls are collected only in the Staten Island-bound direction in accordance with federal law.
Financial Implications. The projected annualized cost of the VNB Rebate Programs would be $14
million, with $7 million allocated for the SIR Rebate Program and $7 million allocated for the
Commercial Rebate Program. The VNB Rebate Programs would be funded equally by New York State
and MTA. The moneys to fund a year’s estimated costs for the VNB Rebate Programs would be
transferred by the MTA to the TBTA prior to the implementation of the VNB Rebate Programs each year.
The VNB Rebate Programs would be implemented only for such periods of operation during which, net
of State actions or available offsets, MTA’s financial responsibility does not exceed half of the expense of
the VNB Rebate Programs. In the event that such condition is not met, the VNB Rebate Programs would
cease and Staten Island residents would be charged the applicable SIR toll and trucks and other
commercial vehicles would be charged the applicable NYCSC E-ZPass toll for the Verrazano Narrows
Bridge. MTA has been told by the New York State Division of the Budget that for calendar year 2014, the
State’s contribution will be provided by the waiving of $7 million of cost recovery assessments levied by
the State and payable by the MTA pursuant to Public Authorities Law section 2975.
The 2012 Executive Budget approved by the New York State Legislature expressly provides for the State
to pay the MTA the costs associated with restoration of the Rockaway Resident Toll Rebate Program to
its prior level and appropriates to the MTA sufficient funds, estimated at $3.9 million, to restore the rebate
for tolls incurred on the first two trips made by eligible participants across the Cross Bay Bridge within a
calendar day (using the same E-ZPass tag). In March 2012, the MTA Board authorized appropriate
officers of the MTA and MTA Bridges and Tunnels to take the steps required to restore the Rebate
Program to its prior level, subject to the express condition that providing this rebate is contingent upon
having sufficient funds to do so and should the funds allocated by the Legislature be depleted before the
next appropriation of such funds, the first two trips across the Cross Bay Bridge within a calendar day
(using the same E-ZPass tag) will cease to be subject to the rebate and the customer will be charged the
applicable resident discount toll for the Cross Bay Bridge.
- 12 -
During 2013 and 2012, MTA Bridges and Tunnels has redeemed or refinanced a number of its bonds to
manage its interest cost risk and replace downgraded insurers. See Note 11 for further Long Term Debt
details.
The MTA Board passed an increase in the Crossing Charge Schedule on December 19, 2012. The new
Crossing Charge Schedule went into effect on March 3, 2013.
******
- 13 -
TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY
STATEMENTS OF NET POSITION
DECEMBER 31, 2013 AND 2012
(In thousands)
2013
2012
ASSETS AND DEFERRED OUTFLOWS OF RESOURCES
CURRENT ASSETS:
Cash — unrestricted (Note 3)
Investments (Notes 4 and 5):
Unrestricted
Restricted
Accrued interest receivable
Accounts receivable — net of allowance
of $6,303 in 2013 and $4,458 in 2012
Due from MTA (Note 22)
Prepaid expenses
$
Total current assets
NONCURRENT ASSETS:
Investments (Notes 4 and 5):
Restricted
Insurance recovery receivable (Note 10)
Capital assets — net (Note 6)
Derivative assets (Note 15)
Unamortized bond issuance costs
Total noncurrent assets
TOTAL ASSETS
18,043
$
11,269
113,078
466,299
648
62,243
510,786
667
29,928
1,901
22,417
163,995
3,995
19,259
652,314
772,214
103,304
126,325
4,204,781
8,948
-
101,652
3,973,046
3,608
304,782
4,443,358
4,383,088
5,095,672
5,155,302
94,246
229,217
323,463
195,745
195,745
$ 5,419,135
$ 5,351,047
DEFERRED OUTFLOWS OF RESOURCES:
Accumulated decreases in fair value of derivative instruments
Loss on refunding debt
TOTAL DEFERRED OUTFLOWS OF RESOURCES
TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES
See notes to financial statements.
(Continued)
- 14 -
TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY
STATEMENTS OF NET POSITION
DECEMBER 31, 2013 AND 2012
(In thousands)
2013
2012
LIABILITIES AND NET POSITION
CURRENT LIABILITIES:
Current portion — long-term obligations (Notes 11 to 14)
Interest payable due
Accounts payable
Payable to MTA (Note 22)
Payable to NYCTA — operating and financing expense (Note 22)
Accrued salaries
Accrued vacation and sick pay benefits
Current portion of estimated liability arising from injuries
to persons (Note 17)
Due to NYCTA (Note 1 and 22)
Current portion of capital lease obligation (Note 16)
Due to MTA (Note 1 and 22)
Pollution remediation projects (Note 9)
Prepaid tolls revenue (includes $49,604 and $48,442 in 2013 and
2012, respectively, due to other toll agencies)
$
240,375
55,046
70,181
26,121
841
40,451
16,778
$
212,920
58,738
87,552
22,140
30,821
26,441
16,131
22,142
21,687
6,223
46,381
1,829
12,028
20,756
6,276
39,068
1,837
186,486
171,290
734,541
705,998
7,335
435,022
8,613,340
73,758
30,420
135,584
16,141
375,755
8,582,607
169,896
30,963
133,889
9,295,459
9,309,251
TOTAL LIABILITIES
10,030,000
10,015,249
NET POSITION:
Net investment in capital assets
Restricted
Unrestricted
693,234
569,603
(5,873,702)
532,002
612,438
(5,808,642)
Total net position
(4,610,865)
(4,664,202)
Total current liabilities
NONCURRENT LIABILITIES:
Estimated liability arising from injuries to persons (Note 17)
Other postemployment benefits other than pensions (Note 8)
Long-term debt (Notes 11 to 14)
Derivative liabilities (Note 15)
Derivative liabilities-off market elements (Note 15)
Capital lease obligations (Note 16)
Total noncurrent liabilities
TOTAL LIABILITIES AND NET POSITION
$ 5,419,135
See notes to financial statements.
$ 5,351,047
(Concluded)
- 15 -
TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
YEARS ENDED DECEMBER 31, 2013 AND 2012
(In thousands)
2013
OPERATING REVENUES:
Bridges and tunnels
Building rentals and fees
Other income
Total operating revenues
OPERATING EXPENSES:
Salaries and wages
Retirement and other employee benefits
Electricity
Fuel
Insurance
Maintenance and other operating contracts
Professional service contracts
Materials and supplies
Depreciation expense
Other expenses
Total operating expenses
Asset impairment and related expenses — (Note 10)
net of estimated and probable insurance recoveries
OPERATING INCOME
NON-OPERATING REVENUES (EXPENSES):
Build America Bonds subsidy
Federal Emergency Management Agency reimbursement
related to Tropical Storm Sandy
Interest expense
Change in fair value of derivative financial instruments (Note 15)
Investment income
Total non-operating (expenses)
INCOME BEFORE CONTRIBUTIONS AND TRANSFERS
TRANSFERS IN — Metropolitan Transportation Authority
TRANSFERS OUT (Note 1):
New York City Transit Authority
Metropolitan Transportation Authority
CHANGE IN NET POSITION
$ 1,645,193
16,597
1,763
$ 1,490,982
15,618
2,061
1,663,553
1,508,661
128,678
151,280
6,942
2,841
10,482
95,429
14,258
2,965
98,235
28,720
127,827
166,405
5,706
3,117
7,020
85,356
22,038
2,040
88,732
24,649
539,830
532,890
(2,181)
920,349
8,345
9,063
3,782
(350,834)
522
131
(413,823)
256
136
(338,054)
(404,368)
787,850
515,981
164
553
(246,902)
(367,308)
(189,219)
(308,424)
173,804
18,891
(4,664,202)
Restatement of beginning net position
(120,467)
$ (4,610,865)
See notes to financial statements.
- 16 -
55,422
1,125,904
NET POSITION — Beginning of year
NET POSITION — End of year
2012
(4,683,093)
$ (4,664,202)
TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2013 AND 2012
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Tolls collected
Building rentals and fees received
Payments to employees and related costs
Other operating costs
Net cash provided by operating activities
2013
2012
$ 1,640,343
26,705
(166,271)
(237,465)
$ 1,472,184
25,825
(165,594)
(216,768)
1,263,312
1,115,647
CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES:
Subsidies paid to affiliated agencies
(606,099)
(509,412)
Net cash used in noncapital financing activities
(606,099)
(509,412)
(312,340)
(223,859)
229,978
9,264
(366,871)
(254,853)
(206,206)
237,112
(177,232)
(405,995)
(663,828)
(807,174)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES FOR THE
AUTHORITY AND AFFILIATES:
Purchase of capital assets
Principal payments on Senior, Subordinate, and COPS
Proceeds from new bond issues
TBTA bonds refunded
Interest payments on Senior, Subordinate, and COPS
Net cash used in capital and related financing activities
See notes to financial statements.
(Continued)
- 17 -
TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2013 AND 2012
(In thousands)
CASH FLOWS FROM INVESTING ACTIVITIES:
Gross sales of short-term securities
Gross purchases of short-term securities
Gross sales of long-term securities
Gross purchases of long-term securities
Increase/(decrease) in MTA investment pool
Unrestricted income from investments
Investment income restricted for capital purposes
2013
2012
$ 3,145,146
(3,001,139)
425,845
(573,022)
16,227
131
201
$ 542,698
(614,639)
319,036
(19,999)
(31,142)
136
306
Net cash provided by investing activities
13,389
NET INCREASE/(DECREASE) IN CASH
CASH — Beginning of year
6,774
(4,543)
11,269
15,812
CASH — End of year
$
RECONCILIATION OF INCOME FROM OPERATIONS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Income from operations
$ 1,125,904
ADJUSTMENTS TO RECONCILE INCOME FROM
OPERATIONS TO NET CASH PROVIDED BY
OPERATING ACTIVITIES:
Depreciation
Asset impairment (Note 10)
Capitalized salary expense
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Decrease/(Increase) in receivables
Increase in operating payables
(Increase) in prepaid expenses and deferred charges
Increase in accrued salary costs, vacation and insurance
Increase in prepaid toll revenue
NET CASH PROVIDED BY OPERATING ACTIVITIES
196,396
18,043
$
11,269
$ 920,349
98,235
(7,400)
(15,149)
88,732
174,220
(14,152)
9,836
23,883
(3,158)
15,965
15,196
(130,851)
49,335
(2,966)
10,449
20,531
$ 1,263,312
$ 1,115,647
NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES: —
At December 31, 2013 and 2012, the Authority had capital asset related liabilities
of $23,011 and $35,449, respectively.
At December 31, 2012, the Authority had a payable to NYCTA
for $29,863 related to a swap termination payment.
See notes to financial statements.
(Concluded)
- 18 -
TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY
NOTES TO FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(In thousands)
1.
BASIS OF PRESENTATION
Reporting Entity — The Triborough Bridge and Tunnel Authority (the “Authority” or “MTA Bridges
and Tunnels”) is a public benefit corporation created pursuant to the Public Authorities Law (the “Act”)
of the State of New York (the “State”). MTA Bridges and Tunnels is part of the related financial
reporting group of the Metropolitan Transportation Authority (“MTA”). The MTA is a component unit
of the State and is included in the State of New York Comprehensive Annual Financial Report of the
Comptroller as a public benefit corporation.
MTA Bridges and Tunnels operates seven toll bridges, two toll tunnels, and the Battery Parking Garage.
All Authority toll facilities operate E-Z Pass in conjunction with a regional electronic toll collection
system. MTA Bridges and Tunnels’ annual net earnings before depreciation and other adjustments
(“operating transfer”) are transferred to the New York City Transit Authority (the “TA”) and the MTA
pursuant to provisions of the Act. In addition, MTA Bridges and Tunnels annually transfers its
unrestricted investment income to the MTA. The operating transfer and the investment income transfer
can be used to fund operating expenses or capital projects. The TA receives $24,000 plus 50% of MTA
Bridges and Tunnels’ remaining annual operating transfer, as adjusted, to reflect certain debt service
transactions and the MTA receives the balance of the operating transfer, as adjusted, to reflect certain
debt service transactions, plus the annual unrestricted investment income. Transfers are made during the
year. The remaining amount due at December 31, 2013 and 2012, of $68,068 and $59,824, respectively,
is recorded as a liability in MTA Bridges and Tunnels’ financial statements.
MTA Bridges and Tunnels certified to the City of New York (the “City”) and the MTA that its operating
transfer and its unrestricted investment income at December 31, 2013 and 2012, were as follows:
(In thousands)
2013
Operating transfer
Investment income (excludes unrealized gain or loss)
2.
2012
$ 614,210
131
$ 497,643
136
$ 614,341
$ 497,779
SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting — The accompanying financial statements are prepared on the accrual basis of
accounting in accordance with accounting principles generally accepted in the United States of America.
The Authority applies Governmental Accounting Standards Board (“GASB”) Codification of
Governmental Accounting and Financial Reporting Standards (“GASB Codification”) Section P80,
Proprietary Accounting and Financial Reporting.
- 19 -
New Accounting Standards —
The MTA Bridges and Tunnels has completed the process of evaluating the impact of GASB Statement
No. 65, Items Previously Reported as Assets and Liabilities. The Statement reclassifies and recognizes
certain items currently reported as assets and liabilities as one of four financial statement elements:
deferred outflows of resources, outflows of resources, deferred inflows of resources, and inflows of
resources. As a result of adopting GASB Statement No. 65, gains/losses on refunding debt are no longer
part of long-term debt but were reclassified separately under the section “Deferred Outflow of
Resources.” The financial impact resulting from the implementation of GASB Statement No. 65 is the
restatement of 2013 beginning net position by $120,467 for unamortized bond issuance costs incurred in
prior years. As a result of this pronouncement, current bond issuance costs expended for the year ended
December 31, 2013 was $10,447.
The MTA Bridges and Tunnels has completed the process of evaluating the impact of GASB Statement
No. 66, which amends GASB Statement No. 10, Accounting and Financial Reporting for Risk
Financing and Related Insurance Issues, removing the provision that limits fund-based reporting of a
state and local government’s risk financing activities to the general fund and the internal service fund
type. As a result, governments would base their decisions about governmental fund type usage for risk
financing activities on the definitions in GASB Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions. This Statement also amends GASB Statement No. 62,
Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989
FASB and AICPA Pronouncements, by modifying the specific guidance on accounting for (1) operating
lease payments that vary from a straight-line basis, (2) the difference between the initial investment
(purchase price) and the principal amount of a purchased loan or group of loans, and (3) servicing fees
related to mortgage loans that are sold when the stated service fee rate differs significantly from a
current (normal) servicing fee rate. These changes would eliminate any uncertainty regarding the
application of GASB Statement No. 13, Accounting for Operating Leases with Scheduled Rent
Increases, and result in guidance that is consistent with the requirements in GASB Statement No. 48,
Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future
Revenues, respectively. The MTA Bridges and Tunnels has determined that GASB Statement No. 66
had no impact on its financial position, results of operations, and cash flows.
The MTA Bridges and Tunnels has not completed the process of evaluating the impact of GASB
Statement No. 67, Financial Reporting for Pension Plans. This Statement replaces the requirements of
GASB Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures
for Defined Contribution Plans and GASB Statement No. 50 as they relate to pension plans that are
administered through trusts or similar arrangements meeting certain criteria. The Statement builds upon
the existing framework for financial reports of defined benefit pension plans, which includes a statement
of fiduciary net position (the amount held in a trust for paying retirement benefits) and a statement of
changes in fiduciary net position. GASB Statement No. 67 enhances note disclosures and required
supplementary information (“RSI”) for both defined benefit and defined contribution pension plans.
GASB Statement No. 67 also requires the presentation of new information about annual moneyweighted rates of return in the notes to the financial statements and in 10-year RSI schedules. The
provisions in GASB Statement No. 67 are effective for financial statements for periods beginning after
June 15, 2013.
The MTA Bridges and Tunnels has not completed the process of evaluating the impact of GASB
Statement No. 68, Accounting and Financial Reporting for Pensions. GASB Statement No. 68 replaces
the requirements of GASB Statement No. 27, Accounting for Pensions by State and Local Governmental
Employers and GASB Statement No. 50, Pension Disclosures, as they relate to governments that
provide pensions through pension plans administered as trusts or similar arrangements that meet certain
- 20 -
criteria. GASB Statement No. 68 requires governments providing defined benefit pensions to recognize
their long-term obligation for pension benefits as a liability for the first time, and to more
comprehensively and comparably measure the annual costs of pension benefits. The Statement also
enhances accountability and transparency through revised and new note disclosures and RSI. The
provisions in GASB Statement No. 68 are effective for fiscal years beginning after June 15, 2014.
The MTA Bridges and Tunnels has not completed the process of evaluating the impact of GASB
Statement No. 69, Government Combinations and Disposals of Government Operations. GASB
Statement No. 69 establishes accounting and financial reporting standards related to government
combinations and disposals of government operations. GASB Statement No. 69 requires the use of
carrying values to measure the assets and liabilities in a government merger and requires measurements
of assets acquired and liabilities assumed generally to be based upon their acquisition values. GASB
Statement No. 69 also provides guidance for transfers of operations that do not constitute entire legally
separate entities and in which no significant consideration is exchanged. GASB Statement No. 69
provides accounting and financial reporting guidance for disposals of government operations that have
been transferred or sold. GASB Statement No. 69 requires disclosures to be made about government
combinations and disposals of government operations to enable financial statement users to evaluate the
nature and financial effects of those transactions. The requirements of GASB Statement No. 69 are
effective for government combinations and disposals of government operations occurring in financial
reporting periods beginning after December 15, 2013, and should be applied on a prospective basis.
The MTA Bridges and Tunnels has not completed the process of evaluating the impact of GASB
Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. GASB
Statement No. 70 requires a state or local government guarantor that offers a nonexchange financial
guarantee to another organization or government to recognize a liability on its financial statements when
it is more likely than not that the guarantor will be required to make a payment to the obligation holders
under the agreement. GASB Statement No. 70 also requires a government guarantor to consider
qualitative factors when determining if a payment on its guarantee is more likely than not to be required.
Such factors may include whether the issuer of the guaranteed obligation is experiencing significant
financial difficulty or initiating the process of entering into bankruptcy or financial reorganization. An
issuer government that is required to repay a guarantor for guarantee payments made continues
to report a liability unless legally released. When a government is released, the government would
recognize revenue as a result of being relieved of the obligation. A government guarantor or issuer is
required to disclose information about the amounts and nature of nonexchange financial guarantees. The
requirements of this Statement are effective for reporting periods beginning after June 15, 2013.
The MTA Bridges and Tunnels has not completed the process of evaluating the impact of GASB
Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date.
The objective of GASB Statement No. 71 is to address an issue regarding application of the transition
provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions. The issue
relates to amounts associated with contributions, if any, made by a state or local government employer
or non-employer contributing entity to a defined benefit pension plan after the measurement date of the
government’s beginning net pension liability. The requirements of this Statement will eliminate the
source of a potential significant understatement of restated beginning net position and expense in the
first year of implementation of GASB Statement No. 68 in the accrual-basis financial statements of
employers and non-employer contributing entities. This benefit will be achieved without the imposition
of significant additional costs. The requirements of this Statement should be applied simultaneously with
the provisions of GASB Statement No. 68 and are effective for fiscal years beginning after June 15,
2014.
- 21 -
Use of Management’s Estimates — The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Significant estimates include the market value of
investments, allowances for doubtful accounts, arbitrage rebate liability, accrued expenses and other
liabilities, depreciable lives of capital assets, estimated liability arising from injuries to persons, and
other postemployment benefits. Actual results could differ significantly from those estimates.
Operating Revenues — Bridges and tunnel revenue is recorded as earned (i.e., tolls are paid in cash,
when vehicles pass through the electronic toll collection system or cashless tolls — Henry Hudson
facility).
Non-Operating Revenues — Build America Bonds subsidy and investment income account for the
MTA Bridges and Tunnels’ non-operating revenues.
Operating and Non-Operating Expenses — Operating and non-operating expenses are recognized in
the accounting period in which the liability is incurred. All expenses related to operating the MTA
Bridges and Tunnels (e.g. salaries, insurance, depreciation, etc.) are reported as operating expenses. All
other expenses (e.g. interest on long-term debt, etc.) are reported as non-operating expenses.
Investments — It is MTA Bridges and Tunnels’ intent to hold its investments to maturity. Investments
are recorded on the statement of net position at fair value which is the amount at which a financial
instrument could be exchanged in a current transaction between willing parties, other than in a forced or
liquidation sale. All investment income, including changes in the fair value of investments, is reported as
revenue (either as investment income and net increase (decrease) in fair value of investments) on the
statements of revenues, expenses and changes in net position. Two investments are recorded at
amortized cost.
MTA Investment Pool — The MTA, on behalf of the MTA Bridges and Tunnels, invests funds which
are not immediately required for the MTA Bridges and Tunnels’ operations in securities permitted by
the New York State Public Authorities Law, including repurchase agreements collateralized by U.S.
Treasury securities, U.S. Treasury notes and U.S. Treasury zero-coupon bonds. All investments are held
by the MTA’s agent in custody accounts in the name of the MTA.
Capital Assets — Capital assets include all land, buildings, toll equipment, and other structures of MTA
Bridges and Tunnels having a useful life of greater than two years and having a cost of at least $25.
Capital assets are generally stated at historical cost, or at estimated historical cost based on appraisals or
on other acceptable methods when historical cost is not available. Capital leases are classified as capital
assets in amounts equal to the lesser of the fair market value or the present value of net minimum lease
payments at the inception of the lease.
Accumulated depreciation and amortization are reported as reductions of fixed assets. Depreciation is
computed using the straight-line method based upon estimated useful lives, generally 99 years for
primary structures, 10 to 50 years for buildings and improvements, 40 years for toll equipment and toll
plazas, 30 years for roadways, and 2 to 7 years for all other equipment. Capital lease assets and
leasehold improvements are amortized over the term of the lease or the life of the assets, whichever is
less.
- 22 -
Major reconstruction and improvements to such facilities are capitalized. Expenditures for maintenance
and repairs which do not extend the useful life of the asset are charged to operations as incurred.
Title to substantially all real property is vested in the City of New York, and MTA Bridges and Tunnels
has the use and occupancy thereof as long as its corporate existence continues.
Pollution Remediation Projects — Effective January 1, 2008, pollution remediation costs are being
expensed in accordance with the provisions of GASB Statement No. 49, Accounting and Financial
Reporting for Pollution Remediation Obligations (see Note 9). An operating expense provision and
corresponding liability measured at current value using the expected cash flow method has been
recognized for certain pollution remediation obligations, which previously may not have been required
to be recognized, have been recognized earlier than in the past or are no longer able to be capitalized as a
component of a capital project. Pollution remediation obligations occur when any one of the following
obligating events takes place: the MTA Bridges and Tunnels is in violation of a pollution preventionrelated permit or license; an imminent threat to public health due to pollution exists; the MTA Bridges
and Tunnels is named by a regulator as a responsible or potentially responsible party to participate in
remediation; the MTA Bridges and Tunnels voluntarily commences or legally obligates itself to
commence remediation efforts; or the MTA Bridges and Tunnels is named or there is evidence to
indicate that it will be named in a lawsuit that compels participation in remediation activities.
Compensated Absences — MTA Bridges and Tunnels has accrued the full value (including fringe
benefits) of all vacation and sick leave benefits earned by employees to date if the leave is attributable to
past service and it is probable that MTA Bridges and Tunnels will compensate the employees for the
benefits through paid time off or some other means, such as cash payments at termination or retirement.
Total outstanding compensated balances at December 31, 2013 and 2012 were $864 and $1,026,
respectively.
Subsidies — Subsidies provided by MTA Bridges and Tunnels represent its operating transfer and
investment income computed on an accrual basis.
Pension Plans — In November 1994, GASB issued Statement No. 27, Accounting for Pensions by State
and Local Governmental Employers, which establishes standards for measurement, recognition, and
display of pension expense and the related accounting for assets, liabilities, disclosures, and required
supplementary information, if applicable. MTA Bridges and Tunnels has adopted this standard for its
pension plans. Pension cost is required to be measured and disclosed using the accrual basis of
accounting. Annual pension cost should be equal to the annual required contributions (“ARC”) to the
pension plan, calculated in accordance with certain parameters.
Postemployment Benefits Other Than Pensions — In June 2004, the GASB issued Statement No. 45,
Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions.
This Statement establishes standards for the measurement, recognition, and display of OPEB
expense/expenditures and related liabilities (assets), note disclosures, and if applicable, required
supplementary information (“RSI”) in the financial reports of state and local governmental employers.
In June 2005, GASB issued Statement No. 47, Accounting for Termination Benefits. This statement
establishes accounting standards for termination benefits. For termination benefits provided through an
existing defined benefit OPEB plan, the provisions of this Statement should be implemented
simultaneously with the requirements of Statement 45. MTA Bridges and Tunnels has adopted these
standards for its Postemployment Benefits Other Than Pensions.
- 23 -
3.
CASH
The Bank balances are insured up to $250 in the aggregate by the Federal Deposit Insurance Corporation
(“FDIC”) for each bank in which funds are deposited.
The Bank balances in 2013 and 2012 that were not insured were maintained in major financial
institutions considered by management to be secure. The difference between the carrying amount and
the bank balance for the years ended December 31, 2013 and 2012 is due to the petty cash and change
funds which are maintained at the various toll facilities and not recorded by the bank. In addition, there
were deposits in transit in each of the years ended December 31, 2013 and 2012.
Cash at December 31, 2013 and 2012 consists of the following:
Insured deposits
Collateralized deposits
Uncollateralized deposits
4.
2013
Carrying
Bank
Amount
Balance
2012
Carrying
Bank
Amount
Balance
$ 250
15,470
2,323
$
$
$18,043
$ 14,599
250
14,349
-
250
9,533
1,486
$ 250
4,822
-
$11,269
$5,072
INVESTMENTS
MTA Bridges and Tunnels’ investment policies comply with the New York State Comptroller’s
guidelines for investment policies. MTA’s All-Agency Investment Guidelines restrict MTA Bridges and
Tunnels’ investments to obligations of the U.S. Treasury, its agencies and instrumentalities and
repurchase agreements backed by U.S. Treasury securities. All investments were managed by the MTA,
as MTA Bridges and Tunnels’ agent, in custody accounts kept in the name of MTA Bridges and Tunnels
for restricted investments and in the name of the MTA for unrestricted investments. MTA’s All-Agency
Investment Guidelines state that securities underlying repurchase agreements must have a market value
at least equal to the cost of the investment. As of December 31, 2013 and 2012, all investments are at
fair value as set forth below (in thousands):
2013
Investments maturing in 2014 under
terms of repurchase agreements
Commercial Paper
U.S. Treasuries due 2014 to 2016
U.S. Treasury Notes
MTA Investment Pool
Other government agencies
Irrevocable deposit account
2012
$ 11,406
193,891
27,763
52,390
250,575
70,156
76,500
$ 177,440
100,253
14,211
234,348
71,929
76,500
$ 682,681
$ 674,681
The fair value of the above investments consists of $113,078 and $62,243 in 2013 and 2012 in
unrestricted investments, respectively, and $569,603 and $612,438 in 2013 and 2012 in restricted
investments, respectively. Investments had weighted average monthly yields ranging from 0.091% to
0.307%, for the year ended December 31, 2013 and 0.313% to 0.389%, for the year ended December 31,
- 24 -
2012. The net unrealized gain on investments was $4 and $49 for the years ended December 31, 2013
and 2012, respectively.
Unrestricted cash and investments available to pay operating and maintenance expenses, debt service
and operating surplus transfers, at December 31, 2013 and 2012, are as follows (in thousands):
Investments:
2013
CURRENT:
Restricted:
General Purpose Revenue Bonds
1980 Resolution — Operating Funds
Bond Proceeds Fund
Debt Service Fund
Cost of Issuance Fund
COPS 2 Broadway
2012
$ 55,594
254,782
155,028
691
204
$ 105,342
260,052
144,097
938
357
Total current — restricted
466,299
510,786
Total current — unrestricted
113,078
62,243
$ 579,377
$ 573,029
$
$
Total — current
LONG-TERM:
Restricted:
General Purpose Revenue Bonds
Senior Revenue Bonds
Capital Lease Obligation:
US Treasury Strips
Irrevocable Deposit Account
Total long-term — restricted
Total — long-term
2
40
5
26,802
76,500
25,107
76,500
103,304
101,652
$ 103,304
$ 101,652
The unexpended bond proceeds of the General Purpose Revenue Bonds 1980 Resolution, not including
proceeds held for the Transportation Project, were restricted for payment of capital improvements of
MTA Bridges and Tunnels’ present facilities. The Debt Service Funds are restricted for the payment of
debt service as provided by the bond resolutions.
MTA Bridges and Tunnels’ accrual of the liability to the federal government for rebate of arbitrage
income from tax-exempt borrowings was $0 at December 31, 2013 and 2012, respectively.
5.
MTA INVESTMENT POOL
The MTA, on behalf of MTA Bridges and Tunnels, invests funds which are not immediately required
for MTA Bridges and Tunnels’ operations in securities permitted by the MTA’s All-Agency Investment
Guidelines in accordance with the New York State Public Authorities Law, including repurchase
agreements collateralized by U.S. Treasury securities, U.S. Treasury notes, and U.S. Treasury zerocoupon bonds.
- 25 -
6.
CAPITAL ASSETS
(In thousands)
CAPITAL ASSETS NOT
BEING DEPRECIATED:
Land
Construction in progress
Balance
December 31,
2011
$
27,940
563,211
Total capital assets
not being depreciated
Additions
$
261,374
Deletions
$
216,139
Balance
December 31,
2012
$
27,940
608,446
Additions
$
317,900
Deletions
$
272,655
Balance
December 31,
2013
$
27,940
653,691
591,151
261,374
216,139
636,386
317,900
272,655
681,631
82,398
2,344,543
219,342
107,284
523,578
1,009,810
152,608
52,730
18,852
53,937
98,147
9,368
130,523
9,925
2,137
35,692
45,371
3,813
82,398
2,266,750
228,269
105,147
541,823
1,062,586
158,163
69,700
21,003
1,981
33,850
144,984
30,056
373
11,163
1,523
82,025
2,325,287
249,272
107,128
575,673
1,207,570
186,696
Total capital assets
being depreciated
4,439,563
233,034
227,461
4,445,136
301,574
13,059
4,733,651
LESS ACCUMULATED
DEPRECIATION:
Building — 2 Broadway
Primary structures
Toll plazas
Toll equipment
Buildings
Roadway
Other
35,360
458,088
111,947
40,054
119,334
183,927
124,275
1,560
22,366
5,039
2,676
13,208
33,967
9,916
27,510
4,102
813
6,095
11,017
3,704
36,920
452,944
112,884
41,917
126,447
206,877
130,487
1,506
21,894
5,459
2,628
13,660
39,362
13,726
2,007
(1,209)
(707)
(1,995)
(1,856)
(30)
38,426
472,831
119,552
45,252
142,102
248,095
144,243
Total accumulated
depreciation
1,072,985
88,732
53,241
1,108,476
98,235
(3,790)
1,210,501
3,366,578
144,302
174,220
3,336,660
203,339
16,849
3,523,150
$ 3,957,729
$ 405,676
$ 390,359
$ 3,973,046
$ 521,239
$ 289,504
$ 4,204,781
CAPITAL ASSETS
BEING DEPRECIATED:
Building — 2 Broadway
Primary structures
Toll plazas
Toll equipment
Buildings
Roadway
Other
TOTAL CAPITAL
ASSETS BEING
DEPRECIATED — Net of
accumulated depreciation
CAPITAL ASSETS — Net
In 2013 and 2012, capital asset additions included $15,149 and $14,152, respectively, of costs incurred
by engineers working on capital projects.
7.
EMPLOYEE BENEFITS
Most employees of MTA Bridges and Tunnels are members of the New York City Employees’
Retirement System (“NYCERS”), which is a cost sharing, multi-employer retirement system. MTA
Bridges and Tunnels’ total payroll costs were $132,095 or 92% for 2013 and $128,184 or 90% for 2012,
which includes the cost of capital engineers charged to capital projects, of which such costs relate to
employees who participate in NYCERS.
NYCERS provides retirement, as well as death, accident and disability retirement benefits. Benefits vest
after 5 years of credited service depending on date of employment. Certain retirees also receive
supplemental benefits from MTA Bridges and Tunnels.
- 26 -
Benefit and contribution provisions, which are contingent upon the point in time at which the employee
last entered qualified service and length of credited service, are established by State law and may be
amended only by the State legislature. NYCERS has both contributory and noncontributory
requirements, with retirement age varying from 55 to 70 depending upon when an employee last entered
qualifying service. Employees entering qualifying service on or before June 30, 1976, are enrolled in a
noncontributory plan. Employees entering qualifying service after June 30, 1976, are enrolled in a plan,
which requires a 3% contribution of their salary. The State legislature passed legislation in 2000 that
suspends the 3% contribution for employees who have 10 years or more of credited service. In addition,
members who meet certain eligibility requirements will receive one month’s additional service credit for
each completed year of service up to a maximum of two additional years of service credit. Bridges and
Tunnels is required to contribute at an actuarially determined rate. The current rate is 25.3% of annual
covered payroll. The rate was 28.2% of annual covered payroll in 2012. The contribution requirements
of plan members and MTA Bridges and Tunnels are established and may be amended by the State
Legislature. Effective April 1, 2012, Chapter 18 of the Laws of 2012 (commonly referred to as Tier 6)
was enacted. Tier 6 members who joined NYCERS between April 1, 2012 and March 31, 2013 are
required to contribute 3% of gross wages. Beginning April 1, 2013, the contribution rate for all Tier 6
members is dependent upon annual wages earned, ranging from 3% to 6%.
NYCERS established a “special program” for employees hired on or after July 26, 1976. A plan for
employees, who have worked 20 years, and reached age 50, is provided to Bridge and Tunnel Officers,
Sergeants and Lieutenants and Maintainers. Also, an age 57 retirement plan is available for all other
such MTA Bridges and Tunnels employees. Both these plans required increased employee contributions.
Certain participants are permitted to borrow up to 75% of their own contributions including accumulated
interest. These loans are accounted for as reductions in such participants’ contribution accounts. Upon
termination of employment before retirement, certain participants are entitled to refunds of their own
contributions, including accumulated interest, less any loans outstanding.
Employee contributions amounted to $10,054 (7.61% of covered payroll) and $10,392 (8.11% of
covered payroll) in 2013 and 2012, respectively. MTA Bridges and Tunnels contributions to NYCERS
for the years ended December 31, 2013, 2012, and 2011, were $33,461, $36,183, and $27,671,
respectively, equal to the required contributions for each year.
Additional information about the plan is presented in the component unit financial report prepared by
NYCERS. NYCERS issues a publicly available financial report that includes financial statements and
required supplementary information. The NYCERS financial report may be obtained by writing to
NYCERS Headquarters, 340 Jay Street, Brooklyn, NY, 11201.
Postretirement Benefits — In addition to providing pension benefits, MTA Bridges and Tunnels
provides certain health care and life insurance benefits for retired employees. Substantially all of MTA
Bridges and Tunnels’ employees who are members of NYCERS may become eligible for those benefits
if they reach normal retirement age while working for MTA Bridges and Tunnels. The insurance
premiums for these benefits are recorded on a pay-as-you-go basis and totaled $17,629 and $16,346 in
2013 and 2012, respectively. No contributions are made by participants. As of December 31, 2013 and
2012, 1,213 and 1,211 retirees, respectively, including spouses and dependents, met those eligibility
requirements. See Note 8 for further disclosure on Other Postemployment Benefits.
8.
OTHER POSTEMPLOYMENT BENEFITS
The MTA and its Related Groups, which includes the MTA Bridges and Tunnels, has implemented GASB
Statement No. 45, “Accounting and Financial Reporting by Employers for Postemployment Benefits Other
- 27 -
Than Pensions” (“GASB 45”). This Statement establishes the standards for the measurement, recognition,
and display of Other Postemployment Benefits (“OPEB”) expense/expenditures and related liabilities
(assets), note disclosures, and, if applicable, required supplementary information (“RSI”) in the financial
reports of state and local governmental employers.
Postemployment benefits are part of an exchange of salaries and benefits for employee services
rendered. Most OPEB have been funded on a pay-as-you-go basis and have been reported in financial
statements when the promised benefits are paid. GASB 45 requires state and local government’s
financial reports to reflect systematic, accrual-basis measurement and recognition of OPEB cost
(expense) over a period that approximates employees’ years of service and provides information about
actuarial accrued liabilities associated with the OPEB and whether and to what extent progress is being
made in funding the plan.
Plan Description — The Benefits provided by the MTA and its Related Groups include medical,
pharmacy, dental, vision and life insurance, plus monthly supplements for Medicare Part B or Medicare
supplemental plan reimbursement and welfare fund contributions.
MTA Bridges and Tunnels’ participates in the New York State Health Insurance Program (“NYSHIP”) to
provide medical and prescription drug benefits, including Medicare Part B reimbursements to its
members. NYSHIP provides a PPO plan and several HMO plans.
GASB Statement No. 45 requires employers to perform periodic actuarial valuations to determine annual
accounting costs, and to keep a running tally of the extent to which these amounts are over or under
funded. The valuation must be performed at least biennially. The most recent biennial valuation was
performed for the year ended December 31, 2013 and was performed with a valuation date of January 1,
2012.
Since the MTA Bridges and Tunnels’ is a participating employer in NYSHIP, it does not issue a standalone financial report regarding post-employment benefits. The NYSHIP financial report can be obtained
by writing to NYS Department of Civil Service, Employee Benefits Division, Alfred E. Smith Office
Building, 805 Swan Street, Albany, NY 12239.
Annual OPEB Cost and Net OPEB Obligation — MTA Bridges and Tunnels’ annual OPEB cost
(expense) represents the accrued cost for post-employment benefits under GASB 45. The cumulative
difference between the annual OPEB cost and the benefits paid during a year will result in a net OPEB
obligation, included on the statement of net position. The annual OPEB cost is equal to the annual
required contribution (“ARC”) less adjustments if a net OPEB obligation exists. The ARC is equal to the
normal cost plus an amortization of the unfunded frozen actuarial accrued liability.
For determining the ARC, the MTA and its Related Groups have chosen to use Frozen Initial Liability
(“FIL”) cost method with the initial liability amortized over a 22-year period. The remaining amortization
period at December 31, 2013 is 16 years.
In order to recognize the liability over an employee’s career, an actuarial cost method divides the present
value into three pieces: the part that is attributed to past years (the “Accrued Liability” or “Past Service
Liability”), the part that is being earned this year (the “Normal Cost”), and the part that will be earned in
future years (the “Future Service Liability”). Under FIL, an initial past service liability is determined
based on the Entry Age Normal (“EAN”) Cost Method and is amortized separately. This method
determines the past service liability for each individual based on a level percent of pay. The Future
Service Liability is allocated based on the present value of future compensation for all members combined
to determine the Normal Cost. In future years, actuarial gains/losses will be incorporated into the Future
Service Liability and amortized through the Normal Cost.
- 28 -
Actuarial valuations involve estimates of the value of reported amounts and assumptions about the
probability of events far into the future, and that actuarially determined amounts are subject to continual
revision as actual results are compared to past expectations and new estimates are made about the future.
Actuarial Methods and Assumptions — The Frozen Initial Liability (“FIL”) Cost Method was used for
determining the Normal Cost. The Entry Age Normal (“EAN”) Cost Method was used to determine the
Frozen Accrued Liability and will be used to determine the unfunded actuarial accrued liability in the
GASB 45 supplementary schedules. This method determines the Frozen Accrued liability for each
individual based on a level percent of pay for service accrued through the initial valuation date. The
difference between the Actuarial Present Value of Benefits and the Frozen Accrued Liability equals the
Present Value of Future Normal Cost. The Normal Cost equals the Present Value of Future Normal Cost
divided by the present value of future compensation and multiplied by the total of current compensation
for members less than certain retirement age.
Inflation rate used was 2.5% per annum compounded annually.
Salaries were assumed to increase by years of service as follows:
1st year
5th year
10th year
15th year
20th year
21st year
10.5 %
16.0
5.0
5.0
5.0
4.0
Investment returns were calculated using a discount rate of 3.75%, compounded annually, based upon a
projection of the MTA Investment Pool.
Valuation Date — January 1, 2012.
Discount Rate — 3.75%.
Medicare Part B Premiums — The Medicare Part B premium reimbursement was included in the 2012
and 2013 premium for those members covered by NYSHIP. Medicare Part B reimbursements were
assumed to have an annual trend of 5%.
These trends were combined with the adjusted Getzen model trend to determine a single weighted trend
assumption. The weighting was based on an estimated liability basis.
For those retirees participating in NYSHIP, the trend assumption used for 2013 and 2012 was 7.9% and
7.4%, respectively. This was based on the fact that the 2009 NYSHIP premium was lower than 2008 and
rose modestly in 2012 and 2013. It also reflected actual premium increases for dental and vision benefits
and Medicare Part B reimbursements.
The trend assumption utilized in this valuation has changed from the assumption used in the previous
valuation and lowered actuarial liabilities 5% to 10% for each agency. Further reflection of actual
NYSHIP premiums for 2012 and 2013 further lowered the actuarial liabilities.
- 29 -
Health Care Cost Trend Rates
Fiscal Years
2012
2013
2014
2015
2016
2017
2022
2027
2032
2037
2042
2047
2052
Trend
0.0 %
1.7
5.0
5.5
5.7
5.9
5.9
6.8
6.5
6.1
5.7
5.5
5.4
The healthcare trend assumption is based on the Society of Actuaries-Getzen Model version 11.1
utilizing the baseline assumptions included in the model, except real GDP of 1.8% for medical and
pharmacy benefits. Additional adjustments apply based on percentage of costs associated with
administrative expenses, aging factors and potential excise tax due to healthcare reform.
Participation — For the 2,762 members who participate in NYSHIP, 100% of eligible members,
including current retirees and surviving spouses, are assumed to elect the Empire PPO Plan.
Dependent Coverage — For members that participate in NYSHIP, 100% of eligible members,
including current retirees and surviving spouses, are assumed to elect the Empire PPO Plan.
Spouses are assumed to be the same age as the employee/retiree. 85% of male and 55% of female
eligible members are assumed to elect family coverage upon retirement. No children are assumed.
Actual family coverage elections for current retirees are used. If a current retiree’s only dependent is a
child, eligibility is assumed for an additional 7 years of dependent coverage if the member participates in
NYSHIP (otherwise, 5 years) from the valuation date was assumed.
Demographic Assumptions:
Mortality — Pre-retirement and postretirement healthy annuitant rates are projected on a generational
basis using Scale AA, as recommended by the Society of Actuaries Retirement Plans Experience
Committee.
Pre-Retirement — RP-2000 Employee Mortality Table for Males and Females with blue-collar
adjustments. No blue-collar adjustments were used for management members of Headquarters.
Postretirement Healthy Lives — RP-2000 Healthy Annuitant mortality table for males with Blue Collar
adjustments and 133% of the rates from the RP-2000 Healthy Annuitant mortality table for females. No
blue-collar adjustments were used for management members of Headquarters.
Postretirement Disabled Lives — 75% of the rates from the RP-2000 Disabled Annuitant mortality table
for males and females. At age 85 and later for males and age 77 and later for females, the disability rates
are set to the male and female healthy rates, respectively.
- 30 -
Turnover and Retirement Rates — All demographic assumptions were based on assumptions utilized in
the 2008 actuarial valuations for the pension plans, with the exception of the mortality assumption. The
following is a table displaying the various sources of the assumptions utilized by group.
Group
MTA Bridges and Tunnels
Pension Plan
NYCERS — MTA Bridges and Tunnels
Vestee Coverage — For members that participate in NYSHIP, Vestees (members who have terminated,
but not yet eligible to retire) are eligible for NYSHIP benefits provided by the Agency upon retirement,
but must maintain NYSHIP coverage at their own expense from termination to retirement. Vestees are
assumed to retire at first eligibility and would continue to maintain NYSHIP coverage based on the
following percentages. This assumption is based on the Development of Recommended Actuarial
Assumptions for New York State/SUNY GASB 45 Valuation report provided to Participating
Employers of NYSHIP. These percentages were also applied to current vestees, which were only
provided by Headquarters.
Percent
Electing
Age at Termination
<40
40–43
44
45–46
47–48
49
50–51
52+
- %
5
20
30
40
50
80
100
The following table shows the elements of MTA Bridges and Tunnels’ net OPEB cost for the year ended
December 31, 2013 and 2012, the amount paid, and changes in MTA Bridges and Tunnels’ net OPEB for
the year ended December 31, 2013 and 2012 (in thousands):
(In thousands)
Annual required contribution
Interest on net OPEB obligation
Adjustment to annual required contribution
Annual OPEB cost/expense
Payments
Increase in net OPEB obligation
Net OPEB obligation - beginning of year
Net OPEB obligation - end of year
- 31 -
2013
2012
$ 98,645
14,090
(35,839)
$ 107,300
12,100
(29,400)
76,896
90,000
(17,629)
(16,346)
59,267
73,654
375,755
302,101
$ 435,022
$ 375,755
MTA Bridges and Tunnels’ annual OPEB cost, the percentage of annual OPEB cost contributed, and the
net estimated OPEB obligation for the year ended December 31, 2013, 2012, and 2011 projected is as
follows (in thousands):
Year
Ended
12/31/2013
12/31/2012
12/31/2011
Period
Ended
Valuation
Date
12/31/2013 1/1/2012
9.
Annual
OPEB Cost
Percentage of
Annual OPEB
Paid
Net OPEB
Obligation
$76,896
$90,000
$83,316
22.9%
18.2%
20.0%
$59,267
$73,654
$66,680
Actuarial
Value
of
Assets
{a}
-
Actuarial
Accrued
Liability
(AAL)
{b}
$
707.0
Unfunded
Actuarial
Accrued
Liability
(UAAL)
{c}={b}-{a}
$
707.0
Funded
Ratio
{a}/{c}
Covered
Payroll
{d}
-
$ 106.9
Ratio of
UAAL to
Covered
Payroll
{c}/{d}
661.4%
The required schedule of funding progress immediately following the notes to the financial statements
and the supplemental schedules presents multiyear trend information about whether the actuarial value
of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.
POLLUTION REMEDIATION PROJECTS
MTA Bridges and Tunnels implemented GASB Statement No. 49, Accounting and Financial Reporting
for Pollution Remediation Obligations, in 2008. The Statement establishes standards for determining
when expected pollution remediation outlays should be accrued as a liability or, if appropriate,
capitalized. An operating expense and corresponding liability, measured at its current value using the
expected cash flow method, have been recognized for certain pollution remediation obligations that are
no longer able to be capitalized as a component of a capital project. Pollution remediation obligations,
which are estimates and subject to changes resulting from price increases or reductions, technology, or
changes in applicable laws or regulations, occur when any one of the following obligating events takes
place:
•
•
•
•
•
An imminent threat to public health due to pollution exists
MTA Bridges and Tunnels is in violation of a pollution prevention-related permit or license
MTA Bridges and Tunnels is named by a regulator as a responsible or potentially responsible
party to participate in remediation
MTA Bridges and Tunnels is named or there is evidence to indicate that it will be named in a
lawsuit that compels participation in remediation activities, or
MTA Bridges and Tunnels voluntarily commences or legally obligates itself to commence
remediation efforts
- 32 -
In accordance with GASB Statement No. 49, there was no pollution remediation expense provision in
2013 and $55 in 2012. The expense provision was measured at its current value utilizing the prescribed
expected cash flow method.
As of December 31, 2013 and December 31, 2012, the pollution remediation liability totaled $1,829 and
$1,837, respectively, primarily consisting of future remediation activities associated with asbestos
removal and soil contamination at MTA Bridge and Tunnels facilities.
The pollution remediation liability is an estimate and is subject to changes resulting from price increases
or reductions, technology, or changes in applicable laws or regulations.
10. ASSET IMPAIRMENT AND RELATED EXPENSES
On October 29, 2012, Tropical Storm Sandy made landfall just south of Atlantic City, New Jersey, as a
post-tropical cyclone. The accompanying storm surge and high winds caused widespread damage to the
physical transportation assets operated by MTA and its related groups. MTA expects to recoup most of
the costs associated with repair or replacement of assets damaged by the storm over the next several
years from a combination of insurance and federal government assistance programs.
As of December 31, 2013, the estimated storm related impairment losses to two of the Authority’s
facilities increased by $5.0 million, while estimated losses to two other facilities decreased by $12.4
million, resulting in a net credit of $7.4 million which is included in “asset impairment and related
expenses” on the Statements of Revenues, Expenses, and Changes in Net Position. Other 2013 costs
associated with the storm included repair and clean-up expenses of $5.2 million which are also included
in “asset impairment and related expenses” on the Statements of Revenues, Expenses, and Changes in
Net Position.
As of December 31, 2012, the storm related impairment losses to the Authority’s assets (based upon
estimates of the extent of impairment of the historical or “book value” of affected assets) are estimated
at $174.2 million. Other 2012 costs associated with the storm included repair and clean-up expenses of
$7.5 million which are also included in “asset impairment and related expenses” on the Statements of
Revenues, Expenses, and Changes in Net Position. Offsetting these impairment losses is $126.3 million
in probable insurance recoveries for losses under the property insurance policy. Additional recoveries
under the MTA property insurance policy for Sandy-related damages and losses above that estimated
sum are possible. Any additional insurance proceeds for Sandy-related losses in excess of the noted
probable recoveries will be recognized for income purposes in future periods when such proceeds are
estimable and all related contingencies are removed. As of December 31, 2012, estimated and probable
insurance recoveries of $126.3 million were expected to be collected within one year, however as the
claim has evolved throughout 2013 and better information has become available from the third party
reinsurance companies, this is no longer likely. As a result, the insurance recovery receivable that was
recorded as a current receivable at December 31, 2012 was recorded as a noncurrent receivable at
December 31, 2013.
As noted, federal governmental assistance programs are anticipated to cover many of the Sandy-related
costs associated with repair and replacement of assets damaged in the storm. The Sandy Relief Act also
provided substantial funding for existing disaster relief programs of the Federal Emergency
Management Agency (“FEMA”). For Sandy-related restoration and mitigation projects of TBTA, it is
anticipated that FEMA will be a significant source of funding. FEMA has already committed to funding
of $6.2 million.
- 33 -
Monies granted FEMA for restoration of specific assets damaged in connection with Tropical Storm
Sandy are anticipated to be reduced in amount (or subject to reimbursement) to the extent MTA also
receives insurance proceeds covering damage to such specific assets.
11. LONG-TERM DEBT
MTA Bridges and Tunnels issues long-term bonds to fund its own capital projects, as well as the
Transportation Project, through the following two credits:
•
General Revenue Bonds, and
•
Subordinate Revenue Bonds.
The following represents MTA Bridges and Tunnels’ issuance of long-term debt in 2013:
•
On January 1, 2013, MTA Bridges and Tunnels terminated the swap agreement with Ambac
Financial Services, L.P. in connection with General Revenue Variable Rate Refunding Bonds,
Series 2002F.
•
On January 2, 2013, MTA Bridges and Tunnels entered into a firm remarketing agreement in
connection with the Remarketing of $29,600 General Revenue Refunding Bonds, Series 2005B-4a.
•
On January 29, 2013, MTA Bridges and Tunnels entered into a refunding agreement in connection
with $653,965 Subordinate Revenue Refunding Bonds, Series 2013A.
•
On January 29, 2013, MTA Bridges and Tunnels entered into a refunding agreement in connection
with $257,195 General Revenue Refunding Bonds, Series 2013B.
•
On April 18, 2013, MTA Bridges and Tunnels closed on $200,000 General Revenue Bonds, Series
2013C. These bonds were issued to finance bridge and tunnel projects.
•
On November 15, 2013, MTA Bridges and Tunnels entered into a remarketing agreement in
connection with $83,500 General Revenue Bonds, Series 2008B-1.
•
On November 20, 2013, MTA Bridges and Tunnels entered into an Invitation to Offer, for the
tender of Subordinate Revenue Refunding Bonds, Series 2002E.
•
On December 19, 2013, MTA Bridges and Tunnels entered into a refunding agreement for the
issuance of $313,975 Subordinate Revenue Refunding Bonds, Series 2013D (Federally Taxable) to
purchase certain maturities of MTA Bridges and Tunnels’ Subordinate Revenue Bonds, Series
2002E.
The following represents MTA Bridges and Tunnels’ issuance of long-term debt in 2012.
In January 2012, MTA Bridges and Tunnels entered into a firm remarketing agreement in connection
with the mandatory tender and remarketing of the Series 2003B Bonds, the Series 2005A Bonds and the
Series 2005B Bonds. As of that date, the standby purchase agreements, (covering all three Series),
entered into by MTA Bridges and Tunnels and Dexia Credit Local were terminated. Irrevocable directpay letters of credit, covering all three remarketed Series were issued by CalPERS $245,220, CalSTRS
$132,480 and by U.S. Bank $156,860.
- 34 -
In June 2012, $231,490 General Revenue Bonds, Series 2012A were issued. The net proceeds of the
Series 2012A were issued to finance projects for MTA Bridges and Tunnels’ own facilities.
In July 2012, MTA Bridges and Tunnels entered into a remarketing agreement in connection with the
mandatory tender and remarketing of $195,600 General Revenue Variable Rate Refunding Bonds,
Series 2005B-4 Bonds.
In August 2012, $1,236,898 General Revenue Refunding Bonds, Series 2012B were issued. The net
proceeds of the Series 2012B were issued to refund certain outstanding obligations of MTA Bridges and
Tunnels, namely Series 2002B $1,317,655, Series 2006A $59,175 and Series 2007A $18,935.
In November 2012, MTA Bridges and Tunnels entered into a remarketing agreement in connection with
the mandatory tender and remarketing of $209,640 General Revenue Variable Rate Refunding Bonds,
Series 2002F. As of that date, the standby bond purchase agreement with ABN Amro Bank N.V. was
terminated and a standby bond purchase agreement with Landesbank Hessen-Thuringen Girozentrale, as
Liquidity Facility Issuer and U.S. Bank Trust National-Association, as trustee and tender agent were
executed.
In November 2012, MTA Bridges and Tunnels entered into a mandatory tender and purchase and
remarketing of the currently outstanding General Revenue Mandatory Tender Bonds, Series 2009A-1
and issuance of $126,230 General Revenue Bonds, Series 2009A-1.
MTA Bridges and Tunnels’ long-term debt as of December 31, 2013 and 2012 is comprised of the
following:
(In thousands)
2013
2012
Senior Revenue Bonds (Note 13)
Subordinate Revenue Bonds (Note 14)
2 Broadway Certificates of Participation (Note 15)
$ 6,872,557
1,730,931
9,852
$ 6,793,342
1,778,880
10,385
Total long-term debt - net of premiums and discounts
$ 8,613,340
$ 8,582,607
TBTA has entered into several Standby Bond Purchase Agreements (“SBPA”) as listed on the table
below.
Resolution
Series
Provider (Insurer)
Exp. Date
TBTA General Revenue
TBTA General Revenue
TBTA General Revenue
TBTA Subordinate
TBTA Subordinate
2005B-3
2001C
2002F
2000AB
2000CD
Bank of America ML
JP Morgan
Helaba
JP Morgan
Lloyds TSB Bank (NY) (Assured)
7/3/2015
9/29/2015
11/1/2015
10/7/2014
10/7/2014
According to each respective SBPA, if the remarketing agent fails to remarket any of the bonds listed
above that are tendered by the holders, the bank is required (subject to certain conditions) to purchase
such unremarketed portion of the bonds. Bonds owned by the bank and not remarketed after a specified
amount of time (generally 90 days) are payable to the bank as a term loan over five years in ten equal
semiannual principal payments including interest thereon. As of December 31, 2013, there were no term
loans outstanding.
- 35 -
12. DEBT — SENIOR REVENUE BONDS
Senior Revenue Bonds at December 31, 2013 and 2012, consist of the following:
Original
Issuance
(In thousands)
Series EFC 1996A
Series 2001A, 5.77%
due through 2032
Series 2001B&C,
4.10% - 5.25%
Series 2002A
Series 2002B
Series 2002C
Series 2002F
Series 2003B
Series 2005A
Series 2005B
Series 2006A
Series 2007A
Series 2008A
Series 2008B
Series 2008C
Series 2009A-1
Series 2009A-2
Series 2009B - BAB
Series 2010A-1
Series 2010A-2 - BAB
Series 2011A
Series 2012A
Series 2012B
Series 2013B
Series 2013C
$
23,530
1,125,720
December 31,
2012
$
7,295
-
Issued
$
-
Principal
Repayments
& Retirements
During 2013
December 31,
2013
$
$
1,525
-
5,770
-
296,400
268,140
-
15,370
252,770
268,300
2,157,065
103,305
246,480
250,000
150,000
800,000
200,000
223,355
822,770
252,230
629,890
150,000
325,000
200,000
66,560
280,400
609,430
231,490
1,236,898
257,195
200,000
216,765
209,640
206,190
129,490
586,800
116,280
184,690
763,660
252,230
588,540
126,230
311,860
200,000
55,655
280,400
609,430
229,670
1,236,898
-
29,600
83,500
257,195
200,000
69,565
7,030
6,505
3,465
32,000
40,635
48,430
127,215
83,500
76,270
5,380
13,145
6,045
7,185
4,155
485
-
147,200
202,610
199,685
126,025
584,400
75,645
136,260
636,445
252,230
512,270
120,850
298,715
200,000
49,610
280,400
602,245
225,515
1,236,413
257,195
200,000
$ 11,106,018
6,579,863
570,295
547,905
6,602,253
375,134
104,398
26,844
452,688
6,954,997
$ 674,693
Add net unamortized
bond discount and
premium
$
- 36 -
$
574,749
$
7,054,941
General Revenue Fixed Rate Bonds Series 2009B and General Revenue Fixed Rate Bonds
Series 2010A-2 are Federally Taxable — Issuer Subsidy- Build America Bonds.
Debt Service Requirements:
Year Ending
December 31
Principal
(In thousands)
2014
2015
2016
2017
2018
2019-2023
2024-2028
2029-2033
2034–2038
2039-2043
$ 182,385
183,660
203,465
211,445
221,105
1,235,790
1,447,988
1,693,825
1,070,255
152,335
$ 298,256
289,823
281,106
272,217
262,721
1,153,529
858,273
602,639
208,621
12,866
$
$
$
$
$
$
$
$
$
$
$ 6,602,253
$ 4,240,051
$ 10,842,304
Interest
Aggregate
Debt Service
480,641
473,483
484,571
483,662
483,826
2,389,319
2,306,261
2,296,464
1,278,876
165,201
The above interest amounts include both fixed and variable rate calculations. The interest rate
assumptions for Senior Revenue variable rate bonds are as follows:
•
MTA Bridges and Tunnels General Revenue Refunding Bonds, Series 2001B and
Series 2001C — 4.00% per annum
•
MTA Bridges and Tunnels General Revenue Refunding Bonds, Series 2002F —3.076% per
annum taking into account the interest rate swaps and 4% per annum on portions not covered by
the interest rate swaps
•
MTA Bridges and Tunnels General Revenue Bonds, Series 2003B — 3.076% per annum taking
into account the interest rate swaps and 4.00% per annum on portions not covered by the interest
rate swaps
•
MTA Bridges and Tunnels General Revenue Bonds, Series 2005A — 4.00% per annum except
from November 1, 2027 through November 1, 2030, 3.076% per annum taking into account the
interest rate swap
•
MTA Bridges and Tunnels General Revenue Refunding Bonds, Series 2005B — 3.076% per
annum based on the Initial Interest Rate Swaps for variable rate demand bonds subseries,
3.076% per annum based on the interest rate swaps; for floating rate notes subseries, 3.076% per
annum based on the interest rate swaps plus the current fixed spread to maturity
•
MTA Bridges and Tunnels General Revenue Bonds, Series 2008B — 4.00% per annum, after the
mandatory tender date. MTA Bridges and Tunnels General Revenue Bonds, Subseries 2008B-2
and Subseries 2008B-3 - at their current coupon to maturity
- 37 -
13. DEBT — SUBORDINATE REVENUE BONDS
Subordinate Revenue Bonds at December 31, 2013 and 2012, consist of the following:
Original
Issuance
(In thousands)
Series 2000AB
Series 2000CD
Series 2002D
Series 2002E
Series 2002G
Series 2003A
Series 2004A
Series 2008D
$
201,120
201,080
261,700
756,095
181,025
500,170
250,000
491,110
Series 2013A
Series 2013D
653,964
313,975
$ 3,810,239
December 31,
2012
$
Add net unamortized
bond discount and premium
$
130,250
89,850
756,095
403,270
435,250
Issued
$
-
Principal
Repayments &
Retirements
During 2013
December 31,
2013
$
$
16,950
24,900
616,270
393,725
41,270
113,300
64,950
139,825
9,545
393,980
1,814,715
653,964
313,975
967,939
1,093,115
653,964
313,975
1,689,539
15,430
1,830,145
103,433
$ 1,071,372
19,481
1,112,596
99,382
1,788,921
$
$
Debt Service Requirements:
Year Ending
December 31
(In thousands)
2014
2015
2016
2017
2018
2019-2023
2024-2028
2029-2033
Principal
$
57,990
47,025
64,465
67,770
92,350
450,115
545,745
364,079
$ 1,689,539
Interest
$
Aggregate
Debt Service
73,515
71,996
69,516
66,347
63,079
251,007
138,251
133,667
$ 131,505
119,021
133,981
134,117
155,429
701,122
683,996
497,746
$ 867,378
$ 2,556,917
The Subordinate Revenue Bonds are special obligations issued in accordance with the 2001 Subordinate
Revenue Resolution Authorizing Subordinate Revenue Obligations.
- 38 -
The Subordinate Revenue Bonds are special obligations issued in accordance with the 2001 Subordinate
Revenue Resolution Authorizing Subordinate Revenue Obligations.
The above interest amounts include both fixed and variable rate calculations. The interest rate
assumptions for Subordinate Revenue variable rate bonds are as follows:
•
MTA Bridges and Tunnels Subordinate Refunding Bonds, Series 2000AB — 6.08% per annum
taking into account the interest rate swap
•
MTA Bridges and Tunnels Subordinate Refunding Bonds, Series 2000CD — 4.00% per annum
14. CERTIFICATES OF PARTICIPATION
In 2000, the Trust (Note 16) issued $121,200 of fixed rate Serial and Term Certificates of Participation,
Series 2000A. In 1999, the Trust issued $328,205 of fixed rate Serial and Term Certificates of
Participation, Series 1999A. In 2004, the Trust issued $357,925 of fixed rate Serial and Term
Certificates of Participation, Series 2004A. The proceeds of the Certificates were used to finance certain
building and tenant improvements to the 2 Broadway office building in New York City, occupied by the
Transit Authority, MTA, on behalf of its subsidiaries, The Long Island Rail Road Company, MetroNorth Commuter Railroad Company, and MTA Bridges and Tunnels (Notes 16 and 21). The Transit
Authority is obligated to pay 68.7% of the debt service, the MTA 21.0%, and MTA Bridges and Tunnels
10.3%.
Certificates of Participation at December 31, 2013 and 2012 consist of the following:
(In thousands)
Series 1999A
Series 2000A
Series 2004A
Original
Issuance
$ 328,205
121,200
357,925
December 31,
2012
$
807,330
Add net unamortized
bond discount and premium
$
10,385
Issued
$
-
Principal
Repayments
& Retirements
During 2013
December 31,
2013
$
$
533
10,385
-
533
-
-
-
10,385
- 39 -
$
-
$
533
9,852
9,852
$
9,852
MTA Bridges and Tunnels’ share of the debt service requirements:
Certificates of Participation
(In thousands)
Year Ending
December 31
Principal
2014
2015
2016
2017
2018
2019-2023
2024-2028
2029-2033
$
0
1,130
1,460
1,342
1,772
3,427
515
206
$ 9,852
Interest
$
370
320
260
210
147
202
73
3
$ 1,585
Aggregate
Debt Service
$
370
1,450
1,720
1,552
1,919
3,629
588
209
$ 11,437
The above interest amounts include both fixed and variable rate calculations. The interest rate
assumptions for Certificates of Participation are as follows:
•
Certificates of Participation, Series 2004A — 3.542% per annum taking into account the interest
rate swaps
•
The above Certificates of Participation include net payments made by MTA Bridges and Tunnels
under the swap agreements (Note 20)
15. GASB 53 — DERIVATIVE INSTRUMENTS
MTA Bridges and Tunnels implemented GASB Statement No. 53, Accounting and Financial Reporting
for Derivative Instruments, in 2010. The Statement deals with the recognition, measurement, and
disclosure of information regarding derivative instruments, and addresses hedge accounting
requirements. Hedging derivative instruments are supposed to significantly reduce financial risk by
substantially offsetting the associated changes in cash flows or fair values of the underlying bond
portfolio.
For the year ended December 31, 2013, the MTA Bridges and Tunnels is reporting gains, derivative
liabilities and deferred outflows from derivative instruments in the amounts of $522, $73,758 and
$94,246, respectively. Also recognized in the same period are derivative assets and derivative liabilitiesoff market elements in the amounts of $8,948 and $30,420, respectively.
For the year ended December 31, 2012, the MTA Bridges and Tunnels is reporting gains, derivative
liabilities and deferred outflows from derivative instruments in the amounts of $256, $169,896 and
$195,745, respectively. Also recognized in the same period are derivative assets and derivative
liabilities-off market elements in the amounts of $3,608 and $30,963, respectively. In 2012, MTA
Bridges and Tunnels negotiated the termination of four swap transactions with Citigroup Financial
Products Inc., which resulted in a loss of $45,166 (see Note 20).
- 40 -
GASB Statement No. 53- Accounting and Financial Reporting for Derivative Instruments
Summary Information as of December 31, 2013
Bond Resolution
S eries
Cash Flow or
Type of Derivative Fair Value Hedge
Effective
Methodology
Trade/Entered
Date
N/a
Regression
Analysis
Regression
Analysis
Regression
Analysis
Regression
Analysis
Regression
Analysis
Consistent Critical
Terms
8/10/2004
Notional
Amount as of Fair Values
12/31/13
as of 12/31/13
(in millions) (in millions)
2 Broadway Certificate of
Investment S wap
Hedging S waps
Participation (1)
M TA Bridges & Tunnels
Senior Revenue Bonds
M TA Bridges & Tunnels
Senior Revenue Bonds (2)
M TA Bridges & Tunnels
Senior Revenue Bonds
M TA Bridges & Tunnels
Senior Revenue Bonds
M TA Bridges & Tunnels
Senior Revenue Bonds
M TA Bridges & Tunnels
Subordinate Revenue Bonds
2004A
2002F (Citi
2005B)
2002F (old
2002C)
2003B (Citi
2005B)
Pay-Fixed Swaps
N/a
Pay-Fixed Swaps
Cash Flow
Pay-Fixed Swaps
Cash Flow
Pay-Fixed Swaps
Cash Flow
2005A
Pay-Fixed Swaps
Cash Flow
2005B
Pay-Fixed Swaps
Cash Flow
Swaption
Cash Flow
2000AB
$
6/2/2005
10.359
194.800
$
(0.987)
(18.184)
2/24/1999
-
-
6/2/2005
-
-
1/1/2011
24.880
(3.288)
6/2/2005
584.400
(54.552)
8/12/1998
113.300
(18.222)
(1) MTA Bridges and Tunnels’ share of the debt service requirements for the 2 Broadway Certificate of Participation is 10.3% (Note 14). Thus, as of December
31, 2013, the notional amount is calculated as 10.3% of $100.575 million; and the fair value is calculated as 10.3% of $(9.586) million.
(2) Matured
- 41 -
The fair value balances and notional amounts of derivative instruments outstanding at December 31,
2013, classified by type, and the changes in fair value of such derivative instruments from the year
ended December 31, 2012 are as follows:
Fair Value at
December 31, 2013
Changes In Fair Value
Classification
Amount
(in millions)
Classification
Amount
(in millions)
Notional
(in millions)
Government activities
Cash Flow hedges:
Pay-fixed interest rate swaps
Basis swap
Swaption
Investment hedge:
Pay-fixed interest rate swaps
Deferred outflow of
resources
Deferred outflow of
resources
Deferred outflow of
resources
Investment Expense
$94.662
Debt
($76.024)
$804.080
0.000
Debt
0.000
6.837
Debt
(18.222)
113.300
0.522
Debt
(0.987)
10.359
0.000
For the period ended December 31, 2013, the MTA Bridges and Tunnels recorded $522 as a gain related
to the change in fair market value of certain investment swap that is not accounted for as hedging
activities.
For the period ended December 31, 2013, there were no derivative instruments reclassified from a
hedging derivative instrument to an investment derivative instrument.
The summary above reflects a total number of seven (7) swaps and hedging relationships that were
reviewed for GASB Statement No. 53 Hedge Accounting treatment. Of that total, six (6) were deemed
effective using Consistent Critical Terms and the Regression Method and one (1) was deemed
ineffective.
In regard to the Consistent Critical Terms method, if the critical terms of the potential hedging
derivative instrument and the terms of the item it is hedging are essentially same, then the potential
hedging derivative instrument is presumed to be effective. Under such circumstances, any changes in
the cash flows or fair value of the item being hedged is offset by changes in the cash flows or fair value
of the potential hedging derivative. The one (1) hedge was deemed effective using this methodology.
For five (5) hedging relationships, the Regression Method was utilized to determine effectiveness.
- 42 -
For a potential hedging derivative instrument to be considered effective using the Regression Method,
the regression analysis must meet the following criteria:
- an R-squared of a range at least 0.80;
- an F-statistic that indicates statistical significance at the 95% confidence level; and
- a regression coefficient for the slope between -1.25 and -0.80
In accordance with GASB Statement No. 53, one of the hedging swaps is classified as a swaption for
which a premium was received by MTA Bridges and Tunnels at contract inception as shown in the
Table below. MTA Bridges and Tunnels have followed the relevant accounting required treatment and
are amortizing the premium over the life of the swap agreement.
Bond Resolution
MTA Bridges & Tunnels-Subordinate
Series
2000AB
Premuim
$22,740,000
Date of the
Swaption
Premium
Contract
Payment Date
8/12/1998
8/25/1998
16. CAPITAL LEASE OBLIGATIONS
2 Broadway
During 1998, the MTA, TA, and MTA Bridges and Tunnels entered into an agreement with the United
States Trust Company of New York (collectively, the “Trust”) to provide for the lease of an office
building located at 2 Broadway in New York City. Subsequently, the same parties provided for the
delivery of certain certificates of participation to finance building and tenant improvements at
2 Broadway (Note 14). The lease is composed of both an operating lease (for the lease of land)
(Note 21) and capital lease (for the lease of the building) elements.
The lease term expires June 30, 2048, with the right to extend the term of the lease for two successive
periods of fifteen years each. Rental payments will be allocated to the MTA, TA, and MTA Bridges and
Tunnels based upon usage.
On November 4, 2003, MTA entered into agreement to end the litigation between the MTA and the
owners of the 2 Broadway facilities. The settlement provides for a rent credit to MTA Bridges and
Tunnels over a 30-year period commencing January 1, 2004.
The credit, which aggregated amounts to $4,525,000, has been reflected proportionately, on an annual
basis through January 1, 2034, in the 2 Broadway capital lease obligations schedule included in the
tables below.
MTA Bridges and Tunnels has recorded capital lease assets using the net present value, and using a
borrowing rate of 9.11%, and has reflected a capital lease obligation as of December 31, 2013 and 2012,
of $38,505 and $38,558, respectively.
Subway Cars
During 1995, MTA Bridges and Tunnels entered into a sale-leaseback transaction with a third party
whereby MTA Bridges and Tunnels sold certain subway cars, which were contributed by the TA, for net
proceeds of $84,229. These cars were subsequently leased back by MTA Bridges and Tunnels under a
- 43 -
capital lease. The gain on the sale of $34,231 was deferred and netted against the carrying value of the
leased assets, and the assets were recontributed to the TA. MTA Bridges and Tunnels transferred $5,488
to the MTA, representing the net economic benefit of the transaction. The remaining proceeds equal the
net present value of the lease obligation, of which $71,258 was placed in an irrevocable deposit account
and $7,483 was invested in U.S. Treasury Strips. The estimated yields and maturities of the deposit
account and the Treasury Strips are expected to be sufficient to meet all obligations under the lease as
they become due.
In 2013 and 2012, there were no capital lease obligation payments which were funded by the
aforementioned investments. At December 31, 2013 and 2012, the balance in the irrevocable deposit
account was $76,500 and the investments in U.S. Treasury Strips had a market value of $26,802 and
$25,107 at December 31, 2013 and 2012, respectively.
At the end of the lease term, MTA Bridges and Tunnels has the option to purchase the subway cars for
approximately $106,000, which amount has been reflected in the net present value of the lease
obligation, or to make a lease termination payment of approximately $89,000, which is expected to be
covered by the irrevocable deposit.
Total net obligations under all capital leases as of December 31, 2013 and 2012, are as follows:
(In thousands)
2013
2 Broadway
Subway cars
Less current portion
$ 38,505
103,302
$ 38,558
101,607
141,807
140,165
(6,223)
$ 135,584
- 44 -
2012
(6,276)
$ 133,889
Net minimum lease payments are as follows:
Aggregate
Lease
Payments
Years Ending
December 31
(In thousands)
2014
2015
2016
2017
2018
2019-2023
2024-2028
2029-2033
2034-2038
2039-2043
2044-2048
2049
$ 11,883
11,970
17,375
104,641
6,227
32,364
34,001
34,109
31,241
24,268
12,842
415
Minimum future lease payments
321,336
Less amount representing interest
(179,529)
$ 141,807
Total accumulated depreciation under capital leases was approximately $38,426 and $36,920 in 2013
and 2012, respectively.
17. RISK MANAGEMENT
MTA Bridges and Tunnels is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of its assets; injuries to persons, including employees; and natural disasters.
MTA Bridges and Tunnels is self-insured up to $2.6 million per occurrence for liability arising from
injuries to persons, excluding employees. MTA Bridges and Tunnels is self-insured for work-related
injuries to employees and for damage to third-party property. MTA Bridges and Tunnels provides
reserves to cover the self-insured portion of these claims, including a reserve for claims incurred but not
reported. The annual cost arising from injuries to employees and damage to third–party property is
included in “Retirement & other employee benefits” and “Insurance” in the accompanying statements of
revenues, expenses and changes in net position.
A summary of activity in estimated liability arising from injuries to persons, including employees, and
damage to third-party property, as of December 31, 2013 and 2012, is as follows:
- 45 -
(In thousands)
2013
Balance — beginning of year
$ 28,169
2012
$ 25,430
Activity during the year:
Current year claims and changes in estimates
Claims paid
7,291
(5,983)
7,577
(4,838)
Balance — end of year
29,477
28,169
(22,142)
(12,028)
Less current portion
Long-term liability
$
7,335
$ 16,141
Liability Insurance — FMTAC, an insurance captive subsidiary of MTA, operates a liability insurance
program (“ELF”) that insures certain claims in excess of the self-insured retention limits of the agencies
on both a retrospective (claims arising from incidents that occurred before October 31, 2003) and
prospective (claims arising from incidents that occurred on or after October 31, 2003) basis. For claims
arising from incidents that occurred on or after November 1, 2006, but before November 1, 2009, the
self-insured retention limits are: $8 million for MTA New York City Transit, MaBSTOA, MTA Bus,
MTA Long Island Rail Road, and MTA Metro-North Railroad; $2.3 million for MTA Long Island Bus
and MTA Staten Island Railway; and $1.6 million for MTAHQ and MTA Bridges and Tunnels. For
claims arising from incidents that occurred on or after November 1, 2009, but before November 1, 2012,
the self-insured retention limits are: $9 million for MTA New York City Transit, MaBSTOA, MTA Bus,
MTA Long Island Rail Road and MTA Metro-North Railroad; $2.6 million for MTA Long Island Bus
and MTA Staten Island Railway; and $1.9 million for MTAHQ and MTA Bridges and Tunnels.
Effective November 1, 2012 the self-insured retention limits for ELF were increased to the following
amounts: $10 million for MTA New York City Transit, MaBSTOA, MTA Bus, MTA Long Island Rail
Road and MTA Metro-North Railroad; $3 million for MTA Staten Island Railway; and $2.6 million for
MTAHQ and MTA Bridges and Tunnels. The maximum amount of claims arising out of any one
occurrence is the total assets of the program available for claims, but in no event greater than $50
million. The retrospective portion contains the same insurance agreements, participant retentions, and
limits as existed under the ELF program for occurrences happening on or before October 30, 2003. On a
prospective basis, FMTAC issues insurance policies indemnifying the other MTA Group entities above
their specifically assigned self-insured retention with a limit of $50 million per occurrence with a
$50 million annual aggregate. FMTAC charges appropriate annual premiums based on loss experience
and exposure analysis to maintain the fiscal viability of the program. On December 31, 2013, the
balance of the assets in this program was $63.15 million.
MTA also maintains an All-Agency Excess Liability Insurance Policy that affords the MTA Group
additional coverage limits of $350 million for a total limit of $400 million ($350 million excess of $50
million). In certain circumstances, when the assets in the program described in the preceding paragraph
are exhausted due to payment of claims, the All-Agency Excess Liability Insurance will assume the
coverage position of $50 million.
Property Insurance — Effective May 1, 2013, FMTAC renewed the all-agency property insurance
program. For the annual period commencing May 1, FMTAC directly insures property damage claims of
the other MTA Group entities in excess of a $25 million per occurrence self-insured retention (“SIR”),
subject to an annual $75 million aggregate as well as certain exceptions summarized below. The total
program is $500 million per occurrence covering property of the related entities collectively. FMTAC is
reinsured in the domestic, Asian, London, European and Bermuda marketplaces for this coverage.
- 46 -
Losses occurring after the retention aggregate is exceeded are subject to a deductible of $7.5 million per
occurrence. The property insurance policy provides replacement cost coverage for all risks of direct
physical loss or damage to all real and personal property, with minor exceptions. The policy also
provides extra expense and business interruption coverage.
Supplementing the $500 million per occurrence coverage noted above, FMTAC’s property insurance
program has been expanded to include a further layer of $200 million of fully collateralized storm surge
coverage for losses from storm surges that surpass specified trigger levels in the New York Harbor or
Long Island Sound and are associated with named storms that occur at any point in the three year period
from July 31, 2013 to July 30, 2016. The expanded protection is reinsured by MetroCat Re Ltd., a
Bermuda special purpose insurer formed to provide FMTAC with capital markets-based property
reinsurance. The MetroCat Re reinsurance policy is fully collateralized by a Regulation 114 trust
invested in U.S. Treasury Money Market Funds. The additional coverage provided is available for
storm surge losses only after amounts available under the $500 million in general property reinsurance
are exhausted.
With respect to acts of terrorism, FMTAC provides direct coverage that is reinsured by the United States
Government for 85% of “certified” losses, as covered by the Terrorism Risk Insurance Act (“TRIA”) of
2007 (originally introduced in 2002). Under the 2007 extension, terrorism acts sponsored by both
foreign and domestic organizations are covered. The remaining 15% of MTA Group losses arising from
an act of terrorism would be covered under the additional terrorism policy described below.
Additionally, no federal compensation will be paid unless the aggregate industry insured losses exceed
$100 million (“trigger”).
To supplement the reinsurance to FMTAC through the 2007 Terrorism Risk Insurance Program
Reauthorization Act (“TRIPRA”) program, the MTA obtained an additional commercial reinsurance
policy with various reinsurance carriers in the domestic, London and European marketplaces. That
policy provides coverage for (1) 15% of any “certified” act of terrorism — up to a maximum recovery of
$161.25 million for any one occurrence and in the annual aggregate, (2) the TRIPRA FMTAC captive
deductible (per occurrence and on an aggregated basis) that applies when recovering under the
15%“certified” acts of terrorism insurance or (3) 100% of any “certified” terrorism loss which exceeds
$5 million and less than the $100 million TRIPRA trigger — up to a maximum recovery of $100 million
for any occurrence and in the annual aggregate. This coverage expires at midnight on May 1, 2014.
Recovery under this policy is subject to a retention of $25 million per occurrence and $75 million in the
annual aggregate — in the event of multiple losses during the policy year. Should the MTA Group’s
retention in any one year exceed $75 million future losses in that policy year are subject to a retention of
$7.5 million.
18. LEASE-LEASEBACK TRANSACTION
On March 31, 1997, the MTA entered into a lease/leaseback transaction with a third party whereby the
MTA leased MTA Long Island Rail Road’s Hillside maintenance facility to the third party. The term of
the lease is 22 years, and the third party has the right to renew for a further 21.5 year term. The facility
was subsequently subleased back to the MTA as a capital lease, and sub-subleased by the MTA to MTA
Long Island Rail Road. MTA Bridges and Tunnels has entered into a guarantee with the third party that
the sublease payments will be made.
Under the terms of the lease/leaseback agreement, the MTA initially received $314,000, which was
utilized as follows. The MTA paid $266,000 to Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.
(Rabobank Nederland), an affiliate of the third party’s lender, which has the obligation to pay to the
MTA an amount equal to the rent obligations under the sublease attributable to the debt service on the
- 47 -
loan from the third party’s lender. The MTA used $21,000 to purchase Treasury securities, which are
pledged as collateral to the third party. The value at maturity of these Treasury securities, together with
the proceeds from the aforementioned obligation of Coöperatieve Centrale Raiffeisen-Boerenleenbank
B.A., is sufficient to pay all of the regularly scheduled rent obligations, including the cost of purchasing
the third party’s remaining rights at the end of the 22 year sublease period, if the related purchase option
is exercised. A further $600 was used to pay for legal and other costs of the transaction, and $3,000 was
used to pay the first rental payment under the sublease. A further $23,000 is the MTA’s net benefit from
the transaction, representing consideration for the tax benefits.
19. COMMITMENTS AND CONTINGENCIES
At December 31, 2013 and 2012, MTA Bridges and Tunnels had unused standby letters of credit,
relative to insurance, amounting to $2.712 million.
MTA Bridges and Tunnels is involved in various litigations and claims involving personal liability
claims and certain other matters. Although the ultimate outcome of these claims and suits cannot be
predicted at this time, management does not believe that the ultimate outcome of these matters will have
a material effect on the financial position, results of operations and cash flows of MTA Bridges and
Tunnels.
20. SWAP AGREEMENTS
Swap Agreements Relating to Synthetic Fixed Rate Debt
Board-adopted Guidelines. The Related Entities adopted guidelines governing the use of swap contracts
on March 26, 2002. The guidelines were amended and approved by the Board on March 13, 2013. The
guidelines establish limits on the amount of interest rate derivatives that may be outstanding and specific
requirements that must be satisfied for a Related Entity to enter into a swap contract, such as suggested
swap terms and objectives, retention of a swap advisor, credit ratings of the counterparties,
collateralization requirements and reporting requirements.
Objectives of synthetic fixed rate debt. To achieve cash flow savings through a synthetic fixed rate,
MTA, MTA Bridges and Tunnels and MTA New York City Transit have entered into separate payfixed, receive-variable interest rate swaps at a cost anticipated to be less than what MTA, MTA Bridges
and Tunnels and MTA New York City Transit would have paid to issue fixed-rate debt. In some cases
where Federal tax law prohibits an advance refunding to synthetically refund debt on a forward basis.
Fair Value. Relevant market interest rates on the valuation date (December 31, 2013) of the swaps are
reflected in the following charts. As of the valuation date, all of the swaps had negative fair values. A
negative fair value means that MTA, MTA Bridges and Tunnels and/or MTA New York City Transit
would have to pay the counterparty that approximate amount to terminate the swap. In the event there
is a positive fair value, MTA, MTA Bridges and Tunnels and/or MTA New York City Transit would be
entitled to receive a payment from the counterparty to terminate the swap; consequently, MTA, MTA
Bridges and Tunnels and/or MTA New York City Transit would be exposed to the credit risk of the
counterparties in the amount of the swaps’ fair value should a swap with a positive fair value be
terminated.
The fair values listed in the following tables represent the theoretical cost to terminate the swap as of the
date indicated, assuming that a termination event occurred on that date. The fair values were estimated
using the zero-coupon method. This method calculates the future net settlement payments required by
the swap, assuming that the current forward rates implied by the yield curve correctly anticipate future
- 48 -
spot interest rates. These payments are then discounted using the spot rates implied by the current yield
curve for hypothetical zero-coupon bond due on the date of each future net settlement on the swap. See
“Termination Risk” below.
Terms and Fair Values. The terms, fair values and counterparties of the outstanding swaps of MTA
Bridges and Tunnels, as well as the swaps entered into in connection with the 2 Broadway Certificates
of Participation refunding, are reflected in the following tables. The MTA Bridges and Tunnels swaps
are reflected in separate tables for the senior lien and subordinate revenue bonds.
- 49 -
MTA BRIDGES AND TUNNELS SENIOR LIEN REVENUE BONDS
Notional
Amounts
as of 12/31/13
Associated Bond Issue
Series 2002F (1)
(in millions)
Series 2005B-2a,b,c,
2005B-3 and 2005B4a,b,c,d,e(3)
Total
Variable
Rate Received
5.404
SIFMA(2)
07/07/05
3.076
-
07/07/05
3.076
24.880
01/01/11
3.092
584.400
07/07/05
3.076
194.800
Series 2003B-1,2,3 and
2005A-2,3(3)
Series 2005A(5)(6)
Fixed Rate
Paid
01/01/00
$ -
Series 2002F(3)
Effective
Date
Fair Values
as of 12/31/13
(in millions)
Swap
Termination
Date
Counterparty
Matured
01/01/13
67% of one-month
LIBOR(4)
67% of one-month
LIBOR(4)
$(18.184)
01/01/32
Ambac Financial
Services, L.P.
Citibank, N.A.
01/01/32
Citibank, N.A.
Lesser of actual
bond rate or 67%
of one-month
LIBOR minus 45
basis points.
67% of one-month
LIBOR(4)
(3.288)
01/01/30
UBS AG
(54.552)
01/01/32
33% each –, JPMorgan
Chase Bank, NA, BNP
Paribas North America,
Inc. and UBS AG
$804.080
-
$ (76.024)
- 50 -
MTA BRIDGES AND TUNNELS SUBORDINATE REVENUE BONDS
Associated Bond Issue
Notional
Amounts
as of
12/31/2013
Effective
Date
Fixed Rate
Paid
Variable
Rate Received
$113.300
Total
Swap
Termination
Date
Counterparty
(in millions)
(in millions)
Series 2000AB(7)
Fair Values
as of
12/31/2013
01/01/01
6.080 %
Actual bond rate
$113.300
$ (18.222)
01/01/19
JPMorgan Chase Bank,
NA
$ (18.222)
(1) In accordance with a swaption entered into on February 24, 1999, the Counterparty paid to MTA Bridges and Tunnels a premium of $8,400,000.
(2) Securities Industry and Financial Markets Association Municipal Swap Index.
(3) On February 19, 2009, MTA Bridges and Tunnels General Revenue Variable Rate Refunding Bonds, Series 2005B-1, were refunded. Notional amounts from
the Series 2005B-1 swap were reassigned to MTA Bridges and Tunnels General Revenue Variable Rate Refunding Bonds, Series 2002F, MTA Bridges and
Tunnels General Revenue Variable Rate Bonds, Series 2003B-1,2,3 and from November 1, 2027 through November 1, 2030, to MTA Bridges and Tunnels
General Revenue Variable Rate Bonds, Series 2005A-2,3.
(4) London Interbank Offered Rate.
(5) On November 10, 2011, MTA Variable Rate Certificates of Participation, Series 2004A associated with the swap in connection with Series 2004A Bonds,
were redeemed. Notional amounts from the Series 2004A swap were reassigned to MTA Transportation Revenue Variable Rate Bonds, Series 2002G-1, Series
2011B and MTA Bridges and Tunnels General Revenue Variable Rate Bonds, Series 2005A.
(6) On November 28, 2011, MTA Variable Rate Certificates of Participation, Series 2004A associated with the swap in connection with Series 2004A Bonds,
were redeemed. Notional amounts from the Series 2004A swap were reassigned to MTA Transportation Revenue Variable Rate Bonds, Series 2002G-1 and
Series 2011B; and MTA Bridges and Tunnels General Revenue Variable Rate Bonds, Series 2005A.
(7) In accordance with a swaption entered into on August 12, 1998 with each Counterparty paying to MTA Bridges and Tunnels a premium of $22,740,000.
- 51 -
2 Broadway Certificates of Participation Swaps
In addition to the foregoing, MTA, MTA New York City Transit and MTA Bridges and Tunnels entered
into separate ISDA Master Agreements with UBS AG relating to the $357.925 million Variable Rate
Certificates of Participation, Series 2004A (Auction Rate Securities) in connection with the refunding of
certain certificates of participation originally executed to fund certain improvements to the office
building located at 2 Broadway in Manhattan. The 2 Broadway swaps have (1) an effective date of
September 22, 2004, (2) a fixed rate paid of 3.092%, (3) a variable rate received of the lesser of (a) the
actual bond rate, or (b) 67% of one-month LIBOR minus 45 basis points, and (4) a termination date of
January 1, 2030.
On November 28, 2011, certain portions of these swaps were re-associated with other floating rate
bonds, including the MTA Bridges and Tunnels General Revenue Bonds, Series 2005A and the
Transportation Revenue Bonds Series 2002G-1 and Series 2011B.
On December 18, 2012, certain portions of these swaps were re-associated with other floating rate
bonds, including the MTA Bridges and Tunnels General Revenue Bonds, Series 2005A and the
Transportation Revenue Bonds Series 2011B.
The portion remaining that is still associated with the 2004A Certificates of Participation is $100.575
million in notional amount as of December 31, 2013, of which MTA New York City Transit is
responsible for $69.085 million, MTA for $21.120 million, and MTA Bridges and Tunnels for $10.359
million. As of December 31, 2013, the aggregate fair value of the remaining portion associated with the
2004A COPs was ($9.586) million (MTA Bridges and Tunnels portion is 10.3%).
Counterparty Ratings
The current ratings of the counterparties are as follows as of December 31, 2013:
Ratings of the Counterparty
or its Credit Support Provider
S&P
Moody’s
Fitch
A+
A2
A+
A
A2
A
A+
Aa3
A+
A
A2
A
Counterparty
BNP Paribas North America, Inc.
Citibank, N.A.
JPMorgan Chase Bank, NA
UBS AG
- 52 -
Swap Notional Summary
The following table sets forth the notional amount of Synthetic Fixed Rate debt and the outstanding
principal amount of the underlying floating rate series as of December 31, 2013.
Series
Outstanding Principal
TBTA SUB 2000AB
TBTA 2005B-4 (a,b,c,d,e)
TBTA 2005B-3
TBTA 2005B-2 (a,b,c)
TBTA 2005A-1
TBTA 2005A (2,3)
TBTA 2003B (1,2,3)
TBTA 2002F
COPs 2004A
Total
(a)
113,300,000
194,800,000
194,800,000
194,800,000
57,800,000
68,225,000
199,685,000
202,610,000
100,525,000
$1,326,545,000
Notional Amount
113,300,000
194,800,000
194,800,000
194,800,000
24,880,000
(a)
(a)
194,800,000
100,525,000
$1,017,905,000
Swaps assigned to future maturities of Bonds on a forward basis.
Except as discussed below under the heading “Rollover Risk,” the swap agreements contain scheduled
reductions to outstanding notional amounts that are expected to approximately follow scheduled or
anticipated reductions in the principal amount of the associated bonds.
Risks Associated with the Swap Agreements
From MTA’s and MTA Bridges and Tunnels’ perspective, the following risks are generally associated
with swap agreements:
•
Credit Risk – The counterparty becomes insolvent or is otherwise not be able to perform its
financial obligations. In the event of deterioration in the credit ratings of the counterparty or
MTA/MTA Bridges and Tunnels, the swap agreement may require that collateral be posted to
secure the party’s obligations under the swap agreement. See “Collateralization” below. Further,
ratings deterioration by either party below levels agreed to in each transaction could result in a
termination event requiring a cash settlement of the future value of the transaction. See
“Termination Risk” below.
•
Basis Risk – The variable interest rate paid by the counterparty under the swap and the variable
interest rate paid by MTA and MTA Bridges and Tunnels on the associated bonds may not be the
same. If the counterparty’s rate under the swap is lower than the bond interest rate, then the
counterparty’s payment under the swap agreement does not fully reimburse MTA and MTA
Bridges and Tunnels for its interest payment on the associated bonds. Conversely, if the bond
interest rate is lower than the counterparty’s rate on the swap, there is a net benefit to MTA or
MTA Bridges and Tunnels.
•
Termination Risk – The swap agreement will be terminated and MTA or MTA Bridges and
Tunnels will be required to make a termination payment to the counterparty and, in the case of a
swap agreement which was entered into for the purpose of creating a synthetic fixed rate for an
advance refunding transaction may also be required to take action to protect the tax exempt status
of the related refunding bonds.
•
Rollover Risk – The notional amount under the swap agreement terminates prior to the final
maturity of the associated bonds on a variable rate bond issuance, and MTA or MTA Bridges and
- 53 -
Tunnels may be exposed to then market rates and cease to receive the benefit of the synthetic
fixed rate for the duration of the bond issue.
Credit Risk. The following table shows, as of December 31, 2013, the diversification, by percentage of
notional amount, among the various counterparties that have entered into ISDA Master Agreements with
MTA and/or MTA Bridges and Tunnels, or in connection with the 2 Broadway Certificates of
Participation refunding. The notional amount totals below include all five swaps (including the UBS
basis risk swap) in connection with the MTA Bridges and Tunnels General Revenue Variable Rate
Refunding Bonds, Series 2005B. The counterparties have the ratings set forth above.
Notional
Amount
(in thousands)
$320,255
308,100
194,800
194,800
$1,017,955
Counterparty
UBS AG
JPMorgan Chase Bank, NA
Citibank, N.A.
BNP Paribas North America, Inc.
Total
% of Total
Notional Amount
31.45%
30.27
19.14
19.14
100.00%
The ISDA Master Agreements entered into with the following counterparties provide that the payments
under one transaction will be netted against other transactions entered into under the same ISDA Master
Agreement:
•
•
JPMorgan Chase Bank, NA with respect to the MTA Bridges and Tunnels Subordinate Revenue
Variable Rate Refunding Bonds, Series 2000AB, and
Ambac Financial Services, L.P. with respect to the MTA Bridges and Tunnels General Revenue
Variable Rate Refunding Bonds, Series 2002F (currently only one transaction is outstanding
under that Master Agreement),
Under the terms of these agreements, should one party become insolvent or otherwise default on its
obligations, close-out netting provisions permit the nondefaulting party to accelerate and terminate all
outstanding transactions and net the transactions’ fair values so that a single sum will be owed by, or
owed to, the nondefaulting party.
The fair market value of MTA's interest rate swaps changes daily primarily as a result of capital markets
changes. Factors that influence LIBOR are local interest rates, banks expectations of future rate
movements, liquidity in the capital markets or changes in the value of the dollar. The relative
financial health of MTA's counterparties, do not directly impact the fair market value of the transaction.
Collateralization. Generally, the Credit Support Annex attached to the ISDA Master Agreement requires
that if the outstanding ratings of MTA or MTA Bridges and Tunnels, as the case may be, or the
counterparty falls to a certain level, the party whose rating falls is required to post collateral with a thirdparty custodian to secure its termination payments above certain threshold amounts. Collateral must be
cash or U.S. government or certain Federal agency securities.
The following tables set forth the ratings criteria and threshold amounts relating to the posting of
collateral set forth for MTA or MTA Bridges and Tunnels, as the case may be, and the counterparty for
each swap agreement. In most cases, the Counterparty does not have a Fitch rating on its long-term
unsecured debt, so that criteria would not be applicable in determining if the Counterparty is required to
post collateral.
- 54 -
2 Broadway Certificates of Participation
If the highest rating of the MTA
Transportation Revenue Bonds falls to
Associated
Bond Issue
Series 2004A
Then MTA, MTA
Bridges and Tunnels and
MTA New York City
Transit must post
collateral if its estimated
termination payments are
in excess of
Fitch — BBB+,
Moody’s — Baa1, or
S&P — BBB+
Fitch — BBB and below or unrated,
Moody’s — Baa2 and below or unrated by
S&P & Moody’s, or
S&P — BBB and below or unrated
If the highest rating of the Counterparty’s
long-term unsecured debt falls to
Series 2004A
$25,000,000
Then the Counterparty
must post collateral if its
estimated termination
payments
are in excess of
Moody’s — Baa1 or lower, or
S&P — BBB+ or lower
$0
MTA Bridges and Tunnels Senior Lien Revenue Bonds
Associated
Bond Issue
Series 2005-A1
Series 2002F (swap with Citibank,
N.A.), Series 2005B-2a,b,c, 2005B3 and 2005B-4a,b,c,d,e(swap with
JPM,BNP,UBS)
If the highest rating of the related MTA
Bridges and Tunnels bonds or the
counterparty’s long-term
unsecured debt falls to
See 2 Broadway Certificates of Participation
For counterparty,
Fitch – A-, or Moody’s – A3, or S&P – AFor MTA,
Fitch – BBB+, or Moody’s – Baa1, or S&P –
BBB+
Then the downgraded
party must post
collateral if its estimated
termination payments
are in excess of
$10,000,000
$30,000,000
For MTA,
Fitch – BBB, or Moody’s – Baa2, or S&P –
BBB
$15,000,000
For counterparty,
Fitch – BBB+ and below, or Moody’s –
Baa1 and below, or S&P – BBB+ and below
$
-
$
-
For MTA,
Fitch – BBB- and below, or Moody’s – Baa3
and below, or S&P – BBB- and below
- 55 -
MTA Bridges and Tunnels Subordinate Revenue Bonds
Then the downgraded
party must post
collateral if its
estimated termination
payments are in excess
of
N/A – Because MTA Bridges and Tunnels’ swap payments are insured,
MTA Bridges and Tunnels is not required to post collateral, but Bear
Stearns is required to post collateral if its estimated termination
payments are in excess of $1,000,000.
If the highest rating of the related MTA
Bridges and Tunnels bonds or the
counterparty’s long-term
unsecured debt falls to
Associated
Bond Issue
Series 2000AB
Notwithstanding the foregoing, in the event any downgraded party is responsible for an event of default
or potential event of default as defined in the ISDA Master Agreement, the downgraded party must
immediately collateralize its obligations irrespective of the threshold amounts.
Under each MTA and MTA Bridges and Tunnels bond resolution, the payments relating to debt service
on the swaps are parity obligations with the associated bonds, as well as all other bonds issued under that
bond resolution, but all other payments, including the termination payments, are subordinate to the
payment of debt service on the swap and all bonds issued under that bond resolution. In addition, MTA
and MTA Bridges and Tunnels have structured each of the swaps (other than the 2 Broadway swaps) in
a manner that will permit MTA or MTA Bridges and Tunnels to bond the termination payments under
any available bond resolution.
The payments relating to debt service on the 2 Broadway swaps are parity obligations with respect to the
sublease payments under the 2 Broadway Certificates of Participation, payable solely from available
transportation revenues after the payment of the MTA’s transportation revenue bonds and additional
parity and subordinate bonds. All other payments, including the termination payments, are payable from
substantially the same pool of available transportation revenues after the payment of the MTA’s
transportation revenue bonds and additional parity and subordinate bonds.
The ISDA Master Agreement sets forth certain termination events applicable to all swaps entered into by
the parties to that ISDA Master Agreement. MTA and MTA Bridges and Tunnels have entered into
separate ISDA Master Agreements with each counterparty that governs the terms of each swap with that
counterparty, subject to individual terms negotiated in a confirmation.
The following table sets forth, for each swap, the additional termination events for the following
associated bond issues. In certain swaps, where the counterparty has a guarantor of its obligations, the
ratings criteria applies to the guarantor and not to the counterparty.
2 Broadway Certificates of Participation
Associated
Bond Issue
Series 2004A
Counterparty
UBS AG
Additional Termination Event(s)
Negative financial events relating to the swap insurer, Ambac
Assurance Corporation.
MTA Bridges and Tunnels Senior and Subordinate Revenue
Associated
Bond Issue
Senior Lien Revenue Bonds
Additional Termination Events
- 56 -
Series 2005A
Series 2002F (swap with Citibank, N.A.),
Series 2005B-2a,b,c, 2005B-3 and
2005B-4a,b,c,d,e (swap with
JPM,BNP,UBS)
Subordinate Revenue Bonds
Series 2000AB
See 2 Broadway Certificates of Participation
The ratings by S&P or Moody’s of the Counterparty fall below
“BBB+” or “Baa1,” respectively, or the ratings of S&P or Moody’s
with respect to the MTA Bridges and Tunnels Senior Lien Revenue
Bonds falls below “BBB” or “Baa2,” respectively, or , in either case the
ratings are withdrawn.
1. MTA Bridges and Tunnels can elect to terminate the swap relating to
that Series on 10 Business Days’ notice if the Series of Bonds are
converted to a fixed rate, the fixed rate on the converted Bonds is less
than the fixed rate on the swap and MTA Bridges and Tunnels
demonstrates its ability to make the termination payments, or MTA
Bridges and Tunnels redeems a portion of the Series of Bonds and
demonstrates its ability to make the termination payments.
2. Negative financial events relating to the related swap insurer, MBIA.
Rollover Risk. MTA and MTA Bridges and Tunnels are exposed to rollover risk on swaps that mature or
may be terminated prior to the maturity of the associated debt. When these swaps terminate, MTA or
MTA Bridges and Tunnels may not realize the synthetic fixed rate offered by the swaps on the
underlying debt issues. The following debt is exposed to rollover risk:
Bond
Associated Bond Issue
Maturity Date
MTA Bridges and Tunnels General Revenue Variable Rate Refunding Bonds, November 1, 2032
Series 2002F (swap with Citibank, N.A.)
MTA Bridges and Tunnels General Revenue Variable Rate Bonds, Series January 1, 2033
2003B (swap with Citibank, N.A.)
Swap Termination
Date
January 1, 2032
January 1, 2032
Swap payments and Associated Debt. The following tables contain the aggregate amount of estimated
variable-rate bond debt service and net swap payments during certain years that such swaps were entered into
in order to: protect against the potential of rising interest rates; achieve a lower net cost of borrowing; reduce
exposure to changing interest rates on a related bond issue; or, in some cases where Federal tax law prohibits
an advance refunding, achieve debt service savings through a synthetic fixed rate. As rates vary, variable-rate
bond interest payments and net swap payments will vary. Using the following assumptions, debt service
requirements of MTA’s and MTA Bridges and Tunnel’s outstanding variable-rate debt and net swap
payments are estimated to be as follows:
•
•
It is assumed that the variable-rate bonds would bear interest at a rate of 4.0% per annum.
The net swap payments were calculated using the actual fixed interest rate on the swap
agreements.
- 57 -
MTA
(in millions)
Year Ended
December 31
2013
2014
2015-2019
2020-2024
2025-2029
2030-2034
Variable-Rate Bonds
Principal
$
2035
Interest
9.0
14.7
163.3
293.8
356.5
729.7
$
36.2
54.7
53.6
255.7
211.5
173.7
391.9
Net Swap
Payments
$
5.2
(6.7)
(6.7)
(31.0)
(24.0)
(14.3)
(5.0)
(0.3)
Total
$
56.9
61.7
388.1
481.3
515.8
1,116.6
41.0
MTA Bridges and Tunnels
(in millions)
Year Ended
December 31
2013
2014
2015-2019
2020-2024
2025-2029
2030-2034
Variable-Rate Bonds
Principal
$
29.8
31.3
202.0
165.4
289.2
484.9
Interest
$
47.3
46.0
206.5
173.2
133.1
23.1
Net Swap
Payments
$ (4.8)
(5.2)
(31.0)
(34.1)
(36.4)
(5.1)
Total
$ 72.3
72.2
377.5
304.5
385.9
502.9
21. OPERATING LEASES
During 1998, the MTA, TA and MTA Bridges and Tunnels entered into a lease and related agreements
whereby each, as sub lessees, will rent for at least an initial stated term of approximately 50 years, space
at 2 Broadway in lower Manhattan (Note 16).
The total annual rental payments over the initial lease term are $1,600. Of this amount, approximately
$488 represents land accounted for under an operating lease agreement. Rental payments will be
allocated to the MTA, TA, and MTA Bridges and Tunnels based upon usage. Minimum lease payments
representing MTA Bridges and Tunnels’ share of the operating lease are as follows:
- 58 -
Aggregate
Lease
Payments
Year Ending
December 31
(In thousands)
2014
2015
2016
2017
2018
2019-2023
2024-2028
2029-2033
2034-2038
Thereafter
$ 2,405
2,405
2,405
2,405
2,405
2,405
2,405
2,405
2,405
62,535
Minimum future lease payments
$ 84,180
22. RELATED PARTY TRANSACTIONS
MTA Bridges and Tunnels and other affiliated MTA agencies receive support from MTA in the form of
budget, cash management, finance, legal, real estate, treasury, risk and insurance management, and other
services, some of which are charged back.
The resulting receivables and payables from the above transactions are recorded in the due from/to MTA
and affiliated agencies account included in the accompanying balance sheets.
Due from/to MTA and affiliated agencies consists of the following at December 31, 2013 and 2012:
(In thousands)
2013
Receivable
(Payable)
2012
Receivable
(Payable)
Due from (due to) MTA
Due from (due to) affiliated agencies
$
1,901
-
$ (72,502)
(22,528)
$
3,995
-
$
(61,208)
(51,577)
Total MTA and affiliated agencies
$
1,901
$ (95,030)
$
3,995
$ (112,785)
23. SUBSEQUENT EVENTS
On January 2, 2014, MTA Bridges and Tunnels entered into a firm remarketing agreement in connection
with the Remarketing of $66,300 General Revenue Variable Rate Refunding Bonds, Series 2005B-4a
and 2005B-4b.
On February 6, 2014, MTA Bridges and Tunnels issued $250,000 General Revenue Bonds, Series
2014A. The net proceeds were issued to finance projects for MTA Bridges and Tunnels’ own facilities.
On February 6, 2014, MTA Bridges and Tunnels issued $100,000 General Revenue Bond Anticipation
Notes, Series 2014A. The net proceeds were issued to finance projects for MTA Bridges and Tunnels’
own facilities.
- 59 -
On April 16, 2014, FEMA approved, under the Public Assistance Alternative Procedures Pilot Program,
approximately $329,000 in FEMA funding for repairs and $74,500 in FEMA funding for hazard
mitigation of the damaged elements of the Hugh Carey Tunnel and the Queens Midtown Tunnel.
******
- 60 -
REQUIRED SUPPLEMENTARY INFORMATION
(Unaudited)
- 61 -
TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
SCHEDULE OF FUNDING PROGRESS - POSTEMPLOYMENT HEALTHCARE PLAN
(In millions)
Actuarial
Value of
Assets
(a)
Actuarial
Accrual
Liability
(AAL)
Initial Entry
Age (b)
Unfunded
(AAL)
(UAAL)
(b-a)
Year
Ended
Actuarial
Valuation
Date
12/31/2013
1/1/2012
-
$
707.0
$
707.0
-
$
106.9
661.4%
12/31/2012
1/1/2010
-
$
691.1
$
691.1
-
$
114.9
601.5%
12/31/2011
1/1/2010
-
$
691.1
$
691.1
-
$
114.9
601.5%
- 62 -
Funded
Ratio
(a/b)
Covered
Payroll
(c)
(UAAL) As a
Percentage
of Covered
Payroll
((b-a)/c)