Metro May Be Facing A Cash Crunch Soon

There’s been some noise recently about banks demanding $14 million from METRO to cover loans insured by AIG, causing agency officials to travel to Washington and hold out the hat.

Maybe METRO planned for the $14 million problem months ago – that’s the amount of additional revenue expected from October’s fare increase – but according to an Official Hair Balls Pal, METRO should be worried about a lot more than $14 million. (Want to be an Official Hair Balls Pal? Send us tips!)

For starters, METRO is relying on about $236 million in expected “grant income” to cover part of this year’s $1 billion budget. Trouble is, the grant money isn’t guaranteed, and if the ~~state doesn’t~~ Feds don’t come through with all that cash, METRO will have to cut projects, lower operating expenses or head back to the bank.

METRO already lists about $220 million in commercial debt on its
budget, and if the grant money is covered with loans, that would mean
that 45 percent of METRO’s revenue is borrowed. Apparently, the lending
situation is already tight. (See paragraph 1).

New construction projects and real estate deals make up about half of
METRO’s budget, and if there is a cash crunch, those plans might be
delayed. Bad news for METRO, considering 2009 is supposed to be a
“banner year” for such projects. Of course, it might be great news for
some people around town, depending on if and where they own property.

We put in some questions to Metro but haven’t heard back, but when we do, we’ll be happy to post a reply.

Update: Metro spokeswoman Raequel Roberts says as far as federal funding, “We
fully anticipate the funding we have put together will be sufficient to build out the program. To talk about ‘what ifs’ would be pure speculation.”

— Paul Knight