Overview of Engagement
Estrada Hinojosa (“EH”) was hired in 2009 to serve as co-financial advisor to VIA Transit (“VIA”), San Antonio’s mass transit agency. EH was VIA’s first financial advisor, and was brought on board to assist with feasibility planning for their ambitious long-range capital plan, which involved the roll-out of new transit modes (BRT, streetcar), expansion of Park and Ride areas, and a re-working of downtown’s mass transit lines to fit around several multi-modal facilities. Over the past several years, this plan has changed (notably streetcar has fallen out of favor), and is now called the Smart Move Plan. After preparing the feasibility analysis, EH was next tasked to begin a debt financing plan for VIA (previously all capital was financed with pay-go), and to establish four new liens where the Agency could issue debt for these and other projects.
Background of Transactions
Working with VIA’s staff and legal advisors the team worked on establishing the legal and financial underpinning of four liens for VIA. Those liens included:
EH worked closely with bond counsel and VIA staff to establish these four liens and create maximum flexibility for VIA to issue debt over time so they could fulfill the obligations of the Smart Move Plan. The first initial move was to issue privately placed debt for these four liens to test the market and determine if there were any legal responses to the borrowing. These financings occurred in 2012 with little trouble. In 2013, EH assisted VIA in refunding the ATD Sales Tax Bonds and VIA Farebox Bonds, and upsized the project fund to include the bulk of the debt funded capital needs. EH worked closely with rating agencies to obtain indicative ratings on this new debt, and settled on S&P, who provided the ATD and Farebox bonds with a “AAA” and “A+” rating, respectively. While both deals priced very well in the market, before the ATD bonds could be delivered, that issue was halted by the Attorney General’s office due to a lawsuit filed on the validity of the ATD bond issue. While the Farebox bond issue closed smoothly, VIA subsequently went through ten months of litigation where Estrada Hinojosa staff testified on behalf of VIA. As a result of the legal proceedings, the Bonds were judicially validated.
Since our hiring, we have been involved in the pricing of over $173 million in VIA Transit related bond issues, including the $32.9 million ATD bond issue and $39.9 million Farebox bond issue. In 2017, we assisted VIA Transit on the issuance of nearly $82 million of KOs to finance the replacement of their existing bus fleet..
Relevance of Transactions