The Commonwealth Transportation Board has awarded the City of Alexandria a $50 million loan from the Virginia Transportation Infrastructure Bank (VTIB), for the City to construct a Metrorail station in the Potomac Yard area.
The new station will be funded through a variety of sources — including new tax revenue from development around the station and two new special tax districts – without the need for any additional local funds. This means that most residents and businesses in Alexandria will not have to contribute to the station’s construction through local taxes. Because the new tax revenue will be received over time but the station must be paid for when it is built, the City plans to issue General Obligation Bonds to finance construction. Today’s VTIB loan, which is close to the maximum available from the state fund, will lower the amount the City must borrow from other sources.
“The Potomac Yard Metrorail Station project is one of the City’s highest priorities,” said Paul Smedberg, member of Alexandria City Council. “Today’s action by the Commonwealth Transportation Board is recognition that the station will also be a key part of the region’s transit network.”
The 30-year loan locks in an interest rate of 2.17%, which is substantially lower than municipal bonds. The loan also requires no interest or principal payments for four and one-half years after contract completion. This grace period is important to allow early development around the Metro station to begin to create new revenue prior to the City’s first repayments.
The City’s loan application included an offer to accelerate repayment if revenue exceeds expectations. Members of the Board took particular note of this innovative provision, which would allow the money lent to the City to be returned to the VTIB’s revolving fund 11 to 12 years earlier than originally planned.