TO: AC Transit Board of Directors
FROM: Salvador Llamas, General Manager/Chief Executive Officer
SUBJECT: State Loan Agreement Approval
ACTION ITEM
AGENDA PLANNING REQUEST: ?
RECOMMENDED ACTION(S):
Title
Consider approving an exception to Board Policy 316 and adoption of Resolution 26-014 to allow the General Manager, or his designee, to execute a loan agreement with the Metropolitan Transportation Commission (MTC) for operating assistance of up to $55 million.
Staff Contact:
Chris Andrichak, Chief Financial Officer
Body
STRATEGIC IMPORTANCE:
Goal - Financial Stability and Resiliency
Initiative - Financial Efficiency and Revenue Maximization
The State loan is necessary for the District to be able to balance its FY 26-27 Operating Budget.
BUDGETARY/FISCAL IMPACT:
The state loan makes $55 million available to AC Transit to support public transit operations. The funds will be used as a bridge to fill in the projected deficit in the FY 2026-27 operating budget to allow the District to continue providing safe, reliable service at existing levels. After FY 26-27 it is hoped that a regional revenue measure will then provide a similar level of funding to continue with current service levels.
The loan will have an initial two-year interest-only period (FY 26-27 and FY 27-28) after which there will be a 10-year amortization period. Loan interest will be based on the State Money Investment Fund (SMIF) rate. The rate will reset quarterly during the interest-only period and yearly based on the prior year average during the amortization period. The SMIF rate for the quarter ending March 31, 2026, was 3.835%.
The District does not have to use the full $55 million, and staff will attempt to minimize loan usage. Two illustrative amortization tables are in Attachment 3. The first table is based on the Recommended Funded budget rounded up to the full $55 million. The second table is based on the Contingency Plan budget, where the amount of loan used is redu...
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