NEWARK, N.J. (AP) - New Jersey Transit is considering taking out a $300 million line of credit with a Canadian bank to cover expenses as the state awaits federal funds.
NJ Transit unveiled the proposal on Friday, four days after the agency proposed a roughly 9 percent fare hike to help close a $60 million budget gap.
An NJ Transit spokeswoman said the proposed loan from Royal Bank of Canada was chosen after a competitive process and the funds would be used as “cash flow management tool.”
NJ Transit incurs expenses throughout the fiscal year but receives federal funds at the end of it.
The agency took out a $241.5 million loan last year from the transportation trust fund to cover costs, and is paying back that amount this year, according to Christie administration documents. The trust fund itself is expected to go broke on July 1, 2016, according to Transportation Commissioner Jamie Fox.
The cost of the loan would include a $900,000 payment to reimburse the bank for reserving the funds. The actual interest cost will depend on the amount NJ Transit taps and on interest rates at the time.
The board is set to consider the loan in May. If it approves the measure, NJ Transit expects it would close on the transaction in June.
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