MTD increases line of credit in case of slow payments or new costs

MTD increases line of credit in case of slow payments or new costs

CHAMPAIGN — A combination of late state payments and anticipated capital expenses is prompting the Champaign-Urbana Mass Transit District board to increase its line of credit with two local banks to $10 million.

The MTD board voted Wednesday to increase its borrowing limit with both Busey Bank and Commerce Bank from $3 million to $5 million.

MTD Managing Director Bill Volk said the move would allow the agency to borrow enough to finance the purchase of 10 buses, plus provide coverage in case state aid payments are delayed for long periods. When borrowing money, the MTD is required to use a line of credit, he said.

"Most of this is because we're trying to be conservative. The line of credit doesn't cost us anything unless we borrow something. And given the state's situation, basically slow payments as well as our heavy use of debt service from our operating account with the state, this is the right way to go."

Volk said the move doesn't guarantee that the MTD will spend more money.

"I'm not sure we'll get above $6 million but it's a conservative approach from a financial management standpoint to hopefully guarantee that we won't get into a cash flow problem," he said. "We used about $5 million this year, and if we buy buses next year, 10 buses will cost about $6 million."

Further, he added, "if we were to get into a situation where the state was nine months behind in payments — I don't anticipate us having to do that — but it doesn't cost us anything to get the line of credit. We're just trying to cover ourselves in case the worst case scenario came."

Also Wednesday, the MTD board accepted the resignation of board member Yuki Llewellyn, who has moved to Columbia, Mo. The board members forwarded Llewellyn's resignation letter to Champaign County Board Chair C. Pius Weibel. The county board will appoint a successor.

Board members also were informed that a disappointing number of applicants have sought the new chief financial officer position with the agency. The MTD had hoped to hire someone for the position, which is expected to pay $80,000 to $90,000 annually, by March 1. The process could be set back about a month, Volk said.

"I think we're going to look at what we can do to increase the number of applicants," he said. "There are qualified folks who we've gotten applications from. But we just think we need to broaden the pool a little bit. We haven't determined how we're going to do that yet."

Volk also reported that the MTD is having trouble with some of its year-old hybrid passenger vans and may have to replace them. The bell housing on the vans has cracked, he said.

"They have 35,000 to 40,000 miles on them and they are spending a great deal of time at a Ford dealership in Bloomington on warranty," he said. "We have three of the five vans there. When we have 14 vans and three of them are down, that becomes somewhat problematic.

"It's also problematic that because these were federal dollars that were involved, we have to keep them for nine years."

The replacement of an undetermined number of vans, along with some other capital items, will require adjustments to the MTD budget in the coming months, Volk said.

Finally, MTD ridership in December was down 2.5 percent from December 2010, the first time in several months that the agency reported a year-to-year decline. Volk attributed the ridership downturn to the mild weather last month and the fact that there was one fewer attendance day at the University of Illinois compared with a year earlier.

Comments embraces discussion of both community and world issues. We welcome you to contribute your ideas, opinions and comments, but we ask that you avoid personal attacks, vulgarity and hate speech. We reserve the right to remove any comment at our discretion, and we will block repeat offenders' accounts. To post comments, you must first be a registered user, and your username will appear with any comment you post. Happy posting.

Login or register to post comments

787 wrote on January 26, 2012 at 11:01 am

Does the leviathan want to grow even bigger?

I'd like to see them run their empire with their property tax income cut in half.  We'd see fewer shiny new fancy busses, and their 100 (yes, one-hundred) bus fleet would likely shrink.

Look at the busses that the Decatur Mass Transit system uses.  There's no comparision to the busses that the MTD buys and uses here.

When there's no lack of money... buy the best you can buy, right?

major02151 wrote on January 26, 2012 at 2:01 pm

It must be exhausting to always be so critical of everything.

Intrigued95 wrote on January 26, 2012 at 4:01 pm

Why do some people in this town so vehemently oppose the MTD? Why? They are one of the most well-managed (financially and otherwise) organizations that I've ever encountered. "787", have you ever thought that maybe this excellence in management is why they are able to purchase new buses? Not to mention the fact that they're only purchasing hybrids now...more expensive, yes, but significantly lower operating costs, and better for the environment.

Imagine C-U without the MTD. Imagine if all 40,000 UI students brought their cars here every year. Then you'd be complaining about traffic and pollution, right?

Rather than complain, why don't you think of all the wonderful things MTD does for this town. "787", clearly you don't ride the bus, but for a lot of us, it's our only option, and I (for one) appreciate the great service MTD provides.