The cash-strapped MTA is trapped in “toxic” long-term debt agreements that have cost it more annually than the agency has saved by slashing subway lines and reducing service two years ago, according to a report.
By the time all of the deals — known as swap agreements — expire two decades from now, the MTA will have likely forked over a staggering $1.3 billion in bank payments, according to the joint report by United New York, the Center for Working Families and Strong Economy for All Coalition.
The MTA paid out $117.6 million because of the risky deals last year.
That sum is nearly $25 million more than the agency saved when it eliminated two subway lines, reduced service on more than a dozen others and slashed bus routes in 2010.
The agency inked its 16 swap agreements as a way to protect itself from rising interest rates on its variable rate bonds, according to the report.
“I think people thought it was a good idea at the time,” said Camille Rivera, executive director of United New York. “Then the economy went bust.”
The MTA disputed the report’s findings, saying that the swaps have saved it money over the long term.
“You can’t look at current market. The idea behind engaging in these swaps is to provide stable funding through the life of the contract,” said spokesman Kevin Ortiz.