reducing the latter's deficit. The change, by itself, isn't sufficient to permit, however, the maintenance of New York subway and bus fares at their current 20-cent level, transportation experts have said.

Both the Triborough entity and the Transit agency are units of the recently created Metropolitan Transportation Authority. Dr. William J. Ronan, chairman of the MTA, said Sunday that the 20-cent fare will rise without a "direct subsidy" from the New York City government.

INVESTORS MUST APPROVE

The use of Triborough surplus funds to aid subway and bus finances must be approved by investors holding two-thirds of the Triborough agency's $300 million of long-term debt. Currently, individuals and institutions holding about $180 million of the bonds have agreed to the switch. In addition, "we're currently in contact with enough holders to get the entire job done," Robert Christie, president of Dillon, Read Municipals Inc., indicated. Dillon-Read is leading a team of investment bankers seeking the bondholders' consent.

In return for their approval, bondholders have been offered a two-part bonus. First, interest rates on bonds outstanding will be raised by 4% a year. The coupons, or annual returns, on issues outstanding range from 2% to 4% at present. Maturities range from Jan. 1, 1970 to Jan. 1, 1985.

Second, in return for bondholder approval, the Triborough unit will waive its right to issue additional bonds on a parity with certain outstanding issues. The current contract between bondholders and the issuing agency permits Triborough to sell another $300 million to $400 million of bonds on the same footing as those already marketed.

SECURITY INCREASED

In surrendering its rights to sell these bonds, the agency is offering to increase the security of the older issues, which will be senior liens and therefore have first call upon Triborough revenue. The Triborough's revenue-producing units include seven bridges and two tunnels.

Problems in gaining the necessary consents are both political and technical, Dillon-Read's Mr. Christie indicated. Some bondholders feel the Transit Authority should raise its revenue by increasing subway and bus fares, rather than siphoning funds from another transportation operation. In other cases, however, the main problem is simply finding bondholders and acquainting them with the transfer plan.

"Years ago most Triborough bonds were held by institutions, and there's no problem reaching the portfolio manager at a casualty company or a bank," Mr. Christie indicated. "Presently, however, many of the bonds are held by individuals, and one guy's always off to Europe, while another's moved and left no forwarding address," he added.

If the necessary consent is received, as expected, two gains will be chalked up by the transfer plan's backers. From one perspective, "we'll have broadened the powers and functions of the Triborough Authority by simply changing a little legal language," Mr. Christie said. From another viewpoint, however, the change could be seen as support for the concept that innovative steps must be taken to deal with the mass transit problems plaguing urban centers, observers have said.

[From the Daily Bond Buyer, Feb. 19, 1968]

PAYOFF TO TRIBOROUGH INVESTORS WEIGHED TO HAVE THEM OKAY TRANSFER OF SURPLUS

(By Paul Heffernan)

The out-of-court abandonment of the Rockefeller Administration's plan to have New York State's new Metropolitan Transportation Authority seize the surplus funds of the Triborough Bridge and Tunnel Authority is leading the new superauthority to go after the Triborough surplus by another route.

The new approach would require the acquiescence of holders of two-thirds of the $354 million Triborough bonds now outstanding and would offer the bondholders a financial inducement in return for their consenting to an amendment to the bond contract that would legalize the transfer of surplus.

The financial incentive probably would be a proffer to the bondholders of a higher interest return on their investment than the one they are now getting.

Under such a plan, some of the Triborough surplus would go to the bondholders in the form of higher interest income; the rest would go to the new Metropolitan super-authority.

TO GET GOING MARCH 1

The new authority is authorized by statute to come into being on March 1st. Presumably, steps will be taken soon thereafter to get in touch with the bondholders with a view to working out a surplus transfer scheme that would be acceptable to two-thirds of the investors. It would take months to negotiate any such agreement.

There are outstanding $354 million of Triborough bonds of four issues. Of this total, three issues totaling $300 million are bonds issued to finance the construction of the Verrazano Narrows Bridge. These bonds mature out to 1985. The rest of the Authority's bonds are 2%s due next year.

The Metropolitan Authority otherwise could get access to the Triborough surplus-a fund estimated at from $5 million to $30 million-by an advance refunding of the whole debt. Such a transaction could be undertaken in connection with an escrowed investment of the proceeds from the new bond sale into United States Government securities until the 1970 call date.

$9 MILLION IN CALL PREMIUMS

To carry out such a refunding, the Metropolitan Authority would have to pay out to bondholders call premiums of 103, a sum about $9 million more than the principal amount of the bonds.

Moreover, the Authority on a new borrowing probably would have to incur an interest rate higher than those carried by the $300 million of Verrazano Bridge bonds, rates ranging from 31⁄2 per cent to 4 per cent.

SELLING AT BIG DISCOUNTS

A further consideration involved in any advance refunding would be that large blocks of the longest-term-maturity-that of 1985-are selling in the market at big discounts from their principal amount of 100.

The 4s of 1985 are quoted in the market at about 912, the 34s of 1985 at 851⁄2 and the 31⁄2s of 1985 at about 81. In an advance refunding, such bonds would be paid off at premium prices above 100 within two years.

The Triborough's surplus funds, if not otherwise committed, could be used to buy up Authority bonds in the market and thereby enhance their market value somewhat.

However, Chairman Robert Moses of the Triborough Authority has taken the position that the surplus aggregates $5 million and would not be available until next year.

[From the Daily Bond Buyer, Feb. 19, 1968]

A REASONABLE TRIBOROUGH SOLUTION

A year of pointless wrangling over the transfer of the surplus funds of the Triborough Bridge and Tunnel Authority has ended ingloriously in the unconscionable money grab being withdrawn from judicial scrutiny by an out-ofcourt decision to drop the whole thing and instead to go after the money surplus in a reasonable and straight-forward way.

Instead of trying to extinguish-by the force of new legislation-the contractual rights of the bondholders to access to the Triborough surplus, the new Metropolitan Transportation Authority will seek to negotiate directly with the bondholders for a settlement. Presumably, the bondholders will be offered a financial incentive-probably a higher rate of interest-in return for their agreeing to an amendment to the bond contract that would make the transaction legal. Was a whole year of tortured statecraft needed to come to this elementary solution?

A superficial glance at this year of legislative sound and fury over the Triborough surplus might seem to indicate that what began as a Lindsay-Rockefeller bang ended up as an ignominious whimper.

But perhaps not. It is inconceivable that all of the parties to the dispute over the Triborough surplus were not fully aware from the start that the attempted seizure was not in the book of Hoyle.

That the guardians of the public sector nevertheless persisted in keeping the act going right up to the moment of trial suggests that the whole business was an arbitrary exercise of legislative power intended mostly to magnify the bargaining power of the state in an inevitable confrontation with the bondholders. Certainly, this noisy and pointless haggling was something less than Albany's finest hour.

[From the New York Daily News, Dec. 29, 1969]

BONDHOLDERS LEERY OF FARE-SAVING IDEA

(By Richard Oliver)

Bondholders of the Triborough Bridge and Tunnel Authority are having serious second thoughts about using the authority's annual surpluses to hold down the subway and bus fare, it was disclosed yesterday.

Approval by two thirds of the bondholders is needed before one penny of the authority's surplus of about $24 million a year can be pumped into the financially ailing Transit Authority.

Yet despite the recurrent proposals by Mayor Lindsay and others on the transit fare, the votes are still not in, according to informed sources.

FRIGHTENED OVER TOLLS

Further, these sources said, talk about raising bridge and tunnel tolls and borrowing against the authority's surpluses is frightening some of the bondholders, thereby delaying or possibly torpedoing the proposed arrangement.

The Metropolitan Transportation Authority, parent body of both the Triborough and Transit authorities, has been seeking the approval of the bondholders for nearly two years in exchange for a "sweetener"-a 0.25% increase in interest on their bonds.

Last week, a high official who asked not to be identified said bondholders approval was "within striking distance."

NERVOUSNESS INCREASES

However, recent pronouncements about saving the fare apparently have affected approvals. "It's getting nervous bondholders more nervous," said one source, who noted that all bondholders have the right to withdraw their approval. Making motorists pay for rails is the heart of recent proposals by Lindsay and his chief transit adviser, labor mediator Theodore W. Kheel. In a plan announced Saturday, apparently with an eye toward saving the 20-cent fare, Lindsay proposed new taxes on city motorists in addition to doubling tolls on the facilities of the Triborough authority. Neither bondholder nor legislative approval would be necessary to double tolls.

Despite Lindsay's call for a "speedy response" from Gov. Rockefeller and MTA Chairman William J. Ronan, both officials withheld comment yesterday.

COMMENT BY KHEEL

Kheel, who is the chief mediator in the current transit negotiations, said yesterday a 30-cent fare would amount to a "soak-the-poor tax."

Kheel, who appeared on NBC-TV's Searchlight with Herbert Bienstock, regional director of the U.S. Bureau of Labor Statistics, said a 30-cent fare would drive the city's consumer price index up by a full percentage point,

"This is not merely a further living cost," he continued, "This would be disastrous for the city."

However, Bienstock noted that the city's 20-cent transit fare is the "lowest of any major city in the United States."

By contrast, he said, the average cost of operating a car here is slightly more than that for other cities. He cited statistics showing that a family of four with an income of $9,977 spends an average of $923 annually here on its car, compared with $914 in other metropolitan areas.

[From the New York Times, May 8, 1970]

TRIBOROUGH APPROVES FUNDS FOR CITY'S TRANSIT

(By Richard Witkin)

The last obstacle to the use of Triborough Bridge and Tunnel Authority surpluses to offset operating deficits of the city's subways and buses has been removed.

In announcing the action yesterday, Dr. William J. Ronan, head of the Metropolitan Transportation Authority, said "some $74-million can now be made available to the Transit Authority."

He said this meant that the Transit Authority, which is part of the M.T.A., "will be able to keep its pledge to hold the subway fare at the present 30-cent level through the calendar year 1971."

Transfer of Triborough funds had been blocked for months pending consents from holders of two-thirds of the Triborough Bridge and Tunnel Authority's $300million in outstanding bonds. The final consents to go over the two-thirds mark were obtained recently.

The inducement offered to the bondholders, in negotiations that started late in 1968, was an additional one-quarter of 1 percent interest. Original rates on the bonds were 4 per cent maximum with some carrying a little less.

The M.T.A. announcement said that next month, "after certain legal formalities are concluded," the 1967 and 1968 Triborough surpluses ($26.064,296 and $21,272,920 respectively) would be transferred to the Transit Authority.

The Transit Authority in turn, will repay the money to New York City, which advanced funds last year to keep the fare at 20 cents until the end of the year, when it was increased to 30 cents.

Last year's Triborough surplus of $26,226,769 will go to the Transit Authority soon after July 1, if the city, as expected, meets the legal requirement of providing $10-million for capital improvements-as opposed to operating expenses of the subways.

Triborough officials declined to estimate the size of this year's and future surpluses that will similarly be available to meet subway and bus deficits.

Political observers regarded the developments as tending to lessen any damage Governor Rockefeller might suffer in the fall election because of poor commuter service and the state's failure to help keep the transit fare from going to 30 cents.

RUBBER AND RAILS

The Governor's transit aides saw the transfer of Triborough funds as symbolizing a significant trend toward public adoption of the philsosophy that "rubber should help pay for rails"--that motorists should help pay for mass transit.

The idea that Triborough surpluses-derived from bridge and tunnel tollsshould be siphoned off to the Transit Authority was contained in the landmark legislation of 1967 creating the Metropolitan Transit Authority.

The M.T.A. was set up as an umbrella agency with control of most metropolitan area transportation, including the Triborough and Transit Authorities, the Long Island Rail Road (which it already operated), and the Staten Island rapid transit line. It has since moved to take over the New Haven, Harlem and Hudson Divisions of the Penn Central.

A bondholders' lawsuit prevented prompt implementation of the fund transfer. A key role in obtaining the consents was played by Robert Christie, a vice president of Dillon Read & Co., of 48 Wall Street.

[From the New York Times, May 5, 1969]

TRANSPORTATION PASSED

Increase in interest-rate ceiling from 4 to 6 percent on bonds of the Triborough Bridge and Tunnel Authority to allow Triborough surplus to be used to maintain the 20-cent subway and bus fare in New York City.

Mortgage tax increases of 25 cents a $100 to provide additional funds to the Metropolitan Transportation Authority. Two-year extension of the life of TriState Transportation Commission, a joint planning agency of New York, New Jersey and Connecticut.

Provision of $18.7-million as the state's share of a $25-million program for modernization of Staten Island Railroad line between St. George and Tottenville.

[From the Daily Bond Buyer, May 11, 1970]

THE EDITOR'S CORNER

(By Paul Heffernan)

A historic shift in the 37-year-old function of the Triborough Bridge and Tunnel Authority of New York State is now in effect as the consequence of 20 months of successful negotiations to get bondholders to let the Triborough's annual surplus-now running to about $25 million-became available to Triborough's new parent, the Metropolitan Transportation Authority-for use in financing MTA's deficit-ridden subway and other mass transit operations.

By reason of the accord just reached with bondholders, the $286 million of Triborough revenue bonds issued from 1960 to 1963, to finance construction of the Verrazano Narrows Bridge connecting Brooklyn and Staten Island, will bear 0.25 percent more than the rate of the original bond contract, and the contract itself will be strengthened for the benefit of the bondholders by giving them a prior lien on the earnings of all of the Triborough's existing facilities, not just the earnings of the Narrows Bridge.

"AA" RATING EXPECTED

It is thus expected that the outstanding debt incurred to finance the Narrows Bridge will win an improvement in market rating from the status of "A" to that of double-"A," just as did the bonded debt of the Triborough's older bridge facilities until the last of such bonds were retired in July of 1969.

To the Metropolitan Transportation Authority, the long-sought consent of the Triborough bondholders to the modification of their investment contract means that MTA will be able to make use of about $74 million of surplus funds accumulated by Triborough since 1967, when the absorption of the Triborough administration into MTA became effective.

Formal effectiveness of Triborough's new status in the financial area will take place on June 17. At that time a two-year Triborough surplus totaling $47,337,216 will be transferred to the Transit Authority. This money, in turn, will repay funds advanced by New York City last year to maintain the subway fare at 20 cents until the end of the year, when it was increased to 30 cents.

To what extent current and future Triborough surplus funds will be used to pay operating expenses for certain limping MTA facilities-namely the subway system, the Long Island Railroad and, next, the Penn Central Railroad's New Haven, Harlem and Hudson River Divisions-is a question.

NEW YORK CITY COMMITMENT

The 1967 New York State legislation incorporating Triborough into the MTA setup requires that any use of Triborough surplus funds for transit operating expenses must commit New York City to spend $100 million a year on capital equipment for the transit systems until 1973, and for a lesser relative outlay thereafter.

There is every indication that the absorption of the Triborough surplus by MTA will not mean a phasing out in the future of the Triborough name in future financings in the public market.

The annual surplus being generated by Triborough is enough to lend debt service support to new Triborough debt running from $300 to $500 million, assuming sizable and lasting improvement in the present overtaxed state of the bond market.

COMING BOND ISSUES

Projects suitable for Triborough financing in a better market could include Triborough projects long in the planning stage, such as third tube for the Midtown Tunnel, expanding the East Side Air Terminal and the Battery Parking Garage, and reconstructing the Beach Channel Bridge over Jamaica Bay.

Subject to further legislative modification of the State laws controlling Triborough, the agency's surplus funds could be used to help finance even transit projects such as the proposed railroad line to connect Kennedy Airport with a transportation terminal on Manhattan's West Side.

BOND SERIES AFFECTED

The Triborough bonds affected by the accord just reached with bondholders are of three issues sold from 1960 to 1963. All of such bonds are slated to be

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