November 20, 2008
Inland Valley Daily Bulletin (CA) on SILO Deals and the Los Angeles MTA
"Failure of AIG Places Transit Agency in Peril"
By Dan Abendschein
The MTA is one of dozens of transit agencies nationwide that are in Washington this week seeking help because of troubles with similar deals.
The MTA's deals originated in the late 1990s and early 2000s, when it sold off a huge number of buses and trains to corporate investors, including Phillip Morris and Comerica.
It then entered into long-term leases to use the equipment. The sales netted about $65 million to put toward operating costs, said Littman.
"Essentially, they were tax shelters," said Joseph Henchman of the Washington-based Tax Foundation, a taxpayer rights organization that opposes guaranteeing the leases. "They were a way to get short-term revenue that was never appropriated."
The Tax Foundation estimates that agencies across the country owe $2 billion to $4 billion in such lease deals, while California lawmakers have estimated that agencies around the state owe $700 million.
