Press Release|Public Finance
KBRA Affirms AA Rating, Stable Outlook on Triborough Bridge and Tunnel Authority (MTA Bridges and Tunnels) Real Estate Transfer Tax Revenue Bonds (TBTA Capital Lockbox Fund)
22 Dec 2025 | New York
KBRA affirms the long-term rating of AA for the Triborough Bridge and Tunnel Authority Real Estate Transfer Tax Revenue Bonds (TBTA Capital Lockbox Fund). The Outlook is Stable. The rating affirmation reflects KBRA’s positive view of:
- The non-appropriation pledge and statutory dedication of New York City Real Estate Transfer Tax (“RETT”) Receipts transferred in monthly installments by the State Comptroller to the Central Business District (“CBD”) Tolling Capital Lockbox Fund (the “Lockbox”) held by TBTA, or “MTA Bridges and Tunnels”, where, upon deposit, they become subject to the lien of the Bond Resolution;
- The segregation of RETT Receipts held in trust in the Lockbox from the general operating budgets and other monies of MTA and TBTA;
- The legal and security provisions of the credit structure, which include: a closed senior lien; in lieu of an additional bonds test, a $150 million cap on maximum annual debt service (“MADS”); a conservative flow of funds that allows for the capture of RETT Receipts equivalent to the full annual debt service requirement and any required DSRF replenishment well in advance of the due date and prior to any transfers out; and a MADS-funded DSRF available at closing, to be immediately replenished if drawn upon. In KBRA’s view, these provisions provide important bondholder security that helps to counterbalance the potential volatility of the pledged revenues;
- Solid, though volatile, coverage of maximum annual debt service (“MADS”) from actual RETT Receipts, based on a December 2nd through December 1st debt service year, which over the short historical timeframe of 2020 through 2025 (November forecast) has averaged 2.35x, and exceeded 2.0x in each year except for 2020.
- The statutory inability of TBTA to file for bankruptcy protection while Real Estate Transfer Tax Revenue Bonds are outstanding, and the inability of creditors to file involuntary proceedings against TBTA, both of which augment bondholder security.
KBRA sees the following factors as partial offsets to the abovementioned credit strengths:
- The RETT has only a five-year collection history. In the absence of a longer period of historical collections, a third-party analysis of pro-forma RETT amounts was relied upon to get a sense of pledged revenue performance across economic cycles.
- While actual collections are expected to exceed 1.0x coverage, there is no built-in revenue cushion above 1.0x, assuming TBTA leverages up to the MADs limit, as they plan to.
- The pro-forma annual sales volumes and units of City residential and non-residential real estate sales subject to the Transfer Tax have been volatile, particularly in the years following the global financial crisis (“GFC”), as well as in 2020, when pandemic impacts were most severely felt.
- During periods of economic stress, high-end residential sales, the largest contributor to RETT receipts, may slow more rapidly than sales of lower priced properties, as high-net-worth buyers are affected by weakness in the financial markets. Additionally, properties are likely to lose value and sell for less following prolonged economic downturns. Supply constraints and limited new inventory, especially in desirable neighborhoods where sales values are highest, can slow the volume of residential real property conveyances.
- While non-residential sales are a small percentage of total RETT Receipts, they provide both an important revenue cushion and a degree of revenue diversification. However, certain sectors of the City’s commercial office sector remain pressured due to the post-pandemic decline in office demand. While the threshold for application of the RETT is low in the case of non-residential real estate, worsening commercial real estate valuations have the potential to negatively impact price appreciation in mixed-use and/or residential neighborhoods and can thus have a detrimental effect on residential sales volume and prices. In addition, a growing number of commercial to residential conversions are taking place, some of which may not meet the Transfer Tax threshold.
Key Credit Considerations
Credit Positives
- Strong legal and security provisions adequately counterbalance the potential volatility of RETT receipts.
- To the extent that real estate sales prices continue to increase, the RETT will apply to a larger percentage of City residential sales, as well as to most non-residential sales.
Credit Challenges
- The short track record of actual RETT Receipts necessitates reliance on pro-forma estimates of historical performance.
- New York City residential real estate sales values and unit transactions, as estimated, have proven particularly sensitive to real estate market cyclicality, as well as to severe economic dislocations including the GFC and the COVID-19 pandemic.
- TBTA intends to leverage pledged revenues up to the $150 million MADS cap (approximately $2.3 - $2.5 billion in debt issuance).
Rating Sensitivities
For Upgrade
- Sustained increases in the share of properties, sales volume and number of unit sales subject to the RETT, resulting in a trend of consecutive years of stable to improving MADS coverage.
For Downgrade
- A decline in RETT Receipts resulting in MADS coverage of 1.15x or below. The 1.15x threshold takes into consideration the lowest pro-forma coverage in a year that was not associated with a severe economic dislocation (1.15x in 2005).
To access ratings and relevant documents, click here.