$83,500,000 TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY (MTA BRIDGES AND TUNNELS) GENERAL REVENUE BONDS, SUBSERIES 2008B-1

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1 REMARKETING CIRCULAR BOOK-ENTRY-ONLY On November 15, 2013 (the Mandatory Tender Date), Triborough Bridge and Tunnel Authority (MTA Bridges and Tunnels) is effecting a mandatory tender and purchase and remarketing of the currently outstanding Triborough Bridge and Tunnel Authority (MTA Bridges and Tunnels) General Revenue Bonds, Subseries 2008B 1 (the Subseries 2008B 1 Bonds). On the Mandatory Tender Date, (i) all of the Subseries 2008B 1 Bonds will be subject to mandatory tender at a purchase price equal to the principal amount thereof, plus accrued interest to, but not including, the Mandatory Tender Date; (ii) MTA Bridges and Tunnels will amend the Certificate of Determination delivered in connection with the original issuance of the Subseries 2008B-1 Bonds, in part, to modify certain terms and provisions of the Subseries 2008B-1 Bonds; (iii) MTA Bridges and Tunnels will convert the Subseries 2008B-1 Bonds from a Term Rate Mode to a Fixed Rate Mode; and (iv) the terms and provisions of the Subseries 2008B-1 Bonds will be amended to reflect the terms and provisions described herein. See REMARKETING PLAN AND APPLICATION OF PROCEEDS. See TAX MATTERS herein for a discussion of certain federal and State income tax matters. $83,500,000 TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY (MTA BRIDGES AND TUNNELS) GENERAL REVENUE BONDS, SUBSERIES 2008B-1 Dated and accruing interest from November 15, 2013 DUE: November 15, as shown on the inside cover The Subseries 2008B-1 Bonds - are general obligations of MTA Bridges and Tunnels, payable generally from the net revenues collected on the bridges and tunnels operated by MTA Bridges and Tunnels as described herein, and are not a debt of the State or The City of New York or any other local government unit. MTA Bridges and Tunnels has no taxing power. The Subseries 2008B-1 Bonds will bear interest at the rates shown on the inside cover hereof. The Subseries 2008B-1 Bonds are subject to redemption prior to maturity as described herein. Upon the conversion of the Subseries 2008B-1 Bonds to a Fixed Rate Mode, the Subseries 2008B-1 Bonds are no longer subject to conversion to another Interest Rate Mode. The Subseries 2008B-1 Bonds are subject to the Book-Entry-Only system through the facilities of The Depository Trust Company. This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of the Subseries 2008B-1 Bonds. Investors are advised to read the entire remarketing circular, including all portions hereof included by specific cross-reference, to obtain information essential to making an informed decision. November 6, 2013

2 Maturity (November 15) $83,500,000 TRIBOROUGH BRIDGE AND TUNNEL AUTHORITY (MTA BRIDGES AND TUNNELS) GENERAL REVENUE BONDS $83,500,000 Subseries 2008B-1 Serial Bonds Principal Amount Interest Rate Yield $29,375, % 2.65% T ,925, * T ,200, T53 CUSIP Number (89602N) The Subseries 2008B-1 Bonds are subject to redemption as described under the caption DESCRIPTION OF SUBSERIES 2008B-1 BONDS Redemption Prior to Maturity in Part I. The following summarizes the optional redemption provisions: the Subseries 2008B-1 Bonds maturing on and after November 15, 2024 are subject to redemption prior to maturity on any date on and after November 15, 2023, at the option of MTA Bridges and Tunnels, in whole or in part at 100% of the principal amount thereof, together with accrued interest thereupon up to but not including the redemption date. CUSIP numbers have been assigned by an organization not affiliated with MTA Bridges and Tunnels and are included solely for the convenience of the holders of the Subseries 2008B-1 Bonds. MTA Bridges and Tunnels is not responsible for the selection or uses of these CUSIP numbers, nor is any representation made as to their correctness on the Subseries 2008B-1 Bonds or as indicated above. * Priced at the stated yield to the November 15, 2023 redemption date price of 100%.

3 Triborough Bridge and Tunnel Authority (MTA Bridges and Tunnels) Triborough Station, Box 35 New York, New York (212) Website: Thomas F. Prendergast... Chairman and Chief Executive Officer Fernando Ferrer... Vice Chairman Andrew B. Albert... Non-Voting Member Jonathan Ballan... Member John H. Banks III... Member Robert C. Bickford... Member James F. Blair... Non-Voting Member Norman E. Brown... Non-Voting Member Allen P. Cappelli... Member Ira R. Greenberg... Non-Voting Member Jeffrey A. Kay... Member Mark D. Lebow... Member Susan G. Metzger... Member Charles G. Moerdler... Member John J. Molloy....Member Mark Page... Member Mitchell H. Pally... Member David A. Paterson... Member Andrew M. Saul.... Member James L. Sedore, Jr.... Member Vincent Tessitore, Jr.... Non-Voting Member Ed Watt... Non-Voting Member Carl V. Wortendyke... Member James Ferrara... President David Moretti... Executive Vice President Joseph Keane... Vice President and Chief Engineer M. Margaret Terry, Esq.... Senior Vice President and General Counsel Donald Spero... Chief Financial Officer HAWKINS DELAFIELD & WOOD LLP New York, New York Bond Counsel LAMONT FINANCIAL SERVICES CORPORATION Fairfield, New Jersey Financial Advisor STANTEC CONSULTING SERVICES INC. New York, New York Independent Engineers -i-

4 SUMMARY OF TERMS MTA Bridges and Tunnels has prepared this Summary of Terms to describe the specific terms of the MTA Bridges and Tunnels General Revenue Bonds, Subseries 2008B-1 (the Subseries 2008B-1 Bonds). The information in this remarketing circular, including the materials filed with the Electronic Municipal Market Access Systems of the Municipal Securities Rulemaking Board and included by specific cross-reference as described herein, provides a more detailed description of matters relating to MTA Bridges and Tunnels and to MTA Bridges and Tunnels General Revenue Bonds. Investors should carefully review that detailed information in its entirety before making a decision to purchase any of the bonds being offered. Issuer... Bonds Being Remarketed... Purpose of Issue... Maturity and Rates... Triborough Bridge and Tunnel Authority, a public benefit corporation of the State of New York (hereinafter referred to as MTA Bridges and Tunnels). General Revenue Bonds, Subseries 2008B-1. The Subseries 2008B-1 Bonds were originally issued on March 27, 2008 to finance transit and commuter projects and to refinance outstanding indebtedness issued by MTA or MTA Bridges and Tunnels. The Subseries 2008B-1 Bonds mature on the dates and at the rates shown on the inside cover. Denominations... $5,000 and whole multiples of $5,000. Interest Payment Dates... May 15 and November 15, commencing May 15, Redemption... See DESCRIPTION OF SUBSERIES 2008B-1 BONDS Redemption Prior to Maturity in Part I. Sources of Payment and Security... Registration of the Bonds... Net revenues collected on the bridges and tunnels operated by MTA Bridges and Tunnels as described herein. DTC Book-Entry-Only System. No physical certificates evidencing ownership of a bond will be delivered, except to DTC. Trustee... U.S. Bank Trust National Association, New York, New York. Bond Counsel... Tax Status... Hawkins Delafield & Wood LLP, New York, New York. See TAX MATTERS Part III. Ratings... Rating Agency Rating Moody s: Aa3 Standard & Poor s: AA- Fitch: AA- Kroll: AA Financial Advisor... Purchase Price/Remarketing Agents Discount... Independent Engineers... See RATINGS in Part III. Lamont Financial Services Corporation, Fairfield, New Jersey. See REMARKETING in Part III. Stantec Consulting Services Inc., New York, New York. -ii-

5 No Unauthorized Offer. This remarketing circular is not an offer to sell, or the solicitation of an offer to buy, the Subseries 2008B-1 Bonds in any jurisdiction where that would be unlawful. MTA Bridges and Tunnels has not authorized any dealer or salesperson or anyone else to give any information or make any representation in connection with the offering of the Subseries 2008B-1 Bonds, except as set forth in this remarketing circular. No other information or representations should be relied upon. No Contract or Investment Advice. This remarketing circular is not a contract and does not provide investment advice. Investors should consult their financial advisors and legal counsel with questions about this remarketing circular and the Subseries 2008B-1 Bonds being remarketed, and anything else related to this bond issue. Information Subject to Change. Information and expressions of opinion are subject to change without notice, and it should not be inferred that there have been no changes since the date of this document. Neither the delivery of, nor any sale made under, this remarketing circular shall under any circumstances create any implication that there has been no change in MTA Bridges and Tunnels affairs or in any other matters described herein. Forward-Looking Statements. Many statements contained in this remarketing circular, including the appendices and the documents included by specific cross-reference, that are not historical facts are forward-looking statements, which are based on MTA Bridges and Tunnels and the Independent Engineers beliefs, as well as assumptions made by, and information currently available to, the management and staff of MTA Bridges and Tunnels and the Independent Engineers as of the date of this remarketing circular. Because the statements are based on expectations about future events and economic performance and are not statements of fact, actual results may differ materially from those projected. The words anticipate, assume, estimate, expect, objective, projection, plan, forecast, goal, budget or similar words are intended to identify forward-looking statements. The words or phrases to date, now, currently, and the like are intended to mean as of the date of this remarketing circular. Neither MTA Bridges and Tunnels independent auditors, nor any other independent auditors, have compiled, examined, or performed any procedures with respect to the forward-looking statements contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability. Neither MTA Bridges and Tunnels independent auditors, nor any other independent auditors, have been consulted in connection with the preparation of the forward-looking statements set forth in this remarketing circular, which is solely the product of MTA and its affiliates and subsidiaries, and the independent auditors assume no responsibility for its content. Projections. MTA Bridges and Tunnels projections set forth in this remarketing circular were not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of MTA Bridges and Tunnels management, were prepared on a reasonable basis, reflect the best currently available estimates and judgments, and present, to the best of management s knowledge and belief, the expected course of action and the expected future financial performance of MTA Bridges and Tunnels. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this remarketing circular are cautioned not to place undue reliance on the prospective financial information. Neither MTA Bridges and Tunnels independent auditors, nor any other independent auditors, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information. Neither MTA Bridges and Tunnels independent auditors, nor any other independent auditors, have been consulted in connection with the preparation of the prospective financial information set forth in this remarketing circular, which is solely the product of MTA Bridges and Tunnels and its affiliates and subsidiaries, and the independent auditors assume no responsibility for its content. -iii-

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7 TABLE OF CONTENTS SUMMARY OF TERMS... ii INTRODUCTION... 1 MTA Bridges and Tunnels and Other Related Entities... 1 Information Provided in Appendix A... 2 Where to Find Information... 2 Recent Developments Affecting MTA... 3 PART I. SUBSERIES 2008B-1 BONDS REMARKETING PLAN AND APPLICATION OF PROCEEDS DESCRIPTION OF SUBSERIES 2008B-1 BONDS General Redemption Prior to Maturity Debt Service on the Bonds PART II. SOURCES OF PAYMENT AND SECURITY FOR THE BONDS SOURCES OF PAYMENT SECURITY Pledge Effected by the MTA Bridges and Tunnels Senior Resolution Revenues and Additional MTA Bridges and Tunnels Projects Flow of Revenues Rate Covenant Additional Bonds Refunding Bonds Subordinate Obligations PART III. OTHER INFORMATION ABOUT THE SUBSERIES 2008B-1 BONDS TAX MATTERS General The Subseries 2008B-1 Bonds BOARD POLICY REGARDING SENIOR LIEN COVERAGE LEGALITY FOR INVESTMENT LITIGATION FINANCIAL ADVISOR REMARKETING RATINGS LEGAL MATTERS CONTINUING DISCLOSURE FURTHER INFORMATION Attachment 1 Book-Entry-Only System Attachment 2 Continuing Disclosure Under SEC Rule 15c2-12 Attachment 3 Forms of Opinion of Bond Counsel Attachment 4 Copy of Bringdown Letter of Stantec Consulting Services Inc. Page

8 Information Included by Specific Cross-reference. The following portions of MTA s 2013 Combined Continuing Disclosure Filings, dated April 30, 2013, filed with the Electronic Municipal Market Access System (EMMA) of the Municipal Securities Rulemaking Board (MSRB), are included by specific cross-reference in this remarketing circular, along with material that updates this remarketing circular and that is filed with EMMA prior to the delivery date of the Subseries 2008B-1 Bonds, together with any supplements or amendments thereto: Appendix A The Related Entities Appendix D Audited Financial Statements of Triborough Bridge and Tunnel Authority for the Years Ended December 31, 2012 and 2011 The following documents have also been filed with EMMA and are included by specific crossreference in this remarketing circular: MTA s Unaudited Consolidated Financial Statements as of and for the six-month period ended June 30, 2013 Summary of Certain Provisions of the TBTA Senior Resolution Definitions and Summary of Certain Provisions of the Standard Resolution Provisions History and Projection of Traffic, Toll Revenues and Expenses and Review of Physical Conditions of the Facilities of Triborough Bridge and Tunnel Authority, dated April 26, 2013, prepared by Stantec Consulting Services Inc. New York For convenience, copies of most of these documents can be found on the MTA website ( under the caption MTA Home MTA Info Financial Information Budget and Financial Statements in the case of MTA s Unaudited Consolidated Financial Statements for the six-month period ended June 30, 2013, MTA Home MTA Info Financial Information Investor Information in the case of (i) the Audited Consolidated Financial Statements of Triborough Bridge and Tunnel Authority for the Years Ended December 31, 2012 and 2011; (ii) the summary of certain provisions of the MTA Bridges and Tunnels Senior Resolution; and (iii) Appendix E History and Projection of Traffic, Toll Revenues and Expenses and Review of Physical Conditions of the Facilities of Triborough Bridge and Tunnel Authority, dated April 26, 2013, prepared by Stantec Consulting Services Inc. New York. No statement on the MTA s website is included by specific cross-reference herein. See FURTHER INFORMATION in Part III. See Attachment 4 for a copy of the Bringdown Letter of Stantec Consulting Services Inc., dated October 29, Definitions of certain terms used in the summaries may differ from terms used in this remarketing circular, such as using the popular name MTA Bridges and Tunnels in place of Triborough Bridge and Tunnel Authority or its abbreviation, TBTA. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

9 INTRODUCTION MTA Bridges and Tunnels and Other Related Entities Triborough Bridge and Tunnel Authority, or MTA Bridges and Tunnels, is a public benefit corporation, which means that it is a corporate entity separate and apart from the State, without any power of taxation frequently called a public authority. MTA Bridges and Tunnels is empowered to construct and operate toll bridges and tunnels and other public facilities in New York City. MTA Bridges and Tunnels issues debt obligations to finance the capital costs of its facilities and the transit and commuter systems operated by other affiliates and subsidiaries of the Metropolitan Transportation Authority or MTA. MTA Bridges and Tunnels surplus amounts are used to fund transit and commuter operations and finance capital projects. MTA has responsibility for developing and implementing a single, integrated mass transportation policy for the MTA Commuter Transportation District, which consists of New York City (the City) and the seven New York metropolitan-area counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester. It carries out some of those responsibilities by operating the transit and commuter systems through its subsidiary and affiliate entities: the New York City Transit Authority and its subsidiary, the Manhattan and Bronx Surface Transit Operating Authority; the Staten Island Rapid Transit Operating Authority; The Long Island Rail Road Company; the Metro-North Commuter Railroad Company; the MTA Bus Company; and the MTA Capital Construction Company. MTA issues debt obligations to finance a substantial portion of the capital costs of these systems. The board members of MTA serve as the board members of the MTA s affiliates and subsidiaries, which, together with the MTA, are referred to collectively herein as the Related Entities. MTA Bridges and Tunnels is an affiliate, not a subsidiary, of MTA. MTA, MTA Bridges and Tunnels and the other Related Entities are described in detail in Appendix A to MTA s 2013 Combined Continuing Disclosure Filings (Appendix A), which is included by specific cross-reference in this remarketing circular. The following table sets forth the legal and popular names of the Related Entities. Throughout this remarketing circular, reference to each agency will be made using the popular names. Legal Name Popular Name Metropolitan Transportation Authority New York City Transit Authority Manhattan and Bronx Surface Transit Operating Authority Staten Island Rapid Transit Operating Authority MTA Bus Company The Long Island Rail Road Company Metro-North Commuter Railroad Company MTA Capital Construction Company Triborough Bridge and Tunnel Authority MTA MTA New York City Transit MaBSTOA MTA Staten Island Railway MTA Bus MTA Long Island Rail Road MTA Metro-North Railroad MTA Capital Construction MTA Bridges and Tunnels

10 Capitalized terms used herein and not otherwise defined have the meanings provided by Appendix A. Information Provided in Appendix A From time to time, the Governor, the State Comptroller, the City Comptroller, County Executives, State legislators, City Council members and other persons or groups may make public statements, issue reports, institute proceedings or take actions that contain predictions, projections or other information relating to the Related Entities or their financial condition, including potential operating results for the current fiscal year and projected baseline surpluses or gaps for future years, that may vary materially from, question or challenge the information provided in Appendix A. Investors and other market participants should, however, refer to MTA s then current continuing disclosure filings for information regarding the Related Entities and their financial condition. Where to Find Information Information in this remarketing circular. This remarketing circular is organized as follows: This Introduction provides a general description of MTA Bridges and Tunnels and the other Related Entities. Part I provides specific information about the Subseries 2008B-1 Bonds. Part II describes the sources of payment and security for all General Revenue Bonds, including the Subseries 2008B-1 Bonds. Part III provides miscellaneous information relating to the Subseries 2008B-1 Bonds. Attachment 1 sets forth certain provisions applicable to the book-entry system of registration to be used for the Subseries 2008B-1 Bonds. Attachment 2 sets forth a summary of certain provisions of a continuing disclosure agreement relating to the Subseries 2008B-1 Bonds. Attachment 3-1 is the form of opinion of Bond Counsel originally delivered in connection with the issuance of the Subseries 2008B-1 Bonds. Attachment 3-2 is the form of opinion of Bond Counsel to be delivered in connection with the remarketing of the Subseries 2008B-1 Bonds. Attachment 4 sets forth a copy of the Bringdown Letter of Stantec Consulting Services Inc., dated October 29, Information Included by Specific Cross-reference in this remarketing circular and identified in the Table of Contents may be obtained, as described below, from EMMA and from MTA. Information from EMMA. MTA and MTA Bridges and Tunnels files and will in the future file annual and other information with EMMA. Information on file with EMMA can be accessed at 2

11 Information Included by Specific Cross-reference. The information listed under the caption Information Included by Specific Cross-reference following the Table of Contents, as filed with the MSRB through EMMA to date, is included by specific cross-reference in this remarketing circular. This means that important information is disclosed by referring to those documents and that the specified portions of those documents are considered to be part of this remarketing circular. This remarketing circular, which includes the specified portions of those filings, should be read in its entirety in order to obtain essential information for making an informed decision in connection with the Subseries 2008B-1 Bonds. Information Available at No Cost. Information filed with EMMA is also available, at no cost, on MTA s website or by contacting MTA, Attn.: Finance Department, at 347 Madison Avenue, New York, New York For important information about MTA s website, see FURTHER INFORMATION in Part III. Recent Developments Affecting MTA MTA Metro-North Railroad New Haven Line Service Disruption On Wednesday, September 25, 2013, the loss of a Con Edison feeder that supplies electricity to the overhead wires that power the New Haven Line caused a disruption of normal train service provided by MTA Metro-North Railroad for the New Haven Line. MTA Metro-North Railroad, working with Con Edison, restored normal service on Monday, October 7, There is currently no firm estimate of the extent of revenue losses that will be sustained by the system. Changes Since the July Plan At the September 16 th meeting of the MTA Finance Committee, the MTA reported the latest available preliminary operating results including: Agency operating results and debt service through July; Payroll Mobility Tax and MTA Aid results through August; and other subsidy results through mid- September. On an overall basis, year-to-date results were better than the July Plan (hereinafter defined) due primarily to positive results from operations. Both operating revenues and expenses, for the month of July and year-to-date, were slightly favorable. Year-to-date debt service costs were slightly favorable. Year-to-date subsidies in aggregate were on target as favorable real estate tax receipts were offset by lower Petroleum Business Tax (PBT) receipts. With regard to expenses, favorable costs for straight-time payroll and non-payroll (OTPS) expenses were partially offset by higher overtime costs, which were the subject of a special report at the September 16 th meeting of the MTA Finance Committee. Among other things, the report noted that while overtime does result in savings to straight-time payroll and fringe benefit costs as a result of unfilled budgeted positions, it results in premium pay rates and higher pension costs that can exceed the cost of hiring new employees. The report concluded that the mid-year forecast for overtime at the MTA was likely understated, and that overtime needs to be managed more effectively and forecasted more accurately. Subsequent to the September Board cycle, more current preliminary financial information became available, and was consistent with those trends previously identified: August passenger and toll revenue continued to be favorable; August expenses, including debt service, were also favorable. Subsidy results through October were positive, as favorable real estate tax receipts were partially offset by lower PBT receipts. These trends will be reflected in the November Plan forecast. The November Plan forecast will be presented to the MTA Board at its meeting scheduled to be held on November 13,

12 Highlights of the July Plan The 2013 Mid-Year Forecast, 2014 Preliminary Budget and July Financial Plan (collectively, the July Plan or Plan) was presented to the MTA Board at its July 24 th meeting. MTA s financial plans have been disciplined, consistent and transparent, and include three key elements: continuous pursuit of recurring cost reductions, three years of net zero wage growth for represented employees, and biennial fare and toll increases. The MTA also seeks to add or restore service when sustainable, preserve and enhance funding for the capital program, while also addressing long term costs such as pension, health care, energy, paratransit, and debt service previously considered uncontrollable. The July Plan includes new and restored service and other customer enhancements and includes resources to improve operations through better maintenance. It funds the local match to federal funds for the Superstorm Sandy repair and recovery projects as well as long-term resiliency projects that either have been or are anticipated to be included in the Capital Program. The July Plan also provides additional financial support for the Capital Program funded largely from debt service savings relating to 2012/13 refundings and lower projected interest rates and cash flow requirements. The July Plan is designed to address long-term uncontrollable costs in order to minimize future fare and toll increases. The July Plan is in balance through 2014, with modest out-year deficits totaling $240 million for The July Plan updated the MTA 2013 Adopted Budget and the Financial Plan of February 26, 2013 (collectively, the February Plan). Service investments and customer enhancements. Since new and restored service adds ongoing expense to the budget, funding for such service must be sustainable. The affordability of additional service is evaluated in the context of the entire budget, not a specific revenue or expense line. The MTA is adding or restoring $18 million per year in additional service and service quality investments. The July Plan also includes $11.5 million of normal platform service adjustments and $11 million in other customer enhancements. MTA is committed to continuing the funding for the $18 million, $11.5 million and $11 million service investments. These investments reflect identified agency service and customer enhancement priorities which MTA believes are affordable given its current financial situation. Addressing important operational and maintenance needs. MTA is investing $76 million to improve both operations and maintenance. Among the investments is the implementation of an Agencywide Enterprise Asset Management initiative aimed at aligning corporate objectives with best standards and procedures, and proactive maintenance. This initiative is intended to provide cost efficiencies and enhancements to maintaining assets in a state of good repair. At MTA New York City Transit, projects also include a life-extending overhaul of R46 cars, increased structural inspections and repairs, and water intrusion remediation. The MTA Long Island Rail Road is investing in maintenance of its rolling stock and elevators/escalators. MTA Metro-North Railroad is purchasing additional snow fighting equipment, and is implementing new programs to improve the maintenance and cleaning of its right-of-way. MTA Bus is converting its hybrid fleet to clean and cheaper diesel propulsion, and implementing a variety of customer-related technology projects. MTA Bridges and Tunnels is increasing resources to support longterm restoration and mitigation projects resulting from Superstorm Sandy. Additional support for Capital Program. The Plan increases support of the Capital Program by $80 million annually beginning in 2015, largely from 2013 refunding savings and revised cash-flow requirements. Increased OPEB deposits. The July Plan assumes that MTA continues to make annual payments to address the $17.8 billion unfunded OPEB liability. Contributions are increasing in this Plan by $3 million in 2013, growing to $29 million in 2016, when compared with the February Plan. The Plan reflects the early repayment in 2012 of (i) inter-agency loans taken from the OPEB account used to fund the Sandy-related operating losses, and (ii) a loan to fund terminations of four interest rate swaps. 4

13 To date, $250 million has been transferred from the OPEB account held by MTA into the OPEB Trust where it is being invested in a manner similar to the management of the MTA-controlled pension plans. Reduction of unfunded pension liability. The 2013 forecast also captures a one-time increase in real estate receipts, due to a high volume of large transactions that occurred early this year, a portion of which is being used to reduce MTA Long Island Rail Road s unfunded pension liability. This payment of $80 million is expected to result in annual recurring savings of $6 million per year. Unexpended General Reserve funds applied towards reducing recurring long-term costs. Consistent with prior plans, this Plan includes a General Reserve that approximates 1% of the MTA s annual operating budget. In 2012, this provision proved essential as the General Reserve helped provide the liquidity needed for the short-term funding of losses occasioned by Superstorm Sandy. Consistent with its increased emphasis on addressing previously considered uncontrollable costs, MTA plans to use any unexpended year-end balance to make one-time payments toward long-term obligations (unfunded pension or OPEB liabilities, pay-as-you-go (PAYGO) and/or debt retirement) to reduce annual expenses, minimizing pressure on future fares and tolls. Overall Results Taken in total, these re-estimates, changes and recommendations encompassed in the Plan result in a net improvement to MTA s financial projections. The Plan projects positive cash balances of $141 million in 2013 and $6 million in 2014, and modest out-year deficits of $49 million in 2015, $91 million in 2016 and $100 million in When compared with the February Plan, this results in favorable changes in 2013, 2014 and 2016 of $92 million, $83 million and $136 million, respectively; and an unfavorable change of $28 million in Key Elements Remain Essential in Addressing Deficits Three years of net-zero wage growth. The Plan continues to capture three years of net-zero wage growth for represented employees. To achieve net-zero wage growth, wage increases may be granted only if they are offset by savings from work rules or other non-wage concessions. In 2012, the State s largest unions agreed to contracts that include three years of zero wage increases as well as contributions towards health care benefits; similarly, this Plan assumes that the three net-zero contracts will be achieved through collective bargaining with MTA s unions. Recurring expense reductions and efficiencies. The Plan continues the strategy developed in 2010 to make every dollar count. This is expected to result in annual, recurring savings of over $800 million in 2013, growing to $1.3 billion by MTA continues to focus on expense containment. In fact, after adjustments for service expansion, wage growth (after the expected three years of net-zero), and additional maintenance programs, projected 2014 spending is essentially flat compared with 2013 (up 0.2%). Through the Plan period, annual increases in controllable costs are kept in line with a Consumer Price Index increase of 1.6%. However, uncontrollable expenses (i.e., pension, health & welfare, energy, insurance, paratransit and debt service) continue to grow at a significantly greater rate of 6.1% annually. Continue biennial fare/toll increases. The Plan continues to project biennial fare/toll increases to help offset continuing rapid growth in uncontrollable expenses. The 2015 fare/toll increase is projected to produce annualized revenue of $500 million, while the 2017 increase is projected to net $550 million 5

14 annualized. Consistent with the Plan, a March 1 implementation for both the 2015 and 2017 increases is anticipated. Risks to the Plan Despite an improved outlook, significant risks remain and the key elements of this Plan are also its primary risks. The Plan assumes that MTA will successfully execute the Financial Plan strategy. Labor agreements currently open must include settlements with three years of net-zero wage growth. Further, the Plan assumes that efforts to reduce costs will continue to be successful. While MTA has been successful in reducing expenses and controlling expense growth, additional reductions and efficiencies beyond those currently forecast will become more difficult to achieve. Finally, biennial increases in fares and toll revenue are essential to the Plan s successful execution. To the extent fare and toll revenue increases are less than projected, additional budget actions will be required. It should be noted that even with successful execution of these key elements, $240 million of cumulative deficits remain to be addressed within the Plan period. The finances of MTA are highly dependent on the regional and national economy. While the regional economy continues to improve, though unevenly, the national economy is growing at a rate much slower than typically expected at this stage of economic recovery. The Plan assumes that State budget actions will reflect full remittance to MTA of all funds collected on its behalf. The legal challenge to the payroll mobility tax is awaiting resolution of the appeals and any further changes to the tax could impact revenues coming to the MTA. Finally, MTA faces long-term vulnerabilities. Increased service costs associated with the mega projects reflected in this Plan rise to $190 million by 2017; to the extent that significant new ridership does not follow resulting in increased fare revenue, the relative burden on customers and taxpayers will increase. There has been little movement to negotiate a comprehensive federal budget for the next federal fiscal year which began October 1, 2013 and the level of ongoing federal support for the MTA capital program remains uncertain. With two major weather events in two years, insurance costs have increased dramatically with less coverage available. Given the competitive process for allocating federal resiliency funding, MTA s funding for this work may need to increase. As noted above, long-term costs such as pension and retiree health costs continue to grow. MTA must continue to set aside funds to meet the needs of its day to day operations and unbudgeted, but foreseeable financial challenges. Insurance As is anticipated annually, the MTA s property insurance program and All Agency Protective Liability Program were renewed, with new expiration dates of April 30, 2014 and May 31, 2014, respectively. In addition, the description of MTA s property insurance program appearing under the subcaption INSURANCE Property Insurance Program in PART 6 REGULATORY, EMPLOYMENT, INSURANCE AND LITIGATION MATTERS in Appendix A, is hereby amended by replacing such information in its entirety with the following: Property Insurance Program Property Insurance. The all-agency property insurance program was renewed by FMTAC effective May 1, 2013 for an annual period expiring April 30, FMTAC directly insures property damage claims of the other MTA Group entities in excess of a $25 million per occurrence self-insured retention ( SIR ), subject to an annual $75 million aggregate. A program limit of $500 million per occurrence covering property of the related entities collectively was placed, which is supplemented by the additional coverage described below. FMTAC is reinsured in the domestic, Asian, European and 6

15 Bermuda marketplaces for this coverage. All reinsurers participating in the property insurance program have eliminated the $150 million coverage sub-limit contained in the expired policy for flood-caused damage to property situated in FEMA Flood Zone A. The property insurance policy provides replacement cost coverage for all risks of direct physical loss or damage to all real and personal property, with certain exceptions and subject to certain sub-limits. The policy also provides extra expense and business interruption coverage. Acts of terrorism (both domestic and foreign) are covered under the Terrorism Risk Insurance Program described below. Losses occurring after the retention aggregate is exceeded are subject to a deductible of $7.5 million per occurrence. Supplementing the $500 million per occurrence coverage noted above, FMTAC s property insurance program has been expanded to include a further layer of $200 million of fully collateralized storm surge coverage for losses from storm surges that surpass specified trigger levels in the New York Harbor or Long Island Sound and are associated with named storms that occur at any point in the three year period from July 31, 2013 to July 30, The expanded protection is reinsured by MetroCat Re Ltd., a Bermuda special purpose insurer formed to provide FMTAC with capital markets-based property reinsurance. The MetroCat Re reinsurance policy is fully collateralized by a Regulation 114 trust invested in U.S. Treasury Money Market Funds. The additional coverage provided is available for storm surge losses only after amounts available under the $500 million in general property reinsurance are exhausted. Terrorism Risk Insurance. With respect to acts of terrorism, FMTAC provides direct coverage that is reinsured by the United States Government for 85% of certified losses, as covered by the Terrorism Risk Insurance Act ( TRIA ) of 2007 (originally introduced in 2002). Under the 2007 extension, terrorism acts sponsored by both foreign and domestic organizations are covered. The remaining 15% of MTA Group losses arising from an act of terrorism are subject to coverage under the additional terrorism policy described below. Additionally, no federal compensation will be paid unless the aggregate industry insured losses exceed $100 million (trigger). To supplement the reinsurance to FMTAC through the 2007 Terrorism Risk Insurance Program Reauthorization Act ( TRIPRA ) program, the MTA obtained an additional commercial reinsurance policy with various reinsurance carriers in the domestic, London and European marketplaces for the policy year commencing May 1, 2013 and expiring on April 30, That policy provides coverage for (1) 15% of any certified act of terrorism up to a maximum recovery of $ million for any one occurrence and in the annual aggregate, (2) the TRIPRA FMTAC captive deductible (per occurrence and on an aggregated basis) that applies when recovering under the 15% certified acts of terrorism insurance or (3) 100% of any certified terrorism loss which exceeds $5 million and less than the $100 million TRIPRA trigger up to a maximum recovery of $100 million for any occurrence and in the annual aggregate. Recovery under this policy is subject to a retention of $25 million per occurrence and $75 million in the annual aggregate in the event of multiple losses during the policy year. Should the MTA Group s retention in any one year exceed $75 million, future losses in that policy year are subject to retention of $7.5 million. Superstorm Sandy Update The July Plan contains updated estimates of the impacts of Superstorm Sandy. The July Plan estimates have put MTA property damage and other losses at $5.105 billion dollars, which includes an estimated $350 million lost fare and toll revenue and expenses necessary to prepare for and restore service (operating losses), and an estimated $4.755 billion in damages to MTA s infrastructure. MTA has also identified the need to fund $5.770 billion in resiliency projects to ensure that MTA assets are better able to withstand future storm events. 7

16 The $350 million in operating losses from Superstorm Sandy includes a $203 million loss for 2012, and projected losses of $147 million for the 2013 to 2015 period. The 2012 loss was funded internally with favorable MTA financial results, the General Reserve and a $75 million internal loan. Proceeds from the Federal Transit Administration (FTA) of $168 million and from FEMA of $6 million enabled MTA to repay the internal loan in MTA is expected to receive an additional $54 million in recovery for operating losses from the FTA in MTA is also seeking recovery for operating losses from insurance (business interruption/extra expense coverage). Operating losses, repairs and resiliency will be funded by a combination of insurance, federal programs and MTA resources, predominantly through reimbursements obtained from federal sources. It is expected that the local share for these projects will be funded by up to $950 million of previouslyapproved bonding and PAYGO funding of $160 million. These projects were included in the MTA s Capital Plan Amendment adopted by the MTA Board in July 2013, which identified sources of funding for Superstorm Sandy resiliency work. The amendment was submitted to the CPRB for approval on July 25, 2013, which approval was received on August 27, Debt Local Match Bridge loans and external borrowing for both infrastructure damages and resiliency are expected to result in additional debt service cost of $1 million in 2013, $7 million in 2014, $17 million in 2015, $44 million in 2016 and $72 million in When compared with the February Plan, these costs are significantly lower by: $28 million in 2013, $41 million in 2014, $31 million in 2015 and $18 million in PAYGO Local Match - $160 million of PAYGO funding is projected to be used to fund the local share for the financing of Superstorm Sandy. On May 23, 2013, the FTA allocated an additional $2.6 billion in disaster relief funds to MTA for Superstorm Sandy recovery efforts, bringing the total allocation to MTA of such FTA emergency relief funding to $3.79 billion. The funds, made available through the FTA s Emergency Relief Program, include $898 million set aside to finance MTA resiliency projects to ensure that transit assets are better able to withstand future storm events. These resiliency projects are aimed at protecting all critical MTA assets, including trains and buses, stations, tunnels, and rail and bus facilities, from storm surges, flooding, as well as high winds. MTA was previously allocated approximately $1.2 billion in funding from the FTA for repair and disaster relief work initiated by MTA New York City Transit, MTA Metro- North Railroad, MTA Long Island Rail Road and other MTA divisions. Superstorm Sandy recovery and resiliency FTA funding year-to-date for MTA is as follows: Initial Allocation (received) $ 193,893,898 March 29, 2013 Allocation 1,000,415,662 May 23, 2013 Recovery Allocation 1,702,462,214 May 23, 2013 Resiliency Allocation 897,848,194 TOTAL FTA FUNDS ALLOCATED TO DATE $3,794,619,968 On December 19, 2012, MTA and MTA Bridges and Tunnels Boards approved $2.5 billion in bond anticipation note issuance authority, consisting of $2.0 billion for transit and commuter purposes under either the MTA Transportation Revenue Obligation Resolution or the MTA Dedicated Tax Fund Obligation Resolution, and $500 million for MTA Bridges and Tunnels under the MTA Bridges and Tunnels General Revenue Obligation Resolution, for purposes of restoration of infrastructure damaged by Superstorm Sandy. MTA and MTA Bridges and Tunnels Boards also authorized the issuance of bonds to retire bond anticipation notes described above. On March 13, 2013, MTA and MTA Bridges and Tunnels Boards expanded the authorized use of the proceeds of such bond anticipation notes for the interim financing of other capital costs included in MTA s approved Capital Programs and MTA Bridges and 8

17 Tunnels projected capital spending requirements. Pursuant to this authority, MTA has put in place two liquidity facilities constituting bond anticipation notes under the MTA Transportation Revenue Obligation Resolution. The first is a Note Purchase Agreement obligating Merrill Lynch, Pierce, Fenner & Smith Incorporated to purchase up to $350 million of notes from time to time on or prior to April 19, 2014; any such notes will mature on April 19, MTA drew on the Merrill Lynch, Pierce, Fenner & Smith Incorporated Note Purchase Agreement for a total of $200 million on October 3, The second is a Revolving Credit Agreement in the amount of $100 million with KeyBank, N.A. available to be drawn on or prior to March 29, 2015; any note issued under such agreement will mature on May 29, MTA drew on the Key Bank, N.A. Revolving Credit Agreement for a total of $100 million, during the week of September 16, Depending on the timing for the incurrence of the costs of repairs relating to Superstorm Sandy and the receipt of insurance and federal reimbursements, MTA and MTA Bridges and Tunnels may enter into additional borrowing arrangements authorized in December 2012 or seek authorization in the future for the issuance of additional bond anticipation notes and bonds. Mobility Tax Litigation On June 26, 2013, the Appellate Division, Second Department unanimously reversed the decision of the Supreme Court, Nassau County in Mangano and County of Nassau v. Silver and declared Chapter 25 of the Laws of 2009 constitutional. The Appellate Division held that the legislation enacting the MTA payroll mobility tax serves a substantial State concern and was not unconstitutionally passed without a home rule message. The Appellate Division also found the plaintiffs other arguments attacking the legislation to lack merit. On October 10, 2013, the New York Court of Appeals dismissed the plaintiffs appeal of this decision sua sponte, upon the ground that no substantial constitutional question is directly involved. The Nassau County government has indicated it intends to make a motion seeking the permission of the Court of Appeals to hear its appeal, notwithstanding that Court s determination that the appeal fails to raise any substantial constitutional question. Any such motion must be filed by November 12, Plaintiffs in the separate Vanderhoef/County of Rockland action challenge to the payroll mobility tax, which was dismissed at the State Supreme Court level, appealed that dismissal to the Appellate Division, Third Department; MTA s and the State Defendants briefs in opposition to the appeal were filed on July 3, The Third Department has scheduled argument for November 12, Other Litigation County of Nassau v. MTA, Long Island Rail Road Company, and Metropolitan Suburban Bus Authority. The MTA parties have prevailed in this lawsuit, commenced by Nassau County in 2001, by which Nassau County sought to declare illegal, void, and unenforceable two mass transportation capital funding agreements it entered into with MTA, MTA Long Island Rail Road and the Metropolitan Suburban Bus Authority in 1996, and with MTA and MTA Long Island Rail Road in MTA, MTA Long Island Rail Road, and Metropolitan Suburban Bus Authority brought counterclaims seeking compensatory damages of at least $ million and moved successfully for summary judgment, resulting in an Order and Judgment entered in March 2011, that dismissed Nassau County s complaint; declared the 1996 agreement a legal and valid agreement, duly authorized by the MTA, and binding on and enforceable against the County; and awarded MTA judgment on all its counterclaims. Nassau County exhausted its appeals, following which the New York County Clerk filed the final Order and Judgment on June 13, 2013, which in part required that Nassau County pay to MTA $22,822, plus additional interest on that amount until it was satisfied. On September 12, 2013, Nassau County paid MTA $22,822, toward satisfaction of the Judgment. 9

18 Management Changes Nuria Fernandez, the Chief Operating Officer of the MTA, is resigning from the MTA effective November 29, 2013, to assume employment as the General Manager of the Santa Clara Valley Transportation Authority. MTA Bridges and Tunnels MTA Bridges and Tunnels 2013 Toll Revenue. Toll revenue for 2013 is estimated at $1,611.8 million, which is $16.9 million greater than the 2013 Adopted Budget as reported in the July Plan (the 2013 Mid-Year Forecast). These positive results are primarily due to higher than forecast traffic levels following the toll increase implemented on March 3, MTA Bridges and Tunnels 2013 Operating Expenses. Total operating expenses in 2013 are estimated to be $451.2 million, which consist of $245.5 million in labor (prior to reimbursements) and $205.7 million in non-labor costs. Labor costs are estimated to be $2.4 million below the 2013 Adopted Budget primarily due to payroll vacancies. Non-labor expenses are estimated to be $23.7 million above the 2013 Adopted Budget primarily due to the timing of expenses for Superstorm Sandy restoration and mitigation efforts. MTA Bridges and Tunnels Infrastructure Losses from Superstorm Sandy. Based on preliminary assessments by MTA Bridges and Tunnels staff and independent engineers, the estimated capital cost of repairs, mostly for damage to the tunnels, is $778 million. The cost of infrastructure repairs is expected to be covered by a combination of insurance, FEMA, MTA Bridges and Tunnel resources, including its necessary reconstruction reserve, and, if necessary, interim external borrowings. Any such interim borrowings are currently expected to be structured as bond anticipation notes under the MTA Bridges and Tunnels Senior Resolution and amounts of such borrowings not reimbursed by the federal government or from insurance coverage are expected to be paid from the proceeds of bonds issued under the MTA Bridges and Tunnels Senior Resolution in E-ZPass Initiatives. MTA Bridges and Tunnels continues to encourage E-ZPass participation through the following initiatives: MTA Bridges and Tunnels began selling E-ZPass On the Go pre-paid tags in the cash toll lanes at each facility in Through September 2013, more than 233,000 tags have been sold. MTA Bridges and Tunnels introduced the MTA Reload Card in February 2012, an initiative which makes it easier for customers to replenish their E-ZPass account with cash. Customers can go to any Visa ReadyLink retail merchant and use the card to reload their E-ZPass accounts through a self-service kiosk or through a sales clerk, eliminating the need to travel to one of three walk-in centers in Yonkers, Queens, or Staten Island to add cash to their E-ZPass accounts. The card is designed for people who want greater cash control and either do not have or do not want to use a credit card for E-ZPass. Through August 2013, more than 67,000 cards have been issued to customers and approximately 12% of total cash replenishments were made using the cards. Spanish language versions of the E-ZPass application, interactive website, and the customer service telephone voice response system were introduced in January of In November 2012, MTA Bridges and Tunnels introduced E-ZPass Pay per Trip, which enables customers to set up an E-ZPass account without a pre-paid balance. Those interested in this program pay for their tolls each day through an Automated Clearinghouse (ACH) deduction from their checking account. To date, nearly 16,000 account holders have signed up for this initiative. 10