Brian Mayhew stepped into his job before the turn of this century, taking on fiscal responsibility for a set of bridges that urgently needed upgrades to protect them against California’s earthquakes.
More than two decades and many billions of dollars in debt later, he will retire as chief financial officer of the San Francisco Bay Area’s Metropolitan Transportation Commission and Bay Area Toll Authority.
The refits and new construction on the region’s seven big state bridges haven’t yet been tested in an earthquake but Mayhew had to guide them through recession, market turmoil and pandemic.
Every time Mayhew thought he could think about leaving, he said, outside events convinced him to stay.
“The first time I submitted my retirement papers was just before the Great Recession,” Mayhew said. “The portfolio was in perfect shape. Everything was going well. The market was good. At that point, I didn’t know what else they would need me for.”
He’ll walk out the door with something on the order of $20 billion of financings and refinancings under his belt.
“When Brian got to MTC, I don’t think we had any outstanding debt at all,” said Steve Heminger, former executive director of MTC, who now serves on the board of directors of the San Francisco Municipal Transportation Agency and the Peninsula Corridor Joint Powers Board.
The authority, a public agency created in 1997 by California lawmakers, administers the toll revenues from seven state-owned toll bridges in the San Francisco Bay Area: the Antioch Bridge, the Benicia-Martinez Bridge, the Carquinez Bridge, the Dumbarton Bridge, the Richmond-San Rafael Bridge, the San Francisco-Oakland Bay Bridge and the San Mateo-Hayward Bridge.
BATA was created to handle the money realized from toll operations that was used to make those bridges seismically safe and to provide financing for maintenance programs in conjunction with the California Department of Transportation.
Lawmakers formed BATA to speed up the retrofit of the Bay Area bridge system, a critical link in an area defined by the geography of the San Francisco Bay and its connected waterways.
Lawmakers had mandated that Caltrans improve the state’s nearly 1,000 bridges following the Bay Area’s Loma Prieta earthquake in 1989 and Los Angeles’ Northridge Earthquake in 1994.
“I thought I would work here for a decade, and then retire or become a commercial banker,” Mayhew said.
Instead he steered BATA through multiple external crises, starting in the 2008 recession that crushed much of the bond insurance business and undermined the liquidity arrangements supporting many of BATA’s variable-rate bonds and associated interest rate swaps.
“He deserves a tremendous amount of credit for standing up the enterprise and seeing us through troubling times like the 2008 Great Recession and construction challenges,” Heminger said.
When the market cratered BATA needed to restructure at a time when market access was in question.
“We were trying to figure out how to keep a $100 million a month capital program going,” Mayhew said. “We couldn’t keep it fed.”
When the federal government came along with Build America Bonds, allowing the sale of taxable bonds with federal subsidy as an alternative to selling traditional tax-exempts, that allowed BATA to access international investors and finish the bridge financing program, Mayhew said.
His road into municipal finance began after college when his sister referred him to a job doing energy analysis and working on energy bonds.
He applied for that position because there weren’t opportunities to work as a commercial banker when he graduated from the University of California at Santa Barbara with a bachelor’s degree in economics and a master’s degree in political science.
“My father, Edward, was a banker and my grandfather was a gold trader,” Mayhew said. “I never expected to be working with municipal bonds.”
Even as his career progressed, and he ended up working as a financial director for the city of Westminster, California, and earlier as a revenue officer for the city of Mountain View, California, he expected to head over to commercial banking at some point.
Then an opening occurred to be the chief financial officer for the BATA and MTC, and he decided to apply. With no experience in transportation finance, Mayhew said he was a “third round draft pick.”
“We decided to hire him despite one of the most disastrous job interviews,” Heminger said. “He got something caught in his throat on the flight up and coughed through the entire interview.”
But that third-round draft pick ended up not only being selected to be BATA’s CFO, but has held the job since October 1999. That longevity means Mayhew has been the CFO nearly the entire time that BATA has been in existence.
“I had a chance to finance $1 billion in capital projects — and that’s a lot. It was the ability to do project financing at the highest level,” Mayhew said. “I didn’t even know if I was good enough.”
Heminger said Mayhew had exactly the kind of experience the MTC wanted in the position, because the state has strong regional transportation organizations that oversee many of its projects in that sector, and Mayhew had local government experience and extensive financial experience.
His financings have earned BATA multiple Far West Deal of the Year recognitions from The Bond Buyer.
The first was in 2002, the first year of the Deal of the Year award.
The most recent came in 2017 for a $1.95 billion dollar deal that saved money by combining the remarketing of bonds that were approaching their mandatory tender date with a fixed rate refunding.
The deal employed a soft-put step up structure the authority pioneered in 2013. The fixed rate refunding bonds were amortized first and the term rate bonds second. This “wrap” allowed BATA to reduce the average life of costly fixed rate debt by approximately five years, at no incremental cost. The amortization also took into account all outstanding debt service to reduce BATA’s maximum annual debt service.
BATA, most recently shocked by a pandemic that undercut toll bridge traffic and end cash toll collections overnight, was back in the market this week with a $1.3 billion deal that Mayhew said he hoped would smooth debt as well as provide funding for projects, and position his successor well for the future.
The MTC is in the process of recruiting a replacement.