INDIANAPOLIS — The Indiana Finance Authority is preparing to issue as much as $400 million in tax-exempt bonds to help finance the newest section of Interstate 69.
The private development group the state chose to design, build and then operate the stretch from Bloomington to Martinsville will pay off the bonds. The developer will use the tax-exempt bonds to help cover design, construction, financing and other project costs.
The Indiana Finance Authority will hold a public hearing Thursday in Indianapolis on the bonds. If approved, they will be issued in late June.
The private-activity bonds are just one source of financing the private developer can tap for the project, Indiana Department of Transportation spokesman Will Wingfield said, naming the developer’s investments and equity and the “down payment” the state will make during construction as other sources.
Under the agreement, I-69 Development Partners will assume responsibility for the construction costs and risks associated with the long-term operation and maintenance of the 21-mile stretch, according to INDOT.
The state announced in April that it finalized a contract with I-69 Development Partners for the fifth section of I-69. Construction of the stretch is anticipated to begin later this year, with the road scheduled to be open by the end of 2016.
The fifth section of I-69 will not charge tolls. The project will upgrade a 21-mile stretch of Indiana 37 to interstate standards and include four new overpasses and intersections.
The developer will oversee the operation and maintenance of the stretch for 35 years, including any infrastructure improvements, snow plowing and patching.
The state will pay an $80 million “down payment” to the private developer, led by Isolux Infrastructure Netherlands B.V., during construction to help cover the $325 million construction cost.
When the road is complete, the state will pay $21.8 million to the developer annually for 35 years to operate and maintain the road, though a portion of the payment is subject to inflation.
The private developer has estimated the cost to maintain the road at $340 million.
Indiana paid for the earlier phases of I-69 out of the $3.8 billion generated by the long-term lease of the Indiana Toll Road and a combination of traditional state and federal funds. The fifth section is the first phase of I-69 to use a private-public partnership, though the state is using a similar model for the East End Crossing — a new bridge that will connect Southern Indiana to Louisville.
The project will create an estimated 500 temporary jobs during construction and 30 permanent jobs after the road is open, according to bond paperwork.