LOUISVILLE — Transportation planners with Indiana and Kentucky think they know how their respective states are going to secure funding for the Ohio River Bridges Project.

Separate delivery models on how to finance the construction of a downtown bridge, east-end bridge and to reconstruct Spaghetti Junction were announced at the Louisville and Southern Indiana Bridges Authority meeting Thursday.

However, the financing plans tentatively chosen for Indiana and Kentucky are different.

The separate financing models follow an agreement reached in principle between Indiana Gov. Mitch Daniels and Kentucky Gov. Steve Beshear that each state would take the lead in financing and overseeing construction of one half of the project. The $2.6 billion bridges plan would essentially be split in half, with each state covering $1.3 billion.

Kentucky would be responsible for financing and constructing the downtown portion of the project, including the reconstruction of Spaghetti Junction, and Indiana would be responsible for financing and constructing the east-end portion of the project.

Bridges Authority Executive Director Steve Schultz said the project will follow a dual procurement approach, chosen from six different options. Six options ranged from the traditional design-bid-build approach to a toll concession plan, which gives a private entity control over financing the entire project.

Indiana’s model

Indiana officials said the state is likely to follow an availability payment structure model.

An availability concession plan awards a private entity the right to design, construct, finance, operate and maintain the project for a long-term period, generally 40 to 50 years. The public sector retains responsibility for setting tolls and a tolling policy and the concessionaire would receive periodic payments for providing and maintaining the facility, according to the report offered at the bridges authority’s October meeting.

“That is the model we’re leaning towards right now,” said Kendra York, public finance director for the state of Indiana. “In Indiana, we sort of have a history of experience with very successful private sector deals, including our toll road lease of course.”

She added the state will still consider all the delivery options, but of those presented, the full toll concession model is unlikely.

Indiana’s Department of Transportation will also dedicate funds through funding received in part from Major Moves toward the completion of the east-end portion of the project.

York said INDOT has committed $54 million each year, for eight years, toward the project. The total money that would be dedicated to the project equals $432 million, leaving an $868 million funding gap to be covered.

The funding gap would be covered via tolling revenues or by securing additional sources of funding, she said.

According to the October report, tolling for the procurement approach is estimated to begin in 2017, last for 41 years and have a construction timeline as short as five years.

Also at the authority’s October meeting, Bridges Authority co-chair Kerry Stemler said if a public-private partnership model is chosen, Indiana would have to complete an additional Economic Impact Study. The study would be separate from the Supplemental Environmental Impact Study process that is ongoing and would likely be more Indiana focused.

One hurdle that Indiana would not have to clear, but is an obstacle for Kentucky, is that it does not require additional legislation to approve any of the financing plans.

Kentucky’s model

Aside from the traditional design-bid-build approach to constructing the Ohio River Bridges Project, Kentucky will need to amend its transportation legislation through its General Assembly to pursue another financing approach.

The model the state is most likely to choose is a design-build and operate-maintain plan. The model transfers responsibility for operations and maintenance to the private sector for a limited term and assumes governmental financing with toll revenue bonds.

According to the bridges authority’s October presentation, tolling would begin on the corridor in 2018, would carry the tolls for 40 years and carry an estimated time to completion of six years.

“One of the hurdles and one of the things we’re watching very carefully is Kentucky, from the traditional funding perspective, we’re still relying heavily on federal funding for this project,” said Secretary of the Kentucky Transportation Cabinet Mike Hancock.

Kentucky’s $1.3 billion share of the project is expected to come from road funds and highway trust funds. But the federal funding remains in question as the state is relying on the reauthorization of Federal Transportation Highway funds, which has only been extended through March.

“That’s critical to us,” Hancock said.

Again, tolling is expected to be used to cover a funding shortfall, and will likely need the approval of the Kentucky legislature.

“Other possibilities as it involves tolling and how the tolls are collected, those are things we’re still looking at that may possibly need some legislation,” Hancock said.

What’s known about tolls

While it has been long known that tolling will be part of the financing structure of the Ohio River Bridges Project, no definitive determination has been made on toll rates or location.

Hancock said planners are working to speed construction, increase competition for contractors, lower costs and determine acceptable tolling parameters.

“Those are things that we’re not ready to divulge just yet,” he said.

What he did divulge is how much revenue is expected to be gathered from the two portions of the project and that toll revenues downtown are expected to be almost double what will be received on the east-end portion of the project.

John Sacksteder, project manager with Community Transportation Solutions and general engineering consultant for the bridges project, also offered a brief overview of the diversion tolling the new spans will create.

The diversion model, which he called one of the most extensive models that has ever been developed in the country, showed most of the diversions will be created in New Albany and lead commuters to the Interstate 64 Sherman Minton Bridge.

“In the middle part of New Albany there will be some traffic that will flow over to I-64, rather than come over to the I-65 corridor,” he said.

The model showed about one to two cars per minute will be diverted in New Albany.

“Our determination thus far, is that is no effect to the property,” Sacksteder said.

In addition, a diversion will be created with drivers going to the Clark Memorial Bridge, especially during non-peak driving times.

TIFIA’s impact

Another factor that will still weigh heavily in the ultimate financing plan is federal loan funding sought through the Transportation Infrastructure Finance and Innovation Act — TIFIA.

The bridges authority had previously sought TIFIA funding, which is a low interest federal loan, through Transportation Investment Generating Economic Recovery grants. The authority lost out on all three TIGER disbursements offered.

However, Schultz said the authority again sent a letter of interest — on Dec. 30 — to attempt to secure TIFIA financing in 2012. He said the states are pursuing options that include models that include TIFIA and non-TIFIA cases.

Despite the uncertainty surrounding the financing plans, and no final decision made on which plan each state will ultimately adopt, Schultz said he believes the authority is still on track to break ground in 2012.

Stemler offered an estimated completion date of 2018.

“That’s what this community has longed for,” he said.
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