Bi-state bridges authority looks for funding answers

LOUISVILLE — The Louisville and Southern Indiana Bridges Authority began the business of trying to develop a funding strategy for the Ohio River Bridges Project at its second meeting Wednesday.

Finding money for the $4.1 billion project will not be an easy feat for the 14-member panel, which may have additional obstacles to clear, several funding sources to contend with and will need to move expeditiously so it will not limit money available to other transportation projects.

Near the beginning of the meeting, Gary Valentine, project engineer for the Kentucky Transportation Cabinet, provided an outline of the project as it stands and led into why the bridges need to be constructed.

The most evident need for a bridges project is to plan for future growth in the region.

Economic development

Future economic development hinges on the connection of Southern Indiana and Louisville.

“It’s about jobs, it’s about investment, it’s about the future going forward,” said Joe Reagan, bi-state authority member. “Without question, this project is the most important economic development initiative in our region at this time and certainly will be in our lifetime.

“It is our economic stimulus now and for future generations.”

It’s all about location for Louisville and Southern Indiana, as it has developed as a crossroads to distribute products across the country and the world.

According to Reagan, 64,000 logistics jobs are located in the region and logistics and manufacturing jobs make up 9.3 percent of all jobs in the area and 10 percent of the regional payroll.

“This region’s strength is around logistics,” he said. “This really is a driving force in our economy. One thing that outside experts have pointed to, a weak link, is the bridge and highway system here connecting this region together.”

The Ohio River and distribution centers such as River Ridge Commerce Center and the UPS Worldport add to the perception of the Louisville metropolitan area as a center for businesses.

The lack of infrastructure around the highways is the major detriment to the area, said Jeffersonville Mayor Tom Galligan.

“They are an economic drag — not being here — on our community and on Louisville and the metropolitan area,” he said, referring to the bridges. “When we talk to customers about locating in our region, they want to know how they can get across the bridge.

“We have to tell them to go across at night or in the middle of the day and that’s not good for economic development.”

Galligan took his criticism a step further.

“We are one metropolitan area — we need to think as one, and we need to work as one and when we do, we will be successful. But until we get the bridges, we will not be successful,” he said.

Success may come along with the physical and metal labor needed.

“The project’s construction alone will create more than 56,000 jobs with a payroll of nearly $2 billion,” Reagan said.

While there may be little argument that the bridges project will have a substantial impact on the region, confusion is still certainly at the forefront when determining how to pay for the two bridges.

Funding

The project still carries at least a $4.1 billion price tag, and funding may be sought out in three arenas — privately, publicly and through the states.

Indiana has already pledged about $1.15 billion raised through the lease of the Indiana Toll Road in Northern Indiana. Kentucky has pledged to sell $100 million in GARVEE bonds.

Though the bi-state authority has money to get the process under way, it is still far from determining how to pay the full cost of the project.

One answer may be through a Transportation Infrastructure Finance and Innovation Act, or TIFIA, loan.

The federal secure loan could cover nearly one-third of the project cost — which would be a maximum of $1.2 billion — with the term of the loan lasting 35 years, said Thomas Howard, executive director of Kentucky’s office of financial management. If the full amount were approved by the U.S. government, it would be the largest amount pledged to a single project, he said.

Another avenue being pursued is a National Infrastructure Innovation and Finance Fund, or NIIFF, grant — a blend of TIFIA and TIGER grants — which could provide up to $2 billion in grants. It has yet to be approved.

The faster the states can move on securing loans, bonds and appropriating funds, the better rate may be secured in financing the project.

The fact that rates are low — the rate for TIFIA is 4.56 percent — could save the states millions over the term of the loan. Despite the possible savings on securing loans quickly, the money borrowed would still need to be paid back, which is where tolls enter the picture.

Tolls

Although tolls seem to be a likely portion of the project, the revenue currently being received on toll roads is not as much as it had been recently. The reason toll roads’ revenues have been down is economic, according to Jennifer Alvey, public finance director for Indiana.

A reduction in semi-truck traffic has caused less-than-expected revenues on the Northern Indiana Toll Road.

How the bridges will be tolled, how many bridges will be tolled, what the cost of the tolls will be and how long the tolls may remain has not been determined.

The inclusion of the tolls, at least from the perspective of Gov. Mitch Daniels, R-Ind., is a foregone conclusion.

“It pretty much resolves to tolls or no project,” he said in an interview Wednesday afternoon.

Daniels was not in attendance at Wednesday’s bridges authority meeting.

“It’s not really fair to ask [all] Hoosiers to pay taxes for a bridge that most aren’t going to use,” he said.

The actual tolling facility would also have to be determined in order to move forward for not only the bridges, but for Kentuckiana Regional Planning and Development Agency’s travel model.

“If tolls are being brought into the process, we need to know how much, where and things along those lines so that we can try and get a more accurate update as to how the travel model will operate,” said David Burton, KIPDA transportation planner. “We cannot proceed with the travel model process without that information.”

One reason KIPDA could not proceed is that in order to complete a travel model, an air quality analysis must be conducted.

“There is a general assumption that if you have tolls on the facilities, there would be some disruption or some change in the traffic flow,” Burton said. “What that’s going to look like, I haven’t the foggiest idea.”

In conjunction with determining funding, the issue becomes even more convoluted.

“There are lots of options, this is very complex,” Alvey said. “It’s going to take us some time to kind of work through these and understand what it is really needs to come together to make this project work.”

Lapse

Time is not something that the bi-state authority has been graced with. One of the main reasons is the delay in finding a funding mechanism has caused a delay in other local transportation projects.

“Our [Transportation Improvement Plan] is in lapse because of the bridge issue and we need to correct that,” Galligan said. “Our communities are going to suffer because of this.”

KIPDA’s long-range plan went into a lapse Dec. 8.

“What that basically means is that our plan does not meet federal requirements,” Burton said. “When we are in a lapse, we cannot amend that plan at all to add or to delete any projects.”

The lapse will remain in effect until a funding mechanism for the bridges is determined. But the longer the lapse lasts the more consequences will add up.

An option remains in extending the long-range horizon plan to 2035.

“As soon as we push it out to 2035, we get all kinds of new steps that have to be added to the planning process,” Burton said.

And there are again more consequences.

“If tolling is proposed, we’re going to have to add more time to that,” Burton said.

Once the funding for the bridges is in place, a full update of the long-range plan can move forward, which will take about one year to complete. As KIPDA plans to move forward in developing its exempt plan, another option may be available to kick-start transportation improvement projects.

Indiana and Kentucky may be able to seek an exemption from the Federal Highway Administration.

“That will be the first approach,” said Joe Prather, chairman of the bridges authority.

— Staff Writer Daniel Suddeath contributed to this report.

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ADDITIONAL INFORMATION

Two bridges, one plan

The Ohio River Bridges project has been broken into six portions:

PART ONE

• The Kentucky approach to a new downtown bridge, including a redo of Spaghetti Junction. The redo of Spaghetti Junction includes 29 miles of ramps and roadways, 82 bridges and 4 miles of retaining walls.

PART TWO

• The new downtown bridge, just east of the Kennedy Bridge on a slightly skewed angle that would carry six lanes of Interstate 65 northbound traffic across the river. Initial designs include a pedestrian path that could be done away with if Jeffersonville receives a Transportation Improvement Generating Economic Recovery grant. The grant would pay for the construction of a ramp and resurfacing of the Big Four Bridge crossing the Ohio River; Kentucky has its ramp under construction. The removal of the pedestrian portion of the new bridge would cut about $20 million off of the cost of the bridge.

PART THREE

• The Indiana approach to the new downtown bridge. The project would include widening I-65, laying down 1 mile of new pavement and a reconstruction of the interstate interchanges for Court Avenue, 10th Street and U.S. 31 in Clark County.

PART FOUR

• The Kentucky approach to the east-end bridge, which includes construction of a tunnel, a redesign at U.S. 42, more than 5 miles of ramps and roads, four bridges and 2.5 miles of retaining walls.

PART FIVE

• The east-end bridge planned to be six lanes with additional room for shoulders on the bridge.

PART SIX

• The Indiana approach for the east-end bridge. The Indiana approach would run from Ind. 62 to the proposed bridge and a new interchange at Old Salem Road, which is known as a diverging diamond. Because of the construction design chosen, nearly $66 million will be cut off of the project because it eliminates need to build a new bridge at the approach site.

For more information and visuals of the design, visit www.kyinbridges.com

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