Innovative Financing Helps Link Northern Kentucky to Southern Indiana
Editor’s Note: The following article is one in a series of six profiles of winners of NCPPP’s 2017 National Public-Private Partnership Awards, which recognize organizations and individuals that have gone above and beyond to advance the concept and implementation of P3s across the country. The winners will be honored during P3Connect in Miami Beach in January.
Commuters driving between traffic-clogged downtown Louisville, Ky., and southeastern Indiana enjoyed much-needed congestion relief when the Lewis and Clark Bridge opened in December 2016.
The new bridge, known during its development as East End Crossing, spans the Ohio River northeast of downtown Louisville, forming part of a ring road that surrounds the metropolitan area. It also connects Kentucky State Highway 841 with Indiana State Highway 265, thereby linking two formerly disjoined segments of Interstate 265. The $1.18 billion bridge is one of two new bridges and one refurbished one that comprise the $2.6 billion Ohio River Bridges Project. As a result, the formal title of the P3 project is the Louisville-Southern Indiana Ohio River Bridges Project – East End Crossing (Lewis and Clark Bridge).
This partnership among the Indiana Finance Authority (IFA), Indiana Department of Transportation and WBV East End Partners, sponsored by Walsh Investors, LLC, VINCI Concessions SAS, and Bilfinger Berger PI International GmbH, came to fruition through an innovative funding mechanism.
“This was the first availability payment P3 for IFA,” said Indiana Public Finance Director Dan Huge. “It was completed on an aggressive timetable and opened to the public ahead of schedule, under budget. While all P3 projects are different, this one provides some important successes to be considered for future transactions.”
The East End Crossing became the first U.S. transportation P3 transaction that did not involve a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan. The WBV consortium proposed a construction price of $764 million — 23 percent below engineering estimate — and maximum availability payments for the term of $32.9 million (in 2012 dollars) per year. The parties closed on the P3 agreement on Dec. 27, 2012. The consortium planned to raise nearly $1 billion of public and private debt and equity funding. IFA, as both public sponsor and counterparty to the P3 agreement, was to serve as conduit issuer for the private activity bonds (PABs).
The project received highly competitive bids from four prospective developers, which culminated in a 23 percent reduction from estimates and shaved nine months off the project’s original construction schedule.
Electronic toll collection began on the bridge on December 20, 2016, eliminating the use of toll booths, coin machines, lines or the need to stop to pay. This project, which took 3.3 million man hours to build, is expected to support 15,000 new jobs and pump $87 million into the local economy over the next 30 years.
The governors of the two states linked by the bridge remarked about the long-awaited advantages of the project. Speaking at the opening ceremony for the bridge, Indiana Gov. Eric Holcomb said: “After decades of discussion and stalled progress, many people thought we’d never see this moment. Now, communities on both sides of the Ohio River will reap the benefit of improved, safe interstate access.”
Kentucky Gov. Matt Bevin noted: “This crowning achievement, 40 years in the making, just goes to show what we can accomplish when we work together toward a common goal. Without our partners, including the state of Indiana, Walsh Construction, WV East End Partners and an outstanding labor force, among others, the completion of this project would not have been possible. We are grateful for all who came together as an enthusiastic community to improve economic opportunity and improve mobility for everyone travelling through this region”
NCPPP is honoring the Louisville-Southern Indiana Ohio River Bridges Project – East End Crossing (Lewis and Clark Bridge) with its 2017 Outstanding Infrastructure Project for the innovative nature of the P3 transactions behind the project.