Kentucky & Indiana finalize details of agreement on responsibility split for Ohio River bridges

October 17, 2012
By Peter Samuel

2012-10-16: Indiana and Kentucky officials are formally approving agreements governing the construction, financing and management of the $2.6 billion Ohio River bridges project, which adds two new tolled river crossings in Louisville and rebuild downtown interchanges on both sides. The formalities of a bi-state development agreement and a related interlocal agreement are scheduled for approval by the Kentucky Public Transportation Infrastructure Authority (KPTIA) and at meetings today in Indianapolis and Frankfort.
 
The new Louisville and Southern Indiana Bridges Authority (LASIBA) which was created to develop a financing plan for the project will  meet before the end of October to begin work on the financing. LASIBA however is reduced to something of a legal shell by the agreements which delegate most of the powers of the bistate authority to each state's sponsoring agencies.

For all the PR talk of these being "final agreements" important details of toll policy remain to be negotiated in a Toll Policy Agreement. And although harmony and goodwill currently prevail across the Ohio River when it comes to tolls and a multi-billion dollar project contention can arise.

Kentucky to do I-65 bridge in Indiana as well as KY, Indiana the East End in both states

Kentucky is in charge of financing and constructing the Downtown Crossing, which includes a new Interstate 65 bridge for northbound traffic, a reconstructed Kennedy Bridge for southbound traffic and revamped interchanges in Jeffersonville IN, and the Kennedy Interchange the complex of ramps connecting I-64, I-65 and I-71 close by downtown Louisville.
 
Indiana is in charge of financing and constructing the upriver East End Crossing between Utica IN and Prospect KY, filling a missing link connecting IN265 Lee Hamilton Highway  and the KY841 Gene Snyder Freeway.

Indiana Department of Transportation Commissioner Michael Cline is quoted: "The development agreement ties together each state's portion of the project and reaffirms the 'two bridges, one project' concept."

Kentucky Transportation Secretary Mike Hancock: "This is a critical step toward achieving this long-sought project to increase cross-river mobility for commercial carriers, workday commuters and others who travel between Louisville and Southern Indiana."

The new upriver crossing will serve local and long-distance traffic offering an alternate river crossing to downtown crossing, providing a bypass for long-distance traffic and opening a considerable area to new residential and industrial development.

Financing will be by the bi-state Louisville and Southern Indiana Bridges Authority (LASIBA) issuance of toll revenue bonds plus some gas tax funds. Indiana proposed a P3 earlier but compromised on that with Kentucky to do more the traditional states' authority bonding.
 
The development agreement spells out the rights and responsibilities of each state, and details:

- budget and financing

- environmental and workforce commitments

- operations and maintenance

- toll collection and enforcement

Kentucky's first venture into electronic tolling

Tolling is to be all-electronic. It will be Kentucky's first venture into electronic tolling and it will join the E-ZPass Group. Indiana is already part of E-ZPass.

There is work to be done in detailing all the toll policies and in toll system procurement. Details will be worked out in a yet-to-be-negotiated Toll Policy Agreement. The agreements signed this week do provide (Dedvelopment Agreement, Article 11 p37)  for:

- a single toll system

- tolls to begin as soon as each new bridge is open for traffic (about 2018)

- toll revenues to be divided equally between the two state sponsors

- Kentucky revenue share to be not less than 1.5x debt service requirements for the senior KY bonds, 1.25x aggregate debt service

- Indiana share to be not less than 100% of availability payments  and other obligations if P3-availability payments model used, the same 1.5x/1.25x debt service scheme if state authority bonds issued

- tolling to be uniform and comprehensive for all components of the project with a single toll system integration and operations provider

- tolls to be all-electronic/cashless

- E-ZPass Group interoperability to be accommodated

- study to be done of toll equity and impacts on poor drivers and measures to mitigate

- an inter local agreement will be reached to establish a toll entity for the bridges and associated toll road approaches on either side

- actual toll rates and terms and adjustment mechanisms to be detailed in a Toll Policy Agreement

Joint board for oversight

The agreements create a Joint Board with long-term oversight and management responsibility for the Bridges Project, consisting of the heads of the two states' transportation agencies, the secretary of the Kentucky Transportation Cabinet and the commissioner of the Indiana Department of Transportation, and the leaders of the two agencies overseeing project financing, the chairman of the Kentucky Public Transportation Infrastructure Authority and the Public Finance director of the Indiana Finance Authority.
 
Members of the Joint Board, together with one additional representative each from KPTIA and IFA, will function as a "Tolling Body" that will develop toll policy. The additional members allow local representation on the Tolling Body.
 
Under the development agreement the states will do an assessment of the economic effects of tolls on low-income and minority commuters as required by the federal Record of Decision.
 
Measures for mitigating any adverse effects of tolling on low-income and minority populations are to be evaluated.

Major construction procurements are under way with selections to be made by the end of the year.

project website: http://www.kyinbridges.com

The two agreements are here:

http://updates.kyinbridges.com/wp-content/uploads/2012/10/2012-10-16-LSIORB-final-Development-Agreement.pdf

http://updates.kyinbridges.com/wp-content/uploads/2012/10/2012-10-16-Interlocal_Agreement.pdf

TOLLROADSnews 2012-10-16 ADDITIONS Oct 17 0900


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