Louisville- S Indiana bridges likely to toll

July 23, 2009
By Peter Samuel

It is now almost six years (2003-09-03) since a federal 'record of decision' (ROD) was issued signifying completion of all the environmental and planning permissions for the $4.1b Ohio River Bridges project in the Louisville Kentucky/ southern Indiana area. Governors and mayors who hailed the federal 'ROD' and were photographed smiling and announcing an imminent start on the work have been succeeded by new officials, all dedicated, they say to building modern links across the river. But nothing happens.

It isn't opposition of any kind that's stopping the project from moving.

Project defined since 2003

There is strong support for a clearly defined project:

1) reconstruction of the complex Kennedy Interchange where I-64/I-65/I-71 merge, provide local downtown Louisville ramps and feed the I-65 bridge, a $1.75b job

2) downtown I-65 bridge $454m

3) reconstruction of I-65 expressway approaches and ramps Jeffersonville on the Indiana side

4) extension of KY/I-265 from I-71 west to the Ohio River $753m

5) East End Bridge for route 265 over the Ohio River $374m

6) route 265 approaches on the Indiana side 318m

No financing plan

John Suiter at the regional transportation planning agency (KIPDA) tells us simply: "There's no financing plan for the bridges project."

Actually nearly two years ago there was a document called "Initial Financing Plan" (January 2008) submitted by Kentucky and Indiana DOTs to FHWA which purported to be a financing plan. Still posted to the project website it showed allocation of funding between the two states with a mix of regular federal and state tax-based grants and borrowing - no tolls.

But that plan isn't working out. The big bucks just aren't available, and officials find a multiplicity of more modestly priced projects around their states which they see as having higher priority and better payoff, politically.

Indiana Governor Mitch Daniels says he thinks the project needs to be toll financed. And John Sacksteder, project manager of the bistate/regional Ohio Bridges Project told us this week he can't see how the project will be financed except with tolls.

The toughest decision is Kentucky's which accepts responsibility for close to the three-quarters of the project cost ($2.92b to Indiana's $1.15b) and presently is an all-tax/no-toll road state.

Good news of a kind is that Kentucky has passed legislation to create an "infrastructure authority" one of whose primary tasks will be to work with Indiana to make decisions on financing of the Ohio River Bridges.

Indiana has legislation supporting cooperation with Kentucky on the project.

Early this month the governors of both states (Steven Beshear KY, Mitch Daniels IN) got together in a press event to publicize the bistate accord over the project.

"We can say more confidently than ever that the Ohio River bridges project can and will become a reality," Beshear said to extended applause from a crowd assembled in the lobby of the Kentucky Center for the Arts, a local newspaper reported.

Indiana's Daniels was quoted: "It is truly a day without boundaries, a day of unity."

Daniels was quite explicit, when questioned, in saying toll financing is the answer.

Tolls, Daniels said "might be the only way to get (the bridges project) built at all and certainly might be the way to get it built most quickly. And you know, those who use the facility paying for it is a pretty fair and time-tested policy."

Kentucky's Beshear was more guarded: "Governor Daniels and I recognize the importance of modern river crossings to both of our states. Kentucky and Indiana are quite literally at the hub of America's interstate commerce. We also recognize that these are massive projects, too costly to be undertaken entirely by one state with only our traditional sources of transportation revenue."

If tax-based funding is "traditional" in Beshear's vocabulary, then the Kentucky governor was saying in a roundabout manner that it won't be sufficient and that "untraditional" tolls will be needed.

The new Kentucky infra authority has to have its board appointed by state and regional groups and it has to be staffed, and it has to discuss financing all over again with Indiana's representatives.

Critical early decisions, it seems, will be:

- commissioning of a full traffic and revenue study to establish how much of project finance would be supported by tolls

- whether they want to have a public authority take the traffic and revenue risk/reward or do a private sector concession

Options study

Back in November 2007 Wilbur Smith Associates (WSA) wrote a "Preliminary Traffic and Revenue Options Study" for Kentucky DOT (grandly named a Kentucky Transportation Cabinet).

WSA numbers were quite positive about the potential for toll-financing.

They proposed all-electronic tolling and looked at various combinations of bridge and interchange toll points, including tolls on the existing parallel US31 bridge and the downriver I-64 bridge.

2030 toll-free daily travel on the bridges (west to east) was projected at I-64 154k, US31 18k, I-65 182k, 265 East End 59k, total 413k/day.

Alternative toll scenarios

Eight tolling alternatives were analyzed:

1) tolls on all four Ohio River bridges I-64, US31, I-65, 265 East End

2) tolls on three bridges US31 and I-65 downtown, and 265 East End

3) tolls on three expressway bridges I-64 , I-65, 265 East End

4) tolls on downtown bridges US31, I-65

5) tolls on new bridges only I-65, 265 East End Bridge

6) toll I-65 bridge only

7) toll only 265 East End Bridge

8) tolls on Kennedy Interchange all movements with ten toll points

WSA made an effort to estimate optimum tolls that would reflect time savings values.

Alt1 and Alt3 above both generated similar amounts - US31 is hardly worth tolling - close to $800m/yr in 2030 at $3 tolls, while Alts 2, 5 and 8 all produce around $300m, Alts 4 and 6 around $200m.

Net revenue (after allowing for toll collection and operations) would be just slightly lower - see nearby barchart.

The report says motorists in the area would have major travel time savings (30m vehicle-hours) and it suggests they would be willing to pay for them in tolls that would easily cover project costs. Tolls on the three expressway standard bridges would quickly generate returns on investment, while tolls only on the two new bridges or the rebuilt interchange would come close.

The last is our reading of WSA's results. They just lay out the numbers and do not express an opinion.

BACKGROUND: In the last Census (2000) Louisville KY-IN MSA was the 50th metro area in the US by population with 1.03m. It had grown below average in the previous 10 years - from 0.95m or just 8.1%. By a newer definition of core-based statistical area (CBSA) the slightly different Louisville/Jefferson Co KY-IN area was 1.24m and 42nd ranking in metro area in the US in 2008 and grew 7.1% in the 8 years from 1.16m in 2000.

project website:

http://www.kyinbridges.com/default.aspx

regional planing agency:

http://www.kipda.org/



copy of the WSA T&R options study:

http://www.tollroadsnews.com//sites/default/files/wsa.pdf

TOLLROADSnews 2009-07-22


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