The Louisville and Southern Indiana Bridges Authority met Thursday to discuss ways of paying for the Ohio River Bridges Project.
Bi-state bridges officials said both states could present a financial plan in the next few weeks, but the decision last week to split the cost and responsibility between Kentucky and Indiana has not made the $2.6 billion project any easier to finance, and both states are looking to the private sector.
The lack of federal funding may become an issue.
Kentucky was denied federal funding from the TIFIA program for the second time last year, but that won’t stop the project, said bi-state authority co-chair Kerry Stemler.
“TIFIA is a loan program. It’s a tool. It does help us. It’s like getting a really great interest rate on your home mortgage. (It) makes your cash flow a little better but it doesn’t mean you can’t buy the house,” he said.
Federal funds could help, and bi-state officials have already sent a letter of interest for TIFIA funds this year, he said.
Indiana and Kentucky must now crunch the numbers to prove how paying for their portion of the project makes sense. Kentucky will seek for a contractor to develop and build the downtown bridge and rebuild the Kennedy Bridge and Spaghetti Junction.
Indiana showed interest in privatizing the maintenance and construction of the East End Bridge, said Steve Schultz, executive director of the bi-state bridges authority. The public sector would still control toll rates and policies, but a private company would receive payments for managing the span.
“In that case the private sector will provide the financing to build the project and they expect to be repaid by something called an availability payment that’s agreed to in the bidding process over a period of years,” he said.
This option involves a different kind of risk because Indiana may lease the span over several years, said Stemler. The state would have to make up any lost revenue from tolls promised to the lessee and how many people would use the bridge remains uncertain, he said.
The East End Bridge would likely be built in four years, while Kentucky’s portion would is estimated to take up to seven years with a total project end date of 2018. Officials said the project could begin later this year. But Kentucky still needs approval from the General Assembly and the state must produce an updated economic impact study, which is expected in the spring.
The bi-state authority will likely schedule a special session in the upcoming weeks to discuss the options.