The Louisville and Southern Indiana Bridges Authority held its quarterly meeting and provided a number of updates on the progress of the Ohio River Bridges Project. The project’s planners announced they expect to receive a record-of-decision by the Federal Highway Administration by late June, issue their final requests for proposals about a month later and award contracts in November or December.
But before a contract is awarded, a number of issues on how Indiana and Kentucky will pay for and construct the $2.6 billion plan to build a downtown bridge, east-end bridge and reconstruct Spaghetti Junction need to be addressed.
To ensure that both states continue to work together to complete the project, they are working to establish a development agreement. Kendra York, public finance director for the state of Indiana, said she hopes the development agreement will iron out some of the issues like how the decisions on tolling scenarios will be made and who will set those rates.
“I think we’ll both want that comfort going into the finalization of our procurement[s],” she said.
Bridges Authority Executive Director Steve Schultz said the agreement is likely to be approved soon.
“We can suspect in the next weeks and months the discussions of this development agreement will take place in earnest to hopefully get a signed agreement before the end of the summer,” he said. “Really, I think it will provide a basis for the project holding together these two separate procurements.”
He added it will help determine the schedule for construction, ownership of properties across state lines, the project’s budgets and environmental matters between the two states.
“Then, of course, [it will decide] the all-importation tolling operations and how that’s going to work from a bistate government perspective,” Schultz said.
While the bridges authority has not received a definitive tolling structure for the bridges project, it has taken a step by getting a plan approval from the Federal Highway Administration. Tolling authorization was granted through a Section 129 agreement with the Federal Highway Administration. Schultz explained it allows the Federal Highway Administration to enter into agreements with states to use federal aid program funds on tolled facilities.
The final terms of the agreement, however, have not been finalized.
Schultz said the authority is still operating under the assumption that the toll rates will total $2 for cars, which include passenger vehicles and sport utility vehicles, $5 for smaller trucks with six wheels and $10 for semi-trucks. A $1 frequent toll rate is also expected to be offered to local commuters. The authority also is operating on the assumption that tolls will be implemented as planned on the east-end bridge and both downtown spans.
“It’s just the project bridges,” Schultz said. “The 129 agreement, with respect to the downtown crossing, will cover both the Kennedy bridge and the new downtown bridge.”
The bridges authority offered that it is continuing to seek additional federal money to help defray some of the cost of the project.
Federal funding has been sought through Transportation Infrastructure Finance and Innovation Act payments, but the authority’s request was denied this year. The authority is still waiting to hear whether or not it will receive some of the $500 million available in the fourth round of Transportation Investment Generating Economic Recovery grants.
Schultz said that announcement is expected sometime in early June.
Indiana and Kentucky were able to offer some additional details on what will be included in the contract that is eventually approved by the respective state. York said Indiana’s public-private-partnership procurement approach has narrowed the group of contractors to four.
The team that is given the contract as Indiana’s concessionaire will maintain the east-end bridge and the Indiana approach. Control and maintenance of the Kentucky approach there and the tunnel under the Drumanard Estate will be handed off to Kentucky.
For Kentucky, the state is taking a more traditional design-build approach to constructing the downtown portion of the project. Kentucky Transportation Cabinet Project Manager Gary Valentine said approval was granted by the state’s General Assembly to use state transportation funds, as well as tolls and bond proceeds to fund the project, and three contractors, or teams of contractors, will compete for the project.
Valentine outlined that incentives will be part of Kentucky’s contract with the winning bidder.
He explained that once construction begins, the expected cost of construction per day will total about $80,000 and the contractor can earn incentives for finishing early and penalties for finishing late. A completion date is set for June 30, 2018.
“If [the contractor] beats that schedule he gets $40,000-a-day for a maximum of $12 million,” Valentine said. “If he doesn’t meet those days [there’s] a disincentive. He gets charged $80,000-a-day.”
Valentine said there is no cap on the disincentive for days the project goes beyond the estimated completion date and that any value engineering savings earned during the construction of the project would be split between the contractor and the state.
Indiana Department of Transportation Spokesman Will Wingfield said Indiana typically offers incentive-laden contracts, especially when existing traffic patterns are affected, citing the Sherman Minton Bridge repair work as a prime example.
However, he said he did not know what and if there will be incentives included in the bridges project contract.
“In comparison to the downtown crossing, the east-end crossing portion of the Ohio River Bridges Project is using a different procurement method and has minimal impacts to existing traffic patterns,” Wingfield said in an email.
Making up the work force
Who those contracting companies will hire is also being determined.
Both states have requested that a certain percentage of Disadvantaged Business Enterprises, or DBEs, are included in the contract. Valentine added that the states are encouraging the use of the local work force when constructing the bridges, but cannot force contractors to hire local skilled laborers.
“We cannot require it, we can only encourage it,” he said. “We know how important that is, and the teams do too.”
Tiffany Mulligan, INDOT economic opportunity director, said for the contract teams to be considered moving into the final request-for-proposal, they must submit in their plan how they will meet INDOT’s goal of 9 percent DBE inclusion in the project.
Tyra Redus, director for the office of civil rights and small business development for the Kentucky Transportation Cabinet, said her state’s goals are 8 percent for DBE’s and work force goals for minorities at 15 percent and 10 percent for females.
She added that Kentucky will have the ability to assess disincentives if the contractor does not meet the DBE goals.
A reciprocity agreement between the two states will allow disadvantaged businesses to be counted in the other state for the purposes of the project.
Schultz also explained that some confusion resulted from the amount of jobs that will be added as a result of the bridges project as it was written in the Final Supplemental Environmental Impact Statement.
According to the supplemental impact statement, 18,000 jobs will be added between 2012 and 2042.
“Essentially what that means is, in any given year over that 30-year period, there will be 18,000 total jobs, on average, in region because of the bridges project that wouldn’t have been there had the bridges project not been done,” Shultz said.