The Indiana Finance Authority says it’s reached an agreement with I-69 Development Partners and its bondholders to take over construction of I-69 from Bloomington to Martinsville.
The Indiana Department of Transportation will assume primary control of Section 5 construction by the end of July. The project was originally supposed to be completed through a public-private partnership between the state and I-69 Development Partners, but ongoing issues with funding and delays put completion of the 21-mile portion of interstate in jeopardy.
Indiana Office of Management and Budget Director Micah Vincent says Gov. Eric Holcomb first started exploring the possibility of the state taking over control of the project in November, but it wasn’t financially feasible until after it was clear a Memorandum of Understanding reached between the state and I-69 Development Partners in February would not be successful. Credit ratings agencies continued to downgrade the project bonds because of issues with the developer’s parent company restructuring its debt.
The state says assuming control of the project won’t increase the overall costs to taxpayers. The IFA says it will actually save $30 million because of the takeover. Costs are now estimated at $560 million, which includes costs of buying out bonds for the project, winterizing the roadway and maintenance costs for the next 35 years. The state also previously committed $80 million in milestone payments to Section 5.
“I am delighted for Indiana taxpayers that we have reached an agreement for the State to assume control and finish this project,” said Governor Eric Holcomb in a statement.
As part of the agreement with bondholders, the IFA will issue lower interest highway revenue bonds to replace the developer’s private activity bonds and related interest for a total amount of $246 million in bonds. I-69 Development Partners will provide an additional $12 million to bondholders and $50 million to the IFA under the agreement.
Section 5 was supposed to be complete in October 2016 but has been delayed until August 2018.
The state originally touted the public-private partnership as an innovative way to save taxpayers money. Indiana Office of Management and Budget Director Micah Vincent says the state stands behind its initial decision to complete the project that way.
“If I was advising the governor at that time period, in 2013, I would have advised the same thing,” Vincent says. “What we would have looked at is to make sure that we had a partner that was experienced in this kind of deal and then we’d also be looking at the financial realities of the roads.”
Under the settlement, INDOT will also be responsible for maintaining Section 5 for the next 35 years.