Indiana last week reached financial close on a $702 million tax-exempt bond transaction that finances the bulk of the state’s half of the $2.6 billion bridges project with Kentucky.

The state said in a press release that the closing marked “the end of an aggressive proposal and selection process.”

The Indiana Finance Authority in mid-March priced $702 million of private activity bonds on behalf of WVB East End Partners LLC, the company that is building Indiana’s half of the Ohio River bridges project.

The borrowing marked the state’s first public-private partnership structured with availability payments, and one of the first such deals in the U.S.

“Indiana’s public-private partnership procurement for the East End Crossing is being hailed as a model for other states,” IFA Director Kendra York said in a statement. “Indiana kept the project on schedule and received responsive proposals from all four short-listed teams – a first for a P3 procurement in the United States.”

The IFA and the Indiana Department of Transportation will make $392 million in milestone payments through the construction period, expected to end in 2020. The state will then make availability payments that will be used to pay off the bonds through the life of the project, in 2050.

The Ohio River Bridges project is a long-planned effort by Kentucky and Indiana to address transportation needs and congestion in the area, as well as promote economic development.

It involves construction of two new bridges across the Ohio River, one linking downtown Louisville and Jeffersonville, Ind., and another upriver.

The project is unique as the two states have opted for different financing models. Kentucky is pursuing a traditional design-build model that relies on toll revenue, grant anticipation revenue vehicle bonds, state funds, and potentially a federal loan.

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