CHICAGO — Indiana is applying for a $170 million Transportation Infrastructure Finance and Innovation Act loan to cover payments to the private team on the $2.3 billion, two-state Ohio River bridges project.
The Indiana Finance Authority approved the move at its Jan. 15, 2015 meeting. The state will use the TIFIA loan to help pay for $392 million in milestone payments due to the private company through 2020.
The TIFIA loan is expected to not exceed 20 years or a 3.5% interest rate.
The IFA opted for the federal loan instead of issuing bonds because the loan is expected to carry a lower interest rate.
"What's really important to understand on the TIFIA question is the fact that nothing is changing in terms of amounts or timing," Kendra York, director of the Indiana Finance Authority, said in an email. "We're using TIFIA instead of issuing bonds due to the lower interest rate available via this financing mechanism. In the larger scheme, the impact isn't significant on the larger project, but anywhere we can save taxpayer's money, we are compelled to do so."
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 state issued $640 million of private activity bonds in March 2013 to finance its piece of the $2.3 billion project. The PABs are backed by annual payments from Indiana to the company. The debt will be paid with so-called milestone payments, totaling $392 million through 2020, and then by availability payments for the 35-year life of the project, roughly through 2050.
Both payments feature an appropriation pledge from triple-A rated Indiana, the state's strongest available pledge as it does not issue general obligation bonds.