BRADENTON, Fla. — Kentucky Gov. Steve Beshear announced late last week the sale of $100 million of grant anticipation revenue vehicle bonds for the Ohio River Bridge Project.
Beshear called the financing critical for creating "tangible, immediate progress" on the massive $4.1 billion bridge project between Louisville and Indiana.
Most of the Garvee bond proceeds will be used to acquire and clear right-of-way approaches for one of two proposed Ohio River bridges and to acquire right of way for reconstruction of a major downtown Louisville interchange known as "spaghetti junction" where Interstates 64, 65, and 71 converge.
"The sale of bonds means this project is moving forward — no more lulls, no more hesitations," Beshear said in a release. "The days of the stop-and-start planning of the Ohio River Bridges project are coming to an end."
The General Assembly authorized the governor to sell up to $231 million worth of Garvees for the project.
The first tranche of Garvees specifically for the Ohio River project is expected to be sold by the Kentucky Asset Liability Commission in mid- to late February by negotiation with Citi as senior managing underwriter, according to Tom Howard, executive director of the Office of Financial Management in Kentucky's Finance and Administration Cabinet.
Howard, whose office is serving as financial adviser, said that the upcoming sale is not expected to be insured and a structure has not been determined. He also said that the syndicate is expected to be composed of Edward D. Jones & Co., First Kentucky Securities Corp., J.J.B. Hilliard, W.L. Lyons LLC, Morgan Keegan & Co., PNC Capital Markets LLC, Ross, Sinclaire & Associates LLC, and Stifel Nicolaus & Co.
Kutak Rock LLP is bond counsel.
Kentucky has $344.8 million of outstanding Garvees, according to the state. Those bonds are rated AA-minus by Fitch Ratings and Standard & Poor's, and Aa3 by Moody's Investors Service.
It has been 50 years since a bridge was built in the major north-south freight corridor between northern Kentucky and southern Indiana, which is severely congested by growth in Louisville.
The federally designated "mega-project" has been a joint effort of the two states for many years but it has stalled because of the lack of funding. In 2003, the Federal Highway Administration released a "record of decision" approving sites for the project as well as an environmental impact statement.
In the years since the FHWA decision, the project has received federal grants and state funding. And a bi-state management team has overseen work completed by the general engineering consultant, Community Transportation Solutions, and six design teams. The states have a Web site about the project at www.kyinbridges.com.
But while studies, public hearings, and early design work have taken place on the massive project, it also stalled as Kentucky pondered how to finance its $2.92 billion share of the construction cost.
Indiana, whose share is $1.15 billion, has offset a portion of its cost already by setting aside $600 million from the leasing of the northern Indiana toll road. Indiana's legislature also has agreed to create an Ohio River Bridges Commission to work with Kentucky on the financing plan.
Beshear proposed a bill allowing Kentucky to participate in a bi-state financing authority with the power to issue bonds backed by tolls and federal grant anticipation revenue. The bill passed in June and it authorized Beshear and Louisville Mayor Jerry Abramson to make appointments to the authority. The two announced Kentucky's seven members on Oct. 30.
Indiana Gov. Mitch Daniels on Dec. 3 signed an executive order appointing the state's seven members to the bi-state authority, which hasn't determined its official name.
The bi-state authority is expected to hold its first meeting in January.