BRADENTON, Fla. A bi-state panel Thursday declined to set the tolls that drivers will pay on the$2.6 billion Ohio River Bridges Project being constructed jointly by Kentucky and Indiana.
During a short meeting, the panel postponed action on setting toll rates due to unspecified “minor” issues raised by Indiana officials, according to Kentucky Transportation Cabinet Secretary Mike Hancock, who also said he expressed concern at the meeting about Kentucky’s ability to sell toll revenue bonds later this year to finance a portion of its project.
“Any delay in moving our process forward and moving our project into the bond market could result in higher interest rates and depending on the length of the delay could result in higher tolls,” he told The Bond Buyer in a telephone interview Thursday.
Though there has been some controversy over tolls, especially since tolls will be levied on the existing Interstate 65, Hancock said he did not believe that was part of the issue causing Indiana officials to seek a delay.
“My sense is there needs to be additional time to properly help Indiana understand what’s going on, on a couple of relatively minor fronts, and it’s not driven by toll rates at all,” he said. “We want everyone associated with this to be comfortable with it, especially our Indiana partners.”
Hancock said his state has worked with the U.S. Department of Transportation, rating agencies and others on a project that has been “incredibly hard to achieve.”
“I have no intention to allow any issue like today’s to hold up the program,” he said, adding that he expects that the bi-state toll panel will meet again next week.
Both states are relying on toll revenue as part of the funding source for their respective projects.
Indiana’s need for the revenue is less critical because the state has already entered into a public-private partnership contract backed by appropriations, said Russ Romine, executive advisor of the Kentucky Public Infrastructure Finance Authority.
Kentucky’s need is more critical because the state plans to finance the remainder of its $1.3 billion share in the next few months with the sale of bonds.
Though toll collections won’t begin until 2017 when the bridges are expected to open, the rates need to be established so Kentucky can issue $313 million of toll revenue bonds later this year.
The state also expects to issue a $461 million bond anticipation note this year, which would be taken out in 2017 with proceeds from a federal loan obtained through the Transportation Infrastructure Finance and Innovation Act.
Last week, an investment-grade traffic and revenue study by the consulting firm Steer Davies Gleave concluded that toll rates, which received preliminary approval some time ago, would generate the revenue necessary to support Kentucky’s plan of finance.
The rates are expected to range from $2 to $12 and depend on the method of payment, and the type of vehicle. A discount program has yet to be established. The rates would increase 2.5% annually to keep pace with inflation, according to the Steer Davies Gleave study.
Tolls will be collected electronically for drivers with transponders or video cameras will identify license plates and invoices will be mailed to drivers.