Kentucky, Indiana to choose contractors later this year
By Lorie Hailey
Work on a major Kentucky transportation project decades in the making to alleviate severe traffic congestion and improve safety in Louisville’s city center began last month as construction crews demolished several buildings to make way for a new downtown bridge over the Ohio River.
The six-lane bridge will be part of the $2.6 billion Ohio River Bridges Project, which also includes modernization of the Kennedy Interchange in downtown Louisville and the construction of a new East End Crossing into Indiana.
Kentucky and Indiana have divided the endeavor’s responsibilities, each tasked with financing and construction half of the project: Indiana the East End Crossing and Kentucky the downtown bridge and interchange upgrade.
Later this year, both states will name managing contractors, and direct construction should begin next spring. Kentucky will choose from three design-build teams it has selected as finalists. Indiana had not announced finalists as of Aug. 1, but it recently opened bids from six teams for its piece of the project.
The work is a 3,000-foot extension of Old Salem Road, including a 170-foot bridge that will span the future State Road 265 approach to the East End Bridge. When the East End Crossing opens to traffic, Old Salem Road will be the first Indiana exit north of the new bridge.
The bids ranged from $3.19 to $4 million. Regional contractors will have many dozens of opportunities the next six years to get parts of the $2.3 billion in work that is planned – and much needed.
Average daily downtown area traffic was at 293,200 vehicles in a 2006 Kentucky Transportation Cabinet count, with 342,000 vehicles per day forecast by 2025 using federal computer simulations. At that point, Kennedy Bridge without relief would be handling 142 percent of its designed capacity – it was at 106 percent of capacity back in 2000.
The contractors selected to uncrimp this regional bottleneck will be just the first in a wave of financial beneficiaries from the project, said Mike Hancock, secretary of the Kentucky Transportation Cabinet.
“Overall, the economic opportunity for this project is immense, not just for the short-term but carrying well into the future,” Hancock said.
Construction is expected to create about 4,000 jobs, most of which the state hopes will go to the local workforce. Dozens of subcontractors will complete the many components of the project, from landscaping to concrete work and everything in between, Hancock said.
“We’re working with the Cabinet for Workforce Development … to build the kind of training processes for specific jobs that we need. We are creating the right kind of curriculum to teach people how to do those jobs so that the workforce is adequate and that the ultimate successful bidders can look to the local workforce to supply their needs as opposed to having to look outside the region,” he said.
Both states’ goals for the use of Disadvantages Business Enterprises (DBE) are higher than 10 percent. DBEs are for-profit small businesses where socially and economically disadvantaged individuals own at least 51 percent of the company.
Kentucky also has specific goals for minority-owned business involvement.
“We’re working very carefully to establish … workforce employment goals for minorities and women, trying to make sure that we have the representation we need in the project from those minority businesses and that the employment opportunities are truly equal for the region,” Hancock said.
The long-term economic impact of the project is significant. The massive construction project will “reinvigorate and modernize the downtown bridge area (and) the cross-river flow of traffic … creating a cleaner line, which for the downtown portion of the project bodes very, very well for future economic activity,” he said.
The intersection of Interstates 64, 65 and 71 – commonly referred to as “Spaghetti Junction” – was named the 11th worst traffic bottleneck in the country by the American Transportation Research Institute. During peak hours, from 6:30 to 9:30 a.m. and 3 to 6 p.m., traffic backs up across the Kennedy Bridge, which is over capacity.
“The bridge serves over 200,000 people a day,” said Gary Valentine, Kentucky’s project manager.
There are at least two accidents at the Kennedy Interchange each day, he said, plus nearly two additional crashes just outside of the interchange area.
The existing Kennedy Bridge will be reconfigured to serve southbound traffic, while the new Downtown Crossing alongside it will convey northbound vehicles.
The East End Crossing also brings long-term economic opportunities “that will come with the increased development potential, primarily on the Indiana side of the river,” Hancock said. “But there is terrific opportunity for Louisville Metro to continue to grow that way.”
The four-lane bridge will be built about eight miles upstream from Spaghetti Junction, connecting I-265 in Kentucky and Indiana to complete that interstate loop. It will be wide enough to accommodate six lanes of traffic in the future, by restriping the bridge deck and reducing the width of shoulders.
The bridge will cross the Ohio River just north of Harrods Creek on the Kentucky side, connecting to Indiana’s Lee Hamilton Highway/S.R. 265 extension just north of Utica. Kentucky’s I-265, also named for a former long-serving local congressman, is known as the Gene Snyder Freeway.
Two bridges, two financing approaches
Kentucky and Indiana are taking differing approaches to financing.
After studying the Louisville and Southern Indiana Bridges Authority’s two top recommended options, Kentucky chose design-build construction financed with tax-exempt toll revenue bonds. Operations and maintenance will be via a separate contract following construction. The method allows the use of conventional and alternative funding sources.
Valentine said Kentucky found this process more economical and to have less impact on the state’s debt load and credit rating. It was also judged to have fewer legal and legislative obstacles.
Indiana chose an availability payment concession model. It will choose a contractor to design, build, operate and maintain the structure, and the concessionaire is responsible for providing or securing private-sector financing, including private equity and debt, to support its obligations to deliver the East End Crossing. Debt payments under the concession agreement will be backed by Indiana’s funding commitments and its share of the toll-based revenues from the project.
The scope and multibillion-dollar costs of the project are so immense, tolls were the only way the project could move forward, Valentine said. The two states will evenly split toll revenues on each bridge.
Meanwhile, the planned all-electric, high-speed collection operation will link up with a transponders that local motorists can place on their vehicles.
“Or it takes a picture of your license plate and you get a bill,” Valentine said. “Tolls are anticipated to start in 2017. By then, who knows what the technology will be?”
Lorie Hailey is associate editor of The Lane Report. She can be reached at email@example.com.
Louisville leaders focus on innovation at IdeaFestival
Event brings global innovators and thinkers to Louisville for four days of events and presentations
Horse Industry Picking Up the Pace
Yearling prices show early signs of Thoroughbred industry recovery; big bet made on Calumet Farm
One-On-One: Greg Fischer
Louisville Mayor Greg Fischer discusses financial issues facing Kentucky’s cities and using innovation for economic gain
Drought: Agribusiness Expectations Get Scorched
Drought and record heat rewriting the initial forecast for record 2012 Kentucky farm receipts
Farmers Markets: Growing the Local Food Economy
Markets will generate an estimated $11 million in sales to farmers
IdeaFestival an Environment for Innovation
Another IdeaFestival lineup of inter-disciplinary creativity aims to fertilize Kentucky’s entrepreneurial foundations
$2.6 Billion Ohio River Bridges Project Brings More Than Jobs, Contractor Cash
Kentucky, Indiana to choose contractors later this year
Ultra High-Speed Internet
Build-out comes slowly in Kentucky and everywhere else as market watches for signs that service is financially sustainable
Law firm Bingham McCutchen to open global services center in Lexington, bring 250 jobs
Average wage, including employee benefits, is $37 an hour