Provides $761.6 million for project to vastly improve I-65 corridor
FRANKFORT, Ky. (Dec. 20, 2013) – Kentucky today closed on the bond issue with which to complete the Downtown Crossing portion of the Louisville-Southern Indiana Ohio River Bridges Project.
Revenue bonds and bond anticipation notes with a par value of nearly $728 million were sold to investors last week. The bonds were priced at a slight premium and generated $761.6 million for the project.
“Completion of financing obviously is a significant milestone in this long-awaited project,” said Kentucky Transportation Secretary Mike Hancock, who also is chairman of the Kentucky Public Transportation Infrastructure Authority (KPTIA), issuer of the bonds and notes. “We were gratified by the strong investor demand we found last week.”
Citigroup Global Markets Inc., senior managing underwriter, actually received orders for the bonds totaling nearly $3 billion. Investors were from around the country, including Kentucky.
KPTIA issued three series of revenue bonds with total par value of $275.6 million and two series of bond anticipation notes with total par value of $452.2 million. All were given investment-grade ratings by Moody’s Investors Service and Fitch Ratings.
In addition, KPTIA secured a $452.2 million loan from the Federal Highway Administration under the Transportation Infrastructure Finance and Innovation Act (TIFIA). The loan was closed on Thursday, Dec. 12.
TIFIA funds will be used to pay the bond anticipation notes in 2017. The revenue bonds will mature at different stages, with the last bonds being retired in 2053. There is no taxpayer obligation for debt service on the revenue bonds and TIFIA loan; both are secured entirely by toll revenues.
The $1.3 billion Downtown Crossing is half of the $2.6 billion Ohio River Bridges Project, which Kentucky and Indiana are jointly building to dramatically improve cross-river mobility, especially on heavily traveled Interstate 65.
The Downtown Crossing includes construction of a new I-65 bridge for northbound traffic, renovation and reconfiguration of the John F. Kennedy Memorial Bridge to carry southbound I-65 traffic and the rebuilding of downtown interchanges in Louisville and Jeffersonville, Ind.
Eight miles upriver, Indiana is building the other half of the overall project – the East End Crossing, with a bridge and approaches to connect the Gene Snyder Freeway in Kentucky with the Lee Hamilton Highway in Southern Indiana.
Once the project is completed in 2016, tolls will be charged for use of the two new bridges and the renovated Kennedy Memorial Bridge. An all-electronic toll system will be used, meaning no toll plazas, no slowing of traffic and no waiting in line. Initial base toll rates were adopted Sept. 11 by a joint Tolling Body composed of officials of both Kentucky and Indiana.
In addition to the toll revenue bonds, notes and TIFIA loan, Kentucky previously issued $336 million of GARVEE bonds (Grant Anticipation Revenue Vehicles) for the project. Weighted average interest cost from all sources of borrowing for the project is 4.4 percent.