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Author Topic: Multi-State I-69 Innovative Financing Study  (Read 3602 times)

Grzrd

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Multi-State I-69 Innovative Financing Study
« on: March 14, 2013, 08:20:15 AM »

AHTD has issued a request for proposal (RFP) for studying innovative financing options for the I-69 corridor.
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Notice is hereby given that the Arkansas State Highway and Transportation Department is seeking proposals from qualified firms to prepare an Innovative Financing Study for the Interstate 69 Corridor from Indianapolis, Indiana to the Mexican Border in the Lower Rio Grande Valley. The work will generally consist of an innovative financing plan for development, construction, maintenance, and operation of this proposed Interstate facility which passes through eight states.
(above quote from AHTD issues RFP for Innovative Financing Options for I-69 thread on "Mid-South" board)

On March 13, I received an email update from AHTD indicating that the study has been completed and is in the process of being prepared by Atkins North America for delivery to the respective state DOTs:

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... the study is ready for release.  The Consultant has sent the report to the printer.  I think we will get all the deliverables in a couple of weeks.

I also received an email followup that AHTD, as the lead agency, will "probably" post the report on their website. I will be on the lookout ...

Mods - Since the I-69 report will discuss seven states in several different regions from Indianapolis to the Lower Rio Grande Valley, I started a new thread on this board to avoid having people think that this is an "Arkansas only" report.  Maybe the two threads should be merged?
« Last Edit: March 14, 2013, 10:44:17 AM by Grzrd »
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Grzrd

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Re: Multi-State I-69 Innovative Financing Study
« Reply #1 on: April 24, 2013, 07:23:15 PM »

I recently received copies of both the Executive Summary and the Final Findings from AHTD. At this point in time, it looks like they will be posted on neither the AHTD nor the FHWA websites (I have not checked the DOT websites of other affected states). If anyone has a website on which they would like to have the study posted (in order to provide a link for everyone), please let me know.

Here is the final paragraph from the Executive Summary:

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Based on the results of this study, toll revenues could represent one element of an overall financial package for consideration. However, in most cases toll revenues are unlikely to fully cover the costs of each SIU. Other funding sources such as Federal and State government loans and/or loan guarantees could potentially leverage bond financing beyond the levels presented in this study. For those SIUs with less than a 0.75 feasibility ratio, a second source of revenue to fill the gap is likely to be needed. Based on the limited availability of resources for I‐69 at the state level, it appears that significant Federal assistance will be required to advance development of the I‐69 corridor, particularly given the high cost of the bridges across the Ohio and Mississippi Rivers that are keys to ensuring connectivity throughout the corridor.

edit

AHTD has posted the Final Findings and the Executive Summary.
« Last Edit: April 30, 2013, 10:36:08 PM by Grzrd »
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Grzrd

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Re: Multi-State I-69 Innovative Financing Study
« Reply #2 on: April 25, 2013, 10:44:06 PM »

After an initial reading, the Study used a feasibility ratio analysis to determine if tolls would be sufficient to cover the respective life cycles of the various Segments of Independent Utility ("SIUs").  First, Texas and Kentucky (except for the Ohio River Bridge) were excluded from the analysis:

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No tolled traffic and toll revenue forecasts were developed for Texas SIUs as TxDOT is not considering the use of tolling as a funding mechanism for any currently planned portion of the I‐69 route in Texas. Additionally, tolled traffic and toll revenue forecasts were not developed for SIUs 5 and 6 in Kentucky as the tolls on these SIUs were removed many years ago and there are no present or future plans to reinstate tolls on those segments.

The Study compared each SIU's Financial Capacity to its upfront project costs, all in 2012 dollars:

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Compare an SIU’s Financial Capacity to its upfront project costs, all in 2012 dollars. If the ratio of Financial Capacity to project costs exceeds 1.0, then this suggests the project could be financed from toll revenues on a self supporting basis. Ratios less than 1.0 indicate toll revenues, after annual expenditures for O&M and R&R, are not sufficient to fully support upfront SIU project needs.

Most of the corridor has a feasibility ratio less than 1.0:



Here's a Summary Table:



A feasibility ratio of less than 0.75 indicates a need for additional federal funding:

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For those SIUs with less than a 0.75 feasibility ratio, a second source of revenue to fill the gap is likely to be needed. Based on the limited availability of resources for I‐69 at the state level, it appears that significant Federal assistance will be required to advance development of the I‐69 corridor, particularly given the high cost of the bridges across the Ohio and Mississippi Rivers that are keys to ensuring connectivity throughout the corridor. This report identifies several FHWA funding programs that could potentially be used to support development of the corridor.

It's no surprise, but it looks like I-69 will need the federal funding fairy even if tolls are implemented.

edit

In order to best position I-69 in the respective states for future federal funding it is suggested that the project should be included in each state's respective freight plan:

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Section 1116 of MAP‐21 includes provisions for development of a freight plan .... the Secretary may increase the Federal share payable for any project to 95 percent for projects on the Interstate System and 90 percent for any other project if the Secretary certifies that the project meets the requirements of this section .... The potential for increased Federal participation could be beneficial for all I‐69 segments, but particularly bridge segments that are high cost and for which funding for the entire segment must be available before any construction can be initiated ... the states should coordinate with FHWA to ensure that I‐69 is included in the Freight Plan to better position themselves for a reduced State match under MAP‐21 and future funding programs.

It is also suggested that each I-69 state coordinate with FHWA to designate I-69 as a Project of National and Regional Significance:

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Section 1120 of MAP‐21 states the following:
Not later than 2 years after the date of enactment of the MAP‐21, the Secretary shall submit a report to the Committee on Transportation and Infrastructure of the House of Representatives and the Committee on Environment and Public Works of the Senate regarding projects of national and regional significance.”
The report must include a comprehensive list of each project of national and regional significance that has been compiled through a survey of State DOTs .... to improve the opportunity for Federal funding of I‐69 segments under both the current and future versions of this program, each state represented in this study should contact FHWA to ensure that they are involved in the process and provide the documentation necessary to support FHWA’s determination that I‐69 warrants a position on the list based on the requirements identified above.
« Last Edit: April 28, 2013, 05:36:30 PM by Grzrd »
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thefro

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Re: Multi-State I-69 Innovative Financing Study
« Reply #3 on: April 26, 2013, 06:55:22 AM »

The other thing that isn't surprising is most of the parts of the road that have good feasibility ratios are already built or under construction.  Extensive tolling is also going to defeat the purpose of the road in areas where there is not sufficient local traffic to support it already (the big trucks will stay on I-30 to I-40 to go from Terarkana to Memphis).

Is SIU 2 in Indiana that they study a new terrain road going through downtown Indianapolis or upgrades to I-465?
« Last Edit: April 26, 2013, 07:21:35 AM by thefro »
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Grzrd

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Re: Multi-State I-69 Innovative Financing Study
« Reply #4 on: April 26, 2013, 08:04:56 AM »

Is SIU 2 in Indiana that they study a new terrain road going through downtown Indianapolis or upgrades to I-465?

SIU 2's "Stage of Development" is described as "Pre-environmental stage". A map showing all of the I-69 SIUs suggests that they used I-465 upgrades for the assumptions underlying their analysis*, but I assume that both a tentative routing(s) through downtown Indianapolis and an I-465 upgrade would be among the alternatives considered during an environmental study.  Interestingly, they determined that the current I-465E has the worst projected 2040 non-tolled Level of Service ("LOS") among current facilities along the I-69 Corridor.

The other thing that isn't surprising is most of the parts of the road that have good feasibility ratios are already built or under construction.  Extensive tolling is also going to defeat the purpose of the road in areas where there is not sufficient local traffic to support it already (the big trucks will stay on I-30 to I-40 to go from Terarkana to Memphis).

This Table reinforces your point:



Also, this Table provides a concise summary of feasibility ratio ranges:



edit

* Here's the portion of the map with SIU 2:

« Last Edit: April 26, 2013, 05:52:19 PM by Grzrd »
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Grzrd

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Re: Multi-State I-69 Innovative Financing Study
« Reply #5 on: April 30, 2013, 10:34:33 PM »

I just noticed that AHTD has posted the Final Findings and the Executive Summary.
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triplemultiplex

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Re: Multi-State I-69 Innovative Financing Study
« Reply #6 on: May 01, 2013, 12:02:02 PM »

The other thing that isn't surprising is most of the parts of the road that have good feasibility ratios are already built or under construction.  Extensive tolling is also going to defeat the purpose of the road in areas where there is not sufficient local traffic to support it already (the big trucks will stay on I-30 to I-40 to go from Texarkana to Memphis).

That's why I've always questioned the Memphis - Shreveport segment.  If tolls are indeed a deal breaker for that portion, is it really needed?  It seems to me a Houston - Texarkana interstate is the more critical link in the system to connect our 4th largest city with the Great Lakes and Ohio Valley.

This expensive, new terrain route from Shreveport to Memphis is going to be largely useless until it's completely finished.  (SIU's be damned.)  This is a corridor that does not exist with established highways at all.  No city in between is large enough to generate enough traffic.

If this portion of I-69 is indeed something we (America) have decided we want, then it should be built over as short a time frame as possible and we should also be willing to for pay it with some tolls to get it done.  If it is of the national importance the advocates say it is, I-69 should have no problem pulling enough traffic between Shreveport and Memphis even if it did have tolls.  If that's not the case, then perhaps the justification for that segment needs to be reevaluated.
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thefro

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Re: Multi-State I-69 Innovative Financing Study
« Reply #7 on: June 20, 2013, 07:23:14 AM »

This expensive, new terrain route from Shreveport to Memphis is going to be largely useless until it's completely finished.  (SIU's be damned.)  This is a corridor that does not exist with established highways at all.  No city in between is large enough to generate enough traffic.

If this portion of I-69 is indeed something we (America) have decided we want, then it should be built over as short a time frame as possible and we should also be willing to for pay it with some tolls to get it done.  If it is of the national importance the advocates say it is, I-69 should have no problem pulling enough traffic between Shreveport and Memphis even if it did have tolls.  If that's not the case, then perhaps the justification for that segment needs to be reevaluated.

Keep in mind that I-69 as currently conceived is a political solution to the problem of folks in Southwestern Indiana not being able to get federal interest in an Interstate 69 extension from Indianapolis to Evansville.

http://www.bloomingtonalternative.com/articles/2010/08/28/10532

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Among the issues that drew Graham's interest were the latest incarnations of the Evansville-to-Indianapolis highway discussions. Four studies commissioned by the state in 1966, 1980, 1982 and 1985 had rejected it, concluding the economic returns could not justify the enormous investment.

The latest such examination, released in February 1990, had reached the same conclusion just a few weeks before David Graham hosted at his home an economist from the Hudson Institute in Indianapolis. Known as the Donohue Study after the lead consulting firm from Waterloo, Iowa, the federally funded study found the proposed road "at best marginal from a cost-effectiveness standpoint," the Federal Highway Administration had told Congress.
 "Graham never ran for office, but he became involved in local Republican Party politics as a fund-raiser and organizer."
 David Reed, Graham's houseguest in the spring of 1990, was a research fellow at the conservative Hudson think tank, whose director at the time was Mitch Daniels. Reed was working on a project, requested by Democratic Congressman Lee Hamilton and funded by the Indianapolis-based pharmaceutical manufacturer Eli Lilly & Company, to examine alternatives for rural development in Southern Indiana.

Reed scoffed at the Southwest Indiana highway plans Graham and a couple other project boosters presented at that breakfast meeting over omelets prepared by the host himself. Their vision, he said, was too limited. "You'll never get to first base unless you can get other people interested in this highway, other states interested," is how Dellinger says Reed responded, "because nobody gives a damn about Indiana."

In what Dellinger calls an epiphany, Reed that morning suggested extending I-69 from the Canadian border at Port Huron, Mich., to Mexico. At Daniels's insistence, Reed subsequently downplayed his call for a transnational highway passing through Evansville in his Hudson study, "The Future of Southern Rural Indiana: Paradigms and Prospects for Rural Development." The discussion appeared as a four-page addendum at the end.

"But the dream of an international highway was so well suited to Graham's interests and biography that he internalized it immediately," Dellinger wrote. "It was Graham who would take the idea and run with it -- or drive with it, as the case turned out to be."


***


Graham took his newly refined vision to the Southwestern Indiana Regional Highway Coalition, whose membership included Keith Lochmueller, a partner at Bernardin, Lochmueller & Associates. He proposed the group sell the idea of an transnational highway on "safety and economics," Dellinger writes.

The group approached Indiana political leaders, like Lugar, Gov. Evan Bayh and Lt. Gov. Frank O'Bannon, both Democrats, who expressed support but weren't willing to take up the call. "No one was ready to accept the responsibility of organizing a multistate campaign for the project," Dellinger says.

 That task fell to David Graham, who owned a home outside of Mexico City. On a drive back in the summer of 1991, David made cold-call stops to strategically selected community leaders in Texas, Louisiana and Tennessee, planting the seed for the I-69 highway.

In a book titled The Graham Legacy, Dellinger says, David, the closest of the three brothers to their father, says of his father: "Dad's chief stock in trade was his ability to sell you on an idea, make you think it was yours, and then subtly encourage you to develop it as fast as possible."

The first to bite on the younger Graham's I-69 salesmanship was a former Shreveport, La., Chamber of Commerce president named David Caruthers, who soon enlisted the active support of Democratic Louisiana Sen. Bennett Johnston.

At a meeting in Greenville, Miss., in November 1992, the multi-state lobbying group calling itself the Mid-Continent Highway Coalition was officially born. Caruthers was named the group's president.

I suspect if I-69 had ended at Memphis (as was planned at one point instead of Indianapolis), the idea for the Memphis to Shreveport extension would never have gotten much serious interest.
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