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For years I’ve been writing about how the project to build two new bridge across the Ohio River at Louisville, Kentucky was an enormous boondoggle.
Years after they opened, the bad financial news continues to roll in. WDRB-TV in Louisville recently reported on a new revenue study conducted by the state of Kentucky in advance of refinancing its bonds.
The study found that due to Covid disruptions, the projected rise of remote work, and other factors, toll revenue is estimated to be $373 million less that previously projected over the next 30 years. This is a 6% decline.
Spread over three decades, this is a manageable amount, but it’s money that’s going to have to come out of the transportation budgets of the states of Indiana and Kentucky. Kentucky used traditional bonding for the project whereas Indiana used a public-private partnership. But Indiana’s P3 structure is a so-called “availability payments” model, which means the private vendor gets their money no matter what. Unlike with the Indiana Toll Road deal, the state of Indiana has all the revenue risk on this project.
The bridges project is an example of how bad deals on infrastructure can be a financial albatross for a very long period of time. Local and state officials really need to do their due diligence before undertaking these kinds of major project.
This is also an early indication of how remote work threatens the financial structures behind many infrastructure projects. Toll roads and bridges, airports, transit systems, or any other facility heavily reliant on commuter or business travel volume is at potential financial risk.