Toll In­crease Deal De­liv­ers $1 Bil­lion to In­di­ana

The Bond Buyer - - Front Page - By Nora Colomer

In­di­ana will raise $1 bil­lion in fund­ing for road and other in­fra­struc­ture projects from a rate hike on the pri­vately op­er­ated In­di­ana Toll Road.

The plan, un­veiled on Tues­day as Gov. Eric Hol­comb’s Next Level Con­nec­tions ini­tia­tive, calls for the In­di­ana Fi­nance Au­thor­ity to amend its agree­ment with the In­di­ana Toll Road Con­ces­sion Com­pany to in­crease the toll rates for heavy ve­hi­cles by 35% be­gin­ning in Oc­to­ber.

The $1 bil­lion pay­ment from the con­ces­sion­aire to the state would be re­ceived over the next three years. The first pay­ment of $400 mil­lion is ex­pected in early Oc­to­ber; $300 mil­lion in Oc­to­ber 2019, and $300

mil­lion in Oc­to­ber 2020.

The agree­ment still has to be fi­nal­ized by the In­di­ana Fi­nance Au­thor­ity at its Sept. 20 meet­ing. No leg­isla­tive ap­proval is needed.

The state has not dis­closed the full amount of rev­enue the rate in­crease will pro­duce or how much profit the In­di­ana Toll Road Con­ces­sion Com­pany es­ti­mates it will get un­der the amended con­tract. The con­ces­sion com­pany has 63 years re­main­ing on its 75-year lease of the toll­way. Aus­tralian fund man­ager fund IFM In­vestors bought the rights to the In­di­ana Toll Road lease in May 2015 for $5.7 bil­lion.

The fund took over the re­main­ing years of the 75-year lease af­ter con­ces­sion­aire ITR Con­ces­sion Com­pany LLC, a sub­sidiary of Mac­quarie In­fra­struc­ture Part­ners, Mac­quarie At­las Roads and Cin­tra, de­clared bank­ruptcy. The orig­i­nal con­ces­sion­aire took over the toll road in 2006 af­ter pay­ing the state of In­di­ana $3.8 bil­lion, the largest such pri­va­ti­za­tion at the time.

Roughly $600 mil­lion will fi­nance the com­ple­tion of sec­tion 6 of In­ter­state 69, from Martinsville to In­di­anapo­lis, call­ing for work to be com­pleted by 2024 in­stead of 2027. The leg is part of a larger project the state took over af­ter a pub­lic pri­vate part­ner­ship failed.

The money the state gets from the toll road agree­ment will fund planned road projects in the seven Toll Road coun­ties and the freed up re­sources will be di­rected to Next Level Con­nec­tions pro­gram projects else­where, ac­cord­ing to a fact sheet pre­pared by the Hol­comb ad­min­is­tra­tion.

The other $400 mil­lion would go to­wards projects in­clud­ing new in­ter­changes on the road be­tween In­di­anapo­lis and South Bend, boost­ing ru­ral broad­band in­ter­net ac­cess, lur­ing new over­seas flights to In­di­ana air­ports and im­prov­ing hik­ing and bik­ing trails.

The state hired an out­side con­sul­tant to as­sess the change, Hol­comb said at a press con­fer­ence on Tues­day. “I was as­sured this is a good deal for the state of In­di­ana,” Hol­comb said. The in­vest­ments “are all about one In­di­ana, right down to our small­est town, and how we con­nect with one an­other and how we con­duct our com­merce via all modes of trans­porta­tion.”

Hol­comb is a Repub­li­can and the GOP con­trols the In­di­ana leg­is­la­ture.

State Rep. Pat Bauer, D-South Bend, con­demned the deal as “an­other tax in­crease,” on top of GOP-sup­ported fuel tax hikes, that he ar­gued would re­sult in higher prices for con­sumers as the cost of the new truck toll rates are passed along to con­sumers.

Bauer also ques­tioned the lack of trans­parency over how much the toll road oper­a­tor stands to make out of the rate hike. “For a gov­er­nor who prides him­self on trans­parency, he is in­ten­tion­ally mud­dy­ing the wa­ter by not com­ing clean on the de­tails of this pro­posal,” he said.

Un­der the cur­rent lease, the In­di­ana Toll Road Con­ces­sion Co. is al­lowed to raise toll rates the greater of 2% or in­fla­tion an­nu­ally. The amend­ment the Hol­comb ad­min­is­tra­tion ne­go­ti­ated will in­crease the toll rate for ve­hi­cles with three or more axles by 35% start­ing Oct. 5. ◽

Bloomberg News

A deal struck by Gov. Eric Hol­comb will raise tolls on the pri­vately run In­di­ana Toll Road in re­turn for a $1 bil­lion pay­ment to the state.

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