Bonds

Louisiana kicks in more money to finalize its largest P3 to date

Louisiana will kick in more money — and get a piece of toll revenue — under a revised public-private partnership for a $2.1 billion bridge that state officials signed off on Thursday.

Bonds to pay for the deal, which marks the state’s largest P3 yet, will hit the market in early April under the current schedule. The state plans to issue debt, including general obligation bonds, and the federal government has allocated $2 billion in private activity bonds for the project.

“The state of funding that the [Louisiana Department of Transportation and Development] has for infrastructure projects is insufficient to construct this bridge or any other comparable bridge without a tolling aspect to it,” newly appointed state transportation secretary Joe Donahue told state lawmakers Tuesday. “There were intense negotiations and we dug deep into the details of the contract and this is a better contract and a better deal.”

A rendering of the proposed Calcasieu River bridge.

Louisiana Department of Transportation and Development

The 50-year design, build, finance, operate and maintain I-10 Calcasieu River Bridge replacement project hit the skids last year amid political opposition to the proposed toll rates. On Monday, the Joint Legislative Transportation, Highways and Public Works Committee approved the P3 after new Gov. Jeff Landry in January announced key changes like reduced tolling rates. State transportation officials and Calcasieu Bridge Partners, a consortium led by Plenary Americas, signed the contract Thursday.

Louisiana will kick in an additional $409 million to “buy down the toll rates,” Donahue said. To cover the new payment, the state plans to issue bonds backed by future vehicle sales tax revenue and tap other potential revenue streams, Donohue said.

The tolls will be linked to CPI.

An additional $800 million in public funds largely remains the same as the original deal: a $150 million federal Mega grant; $100 million in American Rescue Plan Act funds; $240 million from six years of vehicle sales taxes; $85 million of GO bonds; $75 million from the Transportation Trust Fund; and $150 million from the general fund.

The state will also now get a roughly 15% piece of annual toll profits after operations and maintenance. The money will either go to further buy down toll rates, shorten the lease, or toward infrastructure projects in the area, Donahue said.

The DOTD will save roughly $130 million with various design changes for areas related to the bridge that will now cost about $280 million, down from $415 million.

The state expects to see $128 million in financing cost savings due to expected lower interest rates since last year.

The Louisiana Bond Commission will consider the project on Feb. 15 with a final vote scheduled for March 21. The Louisiana Public Facilities Authority will vote on it March 13, with a rating from Moody’s Investors Service scheduled to be released around the same time. Preliminary bond documents will be posted on March 31 with a tentative pricing date of April 2.

The $2.1 billion project includes a replacement of the nearly 70-year-old Calcasieu River Bridge and renovation and widening of the adjacent nine-mile Interstate 10 corridor in southwest Louisiana.

“Getting this deal secured in a way that was best suited for the Southwest Louisiana region was one of my administration’s top goals when I took office,” Landry said in a statement. “With today’s signature, we have proven that we are committed to investing in infrastructure that will significantly benefit Louisiana and the I-10 corridor.”

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