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Indiana agencies finalize deal for new I-69 section

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Indiana officials have approved a deal with the private company that will finance and build the new section of Interstate 69 between Bloomington and Martinsville.

The Indiana Finance Authority and Indiana Department of Transportation said the agencies have finalized the agreement with private contractor I-69 Development Partners to upgrade a 21-mile stretch of the existing Indiana 37 for the I-69 extension.

Private bonds to finance the project are set for to be sold in June and construction is scheduled to start this year. The new section of I-69 is slated to open by the end of 2016.

Under terms of the contract, the state would make an $80 million "down payment" to the private partner, Isolux Infrastructure, which would pay the $325 million estimated for construction. Once that section of highway is complete, the state starts paying the partner $21.8 million a year for 35 years and the company maintains the highway.

Isolux is working with local contractors E&B Paving of Anderson, Force Construction Co. of Columbus and Gradex Inc. of Indianapolis.

Isolux beat three other consortiums with its proposal.

If the private developer doesn't keep the road open to traffic and up to Indiana Department of Transportation standards, the state could reduce the annual payment.

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  • Rich
    The taxpayers are getting the short end. Someone with connection's getting the long end?
  • Seems a little pricey
    The net present value of the deal to the contractor, assuming 3.48% as the risk free rate (current yield on the 30-Year treasury note) is $499.5 million. If the true cost upgrade the 21-mile stretch is $325 million, that leaves about $175 left over to cover maintenance over the 35 year contract. Is is worth paying a private company the equivalent of $5 million a year in today's dollars to maintain a 21-mile strecth of highway? It seems a little extreme to me, especially when the state has a AAA credit rating and we could borrow the $325 million at 4% or 5% over the same period and end up paying less over the long run. This doesn't seem to me to be what is in the best fiscal interest of Hoosiers.
  • Vamanos, Amigos
    Can't wait until this road is finished all the way to Reynosa and Nuevo Laredo and all those Mexican trucks start rolling into Indiana. You didn't really believe this was all about making it easy for you to get to Grandma's house in Evansville, did you?
  • Quit confusing Italiano with facts.
  • Maybe not
    At a 6% discount rate, which is reasonable, the present value of the payments is closer to $400M. So it is essentially a $75M premium for the company to maintain the highway for 35 years. Doesn't sound to out of control to me.
  • Crooks all
    Lets see Indiana is going to pay 843 million for a 325 million stretch of highway (that is a 518 million dollar premium). Am I the only one who thinks this is "highway" robbery? AND am I the only one who wonders who's palm is getting greased?

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    1. I took Bruce's comments to highlight a glaring issue when it comes to a state's image, and therefore its overall branding. An example is Michigan vs. Indiana. Michigan has done an excellent job of following through on its branding strategy around "Pure Michigan", even down to the detail of the rest stops. Since a state's branding is often targeted to visitors, it makes sense that rest stops, being that point of first impression, should be significant. It is clear that Indiana doesn't care as much about the impression it gives visitors even though our branding as the Crossroads of America does place importance on travel. Bruce's point is quite logical and accurate.

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