The proposed Illiana Expressway linking northwestern Indiana with Chicago's south suburbs is eligible for a low-interest federal loan for up to one-third of the cost of the $1.5 billion project, a newspaper reported Monday.
Indiana and Illinois can apply for a Transportation Infrastructure Finance and Innovation Act loan for the 47-mile toll road that would run between Interstate 65 near Lowell and I-55 near Wilmington, Ill., The Times of Munster reported.
"The Illiana Corridor project is creditworthy and a good candidate for TIFIA because it improves interstate commerce," Indiana Public Finance Director Kendra York said. "Today's formal invitation is an important step in securing the lowest cost financing that will result in lower pricing from the private developer teams for both states."
Each state has selected four investment teams to bid on designing, building and operating their respective portions of the highway.
The federal loan is important because investors would be able to draw on it for their shares of the costs. The interest rate on the federal loan is tied to U.S. Treasurys, which means it would carry a lower interest rate than can be secured on the private market.
Investors would recoup their money from payments the states make once the project reaches certain milestones and from annual payment the states would make once the expressway is open to traffic.
Indiana has forecast it will spend $80 million to $110 million in upfront costs to get the road built. Illinois' upfront costs are expected to be between $450 million and $500 million. Both states hope to recoup that money later from tolls.
The two states' transportation departments are preparing a final environmental impact statement to be submitted soon for federal approval. The agencies hope to receive that approval this spring. Construction would begin in 2015.
Indiana Gov. Mike Pence and Illinois Gov. Patrick Quinn both support the project, saying it would promote economic development. Critics maintain the road will have minimal impact on economic development while hurting the environment.