Louisiana toll bridge P3 back on track

Bonds

Louisiana’s largest and most complex public-private partnership that will replace an aging bridge over Interstate 10 appears back on track after the state’s new administration hammered out a revised agreement with the concessionaire to assuage political opposition.

The modified agreement lowers tolls and includes a 15% equity contribution for local infrastructure, new Gov. Jeff Landry announced last week, calling it “one hell of a deal.”

Landry, a Republican, took office after Democrat John Bel Edwards was term-limited out of office. Replacing the Calcasieu River bridge was a top priority for Edwards – and former transportation secretary and gubernatorial candidate Shawn Wilson – but until last week it was uncertain whether Landry would continue that commitment.

“I was pretty surprised that they’ve been able to come to a preliminary new agreement as quickly as they have, just because these P3 things are tough and I wasn’t sure how motivated the incoming governor was,” said Baruch Feigenbaum, senior managing director of transportation policy at Reason Foundation. “That’s a pretty positive step for P3s in the U.S.”

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.

The Louisiana Legislature’s joint Transportation, Highways and Public Works Committee is set to vote on the revised P3 contract Jan. 30.

The committee in October narrowly killed the previous plan amid opposition to the tolls from Republicans and the trucking lobby.

Louisiana Gov. Jeff Landry has reached a revised public-private partnership agreement to replace the Calcasieu River bridge.

Louisiana Governor’s Office

The committee’s vote to kill the deal prompted federal transportation officials to warn that it would rescind a $150 million Mega grant if an agreement was not reached by Sept. 30.

Landry announced the deal last week with a group of southwest Louisiana lawmakers. The new agreement lowers tolls by an average of 25%, trimming large commercial truck tolls to $8.25 from $12.50 and allowing all local passenger cars to pay 25 cents, on top of the 15% equity commitment to the region, local lawmakers said in a release.

“We are immensely grateful to Gov. Jeff Landry for his unwavering commitment to securing a deal that truly benefits the people of southwest Louisiana,” the lawmakers said. ”This approach signifies a new era of inclusive and transparent governance.”

The state last August tapped a consortium led by Plenary Americas US Holdings Inc., with Sacyr Infrastructure USA LLC and Acciona Concesiones S.L. each with a 30% stake.

It remains to be seen if the tolls and equity contribution, which still lacks details, will require a revamped financing plan, Feigenbaum said.

“Overall these are not huge changes, it doesn’t change the scope or the amount of the project,” he said. “It’s just playing around with the tolls and making it more friendly to some of the local residents.”

The project is structured as a design-build-finance-operate-maintain.

Louisiana, which funds most of its transportation infrastructure with a long-stagnant gas tax and faces a $14 billion infrastructure backlog, would have had a hard time covering the tab on its own, Feigenbaum said.

The Louisiana Department of Transportation and Development announced in December that it had extended the deadline for executing the P3 for 60 days, until Feb. 1. The extension provided more time for “further limited negotiations and to secure necessary approvals, with the ultimate goal being to advance the project,” the DODT said in a release.

Articles You May Like

Mortgage refinance demand surges even as rates cross back over 7%. Here’s why
Markets must stop comparing the UK and the US
Philippines looks to generate $100bn of investment from trilateral summit
Musk predicts AI will overtake human intelligence next year
Gold hits fresh high and Japanese equities track US higher