The I-69 Section 5 project will upgrade 21 miles of SR 37 (an existing four-lane divided highway) between Bloomington and Martinsville, Indiana to full Interstate standards. The $325 million project includes four new interchanges and four new overpasses, in addition to improvements at existing interchanges and additional travel lanes in urban areas along the corridor.
I-69 Section 5 is one small piece of a planned new Interstate highway that would extend from Michigan to Texas and facilitate trade and mobility between Canada, the United States and Mexico. A portion of the I-69 route, from Indianapolis to Port Huron, Michigan, was part of the original Interstate System, and other segments of the extended route in other states along the corridor have opened to traffic or are under construction. I-69 Section 5 is one of two final segments of the highway yet to be built in Indiana.
The Indiana Financing Authority (IFA), in close collaboration with INDOT, is developing I-69 Section 5 through a 35-year design-build-finance-operate-maintain (DBFOM) public-private partnership (P3) with I-69 Development Partners, a team led by Isolux Infrastructure Netherlands B.V (a subsidiary of the Spanish firm Isolux Corsan). The private developer will finance and implement the project in return for milestone payments after meeting established construction goals, and will receive annual availability payments based on the performance and availability of the facility throughout the concession period.
Conceptual plans for improving highway connections from Indianapolis through southwestern Indiana to Evansville have been discussed in the region since at least the 1940s. Through high priority corridor designations by Congress in the Intermodal Surface Transportation Efficiency Act of 1991 and subsequent legislation, this route was incorporated into the larger plan to extend I-69 from its original terminus in Indianapolis to the Rio Grande in Texas.
INDOT’s initial environmental studies in the corridor culminated in a Tier 1 Record of Decision (ROD) in March 2004. INDOT then began more detailed Tier 2 environmental studies on six separate sections in the corridor, each between 13 and 29 miles in length. As it pursued these studies, INDOT also explored various options to finance and construct the new Interstate highway, including the possibility of developing it as a toll road (an option that was abandoned by 2006). In 2005, the state committed $2.6 billion from the long-term lease of the Indiana Toll Road to a statewide program of highway improvements called Major Moves, which included funding for the I-69 extension to Evansville.
By 2012, the first three sections of the new route (67 miles) had been completed, and a fourth 27-mile section extending the route north to Bloomington had begun construction. In December 2012, following the release of the draft Tier 2 environmental study for Section 5, INDOT issued a Request for Information to gain industry feedback on the potential for developing this segment as a P3. Encouraged by the responses and by enhanced authority from the state legislature to enter into P3s for freeway projects, IFA and INDOT issued a Request for Qualifications for the I-69 Section 5 in May 2013. FHWA issued a combined Tier 2 Final Environmental Impact Statement and ROD for the project in August of that year, which was followed by IFA and INDOT issuing a Request for Proposals for the project to four shortlisted bidders in October.
In February 2014, IFA selected I-69 Development Partners as the preferred bidder, reaching commercial close in April 2014. Following commercial close, Canada’s Public Sector Pension Investment Board (which also holds a minority equity stake in Isolux Infrastructure) took a 49 percent equity stake in the concession company through its affiliate Infra-PSP Canada; this represents the first upfront direct investment in a U.S. P3 project by an international public pension fund. The partners reached financial close in July 2014, and construction is scheduled to take 28 months, with the project slated to open by the end of 2016.
Project Financing and Delivery
I-69 Development Partners’ financing sources for the I-69 Section 5 Project include $244 million in tax-exempt Private Activity Bonds (PABs) and $40.45 million in private equity. The concessionaire will also receive $80.0 million in milestone payments from INDOT as construction on the project progresses. After the project is complete, the state of Indiana will make annual availability payments to I-69 Development Partners throughout the 35-year operation and maintenance period. The availability payments are subject to appropriation by the state general assembly, but do not require any separate legislative approvals.