Indiana’s state government plans to take control of the I-69 project from Bloomington to Martinsville but the cost of terminating the public-private partnership building the highway is unclear.
According to published reports, state officials have confirmed that the project’s completion date will be pushed back from May 2018 to Aug. 31, 2018.
Less clear is the financial cost in ending the deal with I-69 Development Partners, which originally bid $325 million to win the project.
There have been several delays for the work, which started in 2014, as the design-build contractor “struggles to pay subcontractors and meet deadlines,” IndyStar has reported.
Standard & Poor has downgraded the bonds financing the project, saying the it could run out of money before the end of July.
“We anticipate that negotiations with bondholders will continue until funding runs out and construction stops,” the S&P report said.
The project is about half completed. The state notified bondholders on June 2 of its intention to take over the work.
The state said it would take nearly $237 million to complete the project, and that $72 million was available. That means $164 million is needed to “complete construction and resolve claims.”
The actual taxpayer cost is unclear. There is a performance bond covering 25 per cent of the project’s value.
However, the winning bid was $73 million lower than the next lowest bid, suggesting other contractors might demand more.
I-69 Development Partners won a bid to design, construct and maintain the highway for decades after completion. However, in March the Spanish company Isolux Corsan — which initially comprised more than 80 percent of I-69 Development Partners — entered insolvency proceedings in Spain, IndyStar reported.
It had four months to reach an agreement with creditors and avoid potential bankruptcy.
Negotiations to buy out the project’s bonds have been unsuccessful so far. However, Indiana Finance Authority director Dan Huge said in a statement that “the state is moving forward with the goal of assuming control.” The state has not, however, declared the developer to be in default.
I-69 Development Partners issued the following statement: “I-69 Development Partners and the IFA continue to participate in confidential discussions with the aim of ensuring the successful completion of the project. We are confident that we can reach an agreement with the IFA.”
Gov. Eric Holcomb said in Evansville: “The good news is that work will continue during these negotiations and we have made it crystal clear that finishing I-69, Section 5 and finishing the complete I-69 is a top priority with my administration.”