SUNDAY EDITION | Public works? East End Crossing contract privat - WDRB 41 Louisville News

SUNDAY EDITION | Public works? East End Crossing contract privatizes bridge maintenance for 35 years

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LOUISVILLE, Ky. (WDRB) – As snow showers approached Louisville and Southern Indiana last week, crews began the familiar winter routine of spreading salt brine on hundreds of miles of roads and bridges across the area.

But on the newly completed Lewis and Clark Bridge and its approaches, the weather was the first test of an arrangement in place for decades to come: Letting a group of private companies manage the work.

Under a contract with Indiana, the firms that built the new Ohio River crossing between Utica, Ind., and Prospect, Ky., treated the bridge and nearby roads prior to the snow. They also are responsible for broader maintenance, inspection and upkeep in the corridor until 2051.

Instead of governments choosing to fill potholes, add salt and make repairs on more than five miles of the highway, overpasses and the bridge itself, WVB East End Partners now largely controls those decisions.

“Their job is going to be to inspect the roads, the shoulders, the guardrails, drainage and anything in the right of way to make sure everything is the way it needs to be,” said Dan Hartlage, a WVB spokesman.

The group has five “patrolers” and an office manager who live within a half-hour drive of an operations and maintenance center on Old Salem Road in eastern Clark County, Hartlage said. The companies own four trucks, two of which can spread salt and brine.

He said those workers monitored weather reports and spoke with Kentucky and Indiana transportation officials prior to Thursday’s snow, then worked in 12-hour shifts to treat the freeway.

Indiana tapped its “public-private partnership” law when it chose those firms to not only oversee construction, but also manage the project’s financing and maintain the infrastructure under a long-term deal.

The Louisville-area project was Indiana’s second foray into privatizing some aspects of transportation projects, following a lease of the northern Indiana Toll Road that provided $3.8 billion to state government. The method also is being used for a new section of Interstate 69 between Indianapolis and Evansville.

When the states divided work on the $2.3 billion Ohio River Bridges Project, Indiana assumed control of the eastern, upriver crossing and Kentucky took charge of a new bridge and redesigned interchange near downtown. Each state’s work included sections on the other side of the river.

As a result, the companies hired by Indiana effectively are responsible for maintaining about a mile of Kentucky highway from the Lewis and Clark Bridge to Harrods Creek. Heading south, the Kentucky Transportation Cabinet takes over.

“We’re confident that the roadway leading up to the East End bridge and even across the East End bridge is going to be maintained properly,” said Andrea Clifford, a Kentucky Transportation Cabinet spokeswoman.

She said having WVB East End Partners in charge on a stretch of Kentucky freeway will let the department focus on other areas.

“It is a help to have them working on that bridge and the approaches on both sides (of the river) because it allows us to have our resources in other areas,” she said. “As I always say to people, ‘We can’t cover every square inch of pavement all at once during a snow event.’”

But the arrangement raises questions about how evenly the road is maintained, especially during inclement weather, said Kent Kruer, deputy chief of the Harrods Creek Fire Department.

“What’s it going to look like on that end? Is there going to be a cutoff? Is it going to be, you know, ‘The road’s clear and then all of a sudden it’s covered in ice?’ So that’s definitely a concern,” Kruer said.

State oversight

While Indiana gave WVB East End Partners the responsibility of maintaining the roads, it included a series of checks and balances meant to ensure government oversight. 

The companies must adhere to a set of safety standards, provide state officials with a rehabilitation plan for the roadway and bridge every year and meet other requirements for responding to incidents on the freeway, for example.

The Indiana Department of Transportation expects there will be some overlap among it, WVB and Kentucky officials, particularly for snow removal and mowing, to “ensure full coverage,” agency spokesman Andy Dietrick said in a written response to questions.

Critics of public-private partnerships often question whether private companies have incentive to spend enough money to ensure that public infrastructure is kept in good condition.

In a statement, WVB noted that the department will be monitoring its work over the life of the agreement and has made its expectations and standards "quite clear."

"We certainly will meet or exceed those expectations," the companies said. "It is important to note that the agreement with the state of Indiana is not directly tied to how much money is spent, but it is tied to how we perform. It requires us, at the end of the 35-year agreement, to provide to the state all of the assets in good condition. And the agreement provides a set of criteria and requirements that that we must meet.”

WVB said it isn't required, however, to follow public procurement laws in hiring for work it can't do internally, such as guardrail repairs.The companies will hire some workers for bridge inspections, although Indiana "will have oversight on the inspections and will receive the data generated by the inspections."

They will spend an estimated $134.7 million in operations and maintenance costs through 2051, when the firms are scheduled to hand the roads back, according to financing documents. Starting this year, the group will use a series of “availability payments” from Indiana to cover those costs.

The payments – up to $2 billion over the next 35 years – also will be used to pay off debt on construction bonds, cover insurance payments and fill a reserve account, among other things, documents show.

Indiana has committed to paying WVB from the state’s transportation budget, then using revenue from bridge tolls charged to drivers to cover the payments. It could deduct some of the money owed if WVB breaches its contract by failing to maintain and repair the roads.

Maintaining the bridge – and a separate path on the span for cyclists, runners and walkers – matters to Curtis Warfield of Prospect, who said he plans to cross the bridge by car and bicycle several times a month.

“The fact that they’ve actually built it – it seems like they would have a leg up in terms of knowing what needs to be done to properly maintain It long-term,” he said. “So, overall, I think it’s a positive.”

Privatizing infrastructure

Across the U.S., states have turned to varying types of deals privatizing roads, bridges, water systems and other infrastructure, looking for ways to add private industry expertise to public projects. Investors often help secure financing, or contribute their own money, to help defray public costs.

WVB -- Walsh Investors LLC of Chicago, whose construction arm worked on both bridges; Vinci Concessions of France; and Bilfinger Project Investments of Germany – contributed more than $78 million of its own money in the East End Crossing project.

In all, 35 states and territories have laws authorizing public-private partnerships. Kentucky’s law, signed by Gov. Matt Bevin last year after passing the state legislature with bipartisan support, is among the newest.

Proponents view such arrangements as a tool for cash-strapped governments. But some critics warn that without proper oversight, the deals may let profit-driven companies benefit at the expense of taxpayers.

In allowing WVB East End Partners to maintain the Lewis and Clark Bridge, Indiana mirrored part of its approach to leasing the northern Indiana Toll Road to a private consortium in 2006. The 75-year-lease gave the Spanish-Australian group Cintra-Macquarie maintenance oversight of the road.

Cintra-Macquarie has since declared bankruptcy, and a new operator took over in 2015. But the road has been kept in good shape for years, said Ronald Smith, president of the Steuben County board of commissioners. A stretch of the 156-mile road passes through Smith’s county north of Fort Wayne, Ind.

“They do an excellent job of maintaining the roads. … We are not put at a disadvantage in having the maintenance in that way,” Smith said.

In Colorado, where a private consortium has taken over maintenance of a section of U.S. 36 outside Denver, the Colorado Public Interest Research Group found no evidence that standards governing maintenance, safety and snow and ice removal weren’t adequate. At the same time, the organization stressed that public input and review will be needed.

Danny Katz, director of the Colorado group, said state transportation officials can assess penalties if snow isn’t removed within a certain time frame. Such specific language is important, he said.

In privatization deals, Katz acknowledged, companies “want to make some money.”

“So they’re going to figure out what are the places that they can make money, and you need to make sure those places are not around lacks of safety, lacks of maintenance,” he said.

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