It cost nearly $16 million to run RiverLink last year. Where did that money go?
The toll network is run by a web of consultants, contractors, subcontractors and state workers that stretched from Texas to the Philippines during the first year of tolls in 2017.
LOUISVILLE, Ky. (WDRB) – In the spring of 2015, Kentucky and Indiana officials chose an Austrian company to set up and operate three new toll bridges spanning the Ohio River – a high-tech system now known as RiverLink.
There was no need for tollbooths. Sensors, cameras and other equipment would track drivers and allow them to pay through prepaid accounts or by mail.
“We feel very good about how everything has transpired and feel confident that what we have is a quality team that's ready to make this project happen,” Mike Hancock, Kentucky’s then-Transportation Secretary, said at the time.
The company, Kapsch TrafficCom, has managed RiverLink since it opened to traffic in late 2016. But, in reality, the “team” in charge of the network is much more -- a web of consultants, contractors, subcontractors and state workers that stretched from Texas to the Philippines during the first year of tolls in 2017.
Ultimately overseen by a four-person board made up of top transportation and finance officials in both states, two state employees guide Kapsch’s day-to-day work with the help of three other companies the board approved to manage the toll revenue and advise it, along with a Louisville public relations firm hired by Kentucky. Other firms have supplemented the work.
In all, the states paid contractors associated with RiverLink nearly $16 million last year, according to a WDRB News review of documents obtained through public records requests. Pieced together from invoices, the accounting offers an early view of the toll network’s annual costs and details more than $3 million in expenses that weren’t budgeted.
But the actual costs are higher. Indiana has yet to provide invoices submitted by the states’ toll adviser, the Washington, D.C.-based Parsons Transportation Group, and requested February 28. Acting for both states, the Indiana Finance Authority agreed to a $968,565 annual contract with Parsons last year.
Thus far, the records that have been disclosed by both states show:
- Public relations and marketing firms New West and C2 Strategic Communications billed for work totaling at least $565,641. (On behalf of both states, last December Kentucky hired Louisville-based C2 to do media relations for RiverLink under a contract that will pay $546,000 a year.)
- The tax and accounting firm KPMG earned $546,550. It ensures that toll revenue is moved accurately to US Bank, which holds the money for the states.US Bank was paid $53,750.
- The largest amount spent -- $14.7 million – went to Kapsch. Of that, about $11.4 million was for the fixed costs in the contract that are capped at $41.5 million through 2022. That includes $297,485 to operate customer service centers, such as the call centers run by subcontractor Municipal Services Bureau in Austin, Texas, Muncie, Indiana and Puerto Rico.
- About $3.3 million of the Kapsch costs were passed through directly to the states, which are responsible for paying expenses that include postage on toll bills mailed to drivers, rent on customer service centers in Louisville and Jeffersonville, Ind., and internet service.
There is no cap or budget on those expenses. But because those costs include items such as printers, computers and other one-time purchases, they should decrease over time, said Scott Adams, the Indiana Department of Transportation’s director of tolling.
“There may be some slight seasonal changes associated with some of those billings, but they’re not substantive,” he said. “So they’re going to be fairly consistent regardless.”
In an interview, he and Megan McLain, the Kentucky Transportation Cabinet’s innovative finance director, say they are pleased with how RiverLink is working. But they acknowledged the well-documented customer service mishaps and other glitches during the opening year of tolls.
Even so, an internal report shows Kapsch collected about $80 million in tolls that were evenly divided between the states in 2017 – exceeding projections of $75.6 million. The states use toll revenue to cover the costs of the contracts, RiverLink spokeswoman Mindy Peterson said in an email.
Besides call centers in Texas, central Indiana and Puerto Rico, subcontractors in Austin review photos of license plates and are aided by workers in the Philippines when needed. “With technology today you can accomplish amazing things across the globe,” Adams said.
Although it runs a call center at its Austin headquarters, Municipal Services Bureau has been using more workers in Muncie, where McLain said the turnover rate appears to be lower. An operations report for January shows 26 of the call center agents were in Indiana, 17 in Texas and 6 in Puerto Rico.
McLain said the average time for answering calls has fallen to less than one minute, down from more than three minutes in January. The goal is to have 65 percent of all calls answered in less than 30 seconds.
There are other efforts underway to try and encourage drivers to avoid calling RiverLink representatives. Since late last month, drivers with unpaid toll bills have been to sign up online for accounts tied to transponders and reduce the tolls and fees owed.
Previously, that could only be done on the phone.
The reliance on multiple contractors for the RiverLink project is “very typical,” said Neil Gray, governmental affairs director for the International Bridge, Tunnel & Turnpike Association.
But the trend of privatizing aspects of toll systems has accelerated in recent years, even on projects that are mainly operated by state agencies or public toll authorities with dedicated staff, he said.
Kentucky and Indiana used an appointed board – the Louisville and Southern Indiana Bridges Authority – to develop a financing plan for the $2.3 billion bridges project. But that panel was abolished after the states changed their approach on the project and divided work evenly.
In Kentucky, there have been sporadic reports to committees of the state legislature, but those aren’t happening often enough, said Rep. Steve Riggs, a Louisville Democrat and an early critic of the states’ decision to base the call center jobs in Texas.
“It’s fair for me to say it’s too complex and too convoluted for me to keep track of from a lawmaker’s standpoint,” he said.
Kentucky State Sen. Ernie Harris, a Republican from Prospect who chairs the Senate’s transportation committee, backs the creation of a two-state authority with oversight of RiverLink.
“There will always be issues with the two bridges because one is ours and one is Indiana’s,” he said. “So I believe for the most part a bi-state authority type of structure would be good to identify the needs and any adjustments that need to be made.”
But McLain said that would simply add an extra layer of oversight that isn’t needed, creating an “additional government agency with additional bureaucracies and expenses and health care costs, pensions, administrative overhead costs that we are avoiding doing things the way we are.”