LOUISVILLE, Ky. (WDRB) – The RiverLink toll bridges have had five million fewer crossings this year, battered by abrupt changes to the Louisville region’s work, school and travel during the coronavirus pandemic.
Those declines represent a drop in traffic of more than 16 percent -- and are even sharper after local and state officials in Kentucky and Indiana began imposing closures and issuing other guidelines in mid-March to curb the spread of COVID-19.
From the week of March 15 through mid-October, traffic was off by 25 percent compared with the same time in 2019, according to the most recent data analyzed by WDRB News.
As a result, toll revenues fell short of projections during the fiscal year that ended in June. Consultants had predicted $108.4 million during that time; $100.5 million was collected.
And collections may be even lower next year, with the Kentucky Transportation Cabinet projecting about $90 million in total revenue between July 2020 and June 2021. That would be $25 million below estimates.
Kentucky and Indiana evenly split toll revenue, but use their shares differently.
While the three RiverLink crossings – the Interstate 65 John F. Kennedy and Abraham Lincoln spans and the upriver Lewis and Clark Bridge -- are operated as one system, they were built and financed by the two state governments using their own approaches.
Indiana, for example, uses its toll revenues in part to make a series of “availability payments” to the consortium that oversaw its part – the eastern bridge and its approach roads in Utica, Ind., and Prospect, Ky. The Indiana Finance Authority is preparing answers to questions submitted about toll revenue and expenses.
In Kentucky, the state uses its toll money to pay off bonds that financed construction of the new Lincoln Bridge, repairs to the existing Kennedy Bridge and changes to the Spaghetti Junction interchange near downtown Louisville.
The state Transportation Cabinet declined to make Megan McLain, its innovative finance manager, available for an interview. Mindy Peterson, whose company C2 Strategic Communications handles RiverLink marketing and communications for both states, said she was not authorized to be interviewed for this story.
In a series of statements, Transportation Cabinet spokeswoman Naitore Djigbenou said the traffic declines during the pandemic “has understandably affected toll revenue – a scenario seen by toll systems across the country.
“However, the reduction in toll revenue has not affected Kentucky’s ability to make debt payments or cover the project area's operations and maintenance costs” she said. “As mentioned this spring, Kentucky had a year of debt payments in the General Reserve account and debt service reserve accounts.”
Possible debt refinancing?
In financing its work, Kentucky received a $452.2 million federal loan that’s been paid down to $445,791,184 and sold other bonds that have $308 million left to repay, according to the Transportation Cabinet. Those are the state’s two biggest sources of debt that count on tolls.
The state paid off $32.2 million in debt this year; its next payments are $13.8 million on January 1. There is nearly $77 million in reserve accounts.
Djigbenou said any potential shortfalls would be covered by a general reserve fund, which has more than $30 million in it.
Kentucky announced in early April that it was looking to refinance the largest part of its debt – the federal loan – and possibly take advantage of lower interest rates. At that time, officials envisioned a new deal could be done by June.
That didn’t happen. And there still isn’t a timeline for when it could.
Djigbenou said four years of existing tolling data is being used to “refine future traffic and revenue forecasts. Until this update, the traffic and revenue forecasts have been based on assumptions from the performance of other bridge and toll systems across the country.
“This change to using RiverLink-specific … data is taking a bit longer to process as we work to assure that our projections are as accurate as possible,” she said.
Kentucky state Sen. Jimmy Higdon, chair of the Senate Transportation Committee, said he would rather toll revenues not be down, but he noted that there are cushions for lower-than-expected collections.
“We’re still fine. We can still make our payments,” said Higdon, a Republican from Lebanon. “We’ll be ok – and that’s a good thing.”
And the possible refinancing of some bridge debt could create result in those payments retired earlier, he said, freeing up money for other needs.
“It might even be enough to give us a good start, a good down payment on replacing the old Kennedy Bridge as we go forward,” Higdon said.
Contract changes
In a move that could help address flagging toll revenue now, the Kentucky-Indiana Joint Board earlier this month agreed to several measures meant to improve customer service and toll collections.
The oversight board – the top decision-making body for RiverLink – approved helping cover the cost of out-of-state license plate lookups and customer service representatives and supervisors.
The states now will pay 80% of the actual cost for identifying owners of out-of-state vehicles that use the bridges, up to $1 per lookup. WDRB News reported last year that RiverLink contractors failed to get billing details for hundreds of thousands of drivers from across North America in 2018, resulting in free rides on the toll bridges and no chance to collect money owed.
In addition, Kentucky and Indiana agreed to pay Kapsch TrafficCom, RiverLink’s operator, $2.9 million as part of a change order: $1.6 million for 80% of the cost for out-of-state lookups during 2019 and through September of this year; and $1.3 million for customer service representatives and supervisors from February to November 2019.
For their part, the states increased their ability to recover money from Kapsch if certain customer service goals aren't met.
For example, Kapsch has agreed to pay the states $100 every time a driver waits at least 10 minutes to reach a representative. And if at least 80% of calls aren’t answered within a minute, Kapsch will pay $500 every time based on how far below the mark it was.
Joe McGuinness, commissioner of the Indiana Department of Transportation, said at the Dec. 1 joint board meeting that the states’ ability to collect those damages was a key part of the revised agreement with Kapsch.
“I think that’s important as we’re going forward for all residents for both states, but then anyone that travels over the bridges,” he said.
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