Louisiana preps $1.3 billion of PABs for bridge public private partnership

Louisiana is set to float $1.34 billion of private activity bonds in April as part of its largest public-private partnership to date, which will replace an aging bridge over Interstate 10 near St. Charles.

The Louisiana Public Facilities Authority released details of the financing after the State Bond Commission last week signed off on the issuance of up to $2 billion of senior lien revenue bonds that would mature no later than 2073. The LPFA will return to the state for final approval of the bonds in March, with a rating from Moody's Investors Service scheduled to be released around the same time.

The approvals come a few weeks after state lawmakers revived the project earlier this month. The deal is tentatively set to price the week of April 1 by J.P. Morgan Securities LLC and Wells Fargo Bank, NA. The $1.34 billion includes $800 million to cover construction costs for the first several years, with the remaining $523 million going to capitalized interest and issuance costs.

Louisiana Department of Transportation and Development

The project, with a total cost of $3.04 billion, includes a replacement of the nearly 70-year-old Calcasieu River Bridge and renovation and widening of the adjacent nine-mile Interstate 10 corridor in southwest Louisiana.

The private activity bonds will be paid for with toll revenues, which are estimated to total $16.1 billion over the 50-year period, ramping up from around $100 million annually in early years to more than $500 million annually in the later years. Less operations and maintenance, the tolls are expected to bring in a $9.7 billion profit over the term, officials told lawmakers at the Feb. 15 bond commission hearing.

The state's contribution will total around $1.2 billion which will come from a combination of general obligation bonds and other revenues.

Under revised terms, the state will now get a roughly 15% piece of annual toll profits after operations and maintenance. The money will either go to further buy down toll rates, shorten the lease, or toward infrastructure projects in the area.

The 50-year design, build, finance, operate and maintain I-10 Calcasieu River Bridge replacement project hit the skids last year amid political opposition to the proposed toll rates. On Jan. 29, the Joint Legislative Transportation, Highways and Public Works Committee approved the P3 after new Gov. Jeff Landry in January announced key changes like reduced tolling rates. State transportation officials and Calcasieu Bridge Partners, a consortium led by Plenary Americas, signed the contract on Feb. 1.