With I-70 expansion, Missouri makes overdue investment

Financed with a mix of bonds, general revenue funds and some federal funding, Missouri this month kicked off a major expansion of Interstate 70, which runs parallel to the Missouri River and links St. Louis with Kansas City.

The project, which spans 200 miles from Blue Springs to Wentzville, involves repairing the existing four lanes of I-70 and expanding the highway to six lanes. 

The Missouri Highways and Transportation Commission issued the first bonds for the project in November, according to an official statement posted on the Municipal Securities Rulemaking Board's EMMA disclosure website. 

The Department of Transportation plans to issue more bonds in 2026 and 2028, its chief financial officer Brenda Morris said. The commission typically issues fixed rate tax-exempt bonds, but the type of bonds issued in 2026 and 2028 is still to be determined, she said. 

Missouri Department of Transportation

Fitch Ratings and S&P Global Ratings assigned the bonds a rating of AA-plus with a stable outlook. Moody's Ratings assigned the bonds a rating of Aa1. The outlook is stable.

Fitch said its rating reflects Missouri's annual appropriation pledge and the financing agreement between the commission and the state. S&P said the rating is one notch below the state's AAA issuer credit rating "to reflect the appropriation risk."

Moody's likewise noted "the contingent nature of annual appropriations." It added: "The bonds also benefit from a backstop of a subordinate lien on state road fund and state road bond fund revenues after first, second, and third lien road bonds and GARVEE [bonds] are paid. The backstop pledge does not provide credit uplift beyond the Aa1 rating, however, as the bonds are subordinate to the Aa1-rated second lien, third lien, and GARVEE bonds."

As part of the state's fiscal 2024 budget — a collection of 16 different bills which Gov. Mike Parson signed on June 30 — the General Assembly transferred $1.4 billion to the Department of Transportation for expenditures related to the I-70 project, to be funded by state road bond proceeds. 

House Bill 2004 transferred another $1.4 billion from the State Road Fund's I-70 Project fund to set up a cash account for expenditures related to the project "pursuant to a financing agreement between the [Highways and Transportation Commission] and the Office of Administration."

According to a copy of the financing agreement shared with The Bond Buyer, the Office of Administration agreed to transfer funds from its I-70 Project Fund to the State Road Fund's I-70 Project Fund when a contract has been awarded by the commission. OA agreed to transfer the funds within three business days, and the commission agreed that it shall not use any of the funds transferred for any other project.

The General Assembly appropriated $136 million in annual general revenue to pay debt service on the bonds. 

The I-70 program is now fully funded, Morris said. An analysis by the Kansas City Star found that the state is providing roughly 84% of the total funding for the I-70 expansion and the federal government is supplying about 16%.

The I-70 expansion is divided into six sub-projects. According to the Missouri DOT, the Blue Springs to Odessa phase is slated for summer 2028 completion. The Odessa to Marshall phase targets a winter 2030 completion. The Marshall to Columbia phase aims to finish by winter 2029. The Columbia to Kingdom City phase is scheduled to finish by December 2027. The Kingdom City to Warrenton phase is slated to end by summer 2030. And the Warrenton to Wentzville phase should wrap up by December 2028.

"I-70 is an absolute lifeline across the central U.S.," American Society of Civil Engineers President Marsia Geldert-Murphey told The Bond Buyer. "And if congestion and a lack of maintenance and upgrades cause [businesses] to have to take longer or incur more delays, they're gonna have to adjust their routes, and we don't want them to do that. We need to maintain the economic ecosystem for all those communities along I-70."

The ASCE, she said, is "looking at the movement of our supply chain after we certainly saw some of the downfalls of not addressing that, or not having it as a high priority, during COVID." As civil engineers, they understand the importance of mobility, she noted.

"We want to have those identified free corridors so that we can also have mobility for our communities — that is a safety issue and a sustainability issue, also, for those communities," she said.

The ASCE's most recent report card for Missouri, from 2018, gave the state a C-minus on its infrastructure maintenance. That put Missouri squarely between "mediocre, requires attention" and "poor, at risk."

"Missouri's infrastructure continues to muddle along at the status quo, but if we don't increase investment soon, we will start feeling the ramifications," concluded a panel of more than 30 professional civil engineers throughout the state in the report card.

Missouri's roads received a grade of D-plus from the panel. As of 2018, the report's authors said, "Missouri only spends 43% of the national average on operations and maintenance [of its roads] per state-controlled mile."

The report noted the "effectiveness" of the state's Department of Transportation, but also said it is working from limited funding, and Missouri residents have paid the price in congestion costs and extra vehicle repairs. 

"A long-term revenue stream for transportation must be identified in order to improve Missouri's economic competitiveness and keep residents safe," the report found. 

The stretch of I-70 being updated and expanded in Missouri is one of the oldest interstate sections in the country, Morris said. The Missouri DOT has been studying improvements to that corridor for the past 25 years, she added. 

"Both at the federal level and the state level, we've got to be more mindful about reliable, consistent infrastructure funding — we can't afford not to," Geldert-Murphey said. "A well-maintained infrastructure system is the driver to the economic ecosystem for every community that's attached to it. We get hung up on, what's it going to cost us now? We need to focus on, what's it going to cost us down the road [to put things off]?"

As for the I-70 expansion, it will help not only congested city areas, but also the rural population, which "will benefit so much from this increased economic ecosystem that will follow the major investment that the state is making," she said.