Tax breaks sought for Illiana toll road

Source: Kurt Erickson, Southern Illinoisan, July 28, 2015

In another sign the controversial Illiana Expressway still has a pulse, Gov. Bruce Rauner’s administration is seeking legislative approval of tax breaks that could benefit the on-again, off-again project. In a proposal filed by the Illinois Department of Revenue on July 10, the administration is seeking sales tax exemptions for building materials used to construct the road, which would connect Interstate 55 in Will County with Interstate 65 in Indiana. … Former Gov. Pat Quinn pushed hard for the $1.5 billion project to move forward before he left office in January. Rauner suspended the project earlier this year as part of a review process that is under way during tight budget times. In June, however, the Republican governor signed legislation that included $5.5 million for ongoing efforts to develop the highway.

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Illiana gets push from Quinn
Source: Associated Press, June 4, 2014

Gov. Pat Quinn’s administration wants lawmakers to make the proposed Illiana Expressway more attractive to private investors by guaranteeing toll revenue shortfalls will be covered by dipping into the state’s road fund ahead of other projects. The 47-mile tollway between Indiana and Illinois would be placed at the top of the funding list under draft legislation backed by the Illinois Department of Transportation — only debt service on general obligation bonds would come before it. That’s intended to sweeten a potential deal for the $1.5 billion project that some lawmakers and regional planners contend is not a critical need, will spur little economic development and threatens to become a painful financial drain on a state buried in debt.

Shifts in privatization pose more risk to states
Source: Associated Press, May 26, 2014

Government leaders across Indiana are turning to outside sources to fund and operate big infrastructure projects. But they’re unlikely to see the windfalls that former Gov. Mitch Daniels achieved when he leased the Indiana Toll Road to a foreign consortium for $3.8 billion in 2006. The Times in Munster reports investors in state projects are more likely to demand guaranteed fixed annual payments before providing money for the projects. That helps investors insulate themselves from the risk that revenue from the projects won’t meet expectations. The new approach to privatization has forced officials in Indiana and Illinois to rethink their funding plans for the 47-mile Illiana Expressway. In early 2013, the states had hoped that investors might pay the entire cost of the toll road in exchange for keeping the toll proceeds. But that idea was dropped, and the states are now offering private investment teams competing for the project annual payments throughout the 35-year lease. If toll collections fall short of those fixed payments, the states will have to make up the difference. Indiana and Illinois also estimate they may have to pay a combined $270 million in cash to investors in the form of milestone payments in 2018 and 2019 once the road is built….

Governors pitch Illiana Expressway to investors
Source: Keith Benman, nwi.com, June 24, 2013

…Illinois Gov. Pat Quinn, speaking just before Pence, was just as energetic in his endorsement of the proposed toll road. Both governors hope investors will pay the estimated $1.3 billion construction cost in exchange for a piece of, or all of, the tolls that will be collected once it opens to traffic….

…Indiana Public Finance Director Kendra York said the states are looking at two options for financing. One would be a deal similar to that financing the East End Crossing bridge over the Ohio River. In that deal, milestone payments and subsequent periodic payments, called availability payments, will be made by the state to the investors who are paying the bills for the bridge’s construction. The state wants to sign a deal of 50 years or more for the Illiana Expressway if it mimics the East End Crossing deal, York said. The other financing structure under consideration is more similar to that struck with investors in 2006 for the long-term lease of the Indiana Toll Road. There, the company leasing the road collects and gets to keep all tolls. In the case of the Illiana Expressway, unlike with the Toll Road, there would be no windfall upfront payment to the states. Instead, the upfront money would pay for the Illiana Expressway’s construction. If that option is chosen, the states want a deal of 35 years or more, York said….