Wednesday, January 11th, 2012
In previous installments in this series I highlighted how Indiana managed to increase its share of the Louisville bridges project by $200 million even as it bragged that the total price tag had gone down by $1.5 billion, how this led directly to Indiana having to allocate $432 million in regular highway funds to the project, and how tolling puts Indiana at significant risk of paying an even greater share of the project.
Today I’ll highlight how Indiana is stepping into a potential quagmire by agreeing to take responsibility for building a high-risk mini-Big Dig tunnel under a portion of Louisville’s most affluent community.
The Background Story
Plans for an East End bridge date back to at least 1969. Part of the problem with building it has long been that the Kentucky approach to this bridge would pass through the town Prospect, arguably the Louisville area’s most affluent and influential suburb. (For readers in Central Indiana, think “Zionsville” or Southwest Clay Township in Carmel and you’ll have the picture). The wealthy and influential residents there were long able to stymie progress on the East End bridge. They also had an ally in Louisville major Jerry Abramson, who greatly feared a beltway connection that would allow traffic to bypass downtown Louisville. He promoted a new downtown bridge instead.
In the grand tradition of political compromise, Indiana and Kentucky agreed to build both bridges. This was in part possible because of a city-county merger in Louisville, which reduced the fear of downtown lobby because they would still control revenues from any East End growth the bridge might spawn. Hence was born the fiction of “two bridges, one project” even though there is no real transportation necessity to link the two and either one has independent utility.
But the Prospect residents were never going to give up. As part of their plan to kill the East End bridge, they managed to get the Dumanard Estate put onto the National Register of Historic Places to make it much more difficult to route a roadway through it. After the original listing that included the home and gardens, the listing was later expanded to include the entire 55-acre grounds.
If you are wondering how building two bridges got to be $4.1 billion in the first place, this is an example of how. To avoid impacting this single historic property, Kentucky agreed to build a $261 million tunnel underneath the estate. (LEO Weekly discussed this in an article called “The $260 Million Home.”)
The stunning thing about this tunnel is that the path of the road doesn’t actually affect any buildings, as this graphic from Broken Sidewalk illustrates:
If spending $260 million on this sounds ludicrous to you, then you are getting a sense of why Indiana shouldn’t be touching it with a ten foot pole.
The Financial Quagmire
The cost of the tunnel is pretty ludicrous by itself. But the entire Kentucky approach is grossly overpriced. According to the Supplemental Environmental Impact Statement, the cost of the Kentucky approach to the East End bridge is $795 million. As advocacy web site No 2 Bridge Tolls put noted, this is a staggering $100,000 per foot. The approach on the Indiana side of the bridge plus the entire bridge itself is only $558 million combined.
This chart easily explains why the facile logic of the 50/50 cost split is crazy. Even if the cost split were reversed, it’s still ridiculous. Influential Kentuckians, attempting to insert a poison pill into the East End bridge (by killing the entire project if necessary), managed to grossly inflate the cost of construction on their side of the river with things like the ludicrous Drumanard tunnel that have no relevance or benefit to Indiana (or arguably even Kentucky). If Kentuckians want a $261 million tunnel under some trees, they ought to pay for it.
Call me crazy, but at $795 million for 1.4 miles of road, I think there just might be a little gold plating in this segment. That’s more money than it cost Indiana to build a brand new 10 mile freeway bypass around Kokomo. Heck, it’s more than Indiana is spending to convert 12 miles of US 31 to a freeway through Carmel and Westfield, right in the middle of some of the state’s most expensive real estate. Indiana would never build a road this crazy expensive for actual Hoosiers. I can only imagine the look on Mitch Daniels’ face if a Hoosier town asked him for something like this.
In any event, Indiana has agreed to pay for and construct this tunnel and very overpriced piece of Kentucky roadway. Which raises additional questions about the project. For example, does INDOT have the expertise to build a such a tunnel? I am not aware of a single genuine highway tunnel anywhere in the state of Indiana. I don’t believe INDOT has ever built one before, much less a complicated tunnel adjacent to a river with obvious potential for ground water problems. Kentucky may not be expert at tunneling either, but they’ve built at least two, including one in Louisville itself on I-64.
As anyone who’s read anything about the Big Dig should know, tunneling is frequently plagued with construction problems and cost overruns. After construction the tunnels leaked, and part of one tunnel collapsed on top of a car, killing someone. While this isn’t the Big Dig exactly, similar risks apply. Gov. Daniels can ask Mitt Romney for some tips on the risks associated with tunneling.
Indeed, we already know that the Drumanard tunnel itself has been plagued with problems. The price has already nearly tripled since its original estimate of $96.5 million, which augurs further cost escalations. The Kentucky Transportation Cabinet originally estimated a test tunnel, needed to determine soil and rock conditions so that the actual roadway tunnels could be designed, to cost $14 million. Actual bids came in between $19.1 million and $28.5 million, causing the KYTC to rebid the contract. (“Kentucky must get new bids on test tunnel”, C-J, Jan. 1, 2008 – not available free online). I’m not sure that they were ever able to get that test tunnel actually built. But problems just bidding that small test bore suggest further problems are likely. In fact, the Federal Highway Administration suggested Kentucky consider scrapping the tunnel, with the C-J noting, “High costs of sampling the geology along the proposed tunnel path and contractors’ concerns about the data’s reliability prompted talks of possibly building the approach on the surface rather than under a 50-acre estate listed on the National Register of Historic Places.” (“Bridge tunnel reconsidered”, C-J, August 23, 2008 – not available free online).
Given the risks here, it’s worth asking another question I didn’t see answered in any of the documents: who is responsible for any cost overruns on the project? If Indiana and Kentucky are each responsible for any overruns on their own sections of the project, Indiana would be stepping into a potential huge financial quagmire by taking on construction of a high risk tunnel without any experience in tunnel building.
Another key risk is political risk. One clear benefit of the current arrangement to the states from a purely tactical perspective is that Kentucky is outsourcing the construction of the most controversial segment to Indiana. While Prospect residents have huge influence in Kentucky, I think it’s safe to say that they have zero in Indiana. Their screams aren’t likely to impress anyone at the Indiana State House or at INDOT HQ. Also, this puts the segment Indiana most cares about entirely under Indiana’s control.
If I were one of those Prospect NIMBY’s, I’d be none too pleased with this arrangement, in which Indiana builds a road through their town. There’s actually a point to be made there, as people should operate under the auspices of a government which at least nominally accountable to them at the ballot box.
The bridge moves forward and controversy erupts. There’s an eminent domain dispute (highly likely – and who is doing the land acquisition anyway? I didn’t read anything about that). Or there are complaints about contractors. Again, Indiana readers can imagine what might happen if INDOT sub-contracted a freeway through Zionsville to the Ohio Department of Transportation. It would be Armageddon.
When the inevitable disputes arise, who has the final say, Indiana or Kentucky? And who bears the cost?
Again, we don’t know the answers to all these questions. But it’s easy to see how they could be bad.
Litigation risk is another major concern. An East End group called River Fields is already suing over the project. That lawsuit, which hinges on historic preservation issues, is still pending.
Don’t expect the East End crew to go quietly into the night on this thing. I’d certainly anticipate additional litigation from them over any and every aspect of the project. Indiana should clearly understand the risks here, since it has already lived them. It had to scrap one EIS for the I-69 project after its deficiencies were exposed, crafting a second lawsuit-proof one with the help of a high priced DC law firm. This cost a lot of money and resulted in significant project delay. The bridges project is very similar to I-69 in that the preferred outcome of locals was already known prior to the EIS. This can lead to the temptation to do sloppy work in the EIS, treating it as a mere hoop to jump through rather than dotting all the i’s and crossing all the t’s. This renders the EIS vulnerable to lawsuits from project opponents who scan the document looking for any weakness to glom onto. (This is one reason it’s so ridiculously hard to get anything built in America these days).
Beyond EIS litigation, you can expect further lawsuits over Indiana building a road in Kentucky. I noted the political risk, but why wouldn’t wealthy project opponents in prospect sue claiming that their rights are being violated because another state is constructing a road in their neighborhood?
Also, Southern Indiana resident Denis Frankenberger retained attorneys in Indianapolis who advised him that the Indiana constitution prohibits Indiana from building a road in another state. So this is another potential source of project litigation.
Now the entire project is subject to lawsuit risk, but the Kentucky approach segment that goes through Prospect is the part that has the most local opponents, and ones with money to indulge themselves in lawsuits. Thus I’d categorize as by far the highest risk segment. Again, legal fees and delays could add to Indiana’s cost here, even if any potential claims were judged to be without merit. This is America, and people will sue over anything and everything.
Update: Just today (1/11/12), Kentucky state senate president David Williams criticized the division of the bridges projects, saying that having each state takes one bridge opens the door to lawsuits over whether or not there is really one project or two.
At the end of the day, I’m not sure that INDOT really knows what it’s getting into with this tunnel and this project segment.
Next up, a better approach.