Call to Order and Roll Call
The 3rd meeting of the Interim Joint Committee on Transportation was held on Tuesday, September 1, 2015, at 10:00 AM, in View Pointe Hall at the Muhammad Ali Center, Louisville, Kentucky. Representative Hubert Collins, Chair, called the meeting to order, and the secretary called the roll. The minutes from the Committee’s July 7, 2015 meeting were approved.
Present were:
Members: Senator Ernie Harris, Co-Chair; Representative Hubert Collins, Co-Chair; Senators Joe Bowen, Jared Carpenter, C.B. Embry Jr., Jimmy Higdon, Dorsey Ridley, Albert Robinson, Brandon Smith, Johnny Ray Turner, Whitney Westerfield, and Mike Wilson; Representatives Denver Butler, Leslie Combs, Tim Couch, Donna Mayfield, Tom McKee, Russ A. Meyer, Charles Miller, Jerry T. Miller, Terry Mills, Steve Riggs, Sal Santoro, John Short, Arnold Simpson, Fitz Steele, Jim Stewart III, and Addia Wuchner.
Guests: Donald Lassere, President/CEO, Muhammad Ali Center; Mike Hancock, Secretary, Kentucky Transportation Cabinet; Russ Romine, Deputy Secretary, Kentucky Transportation Cabinet; Andy Barber, Project Manager, Louisville Bridges Project; and Jim Stark, Indiana Department of Transportation (INDOT), Innovative Project Delivery.
LRC Staff: John Snyder, Brandon White, Dana Fugazzi, and Christina Williams.
Welcome
Donald Lassere, President/CEO, Muhammad Ali Center welcomed members and guests to the Muhammad Ali Center and expressed his appreciation for choosing the Muhammad Ali Center for the Committee’s meeting.
Employee Salary Equity Efforts for Heavy Equipment Operators
Mike Hancock, Secretary, Kentucky Transportation Cabinet (KYTC), discussed heavy equipment operator (HEO) and superintendent salary equity efforts. Secretary Hancock stated the issue involves the classifications of HEOs I, II, III, IV, and Superintendents I, and II. Often times these classifications include employees who plow snow and also repair potholes. The labor market for those employees is different in every county across Kentucky. In some areas, particularly in urbanized areas, HEO and superintendent jobs are more plentiful. The cabinet is being faced with training new employees for these jobs and helping them obtain commercial driver’s licenses (CDL), only to lose a significant number to city or county governments that are looking for trained employees with CDL experience. The average salary for a HEO I, is $23,300 annually, which is $1,000 less than the poverty level for a family of four in Kentucky. Few of the HEOs and superintendents make more than the midpoint salary in their classification range.
The cabinet has been working with district engineers on a county by county basis to address this salary issue, however, because there are 120 counties and more than 120 maintenance facilities with 6 different classifications, the cabinet simply cannot address all of the situations at once. Secretary Hancock stated it is a slow process and KYTC has asked the Personnel Cabinet to complete a study similar to the one they did for the district engineer salary study, where classifications are evaluated to see if there is a way to do things more proactively and/or efficiently. After feedback from that study is received, the cabinet will hopefully be able to pursue a course of action. It is imperative for KYTC to have quality employees that know how to properly run and maintain the snowplows and other high-tech equipment. Secretary Hancock apologized for any issues that have arisen because of the situation adding that he fears the alternative of having to outsource jobs if the salary pattern continues, which can become costly. Secretary Hancock and KYTC are doing what is necessary to try to solve the issue in order to attract and retain employees for successful careers within the cabinet.
Representative Simpson and Senator Westerfield voiced concerns about implementing a salary structure to retain employees within KYTC while there are several other entities within Kentucky state government that are in the same situation. They are concerned about being unfair to those other agencies in a similar situation.
In response to a question asked by Representative McKee concerning midpoint salary, Secretary Hancock stated in any classification the pay ranges from entry level salary to some higher level that is defined in the personnel specification and there is a noted midpoint salary for each classification. He has maintained that midpoint should never be an automatic consideration, rather, midpoint is something that takes some employees years to achieve. He said he did not believe that the task had been about achieving midpoint salary as much as it has been about achieving entry level equity, adding that many employee’s entry level salaries have not been adjusted for quite some time and some even bringing in a salary less than poverty wage. Increasing salaries by approximately 10 to 15 percent quite often at the entry level is enough to ensure retaining quality employees.
Representative Mills stated when a new employee has been hired and has been brought in at a salary more than current and established staff, it can be demoralizing. He is looking forward to the personnel study for HEOs.
In response to a question asked by Representative Jerry Miller, Secretary Hancock stated the cabinet outsourced snow and ice removal in some of the metropolitan areas. As the cabinet outsources, the price continues to climb due to being at the mercy of the companies that handle that work. When a cost comparison is done, retirement cost is included.
Final Road Fund Report for FY 2015
Russ Romine, Deputy Director, KYTC, testified about the final Road Fund report for fiscal year (FY) 2015. Comparing the actual receipts for FY 2015 to the Consensus Forecasting Group (CFG) estimate for the same period, the Road Fund in total was down $20 million, approximately 1.3 percent. The bulk of the main source into the Road Fund is the Motor Fuels Tax, which was down $32.9 million from the CFG estimate. House Bill 510 of the 2015 Regular Session of the General Assembly helped ease the pain of counties and cities with a decline in Motor Fuel Tax collections. Approximately $7.8 million came from outside of the Road Fund to benefit the local areas for FY 2015 to help offset some of that loss. The shortage in fuel tax revenue was partially offset by receipts from motor vehicle usage tax, and other taxes and fees coming in over the CFG estimate.
Deputy Director Romine stated that the effects of House Bill 440 of the 2013 Regular Session, which contained the trade-in credit for new motor vehicle purchases and took effect at the beginning of FY 2015, incentivized people to purchase vehicles. The enactment of House Bill 440 was estimated to reduce motor vehicle usage tax receipts between $40 and $50 million annually, but actual receipts only declined $10 million, which means there were more cars sold to help ease the loss in road fund revenues because of the trade-in credit. The total actual motor vehicle usage tax receipts was down $10.3 million from FY 2014 to FY 2015.
Mr. Romine added that this is the first decline in road fund receipts since 2009. There has been relatively steady growth since then, but this is a dip in receipts from one year to the next. The biggest part of that reduction was the fourth quarter in collections. Overall the Road Fund was down 8.7 percent in the 4th quarter of 2015 which was largely due to motor vehicle fuels collections going down 13.3 percent in the quarter. The motor vehicle usage weight distance collections were up 2.9 percent over FY 2014. With the increase in weight distance taxes charged for motor carriers as they transport goods across roadways, this is an indication that the economy is growing again, which is often looked on by the Governor’s Office of Economic Analysis (GOEA) as an indicator of how the General Fund may do. Motor vehicle licensing was also up in FY 2015 from FY 2014. The CFG’s preliminary numbers for the Road Fund showed the receipts for FY 16 to be estimated at $1.42 billion. The operational budget is based on a $1.56 billion estimate, leaving a difference of $139.2 million. The motor fuels collections are the largest part of that amount at $132.2 million because when the CFG put the estimate together in December 2013, it was unpredictable what would happen to gas prices at that time. The $132.2 million could have been much worse had House Bill 299 not been enacted in the 2015 Session of the General Assembly.
Mr. Romine stated in looking ahead if the preliminary numbers are correct for 2016, the total receipts for the Road Fund would be down 7 percent compared to what the receipts were for FY 2015. Road Fund growth is pretty stagnate over that time. It may not be until FY 2020 until the state exceeds FY 2015 receipts.
In response to a question asked by Chairman Collins concerning federal funding, Mr. Romine stated there have been 34 congressional actions since 2009 for Congress to either shore up the Highway Trust Fund or to extend the surface transportation program. Kentucky is now operating under another extension that carries through October 29. More action will be needed at that point. It seems as if there will be another short term extension that will carry the state through the end of the Calendar year. With the action that was taken in late July, another $8 billion was transferred into the Highway Trust Fund to keep it solvent. The $8 billion will last until the end of the 2015 calendar year.
In response to a question asked by Senator Bowen, Secretary Hancock stated the cabinet has not seen a significant reduction in the cost of asphalt as the cost of petroleum has decreased. Bidding prices are not decreasing as dramatically as expected, and he is unsure why. Senator Bowen speculated it may be due to the storage of the previously bought components in large amounts, and that therefore the products may have been purchased at a higher price than today’s costs. Secretary Hancock shares optimism that eventually those prices will drop.
Secretary Hancock introduced Thomas Nelson, who is the new Federal Highway Division Administrator in Kentucky.
Presentation on the Ohio River Bridges Project
Andy Barber, P.E., KYTC Project Manager; and Jim Stark, INDOT, Deputy Commissioner, Innovative Project Delivery, testified about the Ohio River Bridges Project. Mr. Barber stated the regional growth of the area, along with traffic demands particularly with cross river mobility, created a gridlock for the area that needed to be addressed. The community was divided over solutions for the issue, and debate continued for years until a two-bridge system was agreed upon. Kentucky Governor Steve Beshear and Indiana Governor Mitch Daniels united to lower costs and speed up the construction of those bridges and the overall project.
The economic impact of the bridges project over the next 30 years will be significant as it will infuse $87 billion into the local economy, create 15,000 area jobs, add $29.5 billion in personal income, and add $7 billion in tax revenues according to the economic impact study that was prepared for the Indiana Finance Authority. The Ohio River Bridges Project is a $2.3 billion project consisting of a downtown Louisville bridge crossing which Kentucky will oversee, as well as an east end bridge crossing which Indiana will oversee. Tolling for the bridges will begin in late 2016, and the revenues received from the tolls will be split among Kentucky and Indiana.
The downtown crossing consists of three components; a new cable-stayed bridge, an improved Kennedy Bridge, and new interstate connections coming to both Louisville and southern Indiana. Walsh Construction was selected to undertake the project. Construction began on the nearly $1.3 billion project in July 2013. The downtown crossing bridge is on budget and on schedule. The design portion of the project is nearly complete and the construction portion of the project is 70 percent complete. Completion of the downtown bridge will be expected in December of 2016. The project will be delivered 18 months prior to what was required.
The workforce to complete the downtown bridge consists of nearly 800 workers, including subcontractors which are hired through local unions. The Disadvantaged Business Enterprise (DBE) goal is 8.22 percent or $70,692,000. The project is on track to meet and beat the DBE goal with a projection of 8.49 percent. The downtown portion of the project consists of more than 60 overpasses and bridges, more than 60 retaining walls, more than 440,000 tons of asphalt, and more than 1.3 million cubic yards of soil being removed. The new bridge is 2,100 feet long. The bridge ends are being driven down to solid rock on steel pile, and there are over 100 miles of pile being driven.
Section one of the downtown bridge project is the Kentucky approach portion. This portion consists of the Kennedy Bridge interchange being reconfigured, eliminating the weaves of “Spaghetti Junction” by making I-65, I-64, and I-71 all come together in downtown Louisville. The northbound traffic will pair up with northbound traffic and southbound traffic pair up with southbound traffic. More than 40 new ramps and overpasses are being built in Kentucky, several of which have already opened to traffic. Two lanes of interstate traffic are being maintained in peak hours in order to keep Louisville and southern Indiana’s economy from being interrupted.
Section two of the project is the new I-65 cable-stay bridge and the Kennedy bridge work. All three of the towers for the I-65 bridge have reached their finished heights. All 88 stay cables should be installed by October, 2015. Deck connections are being made and the deck should be poured late in the fall of 2015. The I-65 bridge should be open to two-way traffic by January, 2016. The bridge has a strong foundation which is supported by 9 piers, 4 on land and 5 in the water. Three of the piers include tower supports, which include four drilled shafts, a waterline footing and two tower legs. The drilled shafts are 30 feet deep and 12 feet in diameter. In southern Indiana, approximately a mile of I-65 is also being widened to accommodate traffic.
Section three of the project is the Indiana approach. New lanes of I-65 North are complete, with I-65 South traffic to shift over later in September, 2015. Crews will demolish old lanes and build new lanes of I-65 South. The Indiana approach now connects to tower five. The Flyover ramp from US 31 North to I-65 North is set to open late 2015.
The downtown bridge will open to two-way traffic in less than four months. After that time, the new bridge will carry north and southbound traffic while the Kennedy Bridge will be closed for $22 million in improvements. The total project will be completed by December of 2016 consisting of six lanes of northbound traffic on the new bridge, and six lanes of southbound traffic on the Kennedy Bridge. Mr. Barber stated the public can stay informed about the project through Facebook, Twitter, regular media updates, and the website, www.kyinbridges.com.
Mr. Stark updated the Committee on the east end bridge project. The downtown crossings consist of sections one, two, and three, and the east end crossings are referred to as sections four, five, and six. Indiana’s P3 owner is the Indiana Finance Authority (IFA.) The Indiana Department of Transportation and the IFA are sister agencies that work together when any public private partnerships are created in Indiana. That relationship with the P3 developer which is also one of the public private pieces as equity members is Walsh Construction who partnered with Vinci and Bilfinger Berger for equity agreements. A design-build team was then hired which is made up of Walsh and Vinci construction consisting of the acronyms WVB or WVC. Both the downtown and east end crossings have Jacobs as their lead engineer for the project. The Indiana Department of Transportation has relationships with a number of consultants hat are helping manage the east end crossing.
The east end crossing original construction cost was $763 million, of which the WVB partners had $81.9 million in equity and $702 million in private activity bonds were sold. The Indiana Department of Transportation and IFA are putting in $392 million of Milestone payments that includes a $162 million TIFIA loan that was taken out during the project process to help with the final milestone payments. Availability payments (annual payments to the contractor) will be made for 35 years and will begin at substantial completion, approximately December 2016. The base maximum availability payment (BMAP) of $27.7 million will be made for the first year and then will be indexed as payments go forward for the next 35 years. There will be an operation and maintenance portion of the availability payment to operate and maintain all of section six, the bridge, and then a small approach piece in Kentucky as part of section four as well as paying down the debt.
The design portion of the east end crossing is approximately 82 percent complete and the construction portion is approximately 66 percent complete. The project’s current contract amount is $765.5 million of which $105 million is paid to date. There are some changes in progress in all three sections that are totaling approximately $17.7 million, of which a good portion of that is due to the halting of work for approximately 37 days caused by a flood. The east end crossing has a 9.23 percent DBE goal which is equal to $70.5 million, of which 88 percent has been awarded and 60 percent has been paid. The east end crossing has an expected substantial completion date of October 31, 2016.
Section four of the east end crossing consists of three main bridges, the approach bridge coming off of the river which is approximately 2000 ft. long, the Harrods Creek Bridge which is approximately 1200 feet long, the tunnel which is approximately 1680 feet long, and Wolf Pen Branch Road bridge which was completed in 2014. Section four totals 3.2 miles long, $2.1 million in cubic yards excavation, and 180,000 square yards of concrete pavement. Section Five is a 2500 ft. cable-stayed bridge with a 1,200 feet center span and 300 feet high towers. The bridge also includes a shared-use path. Section six, the Indiana approach consists of the State Road 265/State Road 62 Port Road interchange with a roundabout design and the Salem Road Interchange with a connection to River Ridge. Section six is approximately 4.1 miles long with $1.6 million in cubic yards excavation and 263,000 square yards in concrete pavement.
In response to a question asked by Representative Riggs, Mr. Romine stated approximately 30 percent of the vehicles using the bridge crossing on I-65 is from out outside of the area.
In response to a question asked by Representative Riggs, Mr. Barber stated his biggest surprise with this project was how smoothly it has gone and he cannot name a disappointment with the project.
In response to a question asked by Representative Wuchner, Mr. Barber stated the idea of the connectivity of both the downtown bridge and the east end bridge was conceived in approximately 1969.
In response to a question asked by Senator Bowen concerning a similar timeline for the I-69 bridge, Secretary Hancock stated the timeline with the planning and construction of the I-69 bridge will depend on financing and funding of the project. It is his hope that many of the efficiencies that have been used in Louisville, would be applied there as well. He added anytime the private sector is involved or a team is working through design-build and P3 projects, there can be an incentive for contractors to approach deadlines faster.
In response to a question asked by Representative Simpson, Mr. Baber stated the toll revenue study in the downtown bridge on I-65 is estimated that approximately 80,000 vehicles per day will cross it and approximately 30,000 vehicles per day will cross the east end bridge. There will be some diversion going in on the Sherman Mitton bridge on I-64 and then onto the Clark Memorial Bridge. There will be some traffic shifting east to the new bridge, some traffic shifting west and new traffic generation coming because of the development of the downtown Louisville area.
In response to a question asked by Representative Simpson concerning the plan to meet the financial obligations of the bridge if the tolling estimates are incorrect, Secretary Hancock stated when estimating the number of vehicles crossing the bridges, and therefore tolls that will be collected, a conservative estimate was made so he does not foresee that being an issue, however, a tolling body is in control of the tolling system and will act as necessary through the life of the project. He feels strongly that the funds needed from the tolls will materialize. Secretary Hancock stated that the Ohio River Bridges Project is a self-contained project, and therefore it is off the state’s books.
In response to a question asked by Chairman Harris concerning the possibility of redirecting tractor-trailer traffic to the east end bridge as opposed to the downtown bridge, Mr. Barber stated that the idea has been considered, but a definite decision has not been made. This will be a decision made later in the life of the project. Mr. Stark said, that within the trucking industry, time is money. Truckers will use the east end bridge if it is closer. Mr. Barber said message boards will be installed to alert traffic of issues as needed.
Representative Combs reiterated that, when a tolling plan was devised, conservative estimates were made. Secretary Hancock agreed, saying Kentucky also has a TIFIA loan on the downtown portion of the project.
In response to a question asked by Representative Jerry Miller concerning restrictions regarding explosives and hazardous materials traveling on the bridges, Mr. Barber stated there are no any restrictions of the kind.
In response to a question asked by Senator Smith, Mr. Barber stated that the bridges’ clearance is 70 feet from the bottom of the decks to normal pools.
In response to a question asked by Senator Smith, Secretary Hancock stated there will be electronic tolling utilized. No toll booths will be present. Tolling will be handled through automated processes, transponders, and transponder readers. There will not be a cash acceptance booth. Instead, a picture of the vehicle’s license plate will be taken and a bill will be sent to the vehicle owner.
In response to a question asked by Senator Smith, Mr. Stark stated all precautionary measures have been taken in the construction area of the tunnel itself and if something were to happen inside the tunnel, there are safety measures and specifications that have taken place to address those issues. There are containment issues are already in place, and there will be no need to have special requirements.
In response to a question asked by Senator Smith, Mr. Stark stated that the tunnel being constructed for the east end crossing is surrounded by a different type of soil than the soil around the Cumberland Gap Tunnel. All precautionary measures have been made to ensure there is not an issue with an underground stream that caused material to dissolve under the road bed, as happened in the Cumberland Gap Tunnel.
Chairman Collins thanked guests and members for their attendance and cooperation and adjourned the meeting at 11:22 p.m.
Following the meeting, members were given a bus tour of the downtown bridge construction by Mr. Barber.