Bonds

House T&I questions collapsed bridge financing

How much the federal government can contribute to rebuilding the originally bond-financed Francis Scott Key Bridge is now a concern for the House Committee on Transportation and Infrastructure. 

“Hours after the collapse, President Biden announced his intention for the federal government to pay for the entire cost of reconstructing the Key Bridge,” said Committee Chair Sam Graves R- Mo. 

Graves made his opening statement at a House Committee on Transportation and Infrastructure hearing on Wednesday. T&I is reviewing the federal response to the collapse of the Francis Scott Key Bridge in Baltimore’s harbor on March 26, when the Singapore-flagged container vessel Dali crashed into one of the bridge’s main support beams. 

“Hours after the collapse, President Biden announced his intention for the federal government to pay for the entire cost of reconstructing the Key Bridge,” said Committee Chair Sam Graves R- Mo.

U.S. House of Representatives

Promised funding for fixing the bridge comes from an Emergency Relief fund administered by the Federal Highway Administration. State projects are available for 80% reimbursement of funds while federal projects can qualify for up to 90% reimbursement. 

Costs to repair the bridge remain unknown but estimates from the state of Maryland range between $1.7 billion and $1.9 billion, so a 10% swing makes a difference. The FHWA has its own challenges with a $3.7 billion stack of unmet needs and a dwindling Highway Trust Fund. 

Figuring out who is going to pay for rebuilding the bridge is complicated by the President’s original statement and eventual insurance settlements.

To back up Biden’s plan, the federal government is pulling what used to be a state highway into the interstate highway system to boost the Fed’s participation.  

The move soothes the state’s concerns about the rebuild but opens new questions about the federal government fixing a state’s toll bridge. 

“I wonder if you think it’s fair that the American taxpayer should not only pay to reconstruct the bridge, but then pay tolls after which to use the infrastructure they just paid for in their taxes,” said Rep. Scott Perry R – Pa. 

Perry noted that the bridge generated $56.8 million in toll revenues for the state of Maryland in 2023. His question was directed at Shailen Bhatt, administrator of the Federal Highway Administration, United States Department of Transportation. 

“Since this has been federalized and going forward as part of the interstate system, they will have to use title 23 eligible funding,” said Bhatt. “In terms of the precedent, if it was a pre-existing toll facility, they are allowed to toll the facility going forward.” 

Title 23 of the of the United States Code generally restricts the federal government from charging tolls on federal highways but there are exceptions and carve-outs. 

Bhatt confirmed that the government would continue to work on applying insurance payments toward reimbursing the government as the work proceeds. “We don’t want to wait through all of the litigation and the NTSB investigations,” he said.

A temporary channel is allowing access to the harbor as debris is still being stabilized and removed.  

The National Transportation Safety Board issued a report on Tuesday showing the Dali was experiencing electrical power outages the day before the catastrophe while the ship was docked. 

Rebuilding the bridge, which originally cost $60.3 million, and to what standards remains a moving target. 

“I think the key here is you have a bridge that was opened in 1977,” said Homendy, “Over time, it’s not the bridge that’s getting larger, it’s not the waterway that’s getting larger, it’s the vessels that are getting larger. It’s important that states and other bridge owners are looking at from a risk assessment standpoint.”

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