Construction will continue on the South Beltway even as the contractor for Nebraska's largest-ever infrastructure project has failed to secure financing because of market instability from the COVID-19 outbreak, transportation officials announced Monday.
Nebraska Department of Transportation officials will continue to negotiate with Hawkins Construction of Omaha to resolve the challenge and keep the project moving forward, the department said in a news release.
Early construction on the three-year project continued Monday, with crews building box culverts, making drainage improvements, clearing shrubs and trees.
"Although this is a surprising development, NDOT remains committed to the Lincoln South Beltway project," Transportation Department Director Kyle Schneweis said in the news release.Â
"In some ways, for a project that has had so many hurdles, this is just one more. We could not have imagined the scenario that got us here today, but our team has been hard at work with the Hawkins team examining every possible option to minimize the potential impact on the project’s schedule."
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Hawkins' initial financing plan was sound, Schneweis said on a conference call with reporters Monday.
The company had planned to seek financing for the project on the municipal bonds market March 18, but market volatility hit Hawkins "right when it mattered most" and created a liquidity crisis, said Chris Hawkins of Hawkins Construction.
At that time, investors had pulled more than $12 billion out of the market where cities, schools and other issuers sell their debt to finance projects, according to the news agency Reuters.
Though the Federal Reserve committed Monday to measures aimed at settling the bond market, Hawkins said the company needed more time to review the changes to know whether the firm can pursue those financing options.Â
Still, Schneweis said transportation department staff spoke with U.S. Department of Transportation officials about another financing option — a Transportation Infrastructure Finance and Innovation Act loan— which has remained on the table for the project since it was bid.Â
His staff remains committed to the project and providing flexibility for Hawkins, Schneweis said.
For decades, state and local officials have looked to the South Beltway project as a means to improve traffic flow in and around Lincoln by linking U.S. 77 to Nebraska 2 outside the city.
In December, state transportation officials awarded the long-awaited project to Hawkins, the only company to bid on its construction. It pledged to build the freeway for $352 million.Â
That bid amount included Hawkins' cost to finance construction while the state made quarterly payments over an expected eight-year time frame, according to the Transportation Department.
State lawmakers in 2019 passed a new financing tool to allow expedited construction of the beltway with a more standard, phased payment schedule that ensures the construction can proceed without siphoning money from other state roads projects.
Over the coming days, state transportation officials will continue to assess the options for the project and the impact to its construction timeline, as well as the timelines of other state roads projects on an individual basis, Schneweis said.
"Government can really support economic activities in this tough time,†Schneweis said, "especially on this project here."