A rendering of I-4 Ultimate. Credit: FDOTMoody’s Investors Service has issued a negative outlook for the loans for the $2.3 billion “I-4 Ultimate” revamp of 21 miles of Interstate 4 through Orlando. The rating action follows the builder’s request for a 245-day delay and an additional $100 million in compensation filed with the Florida Department of Transportation.
Moody’s also cited a high level of noncompliance points against I-4 Mobility Partners, the partnership created to design, build, finance, operate and maintain the I-4 Ultimate project. Mobility Partners is disputing the points.
Moody’s said it revised its outlook from stable to negative on $1.4 billion in loans, rated at Baa1, because of uncertainty over the outcome of the request for relief to FDOT, according to the action filed June 28.
“The revision of the outlook to negative from stable reflects the current 245 day delay to the Baseline Substantial Completion Date caused primarily by drilled shaft failures, an associated claim filed with the Florida Department of Transportation (FDOT) for $100 million in compensation, and a high level of accumulated noncompliance points in the month of May associated with minor flooding which have led to lane closures and increased oversight by FDOT,” the action states.
The action says that Mobility Partners and FDOT are in talks concerning the delay for relief and compensation, “with a resolution expected around year-end.”
So far, FDOT says it is sticking to the contract’s original completion date and compensation, according to news reports. It has 120 days to review the delay request from the date of its June 11 filing. FDOT has also assessed 147 points against Mobility Partners. The lending agreement has a default threshold of 167 points, and if that is reached, lenders could call for accelerated debt payments or eventually step in.
Moody’s says its rating outlook could be stabilized if Mobility Partners reaches a favorable outcome with its FDOT claim, and the rating could be upgraded after successful project completion and meeting of the contract’s performance criteria. It would be downgraded, however, if the dispute is not settled and a contentious relationship ensues between Mobility Partners and FDOT.
I-4 Ultimate has been billed as the largest infrastructure project in Central Florida’s history. The “I-4 Ultimate” name came from state officials’ claims that the project would mark the final improvements for the interstate.
Work began in 2015 on the project, which involves adding tolled express lanes down the middle of the interstate, restructuring 15 major interchanges and replacing 140 bridges. The contract calls for completion in 2021.
