From Sean Cockerham in Anchorage –
Consultants on the billion-dollar Knik Arm bridge project were pretty clear today the financial plan for the bridge is for the state to foot the bill for any difference between how much money is collected in tolls and how much the private developer will be paid.
“Any difference between tolls and the (developer’s) payment -- that is made up by the state,” said Grant Holland, vice president for Wilbur Smith Associates, which did the traffic forecast.
The question is whether the Legislature agrees to put the state on the hook for a project that had earlier been pitched as not requiring any more state government money. Wasilla Sen. Linda Menard did introduce a bill this spring to give an initial $150 million in state money for the project, as well as another bill to make bridge financial obligations into “obligations of the state.” The bills will be considered in the coming legislative session.
Holland and an executive from Citigroup this morning discussed the project with the technical advisory committee for AMATS, a city-state planning board for Anchorage transportation projects. At least some of the committee members were skeptical of the project and irritated that no one from the Knik Arm Bridge and Toll Authority was there to answer questions.
KABATA chief financial officer Kevin Hemenway attended the first 20 minutes but left, citing a commitment.
The committee members said they need information on the financial plan for the bridge because it is a requirement of the Federal Highway Administration for projects that are included in AMATS’ long-term plan. They said they are planning to ask Hemenway to come back and speak to them next week.
Citigroup executive David Livingstone told the committee the construction is $715 million, with a cost of $1.063 billion including associated expenses.
KABATA is currently looking for a private developer who would borrow money to pay for the bridge construction and operate the bridge in exchange for payments from KABATA. The amount of the payments would be determined as part of the bid process for a developer. The idea is KABATA would make the payments using tolls drivers pay to use the bridge ($5 each way, with the cost of the tolls rising 2.5 percent each year.)
The initial $150 million requested from the state is meant to cover the shortfall between the expected toll revenue and the payments to the developer in the first few years of operation. The executives from Citigroup and Wilbur Smith Associates said the bridge should then break even, and eventually start creating excess money the state can use for other projects.
Jamie Kenworthy, a bridge critic and former director of the Alaska Science and Technology Foundation, argued that’s all based on unrealistic assumptions, including that there will be 36,000 trips a day by 2035 over the toll bridge between Anchorage and what is now mostly undeveloped Mat-Su land near Point Mackenzie.
The Wilbur Smith study for the project figures there will be 26 percent more households in the Mat-Su than the Institute for Social and Economic Research at the University of Alaska Anchorage forecasts, he said.
Wilbur Smith vice president Holland, who described his company as “one of the premier traffic and revenue consultants in the world,” responded that it’s staking its reputation on the study.
The Knik Arm bridge project has challenges other than the willingness of the Legislature to appropriate money.
The financial plan includes federal loan funds that have yet to be authorized, and the Municipality of Anchorage has sued over the design of the project.