With funding uncertain, Knik bridge planners seek builder

KABATA accepting bids despite municipal lawsuit, no funding

July 14, 2011 

Knik Arm bridge planners moved the project forward Thursday, seeking a company to build the mega-bridge, even though the Municipality of Anchorage is suing and the Legislature hasn't provided the state money they need.

The Knik Arm Bridge and Toll Authority, or KABATA, sent out a request for companies to submit their qualifications to be chosen as developer of the proposed bridge connecting Anchorage to mostly undeveloped Mat-Su land near Point MacKenzie. The request says the authority would pick the developer in the summer or fall of next year, with construction starting in 2013 and completion within four years.

This comes just a week after the Municipality of Anchorage filed a lawsuit to force the federal government to drop its green light for the bridge project.

The city's suit says the road connecting the Anchorage side of the bridge would pass through the expanding Port of Anchorage and conflict with port operations.

Authority Chairman Michael Foster did not return a phone message Thursday. But bridge planners are telling potential developers they are "confident" despite the city's lawsuit.

Anchorage Mayor Dan Sullivan has been a big backer of the bridge and the lawsuit came as a surprise. Sullivan said the city tried to resolve the issue without a lawsuit. But last week was the deadline to file a legal challenge and there wasn't a solution.

Sullivan said he met with KABATA officials earlier this week to talk about how to resolve the issue. "It's our hope we can find an engineering solution and then at such point we would withdraw our appeal," he said.

Another big question mark for the bridge is how to pay for it.

When the Legislature created the authority in 2003 to pursue the project, the idea was for tolls paid by drivers who use the bridge to cover the costs. Motorists would be charged $5 each way to cross. The goal is still for the state to team with the private developer, who would borrow money to pay for the bridge construction and operate it in exchange for the state sharing revenue from the tolls.

But bridge planners now say those tolls won't bring in enough money to pay the developer during at least the first few years the bridge is open.

So Wasilla Sen. Linda Menard, who is on the authority board, introduced a bill to provide an initial $150 million in state money for the project.

She also introduced another bill saying the authority's financial obligations under its partnership with the developer are "obligations of the state," a term that had some legislators concerned it could affect the state's credit rating in the event of default.

Those bills didn't pass. The Legislature will consider them again next year and the bridge has influential supporters. But there are also skeptics like Fairbanks Sen. Joe Thomas. "My concern is knowing exactly what the state's obligation is going to be in the long run, " he said.

Project opponents argue that the authority is vastly overstating how much revenue tolls will bring.

State Revenue Commissioner Bryan Butcher wrote in March that "a firm recognition that the bill as drafted creates a direct line to the State of Alaska's balance sheet for the $600 million of KABATA bonds and unlimited authority for a private partner's bonds is important."

He also wrote, though, that he's confident the authority's toll revenue projections are objective and that the companies who did them used the highest standards.

The authority says its financial analysis indicates the requested $150 million in state money, along with toll revenue, will be enough to cover its payments. "If, however, the Project reserve drops below a designated amount of funds, KABATA will undertake to request a supplemental appropriation from the Alaska State Legislature," says the newly released document seeking a developer.

The document also says the Legislature might be asked to provide additional money for "milestone payments" to the developer to mark progress on the bridge.

Bridge supporters argue the project is needed to open up Mat-Su land for housing and industry, creating opportunities for economic development.

Critics call it a boondoggle, and it was ridiculed as one of Alaska's two so-called "bridges to nowhere" when Congress provided initial money.

The authority says it has about $60 million of that federal and state money left, some of which it is using for its administrative costs and permits.

The authority is currently asking potential developers to submit their qualifications. The idea is to put between two and four companies on a "short-list" eligible to bid on the project. Then, even the losers will get money. The authority says it will offer $2 million to each of the short-listed companies that don't get chosen as the developer. In return, KABATA says it would get the rights to "ideas, techniques, concepts and approaches" included in the unsuccessful short-listers proposal.


Reach Sean Cockerham at scockerham@adn.com or 257-4344.

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