City dropping lawsuit against Knik Arm bridge project

TOLLS: Sen. Begich questions guarantees made to developer.

Anchorage Daily NewsOctober 8, 2011 

Anchorage Mayor Dan Sullivan is dropping the city lawsuit against the billion-dollar Knik Arm Crossing and wants state money to go for the bridge.

"I look at the bridge as a critical piece of infrastructure, and I think the state should just build the darn thing, myself," Sullivan said Friday.

Sullivan's predecessor as Anchorage mayor, Alaska Democratic Sen. Mark Begich, expressed concern recently about plans for the state to make up any shortfall between how much money is collected from bridge tolls and how much is paid to a private developer for operating the bridge. The plan is to charge drivers a toll of $5 each way ($10 round trip) to use the bridge.

"If the State of Alaska intends to financially guarantee the project, I am worried this could potentially obligate the state to pay tens if not hundreds of millions of dollars to a private third-party developer if vehicle traffic on the proposed crossing is insufficient to cover the cost of constructing the project," Begich wrote in a letter to Gov. Sean Parnell a month ago.

Sullivan said he would personally prefer that it not be a toll bridge at all. He'd rather the state just go ahead and build it.

"We build bridges. That's what we do as a state. We build roads and bridges and infrastructure," Sullivan said.

The bridge would run from north of downtown Anchorage across the Arm to mostly undeveloped land near Point MacKenzie in the Matanuska-Susitna Borough.

Begich wrote Parnell that he was concerned that "Alaska taxpayers may be left on the hook for a poorly financed project." Begich noted the original congressional earmark for the Knik Arm Bridge was about $231 million, before what he called the "national public outcry."

It was ridiculed as one of Alaska's two "Bridges to Nowhere," and Congress stripped the requirement that the money go for the bridge. But Congress went ahead and let the state have the federal money anyway to use on any transportation projects, and the Alaska Legislature decided to put $93 million of the previously earmarked money into the Knik bridge.

"With the current federal spending deficit and federal earmark moratorium, I do not anticipate additional federal funds for the project will be available in the future," Begich wrote. "I am also concerned existing federal funding allocated for the project may be at risk if the project does not make significant progress."

The Knik Arm Bridge and Toll Authority has $35 million left in government money and says it's making good progress, with a Federal Highway Administration OK for the project and six consortiums, which include global construction firms and investment groups, putting in "statements of qualification" showing interest in being chosen as developer of the project.

The bridge authority agency is in the process of trying to obtain five homes and businesses in the Government Hill neighborhood of Anchorage that stand in the way of the bridge. The property owners received a notice saying that an appraiser would inspect their property and the bridge authority would then offer to buy it. The Legislature has given the bridge authority the power of eminent domain to take the properties if they cannot be purchased.

Bridge supporters say it will open land for the development of housing and industry in the Point MacKenzie area and provide a second route into the growing Mat-Su. Opponents say it's a financial risk that takes money from other transportation projects and won't save commuters any time between Anchorage and the Mat-Su hubs of Wasilla and Palmer.

The plan is for the private developer to borrow money to pay for the bridge construction and then operate the bridge. In exchange, the state would agree to make annual payments to the developer. The idea is for the state payments to come out of the tolls, once there is enough toll revenue.

Bridge planners have asked the Legislature for $150 million in state money to cover the shortfall in the initial years the bridge is open. They also want the Legislature to declare that financial obligations made by the bridge authority are "obligations of the state."

Bridge critics call it a blank check for potentially billions in payments and dispute the traffic forecasts that bridge planners use to say tolls will cover the costs after the first seven years. Among the critics is Scott Goldsmith of the Institute of Social and Economic Research at the University of Alaska Anchorage. Goldsmith questions the assertion that there will be an average of 35,000 trips per day over the bridge by 2035, saying that's double what an ISER analysis came up with.

The bridge authority stands behind its numbers and says they came from consultant Wilbur Smith Associates, which it calls the "pre-eminent traffic and toll revenue consulting firm." Bridge planners assert the tolls would eventually provide a surplus for other projects.

Anchorage Mayor Sullivan said the dispute over numbers is an issue for the state Department of Transportation, but expressed confidence in the quality of the consultant the bridge authority used to come up with traffic and revenue estimates.

"I do know that Wilbur Smith, the traffic analysts, are considered to be the premier analysts in that field in the world, and I think they know a little bit more about it than I do," Sullivan said.

One complication for the project is being resolved with Sullivan's announcement that the city is dropping its lawsuit against the bridge.

Sullivan has long been a supporter of the Knik Arm Bridge. But the city sued over its complaint that the planned road leading to the Anchorage side of the bridge would present problems for operations at the city-owned port.

Sullivan appeared Friday with bridge authority chairman Michael Foster. Sullivan said the city and the bridge authority have almost finished a settlement, and he expected the city would drop the lawsuit in the middle of the week. The Legislature created the bridge authority in 2003 to work toward making the project happen. Foster said the agreement is to redesign the road at a point where it runs through a narrow piece of land in state tidelands near the "dry berth" at the port.

"Basically we've reduced our right of way to a very narrow footprint, which allows the dry barge to still operate as intended while north of that and south we'll widen the right of way a little bit," he said.


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

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