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Cost of delayed Point MacKenzie rail spur swells to $300 million plus

Zaz Hollander
A rail spur connecting Port MacKenzie, shown here in April 2014, is still more than $100 million short. Loren Holmes / Alaska Dispatch News

PALMER -- A 33-mile rail line extension connecting the lethargic Matanuska-Susitna Borough port at Point MacKenzie to commerce-boosting Alaska Railroad tracks near Houston is still $119 million short.

That number surfaced Tuesday afternoon as part of an update from the borough’s executive manager of the extension project. The presentation was made to the Mat-Su Assembly during a priority-setting session; the Assembly took no action during the meeting.

Project manager Joe Perkins blamed the overrun on funding delays, lawsuits that halted work and what he called unforeseen federal Surface Transportation Board requirements to move trails in the area that added $1 million to the price tag.

The total project cost is now $303.5 million, a $31 million increase from the original 2008 cost of $272.5 million, Perkins said.

“We had intended to have the train running by now,” he said.

Boosters have pinned Port MacKenzie’s progress to the rail spur; the port is currently running in the red, with operational and maintenance costs outpacing revenue from real-estate leases and cargo crossing the docks.

Borough officials say they expect the extension to provide a lucrative link from the Interior, and various mineral deposits including coal, to tidewater at Port MacKenzie.

Money for the project has come via eight separate legislative appropriations -- Perkins said the project got “just” $13 million last year -- rather than in larger chunks, he said.

The project also faces problems finalizing right-of-way negotiations with one landowner, to the point that managers opted to push back work on that section until next year. One other section also still needs to be finished. 

The cost of lawsuits against the project, filed by plaintiffs including Cook Inletkeeper and the Sierra Club, drew sharp remarks from Assembly member Ron Arvin, who called the impact “significant” after calculating it to be roughly 2 percent of total project costs.

But the borough’s attorney, Nick Spiropoulos, later pointed out that the legal action only halted work for 60 days and so the costs to the project probably weren’t that high. Spiropoulos wondered if a bigger contributor to the delay was the borough’s failure to get requisite permits to cross state Department of Natural Resources lands.

Perkins said if all the money comes together now, the extension could be finished by late 2017. Otherwise it could take longer, running up even more costs as delays continue.

“I someday would like to retire,” he told the Assembly, to laughter.

Contact Zaz Hollander at zhollander@adn.com.