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Will proposed Knik Arm Crossing follow lead of Alaska's other toll road, the money-losing Whittier tunnel?

Pat Forgey
Artist's rendering of proposed Knik Arm Crossing. Courtesy: Knik Arm Crossing

JUNEAU -- A toll bridge the Parnell administration wants to build across Knik Arm will likely be financially successful, state transportation officials say, based on the success of the bridge that connects Juneau's Douglas Island neighborhoods with the rest of the capital city.

But why are state transportation officials reaching all the way to Juneau for an unlikely comparison to a toll-free bridge when they already have an actual toll road, through the Whittier tunnel, they could have used as an example?

Perhaps it’s because the Whittier toll road shows the potential pitfalls of relying on drivers to directly fund roads.

The 9,200-foot Knik Arm Crossing project would open up the Point MacKenzie area for development and cut travel times to Anchorage for some Matanuska-Susitna Borough commuters. The project has long been a dream of Mat-Su officials and legislators.

But after years of work and a cost of $209 million so far, the Knik Arm Bridge and Toll Authority was unable to find a private developer to take on the project, even with federal loan subsidies. Now, the Legislature has agreed with Gov. Sean Parnell that the state Department of Transportation and Public Facilities should build the bridge -- with federal help.

And state officials are still relying heavily on tolls to sell the project, but they’re now promising that tolls would fund only a portion of the cost.

The bridge toll has not been set, but it appears likely to be about $5 each way for private vehicles -- although KABATA cautioned that tolls could be higher or lower depending on what the market will bear.

Key to the project will be TIFIA bonds, the low-cost bonds from the federal government that can be issued under the Transportation Infrastructure and Innovation Act. Success for the Knik Arm Crossing means raising enough money in bridge tolls to pay back the hoped-for $300 million or more in TIFIA bonds, and eventually up to $300 million in state-issued bonds.

If toll revenues don't materialize as expected, the feds will have to wait to get their money back, legislators were told.

"If the revenues are deficient, TIFIA doesn't get repaid until the revenues are sufficient," said Devon Mitchell, bond expert with the Department of Revenue.

"The risk is taken by the federal government."

But Department of Transportation and Public Facilities leaders say they expect the tolls to be sufficient. To support that view, DOT officials aren't looking at the one toll road they already own -- the Anton Anderson Memorial Tunnel from Portage to Whittier -- but to Juneau.

"The Juneau-Douglas bridge has about 9,500 cars per day going across that bridge. To pay back the TIFIA bond funds takes about 10,000 cars per day," said Jeff Ottesen, the department's program development director.

Big surplus eventually?

A study done for KABATA predicted the crossing would result in rapid growth in the Point MacKenzie area, booming traffic volumes, billions in revenues and even $2.2 billion in surplus revenues through 2061.

But that traffic projection was disputed by the Division of Legislative Audit, which called its conclusions "overly optimistic" and said that many of the assumptions on which they were based were not supported by evidence or independent sources.

But Ottesen maintained that the Knik Arm bridge would be in a much more populous area than Juneau, which has only 33,000 residents, and could easily meet projections.

"Contrast Douglas' population and Juneau's population with Anchorage and Mat-Su (nearly 400,000)," he said. "I think you can see it’s not unreasonable to assume that we'll achieve traffic volumes quickly that will equal the Juneau-Douglas Bridge," he said.

But how good a comparison is the toll-free Juneau-Douglas bridge with a toll bridge across Knik Arm? 

Transportation watchdog Lois Epstein, an engineer and former director of the Alaska Transportation Priorities Project, says there's another important difference: monopoly. The Juneau-Douglas Bridge is the only way for Douglas Island residents to get to the rest of town, or for residents elsewhere to reach the offices of the Department of Corrections and Department of Fish and Game on the island.

For a prospective Knik Arm Crossing, "there is an alternative right there," she said. For a large portion of the people who it is hoped will use the new bridge, the free Glenn Highway will be faster. According to the Department of Transportation, an average of 29,500 vehicles a day passed Eklutna Flats on the highway in 2012.

"If you live in the most populated portion of Mat-Su, Wasilla, you are going to have to travel farther (to use the Knik Arm Crossing). It's going to take more time, and you are going to have the bonus of having to pay a toll" to take the new bridge to Anchorage, she said.

Precursor: failed Susitna ferry

In the once-separate communities of Juneau and Douglas, demand for a bridge was demonstrated by the success of a 250-passenger ferry that crossed the Gastineau Channel between the mainland and Douglas Island before the 920-foot bridge was built.

Epstein said that's typically how bridges get built, whether it’s the Juneau-Douglas Bridge or the Golden Gate Bridge.

"Usually there was a ferry service that couldn't handle the traffic, and they built a bridge. The folks at DOT who have been trained in this most likely know that, that you need some sort of proven traffic before you build a bridge," she said.  

That's what Mat-Su Borough officials had hoped to do with the ill-fated M/V Susitna ferry venture: build traffic for a prospective Knik Arm Bridge, said port director Marc Van Dongen.

"It was a precursor for the bridge," he said. "Most places where bridges are built, you have a ferry operating for a number of years, and that was the idea," Van Dongen said.

That plan has since been abandoned after Mat-Su failed to secure an Anchorage-side landing. There were also concerns about traffic and how big a subsidy would be needed, he said.

As legislators voted to fund the Knik Arm Crossing project without new traffic studies during the last session, they pointed to the Juneau-Douglas Bridge to show it would work.

One of those supporters was Sen. Mike Dunleavy, R-Wasilla, who said he'd been a "huge, huge skeptic" but had been convinced by traffic and toll projections to change his mind.

"I'm confident enough to believe this is going to be a good project," Dunleavy said in supporting passage of House Bill 23, directing the state Transportation Department to take over the project from KABATA.

"It may be the only project that in the end will pay for itself, and then maintain itself with these tolls," Dunleavy said.

But while Dunleavy and other supporters were using the Juneau-Douglas Bridge to win support for Knik Arm, they weren't mentioning Alaska’s only toll road, the Whittier tunnel.

The tunnel connects Whittier, on Prince William Sound, with the state road system, and was widened in 2000 at a cost of $80 million to handle cars. It was hoped a toll would pay for the cost of operation.

"The Whittier road was definitely sold on the basis of those tolls," said Charles Wohlforth, a member of the Anchorage Assembly at the time.

The Assembly endorsed the Whittier tunnel road over the objections of Wohlforth, who said the existing railcar access was more cost-effective.

Traffic never reached the volume expected after tolls were imposed in 2001.

While DOT tunnel manager Gordon Burton calls the tunnel successful, that's on the basis of improving access to Whittier, not on meeting traffic expectations or turning a profit.

"Is it earning a profit from the tolls? No, it isn't," Burton said.

In the state's environmental impact statement for the tunnel widening, tolls were projected to fully cover tunnel operating costs. The shortfall has meant the state must help cover the cost of tunnel operations.

"Every year since roughly 2000, the Legislature subsidizes the gap. For a long time it was $2 million a year, but for the past few years it’s been $2.6 million, so now you are talking about $20 to 30 million added to the cost of the tunnel," Epstein said.

The projected loss this year is $3 million, with the state budget for the Whittier tunnel calling for expenses of $4.76 million and revenues of $1.76 million from tolls paid by tunnel users.

Tunnel tolls fall far short

The Whittier Tunnel EIS said that there was unmet demand for travel to Whittier it was trying to meet with the tunnel, and that the need couldn't be met with additional rail flatcars, which were previously used to transport vehicles through the tunnel. People wouldn't ride them due to the cost and how long the trip took.

The EIS predicted that trips to Whittier, at 91,000 per year before the tunnel highway, would climb to 897,000 quickly. In 20 years, by 2015, traffic would be at 1.4 million visitors, it said.

That never happened, and reductions to tunnel tolls haven't changed things much. For the last 10 years, tunnel traffic has been stagnant, peaking at 248,188 in 2007.

Tunnel tolls were free for the first year, before kicking in in 2001.

After traffic failed to meet expectations, the toll was lowered from $15 to $12 for private passenger vehicles, Burton said, but traffic remains well below projections.

Passage through the tunnel is collected only one way, but Burton said that $12 cost is thought to average out to $6 each way. Larger and commercial vehicles pay more.

Unfamiliar with tunnel

If DOT's estimate of 10,000 cars per day for the Knik Arm Bridge materializes, that would be mean 3.6 million trips per year.

A KABATA traffic consultant, testifying before the Legislature in 2012, told lawmakers she was not familiar with the Whittier tunnel.

The Knik Arm Crossing is estimated to cost about $1 billion, though there is debate about what additional roads on each side of the bridge and what financing costs to include.

Epstein said she's worried that the Whittier tunnel experience will be repeated on Knik Arm.  

"And that's a small project compared to the Knik Arm Bridge," Epstein said.

Contact Pat Forgey at pat(at)alaskadispatch.com