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Anchorage, not the state, should take financial responsibility for port project

  • Author: Jomo Stewart
  • Updated: June 29, 2016
  • Published August 28, 2014

One objective way to know if you've gotten a good deal is if those who offered it to you take the same deal for themselves.

In the last two legislative sessions, Fairbanks received a pair of "great" deals: one for an liquefied natural gas trucking and natural gas distribution project, and the other for the University of Alaska Fairbanks combined heat and power plant. Soon our community will get objective verification of that value characterization -- by seeing if Southcentral-based policymakers, who made much of how "great" a deal Fairbanks received in the funding packages for both projects, and used them to ding the Interior in broader budgeting, request the same "great" deal for their Port of Anchorage project.

In each of those two legislative sessions, the Fairbanks community asked for state assistance in advancing projects of statewide importance. The first was the LNG trucking and natural gas distribution project, named the Interior Energy Project. The IEP was strongly embraced by not only the Interior delegation, but by Gov. Parnell and the many non-Railbelt legislators. They recognized a North Slope-based LNG production and transportation system as developing accessibility to lower-cost energy for river and coastal rural Alaska, assured gas availability for non-pipeline-connected Railbelt communities, in-state energy security for Southcentral, and the best means to position the Interior to provide necessary support to either the in-state bullet line or larger-scale Alaska LNG projects.

The funding package to support this project of statewide import: a blend of financing, including 24 percent "free money" (grants and tax credits) and 76 percent debt (loans and bonds, which will need to be repaid with interest by me, my neighbors and anyone else purchasing gas from the North Slope LNG facility).

During the 2014 legislative session, the UA Board of Regents asked the state for funding to replace the long-ailing combined heat and power plant at the flagship campus in Fairbanks. First fired in 1964, the CHP, by providing both heat and electricity to the campus, supports more than $100 million per year in Outside-funded research; hundreds of millions of dollars of local and statewide economic activity; the administrative nerve center of the entire UA system; and billions of dollars of public infrastructure.

Though the request for funds to replace the UAF CHP came, chronologically, hard on the heels of the IEP, the need to replace, in year 50, a facility designed for a 50-year usable life, came as a surprise to no one. Yet, rather than take the opportunity to simply buy a new CHP for UA's flagship campus during the years of multi-billion-dollar surpluses, the Legislature chose to, again, offer a project of major statewide import a cobbled-together package of blended financing -- 36 percent free money and 64 percent debt (a burden which, in the name of "fairness" and contrary to assurances given during the legislative discussion, folks are already trying to figure out how to shift mostly or entirely onto the shoulders of UAF students).

Were these good deals? Arguably, yes. Certainly, recognizing the immediacy and scale of the need, and taken in the context of a state budget approaching or over the deficit line, they were necessary, timely and substantial. But were they "great" deals? Inarguably, they were treated as such by those who used the debt-heavy financing packages of the IEP and CHP as ready pretext to reduce, delay or eliminate Fairbanks capital projects -- and appropriate tens of millions of dollars in state grants for projects in their own towns and districts.

It was reported in the Alaska Dispatch News Aug. 17 that, after years of mismanagement, shoddy work and massive cost overruns, Anchorage will be requesting no less than $300 million from the state for continuing work on its port; a project upon which, as the Alaska Journal of Commerce noted Thursday, "[m]ore than $300 million of public money has been spent" and from which Alaska "has little more than a barge dock to show for it."

Today, Anchorage-based policymakers have the chance to put money where mouths were and prove to Fairbanks, and the rest of Alaska, their statewide fiscal sincerity by asking that state funding for the Port of Anchorage be almost entirely debt-financed, that the port be considered an "Anchorage project" for capital budgeting purposes, and that Anchorage receive little or no additional capital funding next year -- freeing up $30 million in grant funds to complete the UAF engineering building (as Anchorage did this spring with the engineering building at UAA) and maybe even another $30 million for the underfunded storage and distribution components of the Interior Energy Project.

Would this be the "best" deal possible for Anchorage? Perhaps not. But, in light of the tight budgetary environment, its past statements and legislative actions -- and the port having a history neither as clean nor compelling as either the IEP or CHP -- it'd be a great one.

Jomo Stewart is the energy project manager for the Fairbanks Economic Development Corp. He is a UAF graduate with a degree in political science and a former chief of staff and committee aide in the Alaska Legislature.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)

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