Should we build a bridge across Knik Arm?

As the legislature convened last week, three media stories, a blog and two editorials question the financial viability and political support for the Bridge.

In a story that was picked up nationally, the Anchorage Daily News Sean Cockerham article discloses that Governor Parnell is non-committal on further Bridge financing.

A KTVA story focuses on the dilemma of Government Hill residents weighing the loss of their property for a project that lacks financing.

Editorials last week in the Mat-Su Valley Frontiersman and the Anchorage Daily News, argue against further public funds for the project.

Even the normally pro-development Anchorage Daily Planet asks why the State of Alaska needs to own a Subway Sandwich shop for a project that may never happen.

A blog post written by Anchorage Assemblyman Patrick Flynn highlights how the AMATS Policy Committee is poised to approve a new version of the Long Range Transportation Plan that removes an important “Firewall” inserted by the Assembly into the last LRTP. Losing that “Firewall” means that transportation projects that Anchorage needs are threatened when bridge costs exceed KABATA’s predicted revenues.

The Anchorage Planning and Zoning Commission received a revised cost estimate of $2.6 Billion for the proposed state guarantee to backstop the Bridge’s expected toll shortfall from financial analyst Jamie
Kenworthy, see The Real Finances of the Knik Arm Bridge (updated on January 9, 2012).

The P&Z Commission will deliberate further on Anchorage’s Metropolitan Transportation Plan (MTP) on January 30, 2012. Kenworthy’s paper estimates that $1.1 Billion of the Bridge deficit will occur by 2035 or about half the funds that the draft MTP identifies as needed for road projects in the Anchorage area before 2035. Click here for the latest draft of the MTP.

Three recent developments have solidified Kenworthy’s Bridge deficit estimate:

1. In 2011, the Knik Arm Bridge and Toll Authority (KABATA) was turned down for a $308 million low cost federal TIFIA loan and a $45 Million federal TIGER grant. Both the low cost federal loan and the grant are included in KABATA’s financial plan and the draft MTP. Click here for a copy of KABATA’s latest Bridge financials.

2. In November, in response to concerns that the Bridge would exacerbate Cook Inlet siltation challenges that would impact “essential fish habitat” and further limit shipping access, KABATA signed an agreement with the US Army Corps of Engineers to expand the span of the Bridge from 8200′ to 9200′. Click here for a copy of the KABATA’s permit application with the Corps of Engineers.

3. KABATA’s financial plan and the financial information stated in the draft MTP continue to include the revenue from 4 lanes of toll revenue but only the cost of a 2 lane Bridge. At around 18,000 trips a day, a road needs to move to 4 lanes to accommodate traffic flow. In October in its failed federal loan application, KABATA toll projections showed over 18,000 trips a day in 2022 but no Phase 2 to expand the Bridge and approach roads until 2030 when KABATA projects 30,300 trips across the Bridge. Last week, a KABATA representative told the Muni
that the contractor would pay for Phase 2 so the draft MTP need not include the full capital cost of the 4 lane project. The current MTP shows full capital costs for all other projects.

Finally, this month Senator Coburn (R-OK) cited the release to KABATA by the Federal Highway Administration of $15.3 Million in right of way funds as project #6 in his “2011 Wastebook“, his list of the top 100 wasteful federal projects.

The Federal Highway Administration has now responded to Government Hill Community Council President Bob French’s letter asking what authority FHWA had to release $15 million Right of Way funds for an unfunded project. French’s letter noted that the FHWA’s form which released the ROW funds described the ROW monies as “advanced construction.” French then noted that both the Anchorage Assembly and the Long Range Transportation Plan stated that:

1. Construction was not to be started until “complete funding package is secured” and “the project design has been submitted for review”
2. No further state and local funds for the Bridge.

The Knik Bridge project has yet to be financed by either the private sector or the Alaskan legislature. Yet, KABATA has sent letters (see 9/22/11 post below) requiring that property owners grant access to their property for acquiring appraisals as a first step toward the state acquiring the land for the project by sale or eminent domain.

Rather than directly respond to French’s contention that the project has neither financing or any evidence of meeting the condition of the local unit of government’s conditions and FHWA-accepted Transportation Plan, the FHWA response laughably argues that the public should have commented on the Right of Way acquisition funds in the 2009 revision of the Statewide Transportation and Improvement Program. Click here to view the French letter and Click here to view the FHWA response.

Citizens opposing further state or local funds for the Knik Arm Bridge have a PowerPoint presentation arguing that “Train Wreck” is the best description of what will occur when an estimated $1.1 Billion in Bridge toll shortfall between 2016-2035 collides with the $2.5 Billion needed in Anchorage to cover road, public transportation, and bike, pedestrian, and trail improvements now outlined in the draft 2035 Metropolitan Transportation Plan (MTP). Click here (updated on 1/25/2012) for the Knik Arm Bridge and MTP PowerPoint.

The MTP will be taken up by the Anchorage Planning and Zoning Commission and then the Anchorage Assembly in early 2012.

For a list of current projects included in the draft MTP click here.

The MTP “assumes” that the Alaska legislature will approve $150 Million in state General Funds for the Bridge, provide KABATA a state guarantee for any contracts KABATA signs, and that the tolls will prove sufficient to repay the $150 Million by 2035.

In August, financial analyst Jamie Kenworthy told AMATS, the local transportation agency, that KABATA’s pro forma financial plan included only 2 lanes of cost but the revenue from 4-6 lanes of revenue. Probably in response, KABATA has now added $230 Million to the cost of the Bridge by moving Phase 2 forward to build a 4 lanes Bridge. From reading the description of the Bridge finances in the MTP it is not clear:

• What is included in Phase 2. The original Phase 2 included connecting Ingra-Gambell to the expanded 4 lane Bridge and 4 lanes to Knik Goose Bay Road but the estimate for that work was estimated by FHWA in 2009 as costing $815 Million, considerably more than KABATA’s $230 Million.
• How anything less than 4 lanes from downtown Anchorage to Knik Goose Bay Road in the Mat Su can generate the toll revenue in KABATA’s Financial Plan.
• Where the extra $230 million in toll revenue comes from since no Phase 2 costs were included in in KABATA’s estimate of $4.8 Billion in toll revenue in KABATA’s Financial Plan needed to finance just Phase 1.

See p. 6-33 for the MTP discussion of Bridge finances.

KABATA Chairman Mike Foster has an Anchorage Daily News Compass piece, arguing that KABATA’s population and traffic numbers are “nearly identical” to the numbers Scott Goldsmith of UAA’s Institute of Social and Economic provided AMATS that are used as the basis for the MTP. The MTP cites KABATA’s estimate of 36,000 trips a day crossing the proposed Knik Arm Bridge in 2035; when Ch2M Hill used ISER’s population projection to estimate Bridge traffic in 2035 their number was less than half the KABATA number or 17,700 trips a day.

Three consortia have been selected in the first round or State of Qualifications (SOQ) to construct the Knik Arm Bridge; for a copy of the KABATA press release, click here.
Coincidentally or not, the three teams selected from the six teams applying appear to have the greatest participation of Alaskan-based suppliers.

The KABATA solicitation promises $2 Million to each consortium that submits a final RFP and is not selected in return KABATA will own the work product of the losing proposals. KABATA’s SOQ has clarified a key contention in last year’s legislative debate about whether the agency was seeking an unlimited guarantee to make up the expected shortfall. Per the SOQ: “If, however, the project reserve (the $150 Million KABATA has requested of the legislature) drops below a designated amount of funds, KABATA will undertake to request a supplemental appropriation from the Alaska State Legislature to replenish the project reserve to the minimum amount required under the terms of the PPA.” (p. A-19.)

A final RFP is expected to be issued after this winter’s legislative session after the fate of the bills (SB 70 & 80) is determined. Those bills would establish a $150 Million reserve fund and make any KABATA bonds or contracts “obligations of the state.”

On another front, the local Anchorage transportation planning agency AMATS has requested KABATA to release the traffic analysis zone (TAZ) data upon which the optimistic Wilbur Smith traffic and toll revenue study was done. After a month of delay, AMATS has now received the TAZ data but it has not yet been made public.

On the day after the Knik Arm Bridge and Toll Authority (KABATA) announced that six industry consortiums submitted a statement of qualifications to compete for the project (for KABATA press release click here), the headline story in the Anchorage Daily News focused on the dispute over traffic and revenue estimates between KABATA and UAA’s Scott Goldsmith, the objection of the Government Hill Community Council to Federal Highway Administration approving Right of way money before any financing plan is in place, and KABATA’s plan to downselect to 3 the number of consortiums that will receive $2 M apiece to finalize their bid. For Anchorage Daily News story click here.

The Alaska Dispatch’s story examined questions regarding KABATA’s population and trip estimates and its use of eminent domain.

On September 25, 2011 a story in the Washington Post recapped the status of the controversial project for national readers and unearthed a private 2007 email from then Governor Sarah Palin in which she described the attempt to put further state funds into the project as “nonsensical.” For Post article, click here.

On September 28, the Huffington Post published, The Bridge to Nowhere-Except-Your-Wallet Keeps Chugging Along an op ed by David Boaz, executive vice president of the Cato Institute. Boaz argues,

Federal politicians, with lots of advice from lobbyists and back-home politicians and little oversight by actual taxpayers, pass these massive bills that require the people of every state to fund distant projects that they know nothing about and will never use. This may be “Don Young’s Way,” as the Knik Arm project is named in honor of the venerable Alaska congressman who keeps laboring to extract tax dollars from New York and Florida for his local road, but it’s also Congress’s way. This is what happens when you push road and bridge funding from the local area to the state to the federal government. And it leads to $14 trillion in national debt.

Leaders of Government Hill, UAA Economist Scott Goldsmith, and community representatives held a press availability today and released the following information:

Last month the Federal Highways Administration approved the KABATA’s expenditure of $15 million in right of way funds even though the project has no financing plan and the Record of Decision remains in court while the Municipality of Anchorage and the Knik Arm Bridge and Toll Authority (KABATA) seek to negotiate right of way through the Port. For a copy of FHWA’s release of funds form, click here.

Government Hill property owners are receiving notice from KABATA that their property requires appraisal as a first step toward sale or condemnation, for a copy of August 19, 2011 letter from KABATA to a resident, click here.

Right of Way maps from KABATA are available. To view the Anchorage side ROW maps, click here. To view the Mat-Su ROW maps, click here.

Anchorage’s existing Long Range Transportation Plan (LRTP) 2027 incorporates the conditions the Anchorage Assembly made when the Knik Arm Crossing Bridge was added to the LRTP, only if no further state and local funds were needed and also requiring that a financial plan would be in place before construction activities took place. Government Hill Community Council President Bob French said the Mayor, AMATS and Assembly appear not to have been notified of the end run by FHWA and KABATA to go ahead with Right of Way acquisition without meeting the LRTP conditions. For a copy of the key conditions the Anchorage Assembly attached to the Bridge project in the LRTP, click here.

Scott Goldsmith of the University of Alaska’s Institute of Social and Economic Research (ISER) noted that the ISER/Ch2M Hill forecast for Bridge traffic in 2035 was 17,700 trips a day while KABATA’s traffic consultant Wilbur Smith and Associates projects 36,000 trips a day in 2035, a number that is the basis for KABATA’s optimistic toll revenue forecast in their financial plan. The Technical Advisory Committee of the Anchorage Metropolitan Advisory Committee had requested KABATA to provide the Traffic Analysis Zone (TAZ) data that would help AMATS sort out the consistency and potential accuracy of the different population and traffic estimates. It was announced at the AMATS Technical Committee yesterday that KABATA has decided not to release the TAZ data, at $3,000 to release the data, and $10,000 to answer questions on how they came up with the predictions, KABATA decided it was just too expensive.

For the power point presentation to the AMATS Technical Advisory Committee by Scott Goldsmith and financial analyst Jamie Kenworthy (Goldsmith slides labeled, unlabeled are Kenworthy) please click here.

Finally, a statewide poll by Ivan Moore was released. The poll was taken of 621 registered Alaskan voters in June, 2011 before the Municipality suit on the right of way and before recent publicity that if the KABATA bills before the legislature are passed, the state would be responsible for making up any shortfall in toll revenue. The poll showed that by a narrow majority, Alaskans approve construction of the Bridge but when asked if they support an additional $150 million of State Funds for the Bridge or a state guarantee for KABATA, the two key features of the KABATA bills before the legislature, a strong majority of Alaskans across political affiliation and geographic regions oppose further state support for the Bridge. For a copy of the poll, click here and for Ivan Moore’s statement, click here.

On August 29, 2011, the Technical Advisory Committee of Anchorage Metropolitan Area Transportation Solutions (AMATS), the regional transportation planning agency, heard financial analyst Jamie Kenworthy summarize recent work by Scott Goldsmith of UAA’s Institute of Social and Economic Research (ISER) analyzing projected Bridge revenue.

Key findings:

• For the Seward/Glenn Highway to Highway project, ISER-CH2M HILL forecasted 17,700 vehicles daily crossing the Bridge in 2035 versus Wilbur Smith Associates (WSA) forecast of 36,000 vehicles a day which KABATA used to project toll revenue in its Financial Plan. If the ISER-Ch2M HILL forecast is correct, halving toll revenue will add $2.4 billion to the cost of the state’s guarantee, subject to annual appropriation, under proposed Senate Bill 80.

• Historically there has been a fairly constant 1-1 correlation between the rate growth in households in Anchorage and the Mat-Su Borough and the rate of growth in car trips between Anchorage and Mat-Su. The WSA forecast assumes that by 2035 there will be twice the share of trips per household between Anchorage and Mat-Su in 2035 compared to today.

• The KABATA Financial Plan assumes the revenue of a Phase 2 expansion of the bridge from 2 to 4 lanes without including the cost of Phase 2. Additionally, KABATA estimates the Phase 2 cost at $375 million but $835 million is the median number for Phase 2 that the Federal Highway Administration produced in 2009 through an estimation process which KABATA participated in.

AMATS now is considering how to reconcile the proposed finances of the Bridge with the amount of funds necessary for other road projects in the proposed 2035 Anchorage Metropolitan Transportation Plan (MTP). That
Plan is expected to have a public hearing in October and to go to the Planning and Zoning Commission and the Anchorage Assembly next winter.

Please click here to view the AMATS presentation which contains slides by Scott Goldsmith of ISER and additional financial analysis by Jamie Kenworthy.

A suit was filed in Anchorage federal district court on July 5, 2011 by the Municipality of Anchorage asking for a declaratory judgement that the Final Environmental Impact Statement (FEIS) for the Knik Arm Crossing (KAC) violated the National Environment Policy Act (NEPA) Act and asking that the Record of Decision be vacated.  The suit alleges that the FEIS had no “reasoned evaluation or study” of the conflict between the existing plans of the Port of Anchorage (POA) and the proposed Knik Arm Crossing.  The Port of Anchorage serves 80% of Alaska citizens and is a unit of the Municipality of Anchorage.

The suit alleges that the Federal Highway Administration, the lead federal agency over the KAC, did not adequately consider or address impacts to the POA; that the KAC did not adequately consult with the Federal Maritime Administration, the lead agency over the ongoing POA Project; that the KAC FEIS’s preferred alternative did not comply with the purpose and needs Statement set out in the FEIS; and that in preparing the FEIS, the Knik Arm Bridge and Toll Authority (KABATA) did not respond to documented POA concerns about the land conflict issues between the below-the-bluff access route chosen and the approved plans for Port expansion.  Read the full complaint here.