With less than 2% of the funds in hand to build the Knik Arm Bridge, the Knik Arm Bridge and Toll Authority (KABATA) has in the last few months plowed ahead acquiring property, hiring more consultants, and broadcasting statewide ads about a “fresh start” with “peer review” for the project.
However, KABATA’s new work protects its ability to do transportation planning separately from existing transportation planning agencies and ensures that the new data will not be reviewed by the Anchorage Metropolitan Transportation Solutions (AMATS) this year.
A November 3, 2013 front page Anchorage Daily News article quoted KABATA’s deputy executive director Judy Dougherty saying “the project is a go” though the legislature has yet to approve financing for the project.
So despite over a million spent in consulting work for the “new” socioeconomic population and employment data, it remains likely that when the legislature convenes again in January, 2014 legislators will again face non-reviewed data on the project’s financial feasibility.
Ready to Demolish Homes and Businesses?
Dueling Compass pieces in the Anchorage Daily News questioned and defended the prudence of KABATA acquiring property and announcing plans to demolish Government Hill acquired structures either this fall or next spring.
First, in this compass piece, new Government Hill Community Council President Stephanie Kesler asked how an agency that had spent $85 millio of its original $112 million federal earmark could be acquiring property when the legislature has repeatedly denied further state funding for the KABATA-estimated $1.6 billion needed to build the bridge. She accused KABATA of trying to create “an aura of inevitability” for a project that has “no realistic prospect” of being financed.
In reply, KABATA Executive Director Andrew Niemiec described the Bridge as “a State of Alaska project” that had to follow a “strict, formal process” to fairly compensate property owners. Perhaps ironically in a state whose officials often complain about federal overreach, Director Niemiec mentioned that the Federal Highways Administration (FHWA) had “selected” the Erickson Street route on Government Hill for the Anchorage approach. “Approved” may have been a more accurate description of FHWA’s role in the project than “selected,” since the route and project right of way funding were triggered by an August, 2011 State of Alaska funding request to FHWA.
KABATA now has 4 of the 10 Government Hill properties on the Anchorage side for the Phase I route. Remaining are buyout agreements with the Tesoro gas station, and the Subway sandwich shop, and negotiations with the Alaska Railroad for the land beneath the Tesoro gas station and Subway, and portions of Sunset and Harvard parks. In the November 3 Daily News article, Subway owner Steve Adams indicates he is willing to sell the land to KABATA if they will lease it back to him until needed. But Adams quotes the position of KABATA toward his business as “Nope, we want to tear it down.” Adams believes KABATA “has the cart before the horse.”
While KABATA’s push to acquire and demolish property appears to try to create some physical evidence on the ground showing the Bridge is inevitable, the Government Hill Tesoro and Subway have separate long term leases from another state agency, the Alaska Railroad.
Permit Status: Where’s the Governor?
Aside from two state agencies flashing separate green and yellow lights on acquiring project right of way, Governor Parnell gave a guarded response to a question on his commitment to the bridge at the Wasilla Chamber of Commerce last week. Governor Parnell said the necessary permits were “years away” and said the legislature needed to focus on projects that could be built immediately. See here for more details.
While the Bridge has received a Record of Decision on its Environmental Impact Statement, KABATA has been in discussion with the National Marine Fisheries Service (NMFS) for a Biologic Opinion for the incidental taking of fish and beluga whales during construction and with the Army Corps of Engineers for a Section 404 permit. For two years, KABATA Board minutes disclose that those NMFS and Corps permits are likely to be soon issued. But to date, no NMFS or Corps 404 permits have been issued. Concerns from the Army Corps of Engineers and presumably NMFS were a key factor in KABATA’s to lengthening the planned bridge span by a 1000’ to 9200’ in 2011. The proposed Bridge is now longer than San Francisco’s Golden Gate Bridge.
It may be the Governor knows that to get its final permits from the Corps and NMFS that the bridge will have to be lengthened from 9200’ up to 14,400’ which would greatly increase the cost of the project. Or it may be that the governor has no information on where permitting stands but just did not want to take a stand on the costly project in an election year.
Stiffing AMATS and FHWA?
The “fresh start’ in KABATA’s statewide radio ads refer to the expected role of new consultants, Cardno and Agnew:Beck to revise socio-economic data to project new population, household, and employment data by neighborhood or traffic analysis zones (TAZ) out to 2055. That work was scheduled to be completed November 1st.
What KABATA has avoided mention of, is that when the new data is produced, it will then be turned over to KABATA’s same traffic and revenue consultant CDM Smith whose previous work was discredited by the 2013 Legislative and Budget Audit, to model the new traffic and revenue numbers which will result in revised toll revenue numbers. Those revised toll numbers will then be used by KABATA’s existing financial consultant CITI, to produce a revised financial plan.
In the last quarter (7/1/13-9/30/13), KABATA has spent $201,784 on work by those retained consultants, CDM Smith and Citi.
It is not yet clear if in effect, the new sausage ingredients of revised socio-economic data are to be fed into the same black box traffic model to produce essentially the same financial plan. All previous KABATA “pro forma” financial plans since 2009 have shown a federal TIFIA loan of $300-500 million and the revenue from about 36,000 vehicles a day crossing the Bridge around 2035 or twice the ISER-CH2MHill estimate. Both the federal loan and the higher amount of traffic are necessary in order to try to demonstrate that the project could eventually pay back a proposed state loan.
KABATA staff described the status of their TIFIA loan request to the KABATA Board last month as “valid but on hold.” However, because KABATA was not asked by TIFIA to advance its letter of interest to a full application, the $500 million loan request is dead for this year’s round of TIFIA funding. (Earlier, TIFIA had written to KABATA to say the most KABATA would ever qualify for is a third of the project cost or about $300 M pre-financing.)
This year’s Legislative Budget and Audit (LB&A) review of the project criticized the undocumented and overly optimistic data of the work of CDM Smith and Citi as well as the demographic data.
In May, 2013 financial analyst Jamie Kenworthy made a brief presentation to the AMATS Technical Advisory Committee (TAC) asking that by end of 2013, the TAC produce a TAZ map for 2035 Anchorage Transportation Plan that includes a tolled Knik Arm Crossing. The updated 2035 AMATS TAZ map could then be compared to the new 2035 TAZ data from the new KABATA consultants. This would allow the public and the legislature to come to their own conclusions regarding the reasonableness of the numbers behind KABATA’s expected new financial plan.
The TAC discussed making a TAZ map public by the end of the year, but took no action.
While KABATA describes the new socioeconomic consultants as coordinating with AMATS, Anchorage, and the Mat Su Borough, there is no requirement in the KABATA RFP for the product of that new work to be consistent with existing transportation plans. Nor is there any process yet identified to reconcile different KABATA traffic forecasts with the 2035 AMATS Anchorage Transportation Plan numbers. Nor is there a requirement that the cost of the KABATA Bridge to be included in the AMATS 2035 plan as requiring future transportation funding.
In recertifying AMATS in 2011 as the Metropolitan Planning Organization (MPO) for the Anchorage area, the FHWA urged KABATA, AMATS and affected units of local government to work together to insure consistent population, traffic, and coordinated financial plan for both the Bridge project and all other Anchorage area transportation improvements.
The AMATS TAC has invited KABATA to present its plans to the October, November, and December TAC meetings as a step to the coordinated planning expected of a MPO that FHWA has pushed for. KABATA has refused the invitation to those last three TAC meetings of the year.
Evidently the “peer review” promised in the KABATA radio ads does not include include Anchorage’s traffic planning body, AMATS or indirectly the Federal Highway Administration (FHWA) as peers.
A New Spokesman Without a Project Cost Number
Last year before the 2013 legislative session, KABATA Chairman Michael Foster served as the public spokesman for the project by writing opinion pieces in the state’s papers and speaking to the Resource Development Council. KABATA’s 2012 Annual Report featured supportive quotes and pictures of Anchorage Mayor Dan Sullivan and Mat Su elected officials. But the glossy 14 page report omitted the names of KABATA Executive Director Andrew Niemiec and CFO Kevin Hemenway.
Perhaps in response to the rough treatment of Chairperson Foster by House leaders in their attempt to transfer the bridge project from KABATA to AHFC, the Anchorage Daily News Compass piece and Resource Development Council project update were undertaken by KABATA Executive Director Andrew Niemiec.
In neither the News column nor the RDC presentation — which included a slide “By the Numbers” — did Executive Director Niemiec provide KABATA’s latest cost estimate for the project.
In the November 3rd Daily News article, KABATA cited a $710-$750 million project cost. When reporter Lisa Demer cited the project cost as $1.6 Billion from KABATA’s last public finance plan of December, 2012, KABATA explained the roughly $900 million difference as financing costs and a proposed $150 million state loan. However, KABATA’s lower number of $710-750 million was for Phase 1 that included only 2 lanes on the Bridge. But since the Phase 1 low number also included the revenue from four full lanes of traffic from 2021 to 2051, KABATA had to include four lanes on the Bridge and approach roads in the December, 2012 estimate. This resulted in the project cost jumping $600 million from that one item alone.
Summary: Same Old, Same Old?
For the current fiscal year starting on 7/1/13, the Legislature provided a 27% increase to KABATA’s operating budget which has allowed the agency to increase its profile through paid statewide media and hire new consultants and rehire old consultants to redo the work criticized by the April, 2013 LB&A audit.
When the Legislature reconvenes in January, 2014, despite this higher level of expense and activity, the Bridge project is likely to be in a familiar place:
- A revised financial plan is likely to show again a $300-500 million federal TIFIA loan they have recently again been turned down again for now the sixth time.
- While there may be new socioeconomic data projections, that data will have modeled by the same traffic and revenue consultants with the likely expected result that the project will again show apparent financial feasibility.
- Unless KABATA changes course in terms of sharing data with AMATS and the public, there will be limited ability of knowledgeable non-KABATA experts or the public to critique the assumptions behind the revised KABATA financial plan.
- Without the permits that set the length and likely cost of the bridge and without having performed the additional drilling that KABATA geotech consultant Shannon and Wilson recommended in 2009 to establish the depth of the unstable Bootleggers Clay in Knik Arm, any KABATA cost estimate for the Bridge will need to be set in a wide range.
So when the legislature faces the annual KABATA request for a full state guarantee to make up the toll shortfall, legislators will again be asked to make more than a billion-dollar decision with non-reviewed information.
It will be as if the 2013 LB&A audit never happened.
In short, another $4-5 million in state transportation funds will have been expended in the last year but little will have changed about the prospects for the $1.6 billion plus project.