Better Question: Why Did it Last So Long?
Bridge Critics Summarize Expensive Lessons Learned
Clearly Saudi Arabia and low oil prices were the proximate causes of
the Knik Bridge Project’s demise. See Governor Walker’s comments on the
Day of Reckoning
http://www.adn.com/politics/2016/06/29/walker-budget-vetoes-include-capping-permanent-fund-divdends-at-1000/ (There is an archived copy here.)
and later analysis
http://www.adn.com/politics/2016/06/30/governor-shuts-down-work-on-knik-arm-crossing-susitna-dam/. (There is an archived copy here.)
For a project that was turned down for a federal loan 7 times and,
despite what proponents insisted on for over 10 years, had no one but
the state holding the bag when toll revenues fail to measure up, the
tougher question to answer may be why it was allowed to last so long.
Over $100 million in state and federal funds were spent before the
project was finally canceled by the Governor.
This web site has been maintained since 2007 to provide the public,
media, and transportation planning professionals detailed information
about the project. This final post summarizes the perspectives of those
who fought the bridge for 12 years on why the project failed; and what
lessons can be learned about how public processes function or do not
function.
1. Three Key KABATA assertions were proven wrong
Three key assertions for the bridge did not stand up to scrutiny.
A. The Bridge would not shorten travel time between Mat Su and Anchorage
The original justification for the Bridge was to lessen congestion on
the Glenn Highway and decrease travel time between Anchorage and the
Mat-Su Valley. These arguments quickly unraveled when critics unearthed a
simple map from Knik Arm Bridge and Toll Authority’s (KABATA) own
traffic consultant
(http://www.knikbridgefacts.org/images/maps/wsafigure5.gif ) showing
motorists would save 11 minutes of time by taking the existing, free,
Glenn Highway from downtown Wasilla to downtown Anchorage compared to a
$5 one-way-tolled Bridge. And of course the Glenn was a better choice
coming from Palmer and much faster if the trip from the Valley ended at
the military bases or midtown rather than downtown.
B. The private sector did not hold or share the “downside risk”
Leading proponents of the Bridge, including Representative Mark
Neuman (R-Big Lake), consistently claimed the private sector stood ready
to invest hundreds of millions to launch the project. But the
Public-Private-Partnership (P3) model (supported most strongly by
Republicans in the Legislature) was ultimately scrapped because the P3
“Partners” wouldn’t invest their own money if they had to get paid from
what the Legislative Budget and Audit Committee called “unreasonably
optimistic toll revenues” alone. Legislators filed bills, fortunately
never approved, that would have required the State to write endless
“blank checks” to cover shortfalls. The details changed from year to
year as KABATA came up with new financial schemes to try to back up
their promises of it being a “free bridge, paid for by toll revenues”,
but, as an example, in KABATA’s 2011 P3 financial “Pro-Forma”, the
foreign contractors would “invest” only $76.8 million of their own
money… and receive $914.6 million back in state guaranteed payments.
Unfortunately, every bridge bill introduced directly put the state’s
credit rating at risk by guaranteeing an unlimited amount of
“availability payments” to the contractor or indirectly through an
unlimited moral obligation to cover the toll shortfall necessary to
repay federal and state loans. Even after the Governor canceled the
project, Rep. Neuman, the co-chair of the House Finance Committee,
continued to wrongly insist that the private sector was holding the
downside risk of any toll shortfall.
C. KABATA’s Mat Su population and trip projections were consistently absurd
Population projections are used to project trips and therefore the
tolls that are a key part of any project finance plan. The three
different population studies commissioned by KABATA from out-of-state
firms produced numbers showing a future Mat Su with 50-60% more
residents than projected by either UAA’s ISER or the state’s
demographer.
First, KABATA hired the little known firm Insight Research
Corporation of Dallas Texas to estimate the Mat Su Borough would have
250,700 people by 2030. Their long report was largely ignored by State
and Muni planners until a person sympathetic to the critics’ cause (the
“first whistleblower”) pointed out the buried 250,700 number. The
bridge critics then told anyone who would listen that the Borough would
have to add the equivalent of Palmer, the Borough’s second-largest city,
to the Borough every year for the next 23 years to get to 250,700
people in 2030.
Then, pressed for a more realistic number, KABATA hired consultant
Wilbur Smith to estimate that the Borough would grow from its 2010
Census population of 88,995 people to 204,000 people by 2035. Wilbur
Smith shoved future Borough growth away from the Palmer-Wasilla core to
the unpopulated Point MacKenzie area (the western terminus of the
proposed bridge) where Smith projected 13,828 jobs in 2035. For context,
note that number was more jobs than the Kenai, Juneau, or Mat Su
Boroughs have today. Viewed another way, Wilbur Smith had placed the
employment equivalent of 2.4 Dimond Centers (the largest mall in the
state) at Point MacKenzie.
Finally, after the State Legislative Budget and Audit Committee
(LB&A) released its 2013 audit criticizing the unrealistic optimism
of Wilbur Smith‘s population and toll forecast numbers, KABATA rehired
the same firm which then subcontracted to Agnew::Beck to redo Borough
population numbers. Agnew::Beck came up with 207,888 people in Mat Su
by 2040. The Agnew::Beck figure differed significantly from HDR’s
estimate prepared for the Mat-Su Borough transportation plan which put
7,177 people in 2035 at Point MacKenzie. KABATA’s consultants Wilbur
Smith (now CDM Smith) put more than five times the number there by 2040
or 37,074. If Point MacKenzie had 37,074 inhabitants today it would be
the state’s second largest city.
The Anchorage Metropolitan Area Transportation Solution (AMATS)
Technical and Policy Committees could have used their expertise to
resolve these significant discrepancies; however, those groups never
acknowledged the continual necessity for KABATA to lower Mat Su
population numbers, was accompanied by KABATA’s corresponding need to
project ever increasing population and job numbers at Point MacKenzie.
With no real oversight from these important committees, KABATA’s plans
showed that about twenty years after the bridge opened it would carry
between 36,000 to 40,000 tolled trips a day. This was the “magic
number” necessary to show the project had sufficient revenue to pay off
the expected federal and state obligations on a $1 billion bridge.
2. KABATA’s flawed strategy was to charge ahead without regard to cost or controversy
Having over $100 million in federal funds allowed KABATA to choose a
consistent strategy: keep spending to make it appear that the
project was moving forward. But the perceived extravagance of that
spending, and the questionable sequence of activities, created the
pushback that eroded political support for the project. One can say
that “Free Money” in search of a project, just about guarantees an
unsustainable project.
From the very start, KABATA made a series of unforced errors:
A. Excessive Pay
In a 2006 decision, the KABATA Board of Directors set the pay of the
Executive Director, Deputy Director, and new CFO at $129,000-$130,000
each, salaries larger than the Governor’s. The pay decision, made in
executive session and not reflected in the minutes, drew unwelcome media
attention to the new agency.
http://www.alaskajournal.com/community/2006-10-08/knik-arm-bridge-board-gives-executives-pay-raises#.V8iJ7o-cF2s.
Annual salaries for the project director and CF0 soon grew to about
$160,000 + benefits.
In 2011, KABTA’s financial plan included a $1.6 million upfront
payment to KABATA as a “success fee”. government finance officer who
learned about this proposed payment became a quiet ally of the critics
because a “success fee” is known in venture capital as a payment to the
original entrepreneurs when a firm goes public. It is inappropriate to
give a “success fee” to well-paid public employees who are taking no
financial risk on a public project.
B. Demolish First, Financing Later or Never?
The decision to acquire and demolish homes and business to clear
right of way on Government Hill for the project was viewed by KABATA as a
necessary step in making the project appear “shovel ready”. But for a
major public project that kept being turned down for the $300 + million
federal loan necessary to finance the project and never received the key
environmental permits for construction, demolishing homes seemed to put
the cart before the horse. Eventually, the Sourdough Lodge and three
homes were demolished but faced with bad publicity, Governor Walker
intervened, saying “let’s not go and start tearing down buildings and
closing businesses” for a hypothetical project.
KABATA apparently assumed it could create facts on the ground by
acquiring right of way and demolishing structures. But this strategy
instead stoked opposition from the Government Hill neighborhood that
might otherwise have dissipated in the face of the apparently
inevitable. The demolitions, and the decision of the Tesoro station
owner to stop selling gas because his short term lease made it
financially unfeasible to replace aging tanks, seemed to make the
neighborhood, or at least the activist neighborhood critics, more
determined to fight on.
C. Withholding Key Information
Despite KABATA’s web site hosting extensive links to project reports
and promotional materials, the first single page budget for the project
came from the critics, not the agency. In addition, KABATA’s first
detailed financial plan for the project, authored by Citigroup, was
handed to legislators by the critics, as it had not been included in the
information packets for KABATA’s Legislative bills.
KABATA routinely withheld information on the seven federal loan
denials (often packaged as just a step in the process to skeptical
reporters). This strategy allowed critics (and not the agency) to make
public critical information first, thusputting KABATA on the defensive.
Legislators, the media, and sometimes even the Governor’s office and
Commissioner of Transportation became accustomed to hearing first from
critics or the media about unfavorable project information rather than
hearing it first from KABATA.
KABATA also manipulated the discussion by ignoring pieces of
information that could be used to critique the project. For example,
KABATA’s plan was touse the existing A/C Couplet Bridge over Ship Creek
and the Railroad Yard, even though the A/C Couplet Bridge is listed by
the DOT&PF’s 2007 Bridge Inventory as “functionally obsolete.”It is
also one of only 3 bridges in the state with the comment of “Fracture
Critical”, meaning that it requires special inspections to ensure that
it does not collapse. This weakness would have been exacerbated by
increased traffic flows being projected by KABATA, but the issue was not
addressed.
3. The Critics Held Together but not the Project Team
Opposing the Bridge for over 10 years was a consistent core group of
four people who brought skills and experience in their day jobs in
environmental engineering, transportation planning, and web based
communication to the table. This team remained in almost daily contact,
exchanging unearthed information, sorting out assignments, editing
statements, and in general coordinating efforts. The four leaders were:
- Stephanie Kesler and Bob French, who had different terms as head of the Government Hills Community Council.
- Lois Epstein, who led the Alaska Transportation Priorities Project and then moved to an environmental group.
- A fourth person with a legal background participated mostly behind the scenes.
They organized a much larger group of volunteers willing to write letters, testify at hearings, and contact public officials.
In 2008 Jamie Kenworthy, who had managed a state agency, drafted a
simple project budget for the Anchorage Assembly. KABATA CFO Kevin
Hemenway contradicted Kenworthy by telling the Assembly that the private
sector would take the risk for any toll shortfall. When a subsequent
Public Records Act (PRA) request revealed that Hemenway had authored the
federal loan application asserting the state would cover any toll
shortfall, Kenworthy’s “brief assignment” turned into an eight year
commitment to track KABATA finances, and he became the fifth core
leader.
Later, respected retired UAA economist Scott Goldsmith made public
presentations on KABATA’s undocumented assumptions after KABATA
repeatedly misconstrued his socio-economic projections and refused his
requests to correct the misrepresentations.
Unlike the critics, the leadership of KABATA kept changing. There
were three different chairs of the KABATA Board (George Wuerch, Mike
Foster, and Janet Kincaid), three KABATA Executive Directors (Henry
Springer, Andrew Niemiec, and Judy Dougherty), three Governors (Palin,
Parnell, Walker) and four acting or confirmed Commissioners of
Transportation (MacKinnon, Von Scheben, Kemp, and Luiken). One
legislator commented to Bridge Critics that “You folks have been working
on this bridge longer than anyone who is getting paid to do so!”
Concerned about the credibility of KABATA’s management of the
project, the legislature in 2014 removed the project from the KABATA’s
Board oversight. The legislature placed project management in the
Department of Transportation but DOT&PF kept the same project
leadership team in place, and there was little change in how the project
was managed.
4. The Project Changed its Financial Structure 3 Times
The project changed its financial structure three times, which each
new plan costing a few more millions for financial modeling by Citigroup
and another traffic and revenue study by Wilbur Smith/CDM Smith.
- First, the project was a direct state financed project. In 2005,
Congressman Don Young (R, AK) obtained a $453 million dollar Earmark for
the Knik Arm Bridge and the Gravina Island Bridge near Ketchikan, AK,
when he was chair of the House Transportation and Infrastructure
Committee. There was substantial hope that Don Young and Senator Ted
Stevens (R, AK) would be able to obtain more federal funding to
supplement the typical 10% of project costs provided by the State of
Alaska. Although the agency had briefed Commissioners and legislators,
no project budget had ever been made public. The first financial plan
done by Citigroup showing projected toll revenue and bond payments was
sent to Jamie Kenworthy by a state official who told him “I see no
reason why you shouldn’t have it.” Each page was marked “Draft” and
“Confidential”; neither label summarizing a condition that would exempt
the information from the Public Records Act.
The hope for additional direct federal funding disappeared after
Hurricane Katrina hit Louisiana in 2005, and after Don Young’s Earmark
was the subject of national ridicule as the “Bridges to Nowhere”. The
direct state financing plan was finally canceled after the project was
turned down for a federal TIFIA loan and state officials were reluctant
to recommend state revenue bonds to the legislature since the original
KABATA legislation precluded a state guarantee. KABATA staff had
discovered there was no market for state revenue bonds dependent on
tolls without an underlying state guarantee.
- The second finance plan was a “public-private partnership” or P3.
KABATA told legislators and the public that the private sector would
share the risk or assume the full risk. What was explained to
legislators only by critics was that the new KABATA bills required the
state to guarantee 35 years of “availability payments” to the
contractors who would then make the bond payments. So instead of being
asked to guarantee a $1 billion plus in bonds for the project, the state
was now being asked to guarantee 35 years of availability payments
totaling a KABATA-estimated $3.2 Billion.
Nevertheless, a bill offering a guarantee for the state to finance
the project failed by only 1 vote in the House when two legislators were
absent.
- The third and final finance plan was to cancel the P3 Partnership
that promised each of the 3 finalists a million dollars, even if they
were not selected. Revenue Commissioner and KABATA Board member Angela
Rodell commissioned her former employer, the New York office of First
Southwest, to do a five page study (despite requests, no backup numbers
on toll revenue and bond payments were ever provided) showing a state
financed option would be cheaper than a P3 partnership.
The consistent theme of all finance plans was that the project was
essentially free. When the project repeatedly failed to secure federal
TIFIA loans, and critics kept insisting the state still held the
downside risk, the plans kept being changed without ever being financed.
The result of all the changes in project leadership and the finance
plan was more confusion about the status of the project and an
increasing lack of credibility with the media, the public, and, to a
much lesser extent, the legislature.
5. Enemies Accumulating
As Arthur Block, the author of many books on Murphy’s Law, wrote, “Friends come and go, but enemies accumulate.”
An unexpected large number of people familiar with the project stepped
forward to help the critics. They were motivated by a variety of
factors, but the three most important were:
- KABATA paid much higher salaries than regular Department of Transportation and other public employees.
- Contractor payments were large and do overs frequent. KABATA paid
firms Wilbur Smith/CDM Smith and Citigroup over a million each time, to
do at least 3 different versions of toll and revenue projections and
financial plans. None proved credible to federal loan officials. Los
Angeles law firm Nossaman and Associates was paid $1.2 M to put together
a P3 partnership agreement which was soon canceled. Contractors and
DOT&PF employees who watched while higher priority projects needed
in the shorter term were starved for resources, grew privately acerbic
about the double standard between the use of funds for KABATA and
non-KABATA projects.
- Professionals, even those who still nominally supported the idea of a
Bridge, were increasingly miffed by non-standard professional work.
Among the folks who stepped forward to help the critics were:
- 9 individuals designated by the critics as “whistleblowers” because
they had insider knowledge of the project and wanted to help behind the
scenes. The first and most helpful whistleblower provided over a
hundred hours of advice based on their knowledge of trip modeling and
transportation planning in the Anchorage area.
- Former CIA manager Terry Maynard doing volunteer work for the Reston
Virginia Citizens Association became concerned about the accuracy of
Wilbur Smith traffic and toll projections for the Dulles Toll Road.
After noting that the Knik Bridge Facts web site had documented similar
problems with Wilbur Smith’s work in Alaska, Maynard contacted bridge
critics. Using data from a study by Transportation Research Board, (a
federal entity), Maynard published in 2012 an 81-page report showing
Wilbur Smith’s track record was to overestimate toll revenue by over
114% for the first five years a US project was opened, or less than half
the toll revenue projected was ever realized. He wrote a chapter on
the Knik Bridge project. AMATS officials didn’t read Maynard’s report
but some legislators and Muni Assembly members did.
- 3 “bond geeks” familiar with funding large public projects and
credit markets reviewed Jamie Kenworthy and Bob French’s work that
provided a number of editions of white papers on bridge costs and an
alternative spreadsheet of the project using the same assumptions and
structure of Citigroup’s plan.
- Numerous contractors who were informed and concerned about ignored
or misused data, and non-standard professional work by other contractors
or inappropriate project management by KABATA staff. As one (then
pro-bridge) KABATA consultant told a critic in frustration: “What KABATA
doesn’t get is that the EIS (Environmental Impact Statement) is a
process! You can’t skip steps or cut corners.”
- A number of former and current employees of KABATA and the
DOT&PF and planners with the state and the Muni did not step out of
their government role, but took the time to explain the planning
process, budget information, and traffic analysis to the critics.
A number of times at public meetings, bridge critics would challenge
the numbers or process behind the project and a public official or
employee would respond to refute or deflect the criticism. After the
meeting, the same public employee in the elevator or parking lot would
encourage a bridge critic to keep raising questions, provide more
information, and sometimes even offer a private opinion on the project’s
lack of merit.
This disjoint between public statements of government employees and
their private opinions was sometimes almost surreal. These
conversations encouraged the critics to stay on task even as it provided
discouraging feedback about how government functions when professionals
assessing information felt the need to defer their judgments to Mayor
Sullivan, Governor Parnell, and other elected officials who had already
endorsed the project.
6. Critics stepped in, when AMATS proved unwilling to examine the project’s finances.
How AMATS handled the bridge project resulted in a sorry record for the Muni-State planning organization.
A. AMATS was largely Missing in Action on the fight over Mat Su Population Numbers
Planners from AMATS, the state, and Mat Su had almost endless numbers
of meetings to try to resolve different population and employment
numbers between themselves and between KABATA’s numbers and theirs.
While AMATS planning staff insisted they did not have the time or
resources to look into the reality of whether the large agricultural
zoning at Point MacKenzie could even support the population and job
numbers projected by KABATA, clearly AMATS needed to know whether the
Bridge would be dumping less than 10,000 trips a day downtown in 2035
(an HDR-Mat Su number that surfaced from a PRA request), 16,800 trips a
day (a number HDR estimated from earlier work on the Highway to Highway
project) or 36,600 trips according to KABATA. But AMATS staff did not
have the backbone, expertise, or political freedom to assess the reality
of KABATA’s financial numbers. Instead they inserted in the 2035 Long
Range Transportation Plan (LRTP) a convenient fiction showing the
project would have no fiscal impact on non-bridge projects planned for
the Anchorage area.
B. AMATS budget plans ignored the elephant in the room
AMATS receives about $25 million a year in state and federal
transportation funding. Critics estimated that the toll shortfall for
the first ten years would be more than AMATS funding. Who could believe
that the $1-2 billion project would not affect local funding?
In re-certifying AMATS in 2011 as a regional planning agency eligible
for federal planning funds, the Federal Highway Administration (FHWA)
Division Administrator criticized AMATS for not playing a stronger role
to ensure consistent planning assumptions between KABATA, the state,
the Mat Su, and AMATS. The USDOT Division Administrator wrote that “in
order to make a complete determination that the updated (2035) LRTP is
financially constrained, AMATS must determine that the sources and
levels of funding for all projects are reasonable. Due to the size of
the KAC (Knik Arm Crossing) project relative to a typical AMATS project,
it is particularly important that the best available cost and revenue
estimates by source from the KAC project be included in the next plan
revision.” This was never done.
When critics in 2011 made presentations to every Anchorage community
council about the 2035 draft LRTP, no one questioned that the large
project would affect the ability of AMATS to fund other projects, even
those where existing demands to accommodate traffic and improve safety
should have made those other projects a higher priority than a billion
dollar plus bridge to vacant land.
Whether pro or anti bridge, Anchorage Assembly members did not accept
AMATS’ judgment that the bridge would not impact local transportation
funding. In adopting the 2035 LRTP in 2011, a 9-2 Assembly vote sought
to “wall off” Bridge finances from future AMATS funding. Nevertheless,
the Bridge stayed in the LRTP and it remained in the current Statewide
Transportation Improvement Plan without any further funding commitments.
C. AMATS proved less concerned with KABATA’s numbers than federal loan analysts
While AMATS committees allowed a briefing by critics comparing the
numbers being used in preparing the 2035 MTP and KABATA numbers, AMATS
didn’t follow up. Goldsmith and Kenworthy signed a Memorandum of
Understanding with the Muni to provide a free analysis of KABATA vs.
non-KABATA socio-economic data in return for AMATS traffic information.
Goldsmith and Kenworthy provided comparisons of data and maps down to
the neighborhood level of differences in population and employment
numbers in the Mat Su. After 3 emails to AMATS Coordinator Craig Lyon,
no briefing was ever scheduled for Goldsmith and Kenworthy to present
this information to the AMATS Technical or Policy Committees. Clearly,
AMATS staff didn’t care, didn’t know, didn’t want to know, or did not
have the willingness to try to reconcile their data and traffic
projections with KABATA’s data.
In contrast, the federal loan analysts from the US Department of
Transportation clearly were worried about the overly optimistic numbers
KABATA used to predict that there would be sufficient toll revenues to
pay off the prospective loan. In their last loan rejection letter, of
2/9/16 the CFO of the US Department of Transportation, Shoshana Lew
cited the “aggressive assumptions in your traffic and revenue study” as a
key reason for the loan denial. The critics were not surprised by this
conclusion but for 10 years AMATS was largely missing in action on this
important question because of the unwillingness of planners and staff
to stand up to the elected officials on the Policy Committee and their
representatives who supported the project.
The US DOT conclusion in 2016 echoed the conclusion of the 2013
LB&A audit that KABATA’s numbers were “unreasonably optimistic.”
7. The Media Moved from “He Said/She Said” to “Boondoggle Watch”
Bridge stories until about 2012 largely had a he said/she said
structure and reader comments were generally split between bridge
boosters and critics. But as the loan denials accumulated, the 2013
LB&A audit was released, and reporters got used to receiving
accurate project information on budget and socio-economic data from the
critics, the media’s tone sharpened and they viewed the critics as
information allies. And reader comments and letters to the editor
shifted overwhelmingly against the project.
Reporters now asked critics the two questions they could not answer,
because it asked critics to know the mind and motives of bridge
proponents. Why is this project still spending money? Where is the
support for this really coming from?
Critics had done research on the pattern of land ownership at Point
MacKenzie. The media had disclosed in 2004 land purchases by
Congressman Don Young’s son in law Art Nelson and Senator Stevens aide
Trevor McCabe of 60 acres of Point MacKenzie land made just before Young
announced the original $223 M earmark for the Bridge. But critics
found no later large land purchases at Point MacKenzie that would
represent the “smoking gun” of any one significant private economic
interest that could explain the push for the bridge.
The largest landholders in the Point MacKenzie area were the state,
the Mat Su Borough, and the University of Alaska. KABATA Board Chair
Mike Foster wrote the University of Alaska President a letter to point
out the amount of University land in the area that would benefit from
the bridge and suggested he rein in UAA Professor Scott Goldsmith’s
opposition to the project. The President was amused and at a social
function handed a copy of the letter to Goldsmith.
As media reporting and editorials turned against the project, critics
hoped forlornly that a giant expose could move the legislature to kill
the project. But over the 12 years the Bridge project continued, the
revenue model for print journalism continued to deteriorate with the
result that few reporters had less time than ever to cover large,
complicated projects.
One story that at least one critic thought should have killed the
project came in 2012. A key summary of all KABATA financial plans is a
bond cover ratio showing that there was enough revenue to cover bond
payments and other fixed payments. Of at least 12 variations of the
finance plans done by Citigroup, that ratio varied between 1.25-1.40 or
about $1.35 of revenue was expected to pay a dollar of expenses.
The critics discovered that the consultants were counting on up to
50,000 tolled trips a day to cross the Bridge within 30 years after the 2
lane bridge was open. The official FHWA Highway Capacity Manual
estimates about 22,500 vehicles are the maximum capacity for a
restricted 2 lane highway at an acceptable service level. So the
necessary bond cover ratio KABATA was counting on in its loan
application to the feds used at least 4 lanes of revenue to cross a 2
lane bridge. When KABATA was given the chance to refute how the ratio
was constructed and declined, this information was forwarded to the
federal officials assessing the KABATA loan.
Once the “4 lanes of revenue, 2 lanes of cost” problem was made
public, KABATA shifted to a 2 phase project, with Phase 2 of the project
costing about $500 million to expand the bridge to 4 lanes “when
traffic warranted” with the project cost rising now to $1.5 billion.
But the timing of counting over 22,500 trips a day to provide the
revenue for a 2 lane bridge continued to be a problem. Critics
continued to call this extra revenue “impossibly derived” rather than
“fraud,” but no member of the media, AMATS or legislator ever raised the
issue.
Despite the increasingly critical media attention to the project, it
became clear that people who wanted the bridge would not be influenced
by factual critiques of the project. In particular, legislative support
seemed stronger than was reflected in the media or polling. The
legislature proved a lagging indicator of declining support for the
project.
Key reasons for continuing legislative support were leadership positions
being held by Mat-Su Legislators, the strength of the pro-development
bent of the Republican-led majority, the influence of the Associated
General Contractors and to a lesser extent organized labor in pushing
for its inclusion in a large capital budget, and even a KABATA budget
which could afford a full time “legislative liaison” to lobby for the
project In contrast, critics had the time and budget (on their own dime)
to visit the capital at most two or three times a year.
8. Critics Tactics Kept It Non-partisan and Focused
Most of the critics were personally more on the left than the right
of Alaska politics though, when speaking for the group, bridge critics
constantly reminded themselves that it made little sense to link the
bridge fight with other contentious issues.
The tactics of the critics was informed by two Ivan Moore polls (paid
for by critics) that showed that over a third of Bridge skeptics were
small government, anti-spending Republicans, many based in the Mat-Su,
Kenai, and especially Southeast Alaska. Men favored the Bridge by 10
points more than women. One of the initial key critiques of the bridge
was negative impacts on the health of endangered Cook Inlet beluga whale
and salmon caused the the construction and existence of the mile long
earth causeways into the inlet that would constrict Knik Arm. But
polling and conversations with decision makers soon led critics to focus
their key arguments on the poor economics of the project.
While letter writers often used the Bridge as their best example of
misplaced budget priorities (laying off teachers vs. an unneeded Bridge,
etc.), Bridge critics tried hard not to link their opposition to the
project with broader political agendas on either side. Democrats Les
Gara (D-Downtown) and Senator Berta Gardner (D-Midtown) were usually the
biggest public bridge critics and put their comments in the misplaced
priorities context. Rep Mia Costello (R-Sand Lake) was outspoken on the
need for the Department of Transportation to take over the project from
KABATA. Other key allies in getting information out about the potential
state liability for the project were Senator Bert Steadman (R-Sitka),
Senate Finance Member Danny Olson (D-Golovin) and former Rep Eric Feige
(R-Chickaloon) who lost his 2014 primary to a candidate backed by the
unions and the Associated General Contractors.
The leadership of the House and Senate as well as the Finance
Committees remained highly supportive of the project even as they came
to question KABATA’s management. Senate Finance Co-Chair Anna MacKinnon
(R-Eagle River) said in 2014 more in frustration over delays of key
permits and no financial commitments, “I want to build a bridge.”
Despite a minority of legislators from both sides of the aisle being
critical of the project, at the end of the 2014 session after a bid to
offer the project a direct state guarantee failed by two votes in the
House, the project was moved to DOT&PF and the legislative majority
overwhelming passed a new bill that was described as a “new plan”
supported even by former project critics Reps Mike Hawker (R- South
Anchorage) and Mia Costello. While the project remained contingent on a
$380 M federal loan for about one third of the project costs, it now
contained an unlimited “moral obligation” language and had a finance
plan dependent on the same high toll and revenue numbers the federal
loan officials later rejected.
9. Facts really do matter.
Eventually as noted above, the misrepresentations and assertions that
counter common sense caught up with Bridge Boosters. When one side of
an argument is spouting hyperbole without supporting data, and the other
is citing numbers backed up by innumerable quotes and common sense
examples, the preponderance of evidence becomes an important factor.
Bridge proponents were often caught saying that using the bridge
would cut the travel time from Anchorage to Talkeetna or Fairbanks.
However, KABATA’s own data showed that without the half Billion dollars
to build the Pt. MacKenzie to Houston road (a cost not included in the
bridge finance plans or cost estimates, and not even mentioned in the
Statewide Transportation Improvement Plan) it would be nearly 12 minutes
faster, to NOT take the bridge. Not taking the bridge also avoids
paying $2000 to $4832 (in 2051) per year in tolls.
Even if the bridge and the Point MacKenzie to Houston road was built,
KABATA’s own maps showed that it would be only 7 minutes faster to
Talkeetna.
It can be difficult to explain the manipulations that KABATA’s
consultants used to try to justify how they were going to fit 35,000
average daily trips on a 2 lane bridge, but Alaska commuters from the
Mat-Su to Anchorage easily understand that fitting the same traffic that
they see every day on a 4 lane Glenn highway west of Eklutna, just
won’t fit on that 2 lane bridge.
Bridge Critics wondered over the years whether their critiques
allowed KABATA to improve its plans and predictions. However, in the
end, the continual gyrations and tortured “logic” used to support those
ever-changing assumptions probably undermined KABATA’s credibility.
10. “It’s a Process” and a long one
An Environmental Impact Statement is required for large projects
utilizing federal funding by the 1970 National Environmental Policy Act,
or NEPA. The pieces and steps required by the law lead to a fairly
drawn out process, and it is critically important to get involved at the
earliest stage possible. Bridge critics nearly missed an initial
meeting that helped establish the Government Hill Community Council as a
“Consulting Party” with some rights and responsibilities that would
have been lost if we had not attended those initial meetings.
Some key “lessons learned” from the EIS process:
A. Your participation in the pieces and steps is important
From the earliest “project scoping” meetings, to “public meetings”,
to “public comment periods” on each of the scoping, draft EIS, Final
EIS, and Record of Decision and any Programmatic Agreement, Memorandum
of Agreements, etc. are essentially a series of “check lists”, and to
establish legal basis, it is important to participate in those meetings
and to provide comments, even if you have no intention of filing suit.
B. Data generated with public dollars is public information.
Find out the requirements for a Freedom of Information Act (FOIA) and
don’t be afraid to file a FOIA request when you are being stonewalled.
C. Project consultants get paid to generate favorable data.
Getting background or supporting information for that “unusual seeming” data may be a good candidate for a FOIA request.
D. “Need” is a constantly mutating beast.
For a project of questionable benefits or need, there can often be
manipulation of the “Need” statements of the EIS, and questions about
the underlying assumptions and justifications should always be included
in public comments.
E. “Alternative routes” means all possible routes.
High costs alone cannot be used as a reason to avoid evaluating alternate routes.
F. Alternative options always include the “no build” option.
G. Political patronage and pressure can be huge obstacles to good public process.
With large amounts of Mat-Su Borough owned land, the Mat-Su
delegation’s desire to build things, and a simple concept of opening up
empty land to new development, the Knik Arm Bridge and Toll Authority
was established and funded with a single purpose, to build a bridge
across Knik Arm. The initial $223 million “Earmark” from Don Young for
the Knik Arm Bridge furthered that goal and provided KABATA with funding
that didn’t have to fight with other state agencies to spend. That the
Mat-Su’s Republican legislators were in position of power, where they
could both lean on reluctant members, as well as act as gate-keepers for
money being spent in the districts of those reluctant members probably
did more than almost anything else in keeping such an unjustifiable
project alive.
Epilogue: Alaska Needs to Step Up Its Game in Assessing Mega-Projects
The critics remain grateful to the Walker administration for
canceling the project even as they are still somewhat incredulous it
survived so long. More importantly, from what we have learned about how
state government spent money during this project, we are not sanguine
about how government in Alaska functions.
Most of the critics believe that if development continues, a bridge
might be built across Knik Arm sometime in the next 30-70 years. All of
us believe that a number of institutional improvements are necessary
now if Alaska is to improve its oversight of megaprojects and do a
better job spending public funds.
Improvements are needed at:
A. AMATS
AMATS needs to be a more professional planning organization driven
more by fact-based, coordinated socio-economic data and less by
politics. Other regions of the country have an executive director with a
transportation planning background. AMATS lead is a coordinator of the
state and Muni project transportation agendas and the organization is
less leading a regional transportation agenda than coordinating the
existing state and Muni agendas.
B.The Alaska Department of Transportation & Public Facilities
DOT&PF has largely functioned as its own internal, independent
empire for a long time. DOT&PF is used to telling the legislators
and the public which projects are “shovel ready” or not, which projects
are scheduled when in the Statewide Improvement Plan, and using the
complicated federal and state budget rules to justify the timing of all
projects. All $223 million in the original Earmark set aside for the
bridge could have been transferred after 2007 to any other state project
which was eligible for federal transportation dollars. But over $100
million was spent for the bridge with DOT&PF managing (some might
say manipulating) information and the statewide plan, so it never had to
indicate any projects which had been postponed or canceled because of
bridge spending. DOT&PF also never admitted that bridge spending
and pulling engineers off other projects had any impact at all on what
projects went to bid. The continuing result is politicians do not
understand their choices and the department controls the agenda and
timing of launched projects largely regardless of administration.
For example, on July 1, 2016 Alaska was eligible to draw down more
reallocated federal dollars than the state had the 10% match for.
Despite a legislative hearing on the subject, the exact amount of
missing match has not been made public nor necessarily even known to the
legislature, the Transportation Commissioner or the Governor. Our
current analysis is that the missing state 10% match is between $25-40
million. If DOT&PF had better priorities and prepared more shovel
ready projects that realistically can be built, clearly identified the
match needed to the legislature, and had wasted less money on the Knik
Arm Crossing and other unrealistic projects like the road to Ambler, at
least $250 million more in projects could have been bid this
construction season. In this current recession, that $250 million
number represents a political and bureaucratic failure largely
programmed by how DOT&PF continues to function.
C. Elected officials
As a group, elected officials and their staffs do not do enough
homework and are driven too much by their understanding of the politics
involved rather than by any grasp of key project details. While critics
found some outstanding exceptions to this judgment, there remain too
many officeholders of both parties and too many holdovers of high level
staff who have insufficient courage, analytical ability, willingness to
understand large ticket items, and general know-how to adequately do
their job.
