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Consultants say state will be expected to cover early revenue shortfalls for Knik Arm bridge

Posted: August 20, 2011 - 9:38pm

ANCHORAGE — Consultants on a proposed billion-dollar bridge connecting Anchorage to the Matanuska-Susitna Borough over Knik Arm say the state of Alaska will be expected to pay the difference if tolls don’t cover costs of a private developer.

“Any difference between tolls and the (developer’s) payment — that is made up by the state,” said Grant Holland, vice president for Wilbur Smith Associates, at a technical committee for a city-state traffic planning board.

Holland’s company prepared a traffic forecast for the Knik Arm Bridge and Toll Authority. Holland and an executive from Citigroup spoke Thursday at a technical advisory committee for AMATS, or Anchorage Metropolitan Area Transportation Solutions, the city-state planning board for Anchorage transportation projects.

Bridge authority officials want $150 million from the state to create a reserve for expected shortfalls in the first few years the bridge is open. Bridge authority chairman Michael Foster told the Anchorage Daily News in an interview Thursday that KABATA traffic forecasts show the toll revenue should at that point be enough to refill the reserve. If not, Foster said, the Alaska Legislature would be asked for more money.

Lawmakers so far have not agreed to obligate the state for a project that many say was not supposed to need any more state government money.

State Sen. Linda Menard, R-Wasilla, introduced a bill this year for the initial $150 million in state money, and a second bill to make bridge financial debts into “obligations of the state.”

AMATS committee members said they need details on the financial plan for the bridge because it is a requirement of the Federal Highway Administration for projects included in the planning board’s long-term plan.

Citigroup executive David Livingstone told the committee that the construction is pegged at $715 million, with a cost of $1.063 billion including associated expenses.

KABATA is seeking a private developer who would borrow money to pay for the bridge construction and operate the bridge in exchange for annual payments from KABATA. The amount of the payments would be determined as part of the bid process for choosing a private developer.

KABATA would make payments using tolls that drivers pay to use the bridge — $5 each way, with the cost of tolls rising 2.5 percent each year.

The initial $150 million requested from the state would cover an expected shortfall between toll revenue and the payments to the developer. The executives from Citigroup and Wilbur Smith Associates after the first years, the bridge should break even and start creating surplus money the state can use for other projects.

Bridge critic Jamie Kenworthy, a former director of the Alaska Science and Technology Foundation, said at the meeting that the financial projections are based on unrealistic assumptions, including 36,000 trips per day by 2035 over a bridge to what is now mostly undeveloped land in the Mat-Su Borough near Point Mackenzie.

The Wilbur Smith study estimates there will be 26 percent more households in the Mat-Su than have been forecast by the Institute for Social and Economic Research at the University of Alaska Anchorage, Kenworthy said.

Holland, however, described his company as “being one of the premier traffic and revenue consultants in the world” and said it’s staking its reputation on the study. KABATA chairman Foster said in the newspaper interview that the traffic forecasts incorporate data from ISER and the latest 2010 Census numbers. He said the bridge authority believes the numbers are credible.

The municipality of Anchorage has sued over the design of the project and the financial plan includes federal loan funds yet to be authorized.

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