Bids sought for 2020 work at Port of Alaska

Anchorage officials are moving ahead with a plan to build part of a new berth at the city’s beleaguered port while they look for ways to pay for the rest of it.

Municipal Manager Bill Falsey said during a May 16 meeting of the Anchorage Assembly’s Enterprise and Utility Oversight Committee that administration leaders want to use the $60 million they have on hand for port work to fund the first year of construction of a new petroleum and cement terminal.

Port officials in February released a financial analysis that indicated tariffs levied on fuel and cement imported to the state across the Port of Alaska docks would have to be increased at least five-fold in order for the port to fund revenue bonds to pay for the construction of a new terminal, which has been estimated at $223 million.

That caught the attention of both the shippers who call on the port and their customers who expressed fears that sharp tariff hikes could dramatically impact their business, which, because it is in basic commodities, could in turn have significant broader impacts on the overall state economy.

For one, Ted Stevens Anchorage International Airport’s flagship cargo business — Anchorage is among the busiest cargo hubs in the world — relies on geography that makes it economically advantageous for cargo planes flying between Asia and North America to stop and refuel in Anchorage.

Representatives from companies that handle fuel for the airlines have said any change in the tariffs would force the cargo companies to reexamine the business model.

Higher fuel and cement tariffs would also be felt by consumers across Alaska, as the Anchorage port is the primary point of entry for the vast majority of goods sold in the state. The Assembly in 2017 changed the official name of the facility to the Port of Alaska as a means of emphasizing that point, which has also been used to make the case for state funding of the port rebuild.

However, officials say some level of tariff increases will be likely to pay for the needed work.

Large portions of the docks are nearing 60 years old and are close to doubling their 35-year design life. Port maintenance crews for years have been patching the most badly corroded steel pilings that support the docks.

Using the $60 million — a mix of internal port funds, a $20 million state grant and remnants from the first failed expansion plan — to fund a year of construction on the petroleum and cement terminal, or PCT, gives city officials and the Assembly time to reevaluate the scope of the entire port modernization project.

The cost estimate has gone from less than $500 million in 2014 to about $1.9 billion today and there is a general belief that the current price tag is prohibitively expensive.

Falsey said municipal officials have determined that there is no issue with building a portion of the PCT even if it isn’t immediately completed other than a little initial corrosion before it is put into service.

“If we build half the PCT we are one year closer to replacing that facility,” he said.

City officials on April 16 released an invitation to bid on the work for the 2020 construction season; the bids are due by June 7.

Deputy Port Director and engineer Sharen Walsh said the $60 million should enough to drive the pilings and put decking on the terminal trestles.

“It will be a standing unit,” Walsh said.

Soliciting bids now should give port officials time to select a contractor before the Assembly approves or rejects the spending, likely in July. Port spokesman Jim Jager said in a brief interview that the PCT plan provides time to order the major steel components that come with long-lead times in preparation for construction next year.

The partial-build approach is also recognizes that building the entire PCT in one summer was going to be a time crunch, according to Jager, who noted the $223 million estimate contains significant contingency considerations if construction were delayed.

Most in-water work at the port must stop if endangered Cook Inlet beluga whales or other marine mammals are spotted near the port; it’s a work limitation that’s hard to account for.

“Risk is expensive,” he said.

The PCT development would be the first major actual construction to rehabilitate the port since the prior Port of Anchorage Expansion Project was halted in 2010 when flawed construction techniques and possible design issues resulted in major damage to segments of sheet pile that were being installed at the time to support new dock facilities.

Jager added that port officials are “cautiously optimistic” about their chances to get a multimillion-dollar grant from the Federal Emergency Management Agency to fund design components that would make the PCT a super-seismic structure. Those features account for about 5 percent of the cost, he said, but the possible total of the prospective grant isn’t settled.

Meanwhile, city and port project leaders will be holding formal meetings with port users to get a better sense of what they truly need in a new, rebuilt port. A two-day “charette,” or design meeting involving stakeholders, is scheduled for June 13-14 and another will likely follow later in the summer, according to Falsey.

Many of the design choices now seen as possibly too expensive were selected during charettes in 2013 and 2014 led by former Mayor Dan Sullivan’s administration, Falsey said.

“We know that there are a lot of costs that got rolled into the program in the design choice that somebody else was going to pay for and I suspect that we can pull a lot of those things off,” he said.

The charettes will also help flesh out what features, such as crane and dock size, that the users are willing to pay for.

“We all have to be rowing in the same direction if this is going to work,” Falsey said.

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Elwood Brehmer can be reached at [email protected].