Anchorage Assembly delays vote on port repair contract
Caught between potential disasters, the Anchorage Assembly again delayed a vote on July 23 to decide whether the city should start rebuilding its aging port that is badly in need of repair or wait to determine if more cost-effective solutions exist.
Anchorage Mayor Ethan Berkowitz’s administration insists the Assembly should approve a $42.1 million contract with the marine construction firm Pacific Pile and Marine to build the first phase of a new petroleum and cement terminal, or PCT, at the municipal-owned Port of Alaska.
While port officials and members of the administration acknowledge the contract, which is for the 2020 construction season, would leave the city about $100 million short of finishing the PCT, they stress that it would give the port one very basic but seismically resilient dock structure that could be used in an emergency while the rest of the years-long construction on the rest of the port is underway.
Municipal Manager Bill Falsey also noted at the Assembly meeting that part of the reason the administration is pushing the PCT plan is the need to move fuel and cement offloading away from the rest of the docks to free up space for the logistical juggling that is rebuilding the port at the same time ships continue to regularly call on it. The new PCT would be well to the south of the current petroleum and cargo terminals.
“The PCT is the key to unlocking the whole project,” Falsey said during the July 23 meeting.
Port officials also continue to discover new earthquake damage to the already badly corroded steel piles that support the docks and are largely past their intended useful life.
At the same time, the port’s primary user companies are urging the Assembly to suspend the port construction plan because the users fear the PCT is the first step towards another port project that will turn into a financial nightmare, particularly because the city does not have a firm plan to finance the rest of the work.
“We don’t doubt there are problems, but what other options are there and what do they cost?” asked Ryan Zins, a vice president for Alaska Basic Industries, the primary cement importer at the port.
The overall price for the current port reconstruction plan has escalated from roughly $500 million in 2014 to $1.9 billion today because of a myriad of factors that include federal steel tariffs and stringent seismic design criteria, among other reasons.
Falsey and port officials have repeatedly said they do not plan to build the $1.9 billion project — even though the PCT is the first part of it — and will look for major savings in constructing the larger cargo terminals and other aspects of the project. Their experts contend the port has less than 10 years before some of the docks will have to be de-rated for weight capacity or closed altogether if they are not rebuilt.
The users have suggested repairing one of the existing petroleum terminals but the viability of that is unclear at this point.
Consultants hired by the Assembly to review the project for cost saving measures have said alignment between the city and the users will be critical to move the project forward successfully.
The Assembly ultimately voted 8-3 to push the contract vote back about a week, likely to a July 30 special meeting, to give the city and the users time to discuss their options and see if a compromise can be reached.
The users pledged to work diligently and in good faith with the administration in the coming days, and Falsey highlighted that the administration is doing its best to provide as much information as possible on the complex project to anyone who wants it.
Pacific Pile and Marine representatives have said the contract needs to be approved by Aug. 1 in order to ensure the massive steel pilings can be ordered and fabricated in time for the 2020 construction season and to get the best price.
Assemblyman John Weddleton, who owns Bosco’s Comics in Anchorage, said the city needs to listen to its customers at the port and do a more diligent review of the project’s costs.
“Ignore your customers at your peril,” Weddleton said.
His comments were echoed by several other Assembly members.
Assemblywoman Meg Zaletel said she’s worried Gov. Michael J. Dunleavy’s administration might claw back the $49 million in uncommitted state grants the city has received for the project in recent years if the money is not spent soon.
“I’m unwilling to wait for an emergency and worse yet a catastrophe,” Zaletel said, partly responding to assertions from the users and other opponents to the PCT plan that the docks are not truly in dire need of immediate repair.
Assemblyman Fred Dyson of Eagle River wants to slow the project for a more detailed cost review.
“I believe the administration is acting in good faith. I believe they got off-track because they didn’t have the best information,” he said.
Falsey asked Assembly members to send the administration every question they have about the PCT plan and the overall project in the coming days so they have absolutely all the information they need to make a decision on the PCT at the special meeting. It’s unclear at this point how the Assembly will vote then.
Major construction at the port has been on hold since 2010 after major damage to the sheet pile then being installed to support new docks was discovered. The original port expansion project cost upwards of $300 million but resulted in little usable infrastructure.
The Municipality of Anchorage is currently engaged in a lawsuit against the federal Maritime Administration, or MARAD, which oversaw the failed work. The Federal Claims Court judge presiding over the lawsuit is scheduled to visit the port Aug. 1-2.
In February, city officials released a concept analysis that indicated the port’s import charges on fuels and cement would have to be increased five-fold or more if the municipality needed to sell $200 million worth of revenue bonds to pay for the new PCT.
That caught the attention of the users, who also fear the lack of a firm financing plan for the overall project could lead to steep tariff increases, even though city officials have repeatedly pledged to not levy tariffs to fund construction that would drive away business or otherwise harm the Anchorage or state economy.
The ongoing lawsuit with MARAD has made it difficult for the city to secure large chunks of financing for the port since it’s unclear what the suit could potentially yield.
Elwood Brehmer can be reached at [email protected].