Legislature gives DOT bridge, reduces KABATA's role

When the Legislature finally approved a revised Knik Arm bridge funding plan April 25, it left the future of the Knik Arm Bridge and Toll Authority in doubt.

The final House-Senate Conference Committee version of House Bill 23 stripped KABATA of its authority to further permit, design and fund construction of the bridge from Anchorage to Point MacKenzie. HB 23 will put that authority in the lap of the state Department of Transportation and Public Facilities if signed by Gov. Sean Parnell.

KABATA would still operate the bridge once it is built. It’s ability to determine toll rates also transfers to the department under the bill.

DOT estimates put the cost of the 1.7-mile bridge and connections to existing roads at roughly $800 million, with contingencies in the funding plan allowing for expenses to balloon out to $900 million without issue.

Transportation Commissioner Pat Kemp told the committee that construction could still begin in 2015 — on KABATA’s timeline — with the project now under department control.

The governor said in an April 25 press conference immediately following the end of the session his administration still has to review all the legislation passed, but that he has no current plans to veto any bills.

HB 23 passed the Senate by a 14-4 vote with Sens. John Coghill, R-Fairbanks, and Johnny Ellis, D-Anchorage, excused from voting; and it passed the House 28-10, with Reps. Bob Lyn, R-Anchorage, and Lora Reinbold, R-Eagle River, excused.

Some legislators had questioned the transparency of the three-part funding proposal rolled out by Parnell’s administration in December under the auspice of KABATA.

The prior version of HB 23, sponsored by Rep. Mark Neuman, R-Big Lake, gave the authority the power to apply for up to $300 million in federal Transportation Infrastructure Finance and Innovation Act, or TIFIA, loans meant specifically for large state projects. Additionally, KABATA would have been able to issue bonds through the Revenue Department for another $300 million, with the final $300 million chunk coming from the State Transportation Improvement Program, a federal Transportation Department fund that prioritizes money for state projects.

KABATA Executive Director Judy Dougherty has said the state would be “insulated” from debt liability incurred by the authority, but exactly how so is unclear. That purported safety net for the state is gone if DOT takes on the debt.

The TIFIA loans would receive first priority for toll revenue to pay back the loans, with the revenue bonds getting second crack at the toll money when enough is generated.

If toll revenue didn’t initially cover payments on a 20-year loan, the TIFIA debt could be refinanced for up to 35 years, according to Dougherty.

Rep. Alan Austerman, R-Kodiak, and bill Conference Committee member, said during debate on the House floor that shifting the onus of the project to DOT clarifies who is responsible for it.

“It takes away any ambiguity as to who is responsible for getting the bonds and who is responsible for getting the loans,” he said.

Austerman said it’s too early to tell what KABATA will ultimately look like if HB 23 is signed by Parnell and goes into effect July 1.

KABATA spokeswoman Shannon McCarthy concurred with Austerman about the authority’s future in an interview.

“We’re pleased that the project’s moving forward; that’s the most important part,” McCarthy said.

She said KABATA staff would begin working with DOT immediately to get the department up to speed on design and permits for construction to keep on the authority’s schedule of starting early construction during the summer of 2015.

When the bill passed the Senate April 12 with KABATA still as the project proponent McCarthy said there would be a “flurry of activity” if the House concurred at the authority to get the TIFIA application submitted to the federal Transportation Department within days after the Legislature’s approval.

The authority and state Transportation will now work to get in harmony as quickly as possible and keep the project moving, she said April 28.

It is unclear if the $55 million appropriated to KABATA in the just-passed fiscal 2015 capital budget would still go to the authority or if the funds would be shifted to DOT.

Since being formed by the Legislature in 2003, KABATA has spent about $80 million getting the mega-project to this point.

Rep. Les Gara, D-Anchorage, who voted against HB 23, said on the House floor that the bill is better with KABATA’s limited for those who prioritize it, but that the project it supports is “going to result in a radical expenditure and significant amounts of money (spent) the state doesn’t have.”

A section of HB 23 giving KABATA the power to bond for up to $500 million for expansion of the bridge after it is built and traffic requires the two-lane toll road be expanded to four was dropped in the Conference Committee.

“What’s left out of this project is what KABATA has always said is important to this project,” Gara said.

The “phase two” bonding authority not only would have been used to double the lanes on the bridge, but also to expand already busy Knik Goose Bay Road, which would connect the bridge to Wasilla.

Additional work would likely be needed at a cost of around $350 million to divert bridge traffic away from Downtown Anchorage once use of the toll route ramps up, Gara said.

HB 23 only funds half of the project, he said.

Rep. Lindsey Holmes, R-Anchorage, said the change in lead on the Knik Arm bridge changed her from a “no” to a “yes” vote. She said the project is “where it should be” with administrative and legislative budget oversight.

“It is going to be a more transparent and accountable project and I think it’s going to be a better project,” Holmes said.

KABATA officials have said the Army Corps of Engineers has been waiting to formally approve a wetlands permit for the project until it’s clear the state plans to move forward, which it has done with passage of HB 23.

05/01/2014 - 8:57am