Alaska's Knik Arm Authority Issues RFQs for Toll Bridge P3

SAN FRANCISCO — A controversial Alaska public-private partnership toll bridge project has moved a step ahead this month despite years of hurdles.

The Knik Arm Bridge and Toll Authority charged forward last week with a new request for qualifications from potential builders as it retooled its financing plan.

The move comes despite the plan’s latest hurdle, a lawsuit filed earlier this month by the municipality of Anchorage to get the federal government to drop support for the project over concerns about the impact of Knik Arm Crossing on its port.

“We are working with the municipality to resolve their concerns and are cautiously optimistic we will have a resolution to that fairly soon,” said Kevin Hemenway, the authority’s chief financial officer.

The bridge and causeway would link central Anchorage with the Port Mackenzie area of the Matanuska-Susitna Borough, across the two-mile-wide ocean inlet called the Knik Arm. The state Legislature formed the KABTA in 2003.

The project includes an 8,200-foot bridge and an 800-foot tunnel near the Anchorage end.

The authority overcame an earlier lawsuit in 2009 filed by the region’s federally designated metropolitan planning organization, Anchorage Metropolitan Area Transportation Solutions, over the impact on the city’s neighborhoods and traffic. It also had to overcome concerns about endangered beluga whale habitat in the Cook Inlet.

In November last year, the authority got a favorable opinion regarding the whales, allowing it to move ahead three years after launching a procurement that had short-listed two P3 teams.

In the aftermath of the financial crisis, the board in April decided to retool the project P3 plan from a full concession into an availability payment structure, which leaves the state with the risk of traffic failing to meet projections.

Last week it issued another request for qualifications.

Hemenway said the KABTA expects to receive five to seven submissions of qualifications from global teams, including ones from Spain, France, Germany, the United States, and China. He said he expects a short list by mid-October and to send out a formal request for proposals by spring 2012.

If all goes well, construction could begin in 2013 and take four construction seasons to complete.

The developer will get a 35-year contract to operate and maintain the bridge, according to the RFP.

“We feel confident in the record of decision and are moving forward with procurement, right of way and permitting,” Hemenway said.

The authority has invested $57 million through the end of June while $60 million of federal and state appropriation remains available for project development, according to Hemenway.

The bridge also has a federal allocation of $600 million in private-activity bonding authority. KABATA is trying to get authority from the state to raise its cap for issuing bonds to $600 million from $500 million to potentially issue all of the bonds.

Hemenway said two bills are moving through the Legislature that would allocate around $150 million for a reserve fund to act as a credit enhancement and give the project’s obligations the benefit of Alaska’s Aaa from Moody’s Investors Service. The project has a $680 million cost estimate.

KABATA hopes to also obtain a loan through the federal Transportation Infrastructure Finance and Innovation Act, and grants from the Transportation Investment Generating Economic Recovery program.

“The issue has been supply and demand and as a result the most ready-to-go projects tend to float to the top with everything else being equal,” Hemenway said. “We feel we are very well positioned to still receive TIFIA for this project.”

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Transportation industry Alaska
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