SAN FRANCISCO - Supporters of a planned Alaska toll bridge to be funded through a public-private partnership appear to have won a round this summer in legal maneuvering over the project's future, though major financing hurdles remain to be crossed.

The state's Knik Arm Bridge and Toll Authority is charged with building the Knik Arm Crossing, a bridge and causeway linking central Anchorage with the Port Mackenzie area of the Matanuska-Susitna Borough, across the two-mile wide ocean inlet called the Knik Arm, using tolls and a P3 concession.

The new project would link Alaska's largest city with lightly developed territory across the inlet. They are currently separated by an 80-mile drive.

Last week, Anchorage Metropolitan Area Transportation Solutions, the metropolitan planning organization through which federal transportation dollars are funded, settled a lawsuit challenging its decision earlier this summer to delay the Knik crossing until at least 2018, agreeing to revisit the vote on delaying the project.

Two suburban cities had challenged the delay, which was driven by Anchorage representatives on AMATS.

Anchorage Assemblyman Patrick Flynn, one of two Anchorage Assembly representatives on the panel, said he and many city residents are concerned about the authority's current plans for handling traffic on the Anchorage side. He said it would damage the integrity of the historic Government Hill neighborhood and further clog downtown surface streets.

The legal settlement calls for AMATS to revisit the decision, and circumstances have changed, because new Anchorage Mayor Dan Sullivan was sworn in July 1.

The city's mayor has a key vote on the five-member AMATS policy panel, and Sullivan supported the Knik crossing project during his campaign, unlike his predecessors.

Just because the bridge is in the region's transportation plan doesn't mean it will get built.

The project still needs to obtain a record of decision from the Federal Highway Administration - something the authority expected more than a year ago.

"It's a little frustrating," said KABATA's chief financial officer, Kevin Hemenway, adding that the remaining issue is the status of the Beluga whale habitat in the Knik Arm.

"We think that's doable, and we're working through it," he said. "It's probably going to take another three to six months to go thorough."

It has been almost two and a half years since the authority shortlisted two P3 teams for the bridge project, but Hemenway said KABATA has put procurement on hold until the environmental process is complete.

"Once we clear the record of decision, we'll be moving on to the next steps of procurement and financing," he said.

The project has a $680 million cost estimate.

Hemenway said he anticipates support from the federal Transportation Infrastructure Finance and Innovation Act. The project also received a federal allocation for $600 million of private-activity bonds, but Hemenway said it is unclear whether they would be penciled out in the current market.

Flynn, the Anchorage Assembly member, said financing is another reason he has been skeptical of the project.

"Both the city and the state have been pretty adamant they not be on the hook for this," he said. "I've been unclear whether financiers will sign on to a deal where they're on the hook for whatever happened. I think there's a disconnect."

Hemenway said he expects the state Legislature to revisit the project's finances when it convenes next year.

"We'd probably be looking for some credit enhancement from the state in the current market conditions," he said.

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