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A new plan to rescue the Knik Arm Bridge

By Rhonda McBride 9:31 AM March 20, 2014

Mix of federal funds and bonds proposed for bridge project

JUNEAU – There’s more than one way to finance a bridge.

Wednesday, the head of the state transportation department told lawmakers that a rewritten version of House Bill 23 can rescue the Knik Arm Bridge, a project that’s struggled for years to get off the drawing board.

“I think this project is long overdue,” said Jeff Otteson, director of the Department of Transportation and Public Facilities. “It’s been a vision of state imagineers, if you would, for decades.”

Otteson told members of the Senate Finance Committee the bill would use a mix of federal highway money and bonds to be repaid from tolls. An earlier plan involved a public-private partnership, but there was debate about whether the bridge would generate enough traffic to pencil out.

Ottesen said the new plan would tap a federal loan program that offers more flexibility.

“It’s very patient. If traffic doesn’t materialize as quickly as is expected, then they will literally just carry that cost forward,” Otteson said. “They will keep charging interest on those loans at a rather low interest. But there’s no expectation of payment, if payment isn’t possible.”

The bridge would cross Cook Inlet and connect Anchorage to communities on the other side. It’s faced opposition for a number of reasons: its potential impact on the Government Hill neighborhood, as well as worries about keeping the toll low enough so it would be economical for drivers to use the bridge.

Some of the traffic estimates from the Knik Arm and Bridge Toll Authority — which has been the lead agency for the project — have also been questioned.

And that’s why some lawmakers like Anchorage Sen. Johnny Ellis remain skeptical about the bridge, despite the new financing plan.

“It depends on federal funds that I predict will not materialize, so the state gets left holding the bag for the entire exorbitant cost of the project, which will undoubtedly have cost overruns,” Ellis said. “The financing plan is in trouble before it evens gets started.”

Ellis also said he worries the bridge is a threat to other transportation projects across the state.

But Otteson doesn’t believe that would be the case with the new financing structure.

Sen. Anna Fairclough, vice chairwoman of the Senate Finance Committee, said she wants to hear more testimony on the new financing structure, but she’s encouraged.

“It’s a much-improved process,” Fairclough said. “It looks like it can pencil out to the benefit of the people of Alaska. It requires a lower level of volume across the bridge, and it divides the project into three potential payers.”

The bridge, now rebranded as the “Knik Arm Crossing,” has a price tag approaching $800 million.

KABATA has said the cost of the project increases every year by about $25 million, partly due to a combination of inflation and other factors.

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