Legislature(2009 - 2010)Anch LIO Rm 220
07/12/2010 11:00 AM Senate TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| Overview: Knik Arm Bridge and Toll Authority | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
July 12, 2010
11:04 a.m.
MEMBERS PRESENT
Senator Albert Kookesh, Chair
Senator Linda Menard, Vice Chair, via teleconference
Senator Kevin Meyer
MEMBERS ABSENT
Senator Bettye Davis
Senator Joe Paskvan
OTHER LEGISLATORS PRESENT
Representative Peggy Wilson
Senator Fred Dyson
Representative Max Gruenberg
Senator Joe Thomas
COMMITTEE CALENDAR
OVERVIEW: KNIK ARM BRIDGE AND TOLL AUTHORITY
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
MICHAEL FOSTER, Chair
Knik Arm Bridge and Toll Authority
Anchorage, AK
POSITION STATEMENT: Delivered an overview of the Knik Arm
Bridge and Toll Authority Project.
ANDREW NIEMIEC, Executive Director
Knik Arm Bridge and Toll Authority
Anchorage, AK
POSITION STATEMENT: Answered design questions related to the
Knik Arm Bridge.
GOVERNOR BILL SHEFFIELD, Director
Port of Anchorage
Anchorage, AK
POSITION STATEMENT: Provided perspective on the Knik Arm
Bridge.
AVES THOMSON, Executive Director
Alaska Trucking Association (
Anchorage, AK
POSITION STATEMENT: Testified in support of the Knik Arm
Bridge.
LISA MARQUEZ, President
Alaska Trucking Association
Anchorage, AK
POSITION STATEMENT: Testified in support of the Knik Arm
Bridge.
GEORGE LOWERY, Secretary/Treasurer
Alaska Trucking Association
Anchorage, AK
POSITION STATEMENT: Testified in support of the Knik Arm
Bridge.
KEVIN HEMENWAY, Chief Financial Officer
Knik Arm Bridge and Toll Authority
Anchorage, AK
POSITION STATEMENT: Provided financial information related to
the Knik Arm Bridge.
FRANK RICHARDS, Deputy Commissioner
Department of Transportation and Public Facilities (DOTPF)
Anchorage, AK
POSITION STATEMENT: Responded to questions and provided the
state's perspective of the Knik Arm Bridge.
ACTION NARRATIVE
11:04:59 AM
CHAIR ALBERT KOOKESH called the Senate Transportation Standing
Committee meeting to order at 11:04 a.m. Present at the call to
order were Senators Meyer and Menard via teleconference and
Senator Kookesh.
^OVERVIEW: KNIK ARM BRIDGE AND TOLL AUTHORITY
CHAIR KOOKESH announced the business to come before the
committee is to get an overview of the Knik Arm Bridge and Toll
Authority. We want to keep this project in the public view and
talk a bit about the financing, he said.
SENATOR MENARD observed that the record of decision for this
project is rapidly approaching and there's reason for great
optimism.
11:05:02 AM
MICHAEL FOSTER, Chair, Knik Arm Bridge and Toll Authority
(KABATA), stated that the Legislature created the Knik Arm
Bridge and Toll Authority to advance the economic welfare of the
state and further the development of the public transportation
system in the Upper Cook Inlet by constructing a bridge to span
Knik Arm and connect the Municipality of Anchorage and the
Matanuska-Susitna Borough. The final Environmental Impact
Statement (EIS) is complete. The model they used looks at
population growth; regional transportation connections between
Anchorage, Mat-Su, and the Interior; safety corridor redundancy;
access to regional airports, ports, hospitals; and emergency
response.
11:09:25 AM
MR. FOSTER displayed a slide depicting a topographic map of the
area and described the Mat-Su Borough as the "top one percent
fastest growing county in the U.S. - 31st out of 3,142 this
decade." The combined communities in the Mat-Su and Anchorage
bowl represent 54 percent of the state's population. He
displayed a slide showing the approximate location of the
crossing and noted that population is a major deciding factor
for the crossing. Current estimates are that the area will have
about 170,000 more people by 2030, a 50 percent increase. New
ISER [Institute of Social and Economic Research] data also
indicates substantial growth and doubling in the Mat-Su Borough.
The regional population in 2009 was about 286,000 while the Mat-
Su Borough population was about 88,000. These numbers are
expected to increase to 361,000 in the region and 187,000 in the
Mat-Su Borough.
He displayed a slide showing that the Knik Arm Bridge is an
important transportation link in the region. It provides
connectivity to: the potential rail corridor, South Big Lake,
the Point MacKenzie Road upgrade, the Port MacKenzie Industrial
area and dock facility, the Parks Highway, the Glenn Highway
going north to Glennallen and the Seward Highway going south to
Girdwood. He displayed an aerial rendering of the bridge, the
abutments, and the proposed alignment and noted that the 8,200
foot bridge will join about 18 miles of connector roads on each
side.
11:12:40 AM
SENATOR MEYER just joined the committee.
MR. FOSTER highlighted the following project benefits:
· Serves all Alaska and has significant potential to meet
future transportation needs.
· Provides economic stimulus.
· The current estimate to build the crossing is
$687 million.
· The new infrastructure creates about 5,000 direct
construction-related jobs.
· It creates about 5,000 indirect support-services
jobs.
· The cost of freight to the Interior is reduced because the
route is shorter.
· Over the first 10 years truck-freight savings are
estimated to be $326 million. This includes
labor, fuel, and depreciation of capital.
· Savings to Alaskan drivers is estimated to be $303 million
over the first ten years.
· Significant environmental benefit.
· Estimates are that in the first 10 years after
construction, emissions will be reduced by about
10 million metric tons.
· Annual travel savings to bridge users based on $3.53 gas is
about $90 million. Travel savings are based on:
· Value of time.
· Vehicle operating costs avoided against net
tolls.
· An improved network produces sustainability and livability
benefits.
· Reduced commuter times.
· Supports population growth closer to Anchorage.
· Access to and proximity of affordable housing and
good jobs.
· Includes pedestrian and bike path.
· Lower dependency on foreign oil.
· Provides an additional corridor out of Anchorage
going north.
· Accommodates emergency situations and
Glenn Highway closures.
· Improves access to the $240 million, 1,536 bed minimum
security prison at the Goose Creek Correctional Center
that's currently under construction.
· Savings to staff, vendors, and visitors over the
first 10 years will be about $30 million.
· With the crossing it's 9 miles from Anchorage and
without the crossing it's 72 miles from
Anchorage.
· Ties the state's transportation system together benefiting
the entire state.
· Connects the Port of Anchorage and Port MacKenzie to better
serve the state.
11:18:59 AM
SENATOR MENARD welcomed Governor Sheffield
MR. FOSTER said the Port of Anchorage is about one mile south of
the bridge alignment. The port serves about 85 percent of
Alaskans with about 90 percent of the freight coming into the
state. The crossing will help move freight north at a
significant savings in wear and tear on the roads through
Anchorage and the Glenn Highway. The Port of Anchorage generates
more than $750 million in economic stimulus annually and is
currently being expanded to double its size. He pointed out that
the alignment for the road is on the back side of the port and
shouldn't interfere with port activities.
11:23:40 AM
Port MacKenzie is about one mile south of the Knik Arm crossing.
The port is currently a bulk commodities import/export facility
that will allow additional resource export opportunities. It
currently encompasses about 9,000 acres of industrial land. The
railroad is currently doing some development at the port and is
looking at an alignment north to connect to the Parks Highway.
The Mat-Su Borough has also been working on a ferry and landing
site.
MR. FOSTER related that in 2008 the Alaska Railroad Corporation
(ARRC) transported about 500,000 passengers and 6.1 million tons
of freight and 651 miles of track. The main rail yard is located
just south of the Knik Arm crossing. The bridge is designed to
be rail compatible and the railroad has a planned route
extension to Port MacKenzie and then north. This would provide
the railroad a significant savings in operations and freight
costs. He clarified that the rail component is not part of the
initial project.
11:25:55 AM
MR. FOSTER said the Knik Arm crossing provides the following
future/potential benefits to Alaskans:
· It supports the population growth in Southcentral Alaska.
· This area has the potential to be the economic
hub in this area.
· It supports major state infrastructure projects.
· Gas line
· Bullet line
· Resource development, such as export of coal.
· Defers needed upgrades and eliminates some needs amounting
to about $575 million in capital costs that could be used
on other infrastructure needs in the state.
· Increasing the Glenn Highway to 6 lanes between
Eagle River Bridge and the interchange is
estimated to cost about $350 million.
· The Wasilla by-pass wouldn't be necessary if a
connection is made to the Parks Highway in the
Big Lake area.
11:28:12 AM
This is a state priority project that has strong support.
· Dittman surveys indicate that current support of the
project statewide is about 56 percent. Regional support is
as follows:
· Fairbanks 53 percent.
· Anchorage 56 percent.
· Mat-Su 70 percent.
· Kenai 58 percent.
· Rural Alaska 56 percent.
· Southeast 44 percent.
MR. FOSTER made the following points about deliverability and
financing alternatives:
· The project started as a public-private partnership.
· Currently two firms have expressed an interest
and have gone through the initial screening
process.
· Alternative financing is through a state revenue bond.
· The state would provide a revenue bond for
construction and revenue from the project would
be used to retire the bond and for additional
infrastructure.
· Federal/state appropriation.
· This project should not be viewed as competition with any
other state project. State bonding can deliver without
taking away funding for other needed projects.
11:31:28 AM
MR. FOSTER made the following points about the financial plan
development:
· Phase I
· The Point MacKenzie Road to the A/C connector.
· Three-lane bridge with a four-lane foundation.
· The fourth lane would accommodate
pedestrians and bikes in future years.
· Estimated to take four years to construct, plus
or minus a year.
· Construction can happen in late 2012.
· There's a cut-and-cover tunnel under Government
Hill to minimize impact to that community.
· Some houses are in the right-of-way
area.
· Mitigation was to cut the alignment
through, putting on a lid then burying
it back.
· The total estimated cost is $687 million,
validated internally, by a third party, DOT, and
federal highways.
A graph of the base case traffic forecast and assuming the 2015
opening shows that use climbs in the initial years and by 2040 it
starts to plateau. This is the point that capacity is met for the
four lane bridge. Growth beyond that point would require an expansion
of some sort. The chart clearly shows a preponderance of passenger
vehicle traffic as opposed to commercial vehicles.
11:33:58 AM
A chart of proposed one way toll rates at opening shows the
following:
· Foot traffic no cost.
· Passenger vehicle costs $5.
· 3 axel commercial vehicle costs $10.
· 4 axel commercial vehicle costs $15.
· 5 axel commercial vehicle costs $20.
· 6 axel commercial vehicle costs $25.
The base case toll revenue is projected to be $12.1 billion over
56 years of use. He noted that the ISER numbers are lower, but
still show a doubling of population.
MR. FOSTER displayed a slide illustrating that the revenue will
flow to:
· Project operation and maintenance.
· Senior debt service.
· Senior debt service reserves.
· TIFIA debt service.
· Various other project reserves.
· Surplus revenues.
· These can be used for Title 23 services
throughout the state and for improvements on
west and east side of Cook Inlet.
11:36:44 AM
MR. FOSTER made the following points about the public-private
partnership (P3) availability payment model:
· It's competitive and is the lowest annual availability
payment.
· The private partner is responsible for the finance, design,
building, operation, and maintenance over the term of the
lease.
· The state retains the toll revenue.
· It's used to make availability payments.
· The surplus is used for future transportation
projects.
· The state retains the legal ownership of the bridge.
· It's run by a concessionaire, similar to an
airport.
· There are strict contractual terms of performance.
· There is significant risk transfer sharing with the private
partner.
· It has off balance sheet financing.
MR. FOSTER assured the committee that contrary to some reports,
P3s are a very real alternative to public sector financing. He
displayed a chart showing the financing structure of the Port of
Miami, a recent P3 and is similar in size and structure to the
Knik Arm crossing project. He noted that one of the companies
that is interested in the Knik Arm project was a P3 participant
in the Port of Miami project.
MR. FOSTER displayed a visual to illustrate risk sharing.
· The State of Alaska provides some form of credit
enhancement to reduce the cost of capital.
· KABATA retains toll revenue to:
· Make availability payments.
· Deposit surplus to transportation trust fund for:
· Future capacity expansion.
· Other Title 23 transportation projects
statewide.
· P3 SPV responsibilities:
· Finance.
· Design.
· Building.
· Operation and Maintenance.
He displayed a graph showing the base case surplus after phase 1
based on a P3 model. Over 56 years the net revenue to the state
is about $5.6 billion.
11:39:34 AM
MR. FOSTER displayed a visual to illustrate a state-backed
public model.
· The State of Alaska provides a form of credit enhancement
to reduce the cost of capital. Overall, the payoff to the
state is greater in this model.
· KABATA retains toll revenue to:
· Pay for project operations and maintenance.
· Repay project financing.
· Deposit surplus to transportation trust fund for:
· Future capacity expansion.
· Other Title 23 transportation
projects statewide.
· KABATA is responsible for:
· Finance.
· Design.
· Building.
· Operation and Maintenance.
He displayed a chart of the public finance pro forma capital
structure for Phase 1 ($millions) and said he would have the
chief financial officer answer any questions about financial
issues.
A graph of the public finance model surplus after Phase 1 debt
service shows an estimated $8.3 billion in net transportation
revenue earned by the crossing over the life of the project.
11:43:06 AM
A line graph of new highway funding sources needed for Alaska
from September FY06 through September FY10 illustrates that it
will be more and more difficult for Alaska to obtain federal
funding. He opined that this project provides a funding
alternative into the future.
MR. FOSTER highlighted the key differences between private and
public model assumptions:
· They present different risks and costs for financing,
construction and operations to KABATA and the state
· Key assumptions differ between private and public models,
most notably:
· The combination of debt and equity in the private
scenario.
· The public approach is largely debt financed.
· Debt costs and coverage ratios are lower for the
public approach.
· The public approach has higher construction and
operating costs.
· Risk is allocated differently.
Phase II financing scope includes the following:
· Four lane facility from Burma Road to the Ingram/Gambell
Connector is completed.
· New viaduct over Ship Creek.
· Pedestrian and bicycle path is completed.
· The total cost estimate in 2010 dollars is $375 million,
which will come from revenue earned by the crossing.
The Knik Arm Crossing project timeline and tasks to construction
is as follows:
· Preconstruction 2009, 2010, and 2011.
· Construction 2012, 2013, 2014, and 2015.
· Operation 2016, 2017, 2018 and on.
MR. FOSTER informed the committee that KABATA currently has the final
EIS and has submitted a biological assessment. The key remaining
tasks to begin construction in 2012 included the following:
· Receiving a no jeopardy determination on critical habitat
so that the biological opinion can be issued. This is
estimated to be forthcoming in 2010.
· Record of decision in late fall or early winter 2010.
· Finalize project delivery method in 2010.
· Right-of-way procurement and final design in 2011.
· Finalize financial plan that the state wants to pursue in
2011.
· P3.
· Public.
· Some combination thereof.
As currently estimated, construction will begin in late 2012 and the
bridge will be operational by 2016.
11:47:57 AM
MR. FOSTER said the Knik Arm Bridge is important for the
following reasons:
· It will connect Alaska's infrastructure.
· It will provide jobs and support economic growth in the
state.
· It will provide an alternative corridor for safety.
· It will fund future transportation statewide.
· It will reduce greenhouse gas.
· It will be good for Alaska.
MR. FOSTER thanked the committee and closed with a slideshow
illustrating what the bridge will look like when it's complete.
He offered to provide a copy to any interested legislators
listening online.
CHAIR KOOKESH noted that Senator Thomas had joined the committee
via teleconference and Representative Gruenberg and Senator
Meyer were in the room.
SENATOR THOMAS asked if this and any new information is on the
website.
MR. FOSTER confirmed that the information presented today is on
the website.
REPRESENTATIVE GRUENBERG asked if any modeling had been done as
to the potential effect of an earthquake on the bridge and the
tunnel under Government Hill.
MR. FOSTER deferred to Andrew Niemiec who is overseeing the
design portion of the project.
ANDREW NIEMIEC, Executive Director, KABATA, said a lot of
preliminary engineering work has been done and the bridge will
be designed to meet current standards for earthquakes. He added
that they've done a lot of geotechnical and design studies but
they're preliminary to get through the environmental process.
Final design hasn't occurred.
Representative Gruenberg asked if more studies are planned and
when they might be complete.
MR. NIEMIEC said there will be additional studies as soon as the
record of decision on the environmental process is in hand.
11:56:37 AM
SENATOR MEYER stated support for the project and observed that
it has the potential to save Alaskans a lot of money. Noting
that the beluga whale is a big issue right now, he asked if that
sort of study and monitoring was figured into the finances. He
also asked if rails will be a later addition.
MR. FOSTER said he's quite sure that once the bridge is
completed that there will be studies related to silting and the
foundation, but he doesn't envision doing additional studies
unless there is work done on the structure. Responding to the
second question, he said rail isn't included in the project at
this time. The EIS references that the structure is rail
compatible so the alignment could be used, but upgrades to the
foundation and structure would likely be necessary.
11:59:48 AM
GOVERNOR BILL SHEFFIELD, Director, Port of Anchorage, stated
that he's been a bridge supporter since 1953 when he arrived in
Alaska. He informed the committee that KABATA will go to
Mississippi in September to do computer modeling of the bridge.
This is important because how you align the bridge makes a
difference in what happens below, he said.
MR. SHEFFIELD mentioned the current cost estimate and opined
that it will cost more. He can't say why, that's just what
happens on every project.
Last year was the first year that the Port of Anchorage dealt
with the beluga whale listing and he estimates that it will add
$10 to $15 million per year or $200 million over the life of the
[port expansion] project. The project shuts down for half the
work day because of low tide and observers cost $4000 a day.
More money goes to the excellent marine mammal program at the
Alaska Pacific University. These students sit on the Air Force
land and observe the movement of the entire whale population.
He opined that it would be a mistake to design the bridge
without a rail line. Having rail on the bridge would complete
the transportation system and the cost of operation for the
railroad would be less. Port engineers are currently working
with the bridge engineers to use as little port land as possible
for the project. He's come to believe that if the bridge could
go behind Elmendorf Air Force Base and come out at Boniface that
would be the way to go. That route removes the bottleneck. He
suggested KABATA work with Elmendorf Air Force Base and not take
no as an answer. The location of the antennae system shouldn't
stand in the way and everyone should lend support for this
route. Ultimately it will be cheaper for KABATA than going
behind the port.
GOVERNOR SHEFFIELD said this project is all about vision and
transportation in the state. Without it you can't move and enjoy
yourself.
12:13:05 PM
SENATOR MENARD asked if she could characterize his remarks as
fully supportive of the Knik Arm Bridge and Toll Authority.
GOVERNOR SHEFFIELD answered yes.
SENATOR MENARD said she understands that a lot of pounding will
take place when the rail is put in and this will upset the
environment and the whale migration. She asked if that's his
understanding.
GOVERNOR SHEFFIELD agreed that the whale issue is about noise
and the pitch of the noise. It's not about ships moving; it's
about vibrant hammers working on sheet metal in the water. Some
studies show this does no damage, but there's been no decision.
Whales do present problems, but protecting them is the law and
we have to deal with it, he said.
SENATOR MENARD said she appreciates his insight on the railroad
and she assumes that his remarks reflect the Alaska Railroad
Corporation (ARRC) board sentiments with respect to rail going
to Port MacKenzie.
GOVERNOR SHEFFIELD replied they'd all love to see a rail line on
the bridge. He noted that the Port of Anchorage is being
designed to withstand greater than a 1964 earthquake. It's just
a case of more engineering, money, concrete, and steel. "I'm
sure the bridge will do the same thing," he said.
SENATOR MENARD asked him to speak to the landing for the ferry
Susitna.
12:18:38 PM
GOVERNOR SHEFFIELD said he spent more than 5 years of his life
worrying about putting the ferry landing at the port at a cost
of about $135,000, but they were never able to make it work with
the other ships coming in and out of the port.
AVES THOMSON, Executive Director, Alaska Trucking Association
(ATA), said ATA is a statewide organization that represents 200
member companies. Many members are headquartered in or operate
major freight terminals in the Municipality Anchorage. Many
access the Port of Anchorage on a daily basis. He stated that
the ATA has supported the Knik Arm crossing since its inception.
This alternate route is important to enable increasing volumes
of freight to move from the Port of Anchorage. This project is
an essential element in expanding freight moving capabilities.
It's an important investment in Alaska's future, he concluded.
12:24:34 PM
LISA MARQUEZ, President, Alaska Trucking Association, stated
agreement with Mr. Thompson's comments. She said she's done a
lot of emergency response and in the event of emergency an
additional corridor could be vital. She mentioned the measures
she's taken to mitigate environmental concerns and said her
company is all about the future and growth. The bridge is about
growth and opportunity and she's eager to see it happen.
SENATOR MENARD suggested she post her comments on Facebook.
MS. MARQUEZ agreed.
GEORGE LOWERY, Secretary/Treasurer, Alaska Trucking Association,
stated support for the Knik Arm crossing. He related that his
company brings two ocean vessels into the Port of Anchorage each
week and the bridge will improve his ability to service
communities and the state safely and efficiently. Also, the
bridge will provide a transportation alternative going north
which is important to any business. Finally, he's very
supportive of the economic development that this project will
bring the state.
SENATOR MENARD asked Mr. Hemenway to tell the committee about
the award he received on behalf of KABATA.
12:31:19 PM
KEVIN HEMENWAY, Chief Financial Officer, KABATA, said the award
is the Government Finance Officers Association (GFOA)
certificate for excellence and financial reporting. The
association is a nationwide organization that is involved in
establishing accounting standards for government entities. Each
year KABATA has applied for and received this award, which is
about transparency in financial reporting. We're proud of this
and all the work we do, he concluded.
FRANK RICHARDS, Deputy Commissioner, Department of
Transportation and Public Facilities (DOTPF), said he is
available to answer questions. He disclosed that he is a member
of the KABATA board.
REPRESENTATIVE GRUENBERG asked what the plans are for the new
ferry Susitna.
MR. RICHARDS said he's not the best person to respond because
it's not a DOTPF asset; that project and vessel are being
promoted by the Mat-Su Borough.
12:35:13 PM
SENATOR MENARD asked if the estimated cost savings are
believable.
MR. RICHARDS replied any large project comes with controversy
and substantial process, which takes time and considerable
money, and that's what you're seeing. When DOTPF has these
projects, it is never accomplished on the aggressive timeline
that's desired. As to whether the cost-saving analysis is
correct, he said that the consultants gave their best guess
based on their analysis at a point in time. Economic conditions
ebb and flow and hopefully we'll see the growth that's been
projected, but in any event the experts gave their best guess
and I'll take it at that, he concluded.
12:38:51 PM
SENATOR MENARD asked how many bridges DOTPF is responsible for
in the state.
MR. RICHARDS replied the state has about 850 on-system bridges.
DOTPF does a biannual inspection on these bridges and they're
eligible for federal funds.
CHAIR KOOKESH opined that this project won't go forward unless
the state and federal government are part of the process. He
asked if DOTPF or the State of Alaska is doing anything to be
part of the process.
MR. RICHARDS related that the Knik Arm Bridge qualifies for
federal funds because it's part of the Anchorage Metropolitan
Area Transportation Solutions (AMATS) and in turn it's part of
the statewide transportation improvement plan that flows through
DOTPF. The department is part of the KABATA board and as such
consults with the executive director and staff. Other teams
within DOTPF that look at projects and how they relate to the
bridge are also in consultation.
CHAIR KOOKESH said he's pleased to hear that the state is part
of the process.
SENATOR MENARD opined that as the population increases in
Southcentral people are going to demand this bridge in
particular, and once it's built they'll wonder why it wasn't
built sooner. She added that as a new KABATA board member she is
"on fire about this bridge."
CHAIR KOOKESH recapped that the purpose of this meeting was to
continue to establish the record for the bridge. Today the
committee heard invited testimony and from experts with KABATA
and the state. Perhaps a future meeting could provide an
opportunity for public input, he said.
REPRESENTATIVE GRUENBERG expressed appreciation for being
invited to participate.
12:43:59 PM
There being no further business to come before the committee,
Chair Kookesh adjourned the Senate Transportation Standing
Committee hearing at 12:43 p.m.
| Document Name | Date/Time | Subjects |
|---|