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Senate Passes Bill To Fund Construction of Knik Arm Crossing


Crossing offers four direct benefits to Alaskans; Public Financing to Come from Three Sources

JUNEAU-The Alaska State Senate passed House Bill 23 pushing forward a plan to build the Knik Arm Crossing, which would span 1.7 miles between Anchorage and the Mat-Su Valley. The $892 million project provides the infrastructure to move families and freight back and forth between Anchorage and the Mat-Su Valley as well as Interior Alaska.

The most obvious benefit of the Knik Arm Crossing is providing an alternative route to the Mat-Su Valley and Interior Alaska from Anchorage. However, there are four other immediate direct benefits for Alaskans.

“This legacy project will change the entire make-up of SouthCentral Alaska,” said Senate President Charlie Huggins (R-Wasilla). “This bridge exemplifies the kind of strategic infrastructure we need to bring economic growth and stability for our families and the entire state of Alaska for generations to come.”

“People with vision have been recognizing the need for something like the Knik Arm Crossing for more than 90 years,” said Senator Lesil McGuire (R-Anchorage). “Let’s make those dreams come true for our developing economy, our children and our community’s future.”

“I’ve heard this referred to as a Mat-Su Valley project,” said Senator Mike Dunleavy (R-Mat-Su Valley).  “The reality is the bridge will benefit Anchorage more than the Valley-this is SouthCentral project.  Folks from Anchorage will immediately start moving across the bridge for more affordable housing.”

“I know from a very personal perspective, being from Eagle River, I have lived the day-in and day-out stress of commuting on the Glenn Highway,” said Senator Anna Fairclough (R-East Anchorage/Eagle River). “I have waited for hours after an accident closes the one artery we have to commute on. I’ve also seen how dangerous it becomes during bad weather, with people sliding off the road and rolling their cars as they rush to try to get home from work. It is time for a new solution, and I believe the Knik Arm Crossing is the right strategic project at the right time.”

“The Interior and North Slope depend on freight coming into the Port of Anchorage,” said Senate Majority Leader John Coghill (R-North Pole). “With dozens of new, large projects coming online on the North Slope, plus the ongoing economic expansion of Fairbanks, it is critical to the Interior there is more than one route available between the state’s two largest population centers. The Knik Arm Crossing is the infrastructure we need in place to create the economic boom we’ve been working so hard to accomplish.”

Four Immediate Direct Benefits for Alaskans:

#1) Jobs and Economic Benefits for Alaskans

The Knik Arm Crossing has tremendous economic benefits for both Anchorage and the Mat-Su Valley. At the very surface, the project is expected to create at least 1,500 construction jobs. Beyond that, the job growth numbers are staggering as the bridge would allow Port MacKenzie to expand and open up the entire south Mat-Su Valley to development, both commercial and residential.

#2) Affordable Housing in SouthCentral Alaska

Numerous studies have shown Anchorage is running out of residential, commercial, and industrial land. This has forced Anchorage into a real estate crisis, leaving behind no affordable housing and no incentives for businesses and corporations to want to come to Alaska.

“Right now, Anchorage already has just a 3-percent vacancy rate when it comes to housing which is far below a healthy average,” said Senator McGuire. “The demand already strips supply. Failing to change this untenable situation puts additional pressure on our families by continuing to squeeze budgets that are already strained, while removing opportunity for our workforce to grow.”

According to the United Way of Anchorage, a household must earn $100,000 per year to buy an average priced home, $65,000 a year to afford a condo, and $50,000 a year to simply rent a two-bedroom apartment. That means workers in the 21 out of 25 most commons jobs in Anchorage cannot afford a two-bedroom apartment. Workers in 18 of these jobs can’t afford to rent a one-bedroom apartment.

In addition, according to a recent survey conducted by the Anchorage Economic Development Corporation (AEDC), nearly 60-percent of employers believe the cost of housing in Anchorage had become a detriment to hiring and retaining workers.

As dire as the residential property situation is, the commercial property situation is already worse with only a 2.1-percent vacancy rate.

According to projections, Anchorage’s population will grow by 20-percent over the next 20 years. Even more staggering, the Mat-Su Valley population is expected to increase by 76 to 100-percent in the 20 years.

“I love SouthCentral Alaska and I want to see our community continue to prosper and grow,” said Senator McGuire. “For this to happen, families need to be able to afford housing and find well-paying jobs close to home. Knik Arm Crossing provides that answer.”

#3) Increase Safety While Cutting Congestion

The Knik Arm Crossing would increase safety, reduce congestion, further infrastructure needs while addressing air quality problems. If something catastrophic were to cause significant damage to the Glenn Highway, the supply line between Anchorage and Mat-Su Valley and Interior Alaska would be paralyzed. This second corridor provides a critical alternative route during emergencies and evacuations.

In fact, according to Alaska Department of Transportation and Public Facilities estimates, it will take $600 million to add one lane in each direction of the Glenn Highway. If the existing level of service is to be maintained with traffic expected to nearly double in the next 25 years, a second Glenn Highway would be needed.

“By the time the bridge is built in approximately five years, there will already be an additional 10,000 vehicles using the Glenn Highway,” said Senator Fairclough. “As a commuter who uses that highway daily, and knows how much traffic is already clogging the lanes, we need a safe alternative which reduces congestion and provides room for emergency vehicles to respond.”

In addition, since the bridge would also reduce commute time between Anchorage and Mat-Su Valley, as well as provide a more efficient freight route between the Port of Anchorage and Interior Alaska and the North Slope, current levels of emissions would be reduced thereby mitigating air quality issues.

#4) Direct Link Between Anchorage and Fairbanks

Senator Coghill pointed out the many statewide benefits of this project: the bridge makes a direct link from the Port of Anchorage to the north, allowing truck and commuter traffic bound for Interior Alaska and the North Slope to bypass downtown Anchorage and Wasilla. Also, the bridge will reduce freight costs for Alaska’s Interior and North Slope an estimated $300 million over 10 years.

“Thanks to the oil tax reform we passed last year, we are already seeing a big jump in shipping activity up to the North Slope. The Knik Arm crossing will help us make these deliveries more efficient,” said Senator Coghill. “Last year, we passed the LNG trucking project, and having a more direct route from the Port of Anchorage to Fairbanks will help this endeavor and help t”o reduce energy costs for Interior Alaska residents.”

How the Financing will work for the Knik Arm Crossing

The plan for the financing for the Knik Arm Crossing is like a three legged stool, made up of three sources.

The first segment of the financing will come from Transportation Infrastructure Finance and Innovation Act (TIFIA) loans from the federal government which are designed for surface transportation projects of national and regional significance. These loans could total up to $350 million and will be repaid entirely through toll revenue from the bridge. If the TIFIA loans are approved, the next part of the financing would come from $300 million in federal receipts from the National Highway System STIP fund of which the first $55 million are in the Capital Budget including $50 million from federal funds and a $5 million state match. This $5 million represents the only money coming from the state’s general funds. Last, the State will issue bonds up to $300 million to be repaid over a 20-year period at $20 to $25 million per year.  This is the only debt incurred by the State. 

Although, a public-private partnership was considered for financing, after further research, a fully public finance model was discovered to be more cost-effective, while reducing the financial risk to the State.  Under the public finance model offered today, there is less pressure on tolls and more time for those revenues to develop.

“This plan makes sense financially, has many checks and balances, and includes the important safeguard of the contingency of the TIFIA loans,” said Senator Fairclough.  “The State is now completely insulated from toll revenue risk.  Basically, the U.S. Department of Transportation carries the risk under the TIFIA loans.  I should add, under this plan, the project debt is serviced more quickly, so the state benefits from excess tolls sooner. When all is said and done, we will have saved hundreds of millions of dollars over the public-private financing plan and we will not be strapped to a long term contract with a private partner.”

For a presentation explaining House Bill 23, as well as providing supporting information and data, please click here. For a list of Frequently Asked Questions, click here.

After reconsideration on Monday, House Bill 23 will head back to the House for a concurrence vote.

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