|  July 30, 2014  |  
Mostly Cloudy   63.0F  |  Forecast »
Bookmark and Share Email this page Email Print this page Print Feed Feed

Knik Arm Bridge and Toll Authority financial plan shifts to public finance KABATA works with OMB, DOT&PF and DOR on contingency budget to cover cost overruns

Anchorage – State administration officials unveiled the updated financial plan for the bridge in Juneau this week. Changes were made to the plan when the state pursued a move from a P3 to a publically financed project. “Financing includes one-third from bonds, one-third from National Highway System (NHS) funds, and one-third from the federal TIFIA loan program. It simplifies the finances of this project to a much more traditional method.” said Knik Arm Bridge and Toll Authority Board Chairman Michael Foster.

The Knik Arm Crossing Project is a NHS route and federal funds for these routes are available to the state through the Statewide Transportation Improvement Program (STIP). Because NHS is a separate funding category within the STIP, they do not compete with AMATS, FMATS and mandatory programs (such as Safe Routes to Schools, and Highway Safety Improvement Program). Federal Highway/STIP funds can only be used on eligible transportation purposes, and cannot be used for other state of Alaska government programs.

The new construction estimate is $782 million or about $76 million above the last financial estimate developed in 2010. “This represents inflation, the increased bridge length, additional mitigation work, and updated utility relocation costs.” said KABATA Acting Executive Director Judy Dougherty.

The Office of Budget and Management, in cooperation with KABATA, the Alaska Department of Transportation and the Department of Revenue, developed an $894 million contingency budget for the financial plan, which includes the $782 million to construct the bridge. The contingency budget represents the cost of construction, inflation, overruns and change orders. “The contingency number or “risk adjusted” number protects the state by factoring risks into the financial equation,” Dougherty said. “The total cost of the project is expected to come in less than $894 million, but by budgeting for contingency situations it allows the state some flexibility should a cost come in higher than we expect.”

The new construction cost and contingency were developed after a comprehensive financial analysis by the Authority, Alaska DOT&PF, Department of Revenue and OMB.

Knik Arm Crossing Public Finance Plan Factsheet

Construction Cost Estimate

  • The construction cost estimate is the anticipated cost of construction.
  • Knik Arm Crossing construction estimate is now $782 million.
  • This is an increase of $76 million from the 2010 comprehensive cost estimate of $706 million.
  • Delay increases the cost of bridge construction by about $25 million annually.
  • The new cost estimate is the result of inflation, increased bridge length, environmental mitigation, and utility work.

Contingency Budget

  • Contingency budget is an FHWA requirement for major projects greater than $500 million
  • The $894 contingency budget was developed by OMB in consultation with DOT&PF and KABATA.
  • The contingency budget captures the costs of construction, cost overruns and change orders.
  • The bridge costs are not expected to reach $894 million, but contingency planning allows flexibility should a portion of the project come in above what is expected.
  • The contingency budget allows the state to anticipate and plan for risks, and is sometimes referred to as a “risk adjusted” budget or “risk adjusted cost estimate.”

National Highway System Funding

  • Knik Arm Crossing is a National Highway System (NHS) route
  • NHS is a separate funding category within the state of Alaska’s Statewide Transportation Improvement Program (STIP).
  • NHS funds do not compete with AMATS, FMATS and mandatory programs (such as Safe Routes to Schools, and Highway Safety Improvement Program) within the STIP.
  • Federal Highway/STIP funds can only be used on eligible transportation purposes, and cannot be used for other state of Alaska government programs.

Financial Plan

  • 1/3 Bonds: Bonds up to $300 million issued by Department of Revenue, after construction contractor is selected.
  • 1/3 NHS STIP funds: Governor’s FY15 Capital Budget proposal (SB 119) $55 million plus $50 million per fiscal year up to $300 million.
  • 1/3 TIFIA loan: Federal loan to KABATA secured with toll revenue pledge only, not guaranteed by the state.

SOURCE: State of Alaska, Office of Governor Sean Parnell

Add your comment:
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement