Claims in legislative audit miss the mark

Since being established by the Legislature in 2003, the Knik Arm Bridge and Toll Authority has worked diligently to ensure the delivery of the Knik Arm Crossing project is in the best interest of Alaska.

Over the past 10 years, the environmental phase has been completed, a federal Record of Decision to build the project has been obtained, significant engineering work has been completed, a financial model and delivery plan has been developed, and some of the most comprehensive studies of the Upper Cook Inlet have been completed. KABATA is far more than a cheerleader for the project and, as a state agency, it’s our responsibility to ensure the public interest of Alaskans is safeguarded.

The Knik Arm Crossing project is still moving forward, and the Knik Arm Bridge and Toll Authority is dedicated to responsibly delivering to Alaskans this long-sought-after project. We fully recognized the concerns raised by the Legislature and the public, and we are committed to being responsive to those concerns.

The project has been in the news lately because of a legislative audit that criticized the traffic projections and risk analysis sensitivities that have been generated after 10 years of work on the crossing. The audit report has many inaccuracies, and its primary conclusion is based on information never intended for the purpose of determining traffic on the bridge.

What made headlines was the claim by the legislative auditor that KABATA’s traffic projections are “unreasonably optimistic.” There are two main problems with this assessment. First, the Division of Legislative Audit (DLA) used assumptions from a draft traffic model prepared for a Department of Transportaiton project located more than 30 miles away from the crossing location to compare with KABATA’s projections. That model uses a “build-out” study prepared for the Mat-Su Borough School District that assumes no changes to the traditional population and employment growth in the Point MacKenzie area due to the crossing being available for traffic. The consulting firm that prepared the school district study, Western Demographics, told KABATA that evaluation of growth impacts from the bridge was not a part of its scope of work for the school district.

For the legislative auditor’s consultant to use this model as a basis for comparison is dubious, especially in light of a past study by ISER that showed accelerated economic growth in the lower Mat-Su from a proposed ferry that would have only carried 20 cars per hour.

The second area of concern with this audit is that DLA concluded that KABATA’s traffic projections are “unreasonably optimistic.” The Arizona-based consultant hired to review KABATA’s traffic study never used this term. This was a term that appeared in the legislative auditor’s two-page summary of the yearlong audit. The auditor owns that term and failed to provide the evidence that conclusion is based on. What’s more, during the final weeks in Juneau the legislative auditor changed the term again in front of a legislative committee, calling KABATA’s projections “overly optimistic,” again a term not supported by the work of the consultant.

KABATA willingly welcomes review of our work, but this audit was very misguided. Since the auditors were attempting to audit our projections it begs the question, how can you audit the future?

The authority has developed a financial risk analysis based on more than 2,000 simulations of key traffic and toll revenue variables, something the legislative audit discounts. Some of the most noted financial analysts in the world have been working on this project as contractors for many years. Our financial models are based on an “expected case” of traffic, but we have also prepared a range of low and high cases to understand sensitivities and transparently report a potential range of realistic outcomes of the future.

KABATA was created because the Legislature wanted to address a significant infrastructure shortfall in the Southcentral region of the state. Although legislation key to keeping the project on its timeline did not pass during the recent session, there is still plenty to do in preparation for next year. One major item the legislative audit did not explore was the cost of doing nothing, which is a cost the public should know.

This isn’t about being a cheerleader for the project; it’s about our fiduciary responsibility to ensure the public interest of Alaskans is safeguarded while delivering the project under the best terms possible.

Andrew J. Niemiec is executive director of Knik Arm Bridge and Toll Authority.