Mega project work resumes

WASILLA — Some work will continue on two Valley mega projects previously ordered moth-balled by Alaska Gov. Bill Walker.

The change drew applause from Knik Arm Crossing supporters, who say it will enhance transportation and infrastructure in the area. And came under fire from opponents, who say the proposed Susitna dam threatens the environmental stability of a local natural treasure.

A series of memos issued July 6 by the director of the governor’s Office of Management and Budget, essentially allows some aspects of discretionary spending to continue.

Assessments offered by director Pat Pitney seem to reaffirm a report issued by former Department of Transportation and Public Facilities commissioner Pat Kemp, who resigned to avoid being fired for standing up for road projects in the months after Walker’s election.

Kemp had previously submitted his resignation, said Walker spokeswoman Katie Marquette.

“Mr. Kemp’s previously submitted resignation was accepted because he issued a policy statement before that policy was decided on,” she wrote, in an email.

A third memo authorizes construction to proceed on the Juneau road, but only on the condition that no new funds are allocated for the project.

Pitney’s memos join an administrative order from May tying progress on the Alaska Stand Alone Pipeline project to the Alaska Liquefied Natural Gas project. Officials expect to issue a memo on the Ambler Road project, one of the six projects idled in December 2014, soon, Marquette said.

That leaves only the Kodiak Launch Complex without a concrete path forward.

Pitney’s memos reference federal funds that could be forfeited in the event of a full stop.

“Based upon our review of this project, we concur that non-discretionary expenditures would include those necessary to advance the project to complete and preserve the value of Federal Energy Regulatory Commission-required studies; including those that are in process, provided they are within existing appropriations,” Pitney wrote, in a memo to Alaska Energy Authority Executive Director Sara Fisher-Goad over the proposed Susitna-Watana Hydroelectric project.

The memo enables the authority to spend $6.6 million of a $192-million allotment through 2017.

“Incrementally advancing the project toward the FERC study plan determination is deemed non-discretionary activity,” Pitney wrote.

The memo regarding the dam drew fire from the Susitna River Coalition, which points out the government’s dire financial prognostications that led to the temporary stoppage in the first place.

Coalition president Mike Wood called the decision “fiscally irresponsible.”

“At a time when the Walker administration considers asking working Alaskans to accept new taxes on their income and the things they buy, throwing more money at this project is a slap in the face,” he said. “Why are we asking Alaskans to dig deep to pay for this bad idea?”

Pitney also authorized a continuance to some types of work on the Knik Arm Crossing. However, the authorization for the bridge is more narrowly defined, allowing current DOT&PF commissioner Mark Luiken to:

• Advance an application for a Transportation Infrastructure Finance and Innovation Act loan.

• Pursue special permitting for potentially interrupting resident beluga whales during construction.

• Manage state-owned or controlled properties in the best interest of the state.

• Obtain right-of-way requirements from the Joint-Base Elmendorf Richardson.

“These activities ensure the state will have 20 years to address the project and will not have to repay the federal investment,” Pitney wrote.

The federal loan application would provide up to a third of the bridge's total construction cost, said Judy Dougherty, Knik Arm Bridge and Toll Authority director. State bonds (which require TIFIA approval before they are issued) and annually allotted federal highway funds would pay the remaining construction costs, she said. And the Legislature has already set aside up to $100 million in future federal receipt authority, Dougherty said.

“This addition to our authorized activities really identifies things that are not necessarily within our control,” she said. “It will position us to be more responsive once we decide to go forward with additional work.”

The project has never made it past a determination of eligibility, Dougherty said.

“What we had been waiting for was legislation saying that the state backs the project, and has some skin in the game,” she said. “Now that we have that legislation, we anticipate we will pass that eligibility check pretty quickly.”

After the eligibility check, a protracted second step involves risks and feasibility studies, debt examinations, and other forms of financial examination, after which the Federal Department of Transportation either invites the project to apply (or not).

“Once they determine that you’re formally invited to apply, you’re gonna’ get the loan, it’s just the formality of working out the terms of the agreement,” Dougherty said.

The move was made possible when the state redefined what constitutes “discretionary spending,” Dougherty said.

“We haven’t had discretionary spending resumed,” she said. “We have been given a list of tasks that are considered non-discretionary, so they’ve expanded the scope of the non-discretionary work that we’re doing.”

Rumors of the decision left longtime bridge proponent Janet Kincaid so giddy she accidentally announced the bridge decision at the Palmer Lions during the Happy Bucks portion of the meeting — before state officials were ready to move ahead with public disclosure.

“If you’d have talked to me (last) Tuesday, I was top of the world, when I got the call,” she said.

As far as Kincaid is concerned, the decision is a step forward.

“This is a wonderful opportunity for Anchorage, because we’ve got lots of land,” she said. “We’ll have lots of people that will move there. The people will come out of Anchorage because Anchorage is out of land and the housing there is very expensive. We will educate their kids. They will still work in Anchorage, and probably shop there to some extent. You lose money when you educate kids on property tax. I see it as a win-win for Anchorage.”

Contact Brian O’Connor at 352-2269, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano.

Editor's note: An earlier version of this story incorrectly stated the first name of Knik Arm Bridge and Toll Authority director Judy Dougherty. In addition, an editing revision incorrectly summarized the funding formula for the bridge.