Setting the record straight about bridge

I want to address the editorial in the Jan. 20 edition of the Frontiersman. I believe there are factual errors or misleading assertions made.

In the first paragraph of the editorial there is an assertion that the state and the federal government would assume "all the fiscal risk," including payroll and a "good chunk of the actual costs" for the project. This is false and incorrect.

In the public-private partnership (P3) method that is being used to construct the bridge there is a clear division of risk. The private partner's responsibilities (risk) for the bridge are to finance, design, build, operate and maintain the facility. This means the private partner takes the risk of raising the capital to construct the bridge and it bears the financial risk in doing so. If the private partner were to go bankrupt or have some other financial trouble, the state would be completely insulated from any fallout. Essentially, there is no financial risk to the state during construction, while it will still own the bridge and toll revenue once the bridge opens.

The financial obligation of the state in the P3 comes in the form of an "availability payment." This is a contractually agreed upon sum of money that is paid to the private partner for its work on the bridge, after the bridge is open and tolls are being collected. Availability payments are paid on a schedule set in the contract and will be supported two ways: first by toll revenue, then by money from a reserve fund we are seeking to create this session. The reserve fund is predicted to be used only for the first few years of the bridge's operation, and then toll revenue is expected to achieve a level substantial enough to replenish and retire the reserve fund and take care of KABATA's availability payment obligation.

As to the assertion that the private partner "keeps the profit," under the availability payment model the state of Alaska owns the toll revenues and any surplus (profit). By having the private partner finance the bridge, it saves the state from spending almost $1 billion out of the General Fund at one time to construct the project. In addition, the state retains the profits from toll revenue in excess of payments to the private partner.

I also want to correct inaccurate information about the KABATA staff and salaries that was written in the editorial. First, there are seven, not 10, staff members working for KABATA, and no one makes $200,000. Further, state General Fund money does not fund KABATA, and won't this year. The public corporation's budget also goes toward much more than salaries, such as consultants, permitting resources and other crucial items to advancing the project.

The goals of the Knik Arm Bridge and Toll Authority are plainly outlined in law. Alaska Statute 19.75.011 states: "The purpose of the authority created by this chapter is to develop, stimulate and advance the economic welfare of the state and further the development of public transportation systems in the vicinity of the Upper Cook Inlet with construction of a bridge to span Knik Arm and connect the Municipality of Anchorage and the Matanuska-Susitna Borough."

I've run through the benefits of the bridge in this newspaper before, but let me recap. First, and I think the most important, is revenue from the bridge will fund future transportation projects. It's a second route for safety and emergencies, reduces the costs of travel to the Interior and defers the need for expansion of the Glenn and Parks Highway corridor. The bridge also opens western Cook Inlet (on which a large chunk of the Kenai Peninsula Borough - about 60 percent - lies) to coal, hydroelectric, timber, oil and gas and geothermal resources.

Work continues on both the Senate and House bills relating to the Knik Arm Crossing project. We will continue to work through the legislative process this session to come out with a bill that will advance the Knik Arm Crossing.

Sen. Linda Menard, R-Wasilla, represents District G in the state Senate.