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All Hope for Knik Bridge Rides on Federal Decision

By | June 24, 2014

Alaskans who want to see a bridge across Knik Arm would have envied Los Angeles last month. In a U.S. Senate hearing room, California representatives were high-fiving themselves for winning more than $2 billion to extend a subway to the city’s Westside.

“Listen to these numbers. They’re even big by Washington standards,” California Sen. Barbara Boxer boasted. “In addition to the $1.25 billion, full funding grant agreement … the Purple line extension project is also benefiting from an $856 million loan made possible by the TIFIA Program.”

That program, the Transportation Infrastructure Finance in Innovation Act, is the one Alaska hopes will lend the state more than $340 million for the Knik Bridge.

Alaska Gov. Sean Parnell on Friday signed a bill to finance a $900 million bridge across Knik Arm. A decade ago, bridge proponents hoped to fund the project entirely with federal earmarks. But then Congress banned earmarks, in part due to public outrage over this bridge and another in Ketchikan, both derided nationally as “bridges to nowhere.” Now, the Knik project all depends on winning a low-interest TIFIA loan.

Boxer is one of the chief proponents in Congress of the increasingly popular lending program. Year after year, demand for TIFIA funds far outstrips supply. As Boxer explains it, the program is designed to lend the money needed to get a project started while other revenues roll in more slowly.

“Because when you put together projects like this, they’re enormous, and they’re enormously important, so you gotta use all the options at your disposal,” she says.

Los Angeles Mayor Eric Garcetti, who flew to Washington to celebrate the federal funding agreement, thanked his senators but says the real reason his city got the money is that Angelenos reached into their own wallets first. Garcetti commended local voters for approving a 30-year sales tax to pay for transportation.

“We’re not coming here hat in hand with an empty hat. We come here to get it topped off,” he said at the podium in the U.S. Senate hearing room. “We know that in this changed landscape you have to bring something to the game in order to get more, and we consistently do.”

Alaska isn’t coming entirely hat in hand to the feds, either. A few years ago, Knik bridge proponents asked TIFIA to finance nearly half the bridge costs. But federal officials said they wanted to see more of a state commitment — more “skin in the game,” to use the metaphor that’s ubiquitous in TIFIA discussions. So now the state is asking TIFIA to cover about a third. Another third would come from other federal transportation dollars. And for the state’s third, it plans to issue up to $300 million in bonds, but only if it gets the TIFIA money first. The plan is to pay it all off with tolls, estimated at $5 per car.

If there’s not enough toll revenue left after operation and maintenance, the state treasury might be on the hook for the bonds — but not the TIFIA loan. Alaska debt manager Devon Mitchell told the state Senate finance committee this spring if tolls fall short, the feds would have to negotiate some other option.

“None of those options is going to include the state of Alaska appropriating money to pay that TIFIA debt,” he said.

Alaska Transportation development director Jeff Ottesen told state legislators the financing plan is smart for the state.

“We’re getting a chance to build this and, quite frankly somebody else is going to pay a large piece of the tab,” he said.

Ultimately, the U.S. Transportation Secretary decides which projects TIFIA will fund. The department made no one available to interview for this story. But Steve Ellis, vice president of Taxpayers for Common Sense, says the very reason Alaska might like the plan – limited financial commitment — makes it unattractive to federal policymakers. Ellis says Alaska isn’t really bringing revenues to the deal; it’s bringing more debt.

“People may argue these bonds are skin in the game,” he said, “but in reality it’s still somebody else’s skin.”

His group claims credit for pinning the “Bridge to Nowhere” label on the Ketchikan bridge and helped spread the taint to the Knik project as well. Last year Taxpayers for Common Sense gave the Knik project a second “golden fleece award,” a badge intended to highlight wasteful federal spending. Ellis predicts the U.S. Transportation Department won’t like the loose repayment terms Alaska is proposing.

“Certainly if you’re saying that whatever scraps are left will go to pay off the TIFIA loan, that’s going to raise up the hackles of the feds,” he says.

Knik bridge proponents shouldn’t count on Sen. Lisa Murkowski intervening with the department. She says she has concerns about the cost, the routing and the fairness of the project to other parts of the state. As far as winning TIFIA funds, she thinks it’s an uphill battle. Murkowski says it’s unfair, but nationally “big Alaska bridge project” remains synonymous with pork.

“That has clearly stuck, and you can open a newspaper here in Washington, D.C. today and you will still see reference to the ‘Bridge to Nowhere,’” Murkowski says.

A spokesman for Alaska Congressman Don Young says he’ll support the bridge for TIFIA funds. But he notes Young sent hundreds of millions of dollars to the state to build the bridge back in 2005.

“Unfortunately, the State of Alaska chose to spend the majority of that money on anything but the Knik Arm Bridge,” Young spokesman Matt Shuckerow said in an email, “and now, nearly a decade later, they are scrambling to fund the project and squabbling over financial measures that require them to beg President Obama’s bureaucrats for even more federal dollars.”

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