Knik Arm Bridge and Toll Authority Admits it Requires State Support to Build Bridge; Bridge Authority Using Questionable MSB Population Projections to Show High Toll Revenues

FOR MORE INFORMATION:

Lois Epstein, 907.929.9372
Jamie Kenworthy, 907.360.5661

Anchorage, AK – At a Knik Arm Bridge and Toll Authority (KABATA) board meeting today, financial analyst Jamie Kenworthy showed that the proposed private partnership is a sham since KABATA is asking the state to provide the private partner with a Letter of Credit (also called "off balance sheet financing" by KABATA) to backstop inadequate toll revenues. Kenworthy critiqued KABATA's two financing scenarios presented to the state Department of Revenue on March 23, 2010, one involving a private partner in bridge financing and one relying on state financing.

According to Kenworthy, a key problem with KABATA's proposed financing under either scenario is its misleading predictions of toll revenues. KABATA based its predictions on a 2007 Insight Research Corporation (TX) report. In 2030, Insight projected a Mat-Su Borough population of 250,700, whereas the Institute of Social and Economic Research at UAA in 2009 projected it to be 169,000.

'KABATA needs to redo its predicted toll revenues based on ISER's 2009 population projections," stated Kenworthy. "Since ISER's population projection numbers for the Mat-Su Borough in 2030 are 1/3 less than those used by KABATA, toll revenues will be likewise reduced. KABATA is misleading the state and the public on likely toll revenues."

Alaska Transportation Priorities Project Director Lois Epstein urged the state representatives on KABATA's board to review last month's toll road bankruptcy near San Diego to see what lessons can be learned from that. The cost of that road was approximately similar to the cost of Phase 1 of the Knik Arm Bridge, the project utilized the federal TIFIA loan process as KABATA plans to do, and a Macquarie subsidiary was involved as a private investor. Traffic and toll revenues were much less than predicted which resulted in the bankruptcy. As a result, the State of California and federal taxpayers likely will have to pay for the debt incurred.

In the Anchorage Long Range Transportation Plan (LRTP), the amendment that added the Knik Arm Bridge says that no additional state or municipal money would go to this toll-financed bridge. The Anchorage Assembly and Anchorage Metropolitan Area Transportation Solutions (AMATS, the state/local transportation decision-making body) approved in 2007 and retained in 2010 the LRTP amendment with that understanding. Since both of KABATA’s financial scenarios now involve the state paying for any toll shortfalls, these scenarios violate the LRTP.

KABATA has spent over $51 million to date on project planning, staff salaries, and office expenses. The state currently is reserving an additional $60 million in transportation funds for KABATA which is money that could be used for other transportation projects in Anchorage or statewide.

For more information, see www.knikbridgefacts.org and www.aktransportation.org/files/projectseasy10.pdf.