House Approves Knik Arm Crossing Fund

The state House Wednesday approved a bill creating a Knik Arm Crossing Fund that critics say could put the state on the hook for about $2.9 billion over the next three decades.

It did not take the House much time to pass HB 158. The bill, sponsored by Representative Mark Neuman, a Wasilla Republican- passed the House 25- 12. It has yet to pass the Senate.

HB 158 sets up a financial mechanism which obligates the state to make up any Knik Arm Bridge and Transportation Authority private partner for toll revenue shortfalls, if current projections for bridge use and tolls do not materialize in the initial years after the bridge is completed.

“The purpose of the reserve fund is to handle shortfalls in tolls in the initial years of the opening. We know in the initial years, that toll revenues will be short of what we call our availability payment, or our payment to our private partner,” Mike Foster, chair of KABATA’s board, said.

KABATA has no private partner as yet.

Foster says the Knik Arm Crossing fund is one of the bill’s three main provisions. It also increases the level of private activity bonds to be sold from $500 million to $600 million, although neither the state nor KABATA would have financial responsibility for the bonds.

HB 158 also eliminates any borough or municipal taxes on the Knik Arm Bridge, which will be owned by the state.

Bob French, speaking for Knik Bridge Facts, an Anchorage based group opposed to KABATA, says HB 158’s reserve fund only creates a loophole

“To get around some of the prohibitions that KABATA has from obligating the state. It creates this reserve fund to pay availability payments to the public – private partner. It means that the state is guaranteeing those availability payments and over the 35 year life of the project, that is a $2 .9 billion liability that the state has,” French said.

French says availability payments have only two revenue streams – bridge tolls or state legislative appropriations

“KABATA will say that they are hoping to get $6 billion in tolls so therefore there will be a net gain to the state. But if you look closely at the numbers they are predicting, it’s pretty obvious that there will be toll shortfalls, which means the state will be on the hook,” he said.

French says it is ironic that on Tuesday evening, the Anchorage Assembly passed a recommendation prohibiting any more local or state funds to be spent on KABATA. He says the House is bowing to pressure from KABATA. But bill sponsor, Representative Mark Neuman says opponents’ numbers are skewed.

“The critics that tried to figure that out used the lowest available numbers and then keep them that low for the next 35 years out to 2050; like our state’s never going to grow. Actual projections show that within seven years it [KABATA] will be revenue neutral and then be bringing in positive monies back into the state. It will be paying for itself, and paying for all its maintenance and then bringing in positive revenue to the state,” Neuman said.

Neuman says KABATA could diversify the state’s economy and create jobs. He says opposition comes from a “not in my back yard kind of thing.”

Anchorage ‘s Government Hill neighborhood would be impacted by the Anchorage side of the bridge, and some residents have opposed the project. According to Knik Bridge Facts, $59.6 million has been spent on KABATA since 2003 – money from federal earmarks that has been spent on rights of way and permits.

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