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Crews ready to work on massive Anchorage port project sit idle as critical environmental review is postponed

May 10 – The City of Anchorage is trying to resolve a funding issue that threatened to hinder progress on the massive modernization project at Alaska’s Don Young Port.

An unexpected delay in a critical environmental review has left the city burning cash under a $97.5 million construction contract while crews and equipment sit idle at the facility, putting tens of millions of dollars in federal grant funds at risk and shortening the short Summer construction season is quickly approaching. .

The city received a $68.7 million federal grant in 2022 from the U.S. Department of Transportation’s Maritime Administration, or MARAD. At the time, the money was touted as a win by Alaska Sens. Lisa Murkowski And Then Sullivan and welcomed by Mayor Dave Bronson. City officials plan to use the money to pay for a critical part of the port modernization program, phase one of the North Extension Stabilization, which was set to start late last month.

Contractors and equipment have been on site for weeks — starting at a cost of about $100,000 per day for the idle assets, according to a city memo — but if work begins before the environmental review is completed, the city will lose the federal grant.

To keep the port modernization project on track, the city may choose to forego the federal grant — and potentially lose tens of millions in matching funding from the state — if the required approvals from the Maritime Administration don’t come through . over the coming weeks.

On Tuesday, the Anchorage Assembly unanimously approved an emergency plan proposed by Bronson’s administration that would allow the city to plug its budget deficit with bonds, which would be repaid through surcharges.

“This just puts another tool in our toolbox of revenue bonds to ensure we have the money needed to move forward with construction this summer,” said Assembly Vice President Meg Zaletel. “We expect this will be covered by grants, but it’s always great to have a contingency plan in place, especially as this construction season is so important to the rest of the port’s build.”

It is not clear who or what is responsible for the current status. Alaska officials have refused to point fingers, although the Bronson administration suggested in a memorandum that MARAD had suddenly shifted its previous expectations for the completion of the environmental review. The federal agency, for its part, did not answer questions about what exactly the city’s documentation failed to fulfill.

It’s also not clear exactly when the city will face a decision on whether to forfeit the federal grant and move forward without completing MARAD’s environmental review.

The mayor’s office did not respond to a question about when the city must begin construction or lose the season.

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Port officials estimate the total price tag of the modernization project to be somewhere between $1.8 billion and $2.2 billion.

For years, city officials in Anchorage had asked state and federal lawmakers to help fund repairs.

The Maritime Administration awarded the grant to Anchorage as part of a much larger federal spending initiative under the Infrastructure Investment and Jobs Act of 2021. Alaska’s then-federal delegation – Murkowski and Sullivan, and the late Rep. Don Young – praised the passage of the bill and advocated for the subsidy.

The current phase of the project will stabilize the site in the northern extension of the port, immediately adjacent to the shipping route. City officials say it’s an important step in the much larger overhaul of the port’s cargo terminals.

The phase “must be completed before we can start construction of the cargo terminals next summer,” Zaletel said.

The vote in the General Assembly follows a visit by MARAD officials to the port last week.

Port Director Steve Ribuffo said the city is working closely with MARAD to complete the assessment as quickly as possible, and that the city is unlikely to forfeit the grant.

“If we can get the show to market within the next few weeks, then we’re pretty optimistic that this season will get done everything that needed to be done this season,” Ribuffo said in an interview on May 3.

Sens. Murkowski and Sullivan and Rep. Mary Peltola did not respond to requests for comment on the situation.

Sense of urgency

The port’s infrastructure is failing, threatening a crucial part of the state’s supply chain.

About 90% of Alaskans rely on goods shipped through the port, which handles about 75% of the state’s inbound freight, including goods such as food, fuel, construction supplies, vehicles and tools.

“The sense of urgency comes from the fact that we can set up at least one cargo terminal as quickly as possible that we know we have designed and will build to withstand a pretty big earthquake here,” Ribuffo said.

For example, an earthquake could liquefy the site in the North Extension, which would likely flow into the existing dock and cause it to collapse.

The landslide work must take place before work on the waterfront of the first cargo terminal can begin, Ribuffo said. As planned: “We will start piling and working in the water in 2026,” he said.

According to an April 23 memorandum from Bronson’s administration, city staff and Jacobs Engineering, the project management firm, were “under the impression that the environmental review was literally completed” and that it would soon receive the necessary approval.

But that didn’t happen. Earlier in April, MARAD staff “unexpectedly presented a long list of questions” regarding the environmental assessment, the note said.

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“If the contractor does not begin work, the municipality will be liable to pay the contractor for idle workers and equipment. This liability starts at approximately $100,000 per day and escalates as additional employees and equipment arrive on site,” the administration said. the memorandum.

“Even more important is the fact that delaying the start of the project due to the time and effort required to respond to these new, unexpected demands could very well result in the loss of an entire construction season,” the government said.

Ribuffo said while costs could add up, there is a contingency built into the construction contract for such unforeseen delays.

MARAD staff visited Anchorage last week and met with city and port officials and toured the site.

In a May 3 statement, a MARAD spokesperson said it could not say when it expects the assessment to be completed, but that staff is working on a process that would allow the port to begin construction once the assessment is approved.

“We are working hard to support the Port of Alaska as we move forward with this project; however, it is too early in the process to provide a definitive answer to this question. Ultimately, it will depend on how quickly the Port can complete” the environmental assessment, said MARAD spokesperson TV Johnson.

“Once the Port has prepared its updates to the current draft EA, they will submit them back to MARAD. MARAD will undertake a review of the updated EA as soon as possible so that we can properly continue the Port’s efforts to advance the EA MARAD is committed to completing this process as quickly as possible,” said Johnson.

On Wednesday, Johnson declined to answer further questions about the current status of the review and referred the Daily News to the city for questions.

City staff sent amended environmental assessment documents to MARAD on May 3, Ribuffo said Wednesday. It is unclear exactly when the city will receive notice from MARAD that the review has been completed, he said.

“Now we are in a situation where no news is good news. If they don’t come back to us with another set of questions, we’ve come a long way in addressing their initial concerns. So we kindly maintain that that is the case,” he said.

Federal environmental reviews are cumbersome processes that typically take well over a year to complete. In its application for the grant, the city had planned 19 months to complete the review, with the goal of completing it by October last year.

For now, the city still has some wiggle room left in the season, Ribuffo said.

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But there are many factors to consider, including other possible causes of delays such as late delivery of supplies, bad weather and the frequency with which white whales feed in the area, he said.

Complex history

The situation adds another wrinkle to a project beset with problems, including mismanagement that resulted in a yearslong lawsuit between the city and MARAD.

The federal agency oversaw a failed port expansion in the early and mid-2000s that cost hundreds of millions in public money. The need to stabilize the northern expansion of the port stems directly from the failed project.

The municipality sued MARAD and its subcontractors and won. In a 2022 ruling, a federal judge awarded the city $367.4 million.

MARAD has since appealed to the U.S. Court of Appeals for the Federal Circuit, and in March a panel of judges heard arguments in the case.

The city is awaiting a ruling and there is no set timeline for a decision, Ribuffo said. The panel could uphold the 2022 judgment and the full award to the city, or change the amount of the award, or side with MARAD and ignore the previous ruling entirely.

The lawsuit has nothing to do with the subsidy delay, he said.

City leaders have long pushed for financial help from the state and federal governments. But the project’s reputation for mismanagement, coupled with political resistance to spending state money on what many have seen as an Anchorage-specific problem, stymied previous requests for port funding.

The tides seemed to have changed in 2022 when the state included $200 million in the capital budget to help rebuild the port, and the city was awarded the federal grant a few months later.

The city wanted to secure federal and state aid as a way to fund fees that will help pay for the modernization program; fees that are ultimately passed on to the consumers of the goods passing through the port.

The $1.2 trillion infrastructure package is expected to bring billions to Alaska for improvements to the state’s ports, aging highways and bridges, ferry system and better internet access.

The downside, Ribuffo said, is that the workload for MARAD has increased dramatically as communities across the country seek federal dollars and undergo similar assessment processes at the same time.

‘And the pressure is great. Congressional delegations across the country are putting pressure on MARAD and the Federal Highway Administration and the Federal Rail Administration to get these things done as quickly as possible. So I don’t envy them the position that they have in neither,” Ribuffo said.

‘We both move at the speed of government. So patience is necessary,” he added.

Reporter Iris Samuels contributed.

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