Anchorage secures $25M grant for Port of Alaska

Anchorage is getting a $25 million shot in the arm to help rebuild its long beleaguered port.

Municipal officials announced Nov. 6 that they will receive a $25 million grant from the federal Department of Transportation to help complete the $214 million petroleum and cement terminal the Anchorage Assembly approved construction of earlier this year.

The money is coming from the federal agency’s Better Utilizing Investment to Leverage Development, or BUILD, Grant program.

Anchorage Municipal Manager Bill Falsey said in a formal statement that the lump sum helps fill a significant funding gap and gives officials overseeing the Port of Alaska modernization project plenty of confidence that they will be able to complete the petroleum and cement terminal in 2021.

Port of Alaska Director Steve Ribuffo thanked the congressional delegation in a formal statement as well.

The delegation sent a letter in July to DOT Secretary Elaine Chao supporting Anchorage’s grant application.

According to the municipality, Anchorage was competing against approximately $10 billion in other project applications for a portion of $1 billion in grant funding.

“I also thank the port staff and program team who put in some long hours writing a highly competitive application. This award is a giant step towards successful completion of the petroleum and cement terminal,” Ribuffo said. “With this success, we can start directing more attention to planning and financing new general cargo facilities.”

The congressional delegation noted the statewide reliance on Anchorage’s port in a joint Nov. 6 statement about the grant.

“Alaskans have been sounding the alarm about the critical state of Alaska’s primary import terminal for years and, thankfully, the Trump administration and Secretary Chao have listened and are taking action to help us. This new BUILD Grant will help offset the cost of the first phase of the port’s desperately-needed modernization program,” the delegation said.

“We thank Secretary Chao for the administration’s prudent investment today to help ensure that safe, cost-effective and resilient operations at the port continue for years to come.”

The grant comes as the municipality is in drawn-out litigation against another arm of federal DOT, the U.S. Maritime Administration, or MARAD, for its role in the failed port expansion project from about 10 years ago.

The municipality sued MARAD in 2014, alleging the agency allowed contractors to perform shoddy work on new docks that ultimately cost more than $300 million for work that largely needed to be redone. A trial in the case is finally set for February 2020.

In July the Assembly approved a $42 million contract to start construction on the new import terminal next spring.

While there is consensus that the ports aging and badly corroded docks — some of which are more than 50 years old — are in need of replacement, an informal group of port user companies strongly objected to moving ahead with the project because municipal officials still needed $81 million to finish the project.

They worried the tariffs levied on the goods and commodities offloaded at the port would be raised to fill the funding gap. Fuel company representatives stressed that significant additional import tariffs on petroleum products could impact Ted Stevens Anchorage International Airport’s robust cargo traffic business, which they said can be very sensitive to even small changes in fuel prices.

The companies instead urged municipal leaders to hold off on building the new terminal, or PCT, until they had a complete funding plan.

However, Assembly members approved the project mainly on the belief that it was important to start moving ahead with the new facilities at the port, which is the import hub for most of the consumer goods used across mainland Alaska, rather than risk another earthquake or other event rendering the port useless as more firm financing plans were arranged.

Falsey has also stressed that the new PCT — located away from existing docks — needs to be finished first to free up space for work on the port’s cargo terminals that will require complex logistics to keep the port open during dock construction.

The municipal Port Commission, and advisory body to the Assembly, voted 5-4 on Oct. 23 to recommend petroleum and cement tariff increases that would cover debt service on bonds that would be sold to pay for the remaining PCT work to be done in 2021.

The stepped rate changes would increase petroleum tariffs at the port from 16.4 cents per barrel of fuel now to 55 cents per barrel in 2029.

On cement, the recommended tariff increase would add a fee of $3.93 per ton, according to municipal figures.

Port of Alaska spokesman Jim Jager said the BUILD Grant award is extremely helpful for port officials, but it will not reduce the needed tariff adjustments.

They have applied for numerous federal grant and loan opportunities over the summer and expected at least one or two would be successful, he said.

“The notion that we were going to get some grant was cooked into the tariff proposal,” Jager said.

He noted that if the city gets additional outside funding the tariff schedule could always be revised back down later.

The Assembly, which must approve any tariff changes, is expected to take the issue up later this month.

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Elwood Brehmer can be reached at [email protected].

Updated: 
11/13/2019 - 8:55am

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