With easy money gone and port dock failing, Anchorage will have to pay

Alaska's megaproject party is over and the roof is still leaking. Or, rather, the dock is leaking.

At the Port of Anchorage, steel pilings that hold up the docks have rusted through and water squirts out of them at low tide.

The irony here is that the money spent on projects that will never be finished would have paid for the modernization of this basic facility, which is a lifeline for the vast majority of the goods we buy. Now the money's gone but the dock still needs to be fixed, and we'll have to pay for it "with our own money," as my kids used to say.

It will cost another $290 million to get the docks to a safe, usable state, without any expansion of the port. We can pay that back over 30 years, so it's affordable, but how we pay and who pays will be an interesting debate.

But first, how did we get here?

Anchorage exists because of our port, which builders of the Alaska Railroad realized would be critical to the region before they officially chose the site of the city. But shipping has always gone one way, bringing goods into Alaska.

As port director, former Gov. Bill Sheffield came up with a grandiose plan to vastly expand the port, creating a big area of new land where natural resources for export could be staged for shipment from an immense new dock made of a sheet of steel backed by gravel. Thanks to Sheffield's political usefulness and ability to get free money, Mayors Mark Begich and Dan Sullivan both bought the plan.

[Bill Sheffield survived political wounds through friendships, fundraisers]

The idea never made any sense. Alaska cannot compete globally with the cheap, bulk materials that would be exported through a Southcentral port. Our costs are too high and our distance from markets too far. By the time low-value goods arrived, they would cost more than they were worth.

But in the free-money years, we invested heavily in two ports to fight for this nonexistent market, the one in Anchorage and another on Point MacKenzie, a mile away across Knik Arm.

I've seen no ships at Point MacKenzie this year. The state put $184 million in cash into a rail spur to reach that port but bought only a long, disconnected pile of gravel — no money is available to finish the line. The port in Seward exports a little coal but has plenty of extra capacity (our only coal mining company says it would use another port only if Seward is full). We also have ports in Valdez and in Whittier.

The Anchorage port project wasted money on an Alaska scale (strangely, without political cost to Begich or Sullivan). The design didn't work, construction was mismanaged and workers messed up the steel sheets, which were probably being installed beyond their practical limits.

[Critical Port of Anchorage expansion stalls as costs skyrocket]

Sheffield raised $439 million for the project, including $40 million the port borrowed. The port spent all but $128 million of that. Some of the work is usable but the new dock is not and must be removed. It is unstable and causing silt to accumulate around the working docks.

The cost to remove the new land, cut off the metal sheet pile at the sea floor and put in new sheet pile to stabilize the slope? Right around $128 million, the amount left from the failed project. That work can be started next year, including replacing a failing fuel and cement dock.

That leaves the purse empty (except for what we may get back in massive lawsuits yawning into the future). Meanwhile, the main cargo docks are worn out.

[One contractor in Anchorage's lawsuit over port settles for $5.5 million]

Port External Affairs Director Jim Jager took me on a boat ride to look at the rusted dock pilings on one of our warm summer days in July. (Jager got the job in December, so he deserves no blame for what happened before.)

The dock pilings have rusted at the low tide line. They are 24-inch pipes of 7/16-inch steel. They have been sitting in the mud and salt water for 41 to 55 years. The worst-corroded have lost 75 percent of their thickness — as would be expected in that amount of time.

Each year, the port spends about $3 million to send down divers to reinforce the 100 worst pilings out of more than 1,400 under the main docks. They bolt steel jackets around the corroded sections. The fix can be done only once. Jager said that in about 10 years the docks will start to close.

The modernization project would extend the docks 150 feet farther out, into deeper water, with less need of annual dredging and the ability to take bigger ships. The new pilings would be 48 inches, made of 1-inch steel filled with reinforced concrete, and designed to last 75 years.

Alaska and our military bases can't function without the Port of Anchorage. No other port currently has the ability to bring in the 2,400 containers unloaded weekly, plus fuel, cement, vehicles and war-fighting equipment that come over these docks. Without those imports, our store shelves quickly empty.

The municipality asked the Legislature for a bond issue to borrow money for the project, requiring a statewide vote. The general obligation bonds would be guaranteed by our taxes. But the idea didn't get traction in Juneau.

We could also use another kind of bond, called a revenue bond, backed by the income from the port, not taxes.

With its current fees and expenses, the port can't borrow much more money — it already has to pay back the wasted $40 million borrowed for Sheffield's project. Increased port fees to pay off bonds would mean increased prices for you and me in the stores, and potentially more competition from other ports and shipping services.

That's OK. These projects should compete in the free market. With the market vetting projects from the start, the state could have saved billions.

Besides, we don't have a choice anymore. We have to start spending "our own money."

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