Mat-Su Borough seeks $75M federal grant to finish Point MacKenzie rail line

PALMER — The Matanuska-Susitna Borough is resurrecting the scramble for funding to finish a railroad extension across Point MacKenzie.

The borough has applied for a $75 million grant from the U.S. Department of Transportation, officials announced Tuesday. It's estimated to take a total of $125 million to finish the 32-mile line from the borough's port along Knik Arm to the Parks Highway near Houston.

Officials say the line could build the mostly unused port by shipping resources like ore or wood from the Railbelt.

Like several other Alaska megaprojects, progress on the extension fell victim to state funding cuts as plummeting oil prices eviscerated the budget in recent years.

The extension has already cost more than $180 million. It's a surreal sight, a high berm cutting across largely undeveloped farmland and forest that's three-quarters done with a gap in the middle.

Along with the new grant request, the borough is "working on partnerships" to pay for finishing the extension, Borough Manager John Moosey said at a Mat-Su Assembly meeting Tuesday night.

One potential partner could be the group behind a proposed Alberta-to-Alaska rail project that could end at Port MacKenzie, Moosey said. The borough is also talking to the Alaska Industrial Development and Export Authority and pursuing at least one loan possibility, he said.

The borough applied for federal money available through DOT's FASTLANE program, which targets sidelined infrastructure projects. The program has $850 million available in this funding cycle, according to the FASTLANE website. The agency approved just 8 percent of applicants last year, Moosey said.

The prospect of the borough getting the grant, but not the partnerships, raised at least one question at the Assembly meeting.

"I know that the idea is to encourage partners to do the matches with that, but what is the prospect the borough could be on the hook …?" asked Assembly member Jim Sykes, from Lazy Mountain.

Moosey said the Assembly would have to approve any financial commitment for the grant.

Asked Wednesday if mothballing the project has increased future costs, borough officials said the extension has not been mothballed.

Construction on two segments was closed out in 2016 and a clearing contract was issued for an as-yet unbuilt section, according to an email from Brad Sworts, the borough's predesign and engineering manager.

Normally, time does increase the cost of materials on unfinished sections of a project, Sworts said. But the state's economic downturn "may benefit the project by reducing labor costs through increased competition during the construction bidding process," he wrote.

The borough is deriving a small income from the extension: Tuesday night, the Assembly approved more than $12,000 in income from tree cutting and rent paid on properties within the easement of the proposed extension.