Anchorage Daily News Attempting To Doing Its Job - Demer's Port Story

Some of us still believe that newspapers are supposed to do more than carry grocery ads and the weather.  They're supposed to be one of the watchdogs on private and public sector organizations.  But with the changing news environment and newspapers getting slimmer and slimmer (both the product and size of the news staff) the serious reporting of what is going on is not happening as much.  

The Sunday Anchorage Daily News had a big front page story on the Port of Anchorage  hinted at the kind of things newspapers should be doing.  I say hinted because while it brought up a number of important issues, it didn't go very deep and I didn't see anything saying this was part 1 of a series.  But here are some key things it said:

The completion date for the massive dock replacement project at the Port of Anchorage has been pushed back to 2021 from a target of 2011 set before major construction began.

The price tag, which was $360 million as of 2005, has escalated to $1 billion.

Some engineers are questioning whether the new dock can even be built as designed. Much of the work done in 2010 involved dismantling construction from just a year earlier.

So, the port that was supposed to be completed this year for $360 million is now set for ten more years and the budget has nearly tripled, and it may not be technically feasible.  

But there are still a lot more questions to be asked and answered.  Like who is overseeing Port director Bill Sheffield's performance and salary?  Does it reflect the fact that this project is way behind schedule, way over budget, and the method he chose against the recommendations of the engineers isn't working.  The man will be 83 years old this year.  He's got 18 years on me, but I know I don't have the energy I had 20 years ago.  And I've just spent time in LA with people in their 80s and 90s.  Some are still in reasonably good shape, but not nearly good enough to run a multi-billion dollar project.  Look, I understand that age, by itself, is not a reason to fire someone.  My mom worked - not full time at the end - until she was 85.  If the Port construction was finishing up this year, or wasn't way over budget, or the method chosen wasn't failing, I wouldn't have brought it up. 

When we went on the port tour in  they offer to the public every summer, there were lots of flags raised about how this was actually going to be funded.

My August 2009 Port post includes a 16 minute video from the tour.  That's way too long so I included an index with times and topics.   I think the most relevant part came at the end of the video:

• 10:51- How does the port make its revenue? Who owns the port?
• 11:20- Lease land
• 11:59- Dockage
• 12:34- Wharfage or tonnage
• 12:51- How much do they make and how do they use it?
• 13:30- What's the total cost of expansion? ($750 million) And how funded?

Here is are my highlights from the tape:

Guide:  "Our [the Port Authority's] job is to make sure the streets are clean and the lights are on and the plumbing works and the place can function. . . We just lease them [I believe this is the shipping companies, but I'm not sure] [ the land."

Yeah right. And the Port Authority isn't also wheeling and dealing (that's not necessarily bad) to get the partnerships and money to make this 3/4 billion dollar project work? [That was in 2009, the ADN story has it at an even $1 billion now - a 1/3 increase in 18 months.] I think they do a little more than clean the toilets.

Then, we don't cost you anything, we give you money:

"We get zero property tax dollars download to run the port. None. In fact, we give the Municipality about half a million dollars of revenue every year to help run city hall. We pay our own payroll, we pay our own bills. . . After the bills are paid we have anything from $2.5 to $5 million dollars that we put toward the expansion project ourselves."

Except as he goes on, it's not quite that clear. OK, this is a private/public partnership. He said

"the construction project doesn't belong to the Port of Anchorage, doesn't belong to the Municipality of Anchorage. It belongs to the Department of Transportation, Maritime Administration."

Of the $750 million that will be needed for the port expansion, 50% will come from the Feds, 25% from the state, and the rest will have to come from 'us'. Out of the profits or "any debt financing we choose to do." Probably they will float a revenue bond in 2015 and they'll have 20 years to pay it off.


And the head of the Port is Bill Sheffield, who proved to be a good enough business man to make a good profit selling his Sheffield Hotels to Holland Line, was governor - and almost impeached for construction dealings - and then was appointed head of the Alaska Railroad, which now owns the Airport Depot that was built with Federal and State money (tens of millions of dollars) and is only used four months a year by the cruise lines. And it's named for Sheffield. And now he's the director of the Port of Anchorage at the age of 81 years. While he started out as a Democrat and was elected Governor as a Democrat, most of his fund raising lately has been for Republicans.

This begs to have some external scrutiny that goes well beyond bus rides and hot dogs.

A Northern Economics feasibility study completed in 2006 raises some questions. To be successful, they have to get a mileage-based carrier, steal fuel barge business away from Nikiski (does Anchorage really have to screw over small Alaska towns to succeed?), and they have to keep out unions ("carriers say they will only use the new facility if it were non-union.") Here is the executive summary:

Executive Summary
This report presents the findings of a study to evaluate the feasibility of establishing a consolidation and distribution center at the Port of Anchorage with the intent to serve coastal and riverside communities in rural Alaska. It contains an analysis of the feasibility of the concept, as well as marketing arguments that can be used to present the concept to transportation companies.

The findings of this study include:

The concept could result in cost savings. While the cost of transportation may be slightly higher with this concept, the inventory holding cost savings may offset the increased cost of transportation.

Freight rate savings on cargo shipments could require a mileage-based carrier. At present, the price for sending cargo to western Alaska is the same or very similar whether it originates in Anchorage or Seattle. To generate savings for residents of western Alaska would require a carrier who would charge for cargo shipments based on the distance traveled, rather than the market rate.

Incentives could be required to encourage a mileage-based carrier. In order to attract a mileage- based carrier, incentives could be required to make up for the lost revenues that would result from charging lower prices than the industry norm.

Anchorage has an opportunity to increase its fuel barge business. The Port of Anchorage is the preferred location for fuel sales in Cook Inlet. Estimates vary about the percent of fuel that is sold in Anchorage versus Nikiski, but capturing additional sales from Nikiski could substantially increase the Port’s market share.

Need to work on the key issues: Attracting a mileage-based carrier. One of the key issues that must be addressed is the identification and recruitment of a carrier that is willing to charge mileage- based rates. This would represent a break from the industry norm for the concept to work and it is vital that a carrier be identified who is willing to do this.

Need to work on the key issues: Union vs. non-union. Another key issue is unions. Carriers have expressed a high level of concern about union work rules and have said that they would only use a new facility if it were non-union. While the Port of Anchorage is an open port, this is nonetheless a significant issue that needs to be addressed in order to attract customers for a new facility.

So, Demer's article today is a good step, but there is a lot more issues to examine.  There is a little more online, but not a lot.  There's a two minute slide show narrated by Bill Sheffield that says how important the port is, some letters from Mark Begich and the Assembly, and a the initial dive team inspection report which is almost a whole page long and much of it describes how difficult the work is.  Read it - how the diver sees things in 0 visibility water:

The New Port of Anchorage is located in the Cook Inlet basin. The water visibility in this area is zero. The inspection diver used two methods for inspecting the sheet pile interlocks First he feels the interlock for uniformity to see if the thumb of the sheet pile was out of the joint. Then he would scrape out debris from the pile interlock using a thin knife blade. The next step is to utilize a clear water bag and an underwater light. The water bag is placed over the joint and the light is shown into the bag. Next the diver presses their face plate against the bag. The bag, light, and diver adjust till the diver can see the joint. This method can be difficult because dirty water can remain in the joint or there can be debris left can make is difficult to see the joint. Also you are looking at a small area. For more thorough inspection, the area can be cleaned using a water blaster that provided a 20,000 psig water stream.

We live in a democracy folks.  As they say, freedom isn't free.  We all need to either get informed or let people abuse the system since they know we're more interested in Palin gossip than in how the Port Authority, Board of Game, KABATA, and other agencies operate.  While most Alaskans don't pay any state taxes, they money spent on this comes partly from state revenues, mostly from federal revenues, and they're expecting the Municipality to help them float a bond soon.

Let the ADN know that there should be more of their budget doing this sort of work.  I'm guessing that Lisa Demer would love to have more time and staff to do a lot more on this story.

Pat Dougherty   Senior Vice President, Editor 907-257-4303

Patrick Doyle    President & Publisher            907-257-4210