Seward dock funding moves ahead but Port MacKenzie rail extension is stripped by Senate Finance

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Sen. Bert Stedman questions whether the Port MacKenzie rail expansion project is ready for funding, in Senate Finance Committee on Sunday.

The Senate Finance Committee on Sunday stripped funding for the completion of the Port MacKenzie rail extension project.

The committee removed a $58 million bonding authority section meant to complete the rail to Port MacKenzie, which is in the Matanuska-Susitna Borough on the opposite shore of Knik Arm from the Don Young Port of Alaska.

The committee retained the original bill, which was authority to issue up to $75 million in revenue bonds to replace the aging Seward dock and facility with a pier system to better handle Alaska’s 41-foot tides.

House Bill 122‘s funding for the Mat-Su project had been placed into the bill during House committee proceedings, but it had some Senate Finance Committee members skeptical because the previous funding, $184 million, has left the rail project uncompleted, and because the port itself is not completed.

Port MacKenzie has direct access to major road corridors to the Mat-Su Valley, north to Fairbanks, and south to Anchorage. It is still not utilized fully because it lacks rail access, but it’s the only port in Alaska with such massive potential, boasting 9,000-acres (14 square miles) available for commercial and industrial development. It has deeper draft capacity than the Port of Alaska in Anchorage, and is set up for the export of cargo that includes natural resources.

One of Alaska’s greatest champions who moved the project forward with previous state awards was former Department of Transportation Commissioner Joe Perkins, who passed away in 2019 while working on behalf of the Mat-Su Borough to complete the ambitious rail and port project. After his passing, the project slowed to a near standstill.

“The railroad is supportive of the Port Mackenzie rail extension project and rail extension in general,” said Bill O’Leary, president and CEO of the Alaska Railroad, testifying by phone to the committee. “We think that rail and rail infrastructure is key to unlocking many parts of Alaska and the resources that are otherwise trapped and can be a key part in moving the Alaska economy forward.”

Funding for the Seward dock facility will cost the state nothing in cash. Royal Caribbean Group has disembarked cruise passengers for two decades, including 188,000 passengers in 2023. O’Leary said the debt for the Seward project would be paid by future cruise customer use and the 30-year berthing agreement with Royal Caribbean.

But the Port MacKenzie project would still need customers before the railroad could even get bonding for the completion of the rail line. In an era when Alaska can’t seem to get the Ambler Mine or Donlin Mine permitted, and as environmentalists make Alaska coal unfeasible for export, it’s not clear who the customer would be that would make bonding for the rail expansion possible.

Sen. Olson said to O’Leary that the Don Young Port of Alaska “is going to be competing” with Port MacKenzie, “and we know some of the issues we’ve had with the Anchorage port [Port of Alaska] that’s gotten on the wrong track on a couple of occasions.”

The Don Young Port of Alaska is owned by the Municipality of Anchorage and moved 5.2 million tons of fuel and freight in 2022, including containers, liquid bulk, dry bulk, break bulk.

About half of all Alaska inbound cargo crosses Port of Alaska docks, about half of which is delivered to destinations outside of Anchorage, including Southeast. But it has aging piers and docks. Port of Alaska’s Modernization Program is a dock replacement program that would replace aging docks and related infrastructure before they fail. It has been a priority of the Mayor Dave Bronson Administration. It’s a project that may cost as much as $2.2 billion.

The Port MacKenzie project could be a backup dock for the Anchorage port. The railroad has been working on a federal grant that requires the state match — that effort will likely have to be sacked without the Alaska Legislature’s support.

Looking ahead, Sen. Bert Stedman emphasized the need for a comprehensive review of rail expansion projects in the 2025 legislative session, prioritizing initiatives that maximize statewide benefits. With the fate of the Port MacKenzie extension provision uncertain, the Alaska Railroad’s future development trajectory awaits further legislative scrutiny.

HB 122, sponsored by Rep. Frank Tomaszewski of Fairbanks, is now back to what it was in the beginning — funding to make the Seward dock usable in future years. After it is voted on by the Senate, it will be back a the House for a concurrence vote.

15 COMMENTS

  1. If the Alaska Railroad is a quasi private company why is the legislature even involved with there project.
    The legislature has no control of the ARR budget or its operation. The ARR should be on its own to find its funding

    • Nope. You’re quite wrong. The RR is a subsidized, money-losing state enterprise just like the University. Nothing private about it, quasi or not. The RR subsidy is more obscure however because it obtains from the legislature authority to sell and to lease valuable state-owned assets – land, mostly – to keep the RR operating. The RR keeps its main competitor, the AK trucking industry, at bay through lobbying in Juneau.

      From a budget control standpoint the RR is at the whim of the legislature just as much as is the Department of Corrections. The RR can pay what it wants for salaries however, and it can have lobbyists so long as it doesn’t call them that (and Corrections can and does have a lobbyist, called a liaison). Both Corrections and the RR need legislation authorization to sell state debt, and neither has experienced difficulty in doing so. Years ago the RR and AHFC sometimes shared nice, rented apartments in Juneau for their lobbyists to use. Government may be more seedy than you realize.

      The two ports compete with each other for subsidies, and the RR has chosen to side with Anchorage. Neither port is ideal from a site and logistics standpoint but the MacKenzie side may not really even be feasible.

      • Your assumptions of the Alaska Railroad are not based on facts. During my Thesis paperwork for my bachelor’s degree in Transportation and Logistics my research conducted on the Alaska Railroad they are required to conduct business as a separate corporation and required to be self-sustaining. Along with the fact the railroad employees are not part of the state payroll system. The annual report from 2017 released by the railroad showed revenues and net income of $22.4 million. All of this coupled with only one route by land out of Anchorage a major earthquake in southcentral could very well render the ports of Alaska, Seward, and Whittier as an island if the bridges across the Knik river were to be destroyed.
        Also, the fact that the port of Alaska must be continuously dredged to remain opened because of the silt deposited from the Knik Glacier and Port MacKenzie does not it only makes sense to have the rail extension completed.

    • The ARRC is not and never was quasi-private. Purchased from the feds in the 80s, ARRC stood on its own for decades like AHFC, AIDEA, Alaska Aerospace Corp. In recent years it became part of the SOA Department of Commerce.

  2. Whatever happened to Canada’s proposal to complete tracks to Point McKenzie? In sure, two things shot that down. The barge companies not wanting any competition and the fake environmentalist making sure you need to get your energy from somewhere else if at all.

  3. Considering the enormous amount of critical freight entering Alaska through the one and only existing port I guess they have difficulty realizing the need for a backup plan or maybe their backup plan is the airport which shouldnt impact the cost of moving that amount of freight by air by too much…. right Bert? (He said consumers could easily pick up that cost using our generous PFD’s he consistently whittles on.)

    Resource development is a mute argument with the Murky Haaland team of misfits guided by the Obama/Biden regime…. or is it Biden/Obama?…not sure on that one.

  4. Go Seward, the gateway city and home of the states oldest foot race Mount Marathon and deserve a state indendum for a new dock as the city has a natural deep water port, is the gateway terminus for the Alaska Railroad and Seward Highway, which will cost the state nothing 😉

  5. The tides in Seward are in the 20 ft range. Alaskan tides are not all the same. The Port Mackenzie rail spur is stupid. Why would you build a rail spur that does not go to tidewater?

  6. No reason to keep throwing good money after bad, be done with this boondoggle already !

    Whatever happened to Senator Ted’s ferry fiasco ?

  7. I am pretty sure the tides are not 41 feet.
    Anchorage has some rxyream 33 plus tides but I have never seen a 41 foot tide in Alaska.

  8. We should have had rail spurs to the 8 corners of the state by now. A container dock in Seward so ships don’t need to transit up cook inlet. Alaska has dropped the ball when it comes to import / export and serving it’s people. Thousands of cargo ships sail right through our back door and none stop here. Oh but another fifteen boatloads of tourists sucking up our resources with the snowbird proprietors taking all the cash south with them will be great for AK. Gee I can’t wait to shop the new jewelry stores coming to Seward this next summer.

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