Litigation Blamed for Port MacKenzie Rail Spur Delays

by:  Ellen Lockyer, KSKA – Anchorage

Construction of the railroad link between the Matanuska-Susitna Borough city of Houston and Port MacKenzie is over budget and way behind schedule. Borough officials blame litigation for the delays.

 06railroad spur update

At Tuesday night’s Mat Su Borough Assembly meeting, Joe Perkins, the Borough’s executive for the rail extension project, updated earlier financial data on the cost overruns beyond the initial $272 million  pricetag.

“When you add all this up, it totals about $31 million. So if you take $ 272 .5 and add $31 (million) to it,  you get a total project cost now of  $303. 5. (million)”

 The project linking Port MacKenzie with the AK Railroad main line near Houston started in 2008, and Perkins said the way it has been funded, by legislative appropriations over the years, has not helped keep costs down.

”We had intended to have the train running by now, had we received sufficient funding to do that. So, we have had some impacts from delays in funding. Our construction management people are having to stay a considerable number of years past what we have anticipated, same thing with our engineering people. So, again, the way this thing has been funded with eight different appropriations and some more to come, has certainly increased our costs.”

 He told the Assembly that work on some of the six construction segments of the railroad spur are done or near completion. Segment 1 at Port MacKenzie, segment 3 in the middle and segment 6 near Houston are finished. Segment 4 should be done next year, but segment 5, which crosses privately owned land, is being put off until negotiations for a Right of Way are complete. The money appropriated for that segment will be put into producing “ballast” or rock bed material for the entire rail spur.

 Possibly a major cause of the cost overruns, according to Perkins, are delays caused by litigation against the spur’s construction by environmental organizations Cook Inletkeeper and Sierra Club. The lawsuits caused the Ninth Circuit Court of Appeals to issue a stop work order on the spur, which added to the contractor and engineer costs.

”The number on the ongoing construction, which we can prove, is $5  million. The legal costs were somewhere around $1.5 million. We were represented by DC attorneys, and they’re expensive. “

The Ninth Circuit has since given the go-ahead for the project.

 Federal Surface Transportation Board regulations regarding the relocation of trails in the area added an additional one million dollars to costs, and a five percent Borough finance administration charge also upped the total  of building the railroad spur.

The additional costs will add about three and a half million dollars to the Borough’s request for a legislative appropriation of $116 million  for next year to complete work on the spur. Perkins told the body that nearly $120 million is needed to finish the project by late 2017.