Veteran state engineer quits over handling of $21 million federal airport grant by Dunleavy administration

The Alaska Energy Authority’s promotion of the Alaska Cargo and Cold Storage project, a venture at the Anchorage airport, deserves a complete and thorough public examination.

Two years ago, the federal government gave tentative approval to AEA for a $21 million federal grant. Final approval is pending.

The Dunleavy administration wants the money to help subsidize the cargo and storage project, a joint venture of Chad Brownstein and McKinley Capital Management, LLC, headed by Rob Gillam.

I received a copy of an email the other day that contains alarming assertions about the handling of this project by the Dunleavy administration and AEA.

The email, written by a longtime Alaska Energy Authority engineer, was distributed widely within the agency in early August.

In the email, the engineer said he was resigning from his AEA job “because of my concerns regarding the ethics of this project.” The engineer did not send the email to me.

The thrust of the email is that the documents submitted by AEA to the Federal Highway Administration misrepresent the cargo and cold storage project at the Anchorage airport.

The grant is supposed to be for “Phase 1” of the project, which would mean that the grant restrictions and requirements would be limited to the first part of the undertaking, about $87 million. There are lots of requirements with such federal grants.

The federal government said in 2020 the “total cost” of the project was $87 million. “This project will construct an approximately 190,000 square-foot cold storage and climate-controlled air cargo transfer facility at Ted Stevens Anchorage International Airport (ANC), which is Phase 1 of a larger project to develop an approximately 715,000 square-foot cargo transfer and storage facility,” the government said.

If the grant applies to the entire $220 million project, requirements that come with the grant would extend to the entire construction plan. It is easy to imagine that the project builders would want the $21 million grant to apply to as small a portion of the project as possible, reducing the number of strings attached to it.

The AEA engineer wrote to Curtis Thayer, the executive director of AEA, on Aug. 10 to say that a representative of ACCS told him that the Phase 1 “project described in recent AEA submittals to FHWA is not what ACCS is planning to build. He said ACCS has recent detailed designs drawings and a recent cost estimate for a much larger project that ACCS has not shared with AEA.”

The engineer said Thayer had given him instructions to “rely on ACCS for the grant details.” The information he gave to the federal agency Aug. 5, under Thayer’s signature, was for the Phase 1 project that ACCS does not plan to build. The budget numbers and project description were inaccurate, he wrote.

“I now believe it was a mistake to knowingly submit incorrect information to FHWA,” he said. He recommended that AEA contact the inspector general’s office to “determine if it has legal or ethical problems.”

“I have resigned from AEA because of my concerns regarding the ethics of this project.”

Among other things, he said that AEA does not have the “procurement depth, finance resources or experience working with FHWA to manage the grant properly.”

He said that former DOT Commissioner John MacKinnon refused to approve an ACCS grant application and mentioned the potential $21 million liability if the grant was not managed properly. “I share that concern.”

Two years ago, the Anchorage Daily News reported that the grant was supposed to help pay for the first phase of the project. The Alaska congressional delegation cheered the proposed federal subsidy.

“Phase 1” was supposed to cost about $87 million, while the entire project was estimated at $220 million.

In May 2020, the delegation wrote this letter saying the Alaska Industrial Development and Export Authority, not the Alaska Energy Authority, should get the grant. The two agencies share the same seven-member board under state law and AEA contracts with AIDEA to oversee AEA programs.

The grant was under a federal program called the Better Utilizing Investments to Leverage Development, a word salad created to justify using BUILD as an acronym. The program now has a new ungainly name and acronym—The Rebuilding American Infrastructure with Sustainability and Equity or RAISE.

On Sept. 16, 2020, the energy authority announced it had received the grant and would become a partner with the joint venture created by Gillam and Brownstein. The grant would fund “AEA’s participation in Phase 1” of the cargo and cold storage project.

It has never been made clear how or why AEA selected the private partners or if any competitive process was held.

What’s also not clear is why the project was not added to the Metropolitan Transportation Plan until this year, a requirement to collect the money.

The email to Thayer from the engineer said that AEA and ACCS have said for two years that they didn’t have to comply with federal rules requiring the project be included in the local and state transportation plans, “That does not bode well for future AEA or ACCS compliance with FHWA grant conditions.”

All of these matters need examination, along with the basic question of why the Alaska Energy Authority, which exists to lower energy costs in Alaska, is involved in this project at all.

The Federal Highway Administration should cancel this grant to AEA or put it on hold, demanding accountability on the use of federal funds.

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