Statistics for Kenai Peninsula reveal diverse, strong economy

KENAI -- The Kenai Peninsula’s economy is diverse, reasonably strong and, in many ways, better than other economies around the state, despite an economic growth of only 1.8 percent in the 1990s.That’s the message researcher Brigitta Windisch-Cole, of the state Department of Labor and Workforce Development, gave at the Kenai Chamber of Commerce luncheon Feb. 28."We can call 1.8 percent moderate," she said, adding the decline in 1999 was considered leveling out."I was here in 1999 and the mood was not good," she said. "Oil prices were low, tourism was down, and so was fishing."She said the loss of nearly 2 percent of Peninsula jobs in 1999 over 1998 is directly attributable to layoffs at the Unocal fertilizer plant, Southcentral Air’s demise and the explosion and fire at the Icicle Seafoods plant in Homer.Some other facts and figures Windisch-Cole presented included:* The Peninsula has always had a faster rate of growth than the rest of the state. In the 1960s, the Peninsula experienced 16.5 percent growth, compared with 6.6 for the state as a whole; in the ’70s, the Peninsula had 7 percent growth, the state 6.3 percent; in the ’80s, the Peninsula had 5.2 percent to the state’s 3.5; and in the ’90s, the Peninsula’s growth was 1.8 percent to the state’s growth at about 1 percent.* In the ’90s, industry growth was mixed, with oil and gas employment declining by 9.5 percent, and manufacturing -- which includes the then-Unocal fertilizer plant and the Tesoro refinery, but not the Phillips LNG plant -- falling by a whopping 25 percent.* Retail showed the greatest growth of all sectors in the last decade, with a 57.7 percent increase in jobs. It was closely followed by the financial, insurance and real estate industries with 39.5 percent, and construction at 30.8 percent. The service industry and government employment increased by roughly 24 percent each.* There is a huge disparity in wages between the oil and gas industry, which is losing jobs, and the service and retail industries, which account for most of the new jobs created on the Peninsula.Her figures show annual oil and gas wages in 1999 averaged $60,485, while service and retail averaged $18,000.* In 1999, the Peninsula work force earned $498.6 million, with an average wage of $30,091. The biggest piece of the pie came from government employees, highlighting their importance to the area’s economy. More than 30 percent of the total earnings on the Peninsula were made by government employees, compared with 19 percent in service and retail, and 13 percent in oil and gas. Seafood processing accounted for barely 3 percent of income earned.* Unemployment has been a relatively dark spot during the ’90s, but has recently improved, Windisch-Cole said. In 1991, 11.7 percent of the work force was out of a job, and it went up from there. The next year it was 13.6, before peaking a year after that, in 1992, at 15.5 percent. After declining slightly for the next few years, the jobless rate popped back up to 14 percent in ’96 and was 13.6 percent in ’97.The decade’s only year of single-digit unemployment followed in 1998, when the rate was 9.8 percent. In ’99, it rose 1 percentage point, but dropped back down to 10.2 in 2000."The unemployment rate is tied to the economy of the Lower 48," Windisch-Cole said. "If the national economy weakens, we will get an influx of workers from there."* Since the economy in the Lower 48 had been so good during the Clinton years, causing fewer workers to come to Alaska looking for jobs, in-state and local hire skyrocketed in the ’90s. In 1992, out-of-state hire was more than 34 percent. In 1999, it was down to 17.8 percent.* An influx of retired people to the Peninsula -- up 70 percent in the ’90s -- could be attributable to the relatively low cost of buying a home here. The average cost of a home on the Peninsula is $146,631, she said, and it only takes 1.3 wage earners to buy one.In Juneau, it takes 1.9, Kodiak 1.8, Ketchikan 1.7, the Matanuska-Susitna Borough 1.6 and Fairbanks 1.4. The state average is the same as Anchorage at 1.5.* A solid majority of the jobs on the Peninsula are in the central Peninsula. Two-thirds of the jobs are in the Nikiski-Sterling-Kasilof triangle, with the Homer and Seward areas accounting for about 15 percent each.Windisch-Cole said the construction industry is an early indicator of the overall health of an area’s economy, which looks good for the next few years, as millions of dollars are going to be spent on roads and other public works projects.

Better hiring plan keeps Hannibal Lecter from company picnic

Life has been pretty tough lately at the company. Good employees have been really hard to find, but since the economy has slowed things are starting to improve ... so you think. Your phone rings and Harry, your sales manager excitedly tells you about this great employee he hired today. "Let me tell you about this great guy I hired! He is a little older, but he passed the interview with flying colors and best yet, he loves to work with people. He is fascinating and has great ’soft skills,’ just what we need around here. I have a gut feeling he is going to be the best salesperson we’ve ever hired." Finding and placing the right person for the right job is critical to business success. Because of the labor shortage, many businesses feel they need to lower their standards and hire the first body that walks through the door. But that’s a bad strategy. Job interviewing alone is unreliable in today’s market. Many people with hiring responsibilities are not aware how one bad choice can damage or in this case "kill" healthy organizations. Shortsighted decisions often lead to disastrous results.

House resolution takes exception to linking fisheries with Steller sea lion decline

The House Fisheries Committee has given a unanimous nod to a resolution that supports limitations on pending fishing restrictions designed to protect sea lions. The measure is expected to fare as well in the state Senate. House Joint Resolution 10 notes a reference in the National Marine Fisheries Service’s controversial "biological opinion" that salmon and herring fisheries may also be a factor in the decline of the Steller sea lion. "In doing so it raises a red flag," said Rep. Drew Scalzi, R-Homer, who sponsored the resolution. According to the publication "Laws for the Sea," Scalzi said that a committee review of research on the sea lion decline indicated "evidence to curtail the fishery is lacking." Pacific Seafood Processors Association Vice President Stephanie Madsen testified in support of the resolution with a newspaper editorial cartoon that compared federal restrictions on groundfish harvesting to an imaginary order to stop picking berries because of a decline in bear populations. "That’s how we feel," Madsen said. "We’re being broad-brushed because one theory points the finger at us."

Pollock boat owners challenge law requiring U.S. ownership

ANCHORAGE -- The owners of several Bering Sea pollock fishing boats are challenging a 1998 federal law that requires the vessels to be predominantly owned by American citizens by later this year.The owners say that under terms of post-World War II free-trade treaties, their Japanese, Korean and Danish partners should not have to give up their investments in the U.S. fishing boats.But squeezing out foreigners from U.S. commercial fisheries was the aim of the American Fisheries Act of 1998. The law was the latest in a string of efforts by Sen. Ted Stevens, R-Alaska, to reserve for Americans the rich fishing resources in the 200-mile zone around the coastal United States.Previous laws had loopholes that let substantial foreign ownership continue in the fleet, particularly in the Bering Sea pollock fishery. The pollock fishery is the largest fishery in the United States by volume. The annual Bering Sea pollock haul is worth about $700 million after processing.The American Fisheries Act mandates that all boats longer than 100 feet and fishing in U.S. waters be 75 percent owned by American citizens by Oct. 1. Lenders that finance the boats also must meet that standard.The act, however, provides for an exemption in cases where the citizenship standard "is determined to be inconsistent with an existing international agreement relating to foreign investment."Owners of several large fishing vessels are now petitioning a federal agency, the Maritime Administration, for a ruling on whether their foreign investors must shed their interests in the boats. The owners cite treaties of friendship, commerce and navigation between the United States and Japan, South Korea and Denmark.The Maritime Administration is expected to make a ruling on the first of seven petitions, involving a total of 14 boats, by March 15.The act affects more than 500 large fishing boats nationwide, many of them operating off Alaska.William Myhre, a maritime attorney in Washington, D.C., said he’s unsure whether the boat owners petitioning the Maritime Administration will prevail. However, over time, he said, he believes the act will greatly increase American ownership in the pollock and other fleets.In fact, Myhre said he’s already worked on numerous cases in which foreign owners have sold their shares to Americans or boats have changed hands altogether.Last year, the Norwegian owners of American Seafoods, the largest operator of Bering Sea factory trawlers, sold out to American investors, including some Alaska-based companies.Even if the Maritime Administration grants the petitioning boats an ownership exemption, it could limit them in other ways, such as forbidding contracts requiring a boat to deliver all of its catch to a foreign packer, Myhre said."These are not the old days where somebody can sort of wink and hide their foreign partner," he said.

Phillips christens second double-hulled tanker

ANCHORAGE -- The second of five state-of-the-art Millennium Class tankers planned for Phillips Petroleum Co. was christened March 3. A unit of Phillips, Polar Tankers, unveiled the new double-hulled tanker in New Orleans. The Polar Resolution was constructed by Polar Tankers at the Litton Avondale shipyard in New Orleans. It will be delivered late this year. The first of the Millennium Class tankers, the Polar Endeavour, will begin carrying Alaska North Slope crude this spring. Phillips Petroleum Co. and Polar Tankers Inc. christened the second Millennium Class double-hulled tanker called the Polar Resolution in early March. Millennium Class tankers are the first tankers to be built to haul Alaska oil since passage of the federal Oil Pollution Act of 1990. They have twin propellers, twin rudders and double independent engine rooms. Litton Avon currently has four 125,000-deadweight ton crude oil tankers under construction for Polar Tankers. Phillips Chairman and Chief Executive Jim Mulva said the company decided to build a fifth Millennium Class tanker because it plans to increase its North Slope production from 350,000 barrels to 400,000 barrels a day. The fifth tanker is valued at more than $205 million. The carriers will hold slightly more than 1 million barrels of cargo at full capacity. Ship builder Litton Avondale and Polar Tankers have agreed to options for a sixth and seventh ship. The option for the sixth ship is subject to exercise in the third quarter of 2001, and the option for the seventh is subject to exercise during the fourth quarter.  

'Paperless' agencies pass cost onto builders

Electronic commerce has a hidden, but large, cost for construction contractors and subcontractors in Alaska, according to Monty Montgomery, assistant executive director of the Associated General Contractors Alaska Chapter.AGC is the construction industry’s trade association in Alaska. The problem is that federal policies dictating the move to "paperless" procurement has left each agency and, in the case of the military, each base, with authority to establish its own procedures, often using different hardware and different software.Federal agencies require potential bidders to get the information electronically, which saves the government a lot of money. But the information has to eventually be printed out anyway, Montgomery said, so that contractors can use designs and specifications at the job site.Also, some agencies in the Lower 48 require the bids to be made electronically, but for contractors to also send a paper copy of the bid and backup material by mail. It’s a trend that may affect Alaska projects, he said.This doesn’t cut down on paper, but it has passed costs from the government to the private sector, Montgomery said.Keeping up with it has become a nightmare for smaller contractors and subcontractors, Montgomery said. Lack of a uniform, coordinated approach gives an advantage to big firms that can afford to hire specialists to get the information, but leaves smaller businesses in the lurch.For example, federal agencies are now posting Alaska project announcements and specifications on Web sites. The problem is finding the Web sites because they can be almost anywhere, Montgomery said.A defense radar project in Alaska, for example, will be posted on the Web site of the U.S. Air Force base that takes the lead on radar technology, in this case Scott Air Force Base in Ohio, he said. It might not be posted in Alaska on Web pages maintained by Elmendorf Air Force Base in Anchorage or Eielson Air Force Base, east of Fairbanks.Likewise, Montgomery said Alaska projects are sometimes, but not always, posted on the Web page of Hickam Air Force Base in Hawaii, the administrative headquarters for Alaska’s military -- but again, not on Web pages in Alaska."To keep up with this a contractor or subcontractor would have to hire someone full time just to surf the Web and try and find these projects. It’s a cost many smaller companies just can’t bear," Montgomery said.Military officials don’t see the problem because they may not experience a reduction in the number of prime contractors bidding. But what they don’t see, Montgomery said, is that there are fewer subcontractors competing to team up with potential prime contractors.It will wind up costing U.S. taxpayers in the long run, Montgomery said, because fewer subcontractors, and over time fewer prime contractors, will bid to build federal projects, he said. Less competition means higher costs.Another problem is that the different military bases in Alaska use different software. Buying multiple software packages is very costly for small firms, Montgomery said.But one agency that has done an outstanding job of addressing the problem is the U.S. Army Corps of Engineers, he said. The corps tackled the problem in 1990, worked closely with the contractor community, and by 1995 developed an approach used nationwide where bidders on projects are sent a CD-ROM that contains the software. It’s very user-friendly, and it helps the contractor or subcontractor to pull project information off the corps’ Web site.The AGC has been urging other federal agencies to adopt the corps’ approach, but so far there have been no takers."We have meetings every year with the top people, the generals and everybody," Montgomery said. "Every year we bring it up. Nothing ever happens."One step the industry has taken is buying equipment and hiring specialized staff members in a joint project with The Plan Room, a private firm that acquires project documents for contractors."We couldn’t afford it if we did this ourselves because we haven’t enough members of AGC," Montgomery said. "The Plan Room couldn’t afford to do it themselves because they aren’t big enough. Together, we are big enough to make it work."The joint project was undertaken in January 2000. AGC closed down its plans room in Anchorage to pool resources with the private company.In Fairbanks, things were consolidated in the existing AGC plans room. Electronic capabilities were also offered in the plans rooms maintained in Kenai and in Juneau.This step helps, but it doesn’t solve the root of the problem, which is lack of coordination and uniformity in federal agency policies, Montgomery said.The state of Alaska is taking a more cautious approach and is watching the experience of federal agencies, Montgomery said. The state Department of Transportation and Public Facilities is moving toward electronic commerce, but still publishes bid notices in newspapers and sends paper copies of bid requests and project specifications to plans rooms.

Project bonds bet on future U.S. funds

Gov. Tony Knowles has found a way to pave streets in Barrow and Bethel, fix seaside erosion to Kotzebue’s Shore Avenue, fund new ferries for service in Southeast Alaska and fix the Glenn and Seward highways in Anchorage.Department of Transportation and Public Facilities Commissioner Joe Perkins introduced a statewide transportation initiative on Feb. 27 that calls for using revenue anticipation bonds called GARVEE bonds to fund $355 million of transportation projects statewide, meeting Knowles’ expectations.GARVEE or Grant Anticipation Revenue Vehicle bonds will allow the state to issue revenue obligations based on anticipated federal funds allotted the state for transportation construction. Once the bond sale is approved by the Legislature, funds from GARVEE will be applied to statewide projects in addition to projects that have been identified on the Statewide Transportation Improvement Plan, or STIP.Perkins called the new funding process the third leg of a three-legged stool, referring to transportation funding mechanisms like the state general fund and matching funds for federally qualified projects."This will speed up projects that have already been identified by communities statewide, and in the case of Anchorage, transportation projects that are on the Metropolitan Area Transportation Study list," he said.According to Perkins, statewide community identified projects will receive acceleration from the normal lengthy STIP process, and will receive GARVEE funding much sooner than other processes for completion of the projects.Perkins explained that the bonds are not state guaranteed debt but will offer funding earlier, and offer a additional source of revenue outside of the general fund. Under the plan, Alaska will pledge future federal funds to repay the construction costs of the projects. This pledge will be subject to annual appropriation by the Legislature.Knowles’ bill provides $147 million for Anchorage, including: $58.2 million to eliminate the bottleneck on the Glenn Highway near Merrill Field; $28.8 million to extend C Street from Dimond Boulevard to O’Malley Road; and $15 million for the Seward Highway and International Airport Road crossing.Other Anchorage projects include work on the Seward Highway, Bragaw Street, Dimond Boulevard, Ninth Avenue, Northern Lights and Benson boulevards, Mountain View Drive and Spenard Road.The bill includes $67 million each for the Fairbanks and Matanuska-Susitna Boroughs.Fairbanks projects include $18.7 million to reconstruct Illinois and Barnette streets; $16 million for the Richardson Highway interchange at North Pole; $8 million for downtown Fairbanks street improvements; and $10 million for other roads and trails within the Fairbanks North Star Borough.Mat-Su Borough projects include $18 million to expand the Palmer-Wasilla Highway and $13 million for the Old Glenn Highway. Other projects in the area include improvements for the Parks Highway; Petersville, Seward Meridian, Trunk and Bogard roads; and $1 million for Wasilla’s local "gravel to asphalt" program.Knowles’ bill also provides $70 million for two new high-speed ferries for Southeast Alaska, and $15.7 million for Kenai to repave eight miles of the North Kenai Spur Road and rehabilitate East Redoubt Avenue in Soldotna.Rural projects in Knowles’ initiative include $11.5 million for rehabilitation and erosion control along Shore Avenue in Kotzebue; $5.1 million to rehabilitate Bering, Sepalla and Front streets in Nome; $9.9 million to pave the remainder of the Aleknagik Lake Road in Dillingham; $6.8 million for road improvements in Bethel, including Chief Eddie Hoffman Highway and Ptarmigan Street; $10 million to pave dirt streets in Barrow; and $15 million to address the dust problem in rural Alaska by surfacing village roads.

Team to scourge Amchitka for bombs

ANCHORAGE -- The U.S. Army Corps of Engineers will be heading a multi-agency group going to Amchitka Island this summer to look for bombs, grenades and mortar shells left over from years of military occupation.Agency contractors plan to detonate whatever unexploded ordnance they find on that remote island. Old explosives tend to be unstable.The Corps of Engineers, the U.S. Navy and the Department of Energy also will be demolishing old military sites and hauling away PCB-contaminated sludge. The Energy Department plans to cap pits of drilling muds left over from atomic testing on the island in the late 1960s and early 1970s. When the Japanese captured Kiska, 70 miles to the west, in 1942, Amchitka became a forward outpost in World War II. U.S. Army troops moved onto the island, and a Naval Air facility followed. Japanese bombers and fighters hit the island several times before evacuating Kiska in August of 1943.The U.S. maintained a military presence on Amchitka and operated a White Alice communications site there through the 1950s and 1960s. The Atomic Energy Commission chose Amchitka as the site for three underground atomic tests from 1965 through 1971.The last, the 5-megaton Cannikin, was among the largest underground atomic blasts ever conducted by the United States.At one time, more than 1,500 buildings stood on Amchitka.Much of that was removed by the Army Corps of Engineers in a cleanup effort in the mid-1980s, and the Navy made another run at clearing Amchitka in 1991.Suzanne Beauchamp, the corps’ project coordinator, said the five sites contractors will focus on this summer may shelter unexploded bombs and a wide range of munitions and cartridges.

Royal Caribbean hitches two new dome cars to Alaska Railroad

Royal Caribbean Cruises Ltd.’s two new domed railcars are en route to Alaska where they will serve Alaska Railroad visitors this summer.The Miami-based cruise line touts the cars as the world’s largest glass-domed cars, which measure 18 feet tall by 85 feet long and 10 feet wide, said company spokeswoman Michele Smith. The domed cars should arrive in Anchorage in mid-April, she said.Other Alaska cruise players, Holland America Line and Princess Tours, already operate domed railcars, tours and hotels in the state. Holland America runs 13 McKinley Explorer railcars in Alaska carrying 66 passengers each while Princess operates 10 railcars each carrying 88 passengers for its Midnight Sun Express, company representatives said.Royal Caribbean’s two-level Wilderness Express railcars, which can seat 88 people each, were built by Colorado Railcar Manufacturing LLC of Denver.Valued at a total of $5 million, the two railcars offer dome-level seating that complies with the Americans with Disabilities Act, and the cruise line believes the accessibility to both levels is an industry first. Royal Caribbean also aims to improve accessibility on the ships it’s now building, Smith said. Royal Caribbean Cruises Ltd., which owns Royal Caribbean International and Celebrity Cruises, has a total of 20 ships in service and nine under construction or on order, company officials said.The new railcars are part of Royal Caribbean’s move to expand onshore excursions in Alaska for its passengers, Smith said.Last year Royal Caribbean Cruises Ltd. started a new company, Royal Celebrity Tours, based in Seattle, to handle land tour packages for Alaska, Smith said. New railcars and land tours are ways the company can increase its Alaska business with new offerings, she said."We wanted to enter this market in a dynamic way," she said.The company is offering new land tour packages beginning in May ranging from two to six nights and visiting Anchorage, Denali National Park and Preserve, Fairbanks, Girdwood and Talkeetna. Cruise passengers can add the tours before or after their cruise, and Royal Celebrity Tours employs tour directors to guide the land tours.Wilderness Express railcars feature outdoor 360-degree viewing platforms, seats that recline and rotate plus onboard dining.The company was promoting its new railcars this month en route to Alaska during a six-city tour to Denver, Dallas-Fort Worth, Los Angeles, San Jose, Calif., Portland, Ore., and Seattle.

Praxair to merge home care business

Praxair Distribution Inc. has agreed to purchase Interwest Home Medical Inc. which operates a branch in Anchorage.Under terms of the deal, Praxair Distribution, a subsidiary of Praxair Inc., will pay about $42 million for the equity of Salt Lake City-based Interwest Home Medical plus assume debt.Praxair plans to combine its home care business with Interwest Home Medical.The transaction is subject to regulatory approval and Interwest Home Medical shareholders, but has been approved by boards of both companies. Officials expect the deal to close in second quarter.Interwest Home Medical handles the rental and sale of home oxygen and respiratory equipment and other home medical equipment.The company has 25 branches in Alaska, Arizona, California, Colorado, Idaho, Nevada and Utah, employing more than 400 people. Interwest Home Medical also employs about 40 sales people who call on hospitals, physicians, therapists, discharge planners, case managers and other health care professionals.Air ambulance upgradedANCHORAGE -- LifeGuard Alaska recently completed an upgrade of its new Bell 412 helicopter, a move that gives the aircraft state-of-the art equipment and allows it to carry three patients at a time, a company statement says.LifeGuard Alaska is the air ambulance service of Anchorage’s Providence Alaska Medical Center.The Bell 412, which Providence acquired in August, is the only civilian-dedicated, hospital-based helicopter for use in air ambulance service in the state, LifeGuard said, although the North Slope Borough has a Lear jet it frequently uses for medical evacuations.The helicopter upgrade was completed as LifeGuard gears up for its 24-hour summer service, which begins April 1 and runs through Oct. 31.

Pourchot gives go-ahead to power line route via Tanana Flats

FAIRBANKS -- Saying he couldn’t justify a change, Natural Resources Commissioner Pat Pourchot gave his final approval to a controversial route for a power line through the Tanana Flats.Pourchot’s decision March 1 came six years after Golden Valley Electric Association applied for the permits to build the 100-mile Healy-to-Fairbanks power line.The route has been bitterly opposed by environmentalists and others who said the line would disrupt the view and hurt the environment. They also say alternatives were never seriously considered.Pourchot commissioned three reports from staff and two firms to address concerns. He used that information and previously generated information to make his decision, he said.Golden Valley officials applauded Pourchot’s choice. The company wants to build the 230 kilovolt line to boost an existing 33-year-old line."No matter which viewpoint you hold, it’s been a challenging task for all, involving tough compromise," Mike Kelly, GVEA project manager, said. "GVEA now faces the serious task of stewardship."Members of the GVEA Ratepayers Alliance, one group that fought to keep the line off the flats, took the news hard."I’ve traveled all over the world and I’ve seen the world trashed for profit," Stacey Fritz, spokeswomen for the GVEA Ratepayers Alliance, said. "I think the Tanana Flats deserve more than that."Pourchot said he based his decision on several points. The impacts on the Tanana Flats do not outweigh the substantially increased costs, delays and additional impacts associated with a new routing, he said.Opponents of the Tanana Flats route said the power line would impact fens, a unique type of wetlands. Pourchot said studies indicate the impact to the fens would be negligible.The flats are far from untouched by man and the power line would cross less than 1 percent of the flat’s 2 million acres, Pourchot said.Kelly said GVEA would resume building as soon as possible. The company cleared six miles of federal right-of-way near Anderson last summer.Last July then Natural Resources Commissioner John Shively issued a decision that gave the state’s approval for the route favored by Golden Valley. Shively was asked to reconsider his decision by Gov. Tony Knowles in August.Shively stepped down in September and passed the final decision to incoming commissioner Pourchot.Community leaders approved of Pourchot’s decision."I’m happy, I think the process worked and that’s what it’s all about," said Fairbanks North Star Borough Mayor Rhonda Boyles.City of Fairbanks Mayor Jim Hayes said Pourchot’s selection of the route was the right decision."We wanted quicker, cheaper and faster and this route does all of that," he said. "So it was a very, very good decision."Opponents have 30 days from March 1 to file an appeal of the decision.

Knowles taps state's gas line experts

Alaska has 630,000 experts on developing a proposed natural gas pipeline from the North Slope to the Lower 48, and Gov. Tony Knowles says he wants to hear from them. That’s why Knowles organized a 28-member blue- ribbon panel of top citizens in January to synthesize what Alaskans have to say and collect other pertinent information on the subject.The group, known as the Governor’s Alaska Highway Natural Gas Policy Council, held its first organizational meeting in Anchorage March 1.Knowles led a lineup of speakers from his administration who outlined the work expected of the council and current market conditions that suggest urgency in devising a plan to get construction of an Alaska-Lower 48 gas pipeline under way.Knowles told the council to ask tough questions, engage the experts and come up with recommendations by next fall on how the state should proceed in helping to develop an Alaska gas pipeline.He also set a few boundaries for the council’s investigation, emphasizing his desire that the route of the proposed gas line follow the Alaska Highway after traveling south from the North Slope to Fairbanks or Delta Junction.The governor said the highway route has undergone substantial regulatory scrutiny, especially environmental considerations."The state of Alaska would have some serious concerns about digging a trench under the Beaufort Sea," Knowles said. "And even if we agreed to a northern route, we know that it would be pursued much further along in the future because of all the other considerations."Knowles said his proposed project also has other givens, including a worldwide consensus that the Lower 48 is the most economic market for Alaska’s natural gas today; and the project will need national and Canadian support.After his remarks, Knowles also told the Journal that he expects the council to be able to answer some tough questions."People were coming to me and asking if the state of Alaska should own the gas pipeline," he said. "I don’t know the answer to that, but I think these people will find the answer."The governor also said the council members "have the juice" to get the attention of the Alaska Legislature and the public.He cited council member Ron Duncan, who is president of General Communication Inc., as a telecommunications expert who brings a valuable perspective on a related field for many gas pipeline companies.Knowles said Anchorage Mayor George Wuerch, who worked on a project to develop an Alaska-Canada gas line in the 1980s, has valuable engineering and energy company management experience. Wuerch and Fairbanks Mayor Rhonda Boyles also bring the resources of their respective communities to the council, he said.The governor also pointed out the oil and gas expertise of consultants Brian Davies and Ken Thompson, who formerly worked for BP Exploration (Alaska) Inc. and ARCO Alaska Inc. respectively, and the unique contribution he expects from Rosemarie Maher, president and chief executive of Alaska Native regional corporation Doyon Ltd."You know the gas pipeline will have to cross Doyon’s land," he explained.The other council members are:* Retired ARCO Alaska senior vice president Frank Brown, and Jim Sampson, executive director of the AFL-CIO in Alaska, who serve as co-chairmen;* Former Kenai Peninsula Borough Mayor Mike Navarre;* Former state Attorneys General Grace Schaible and Charlie Cole;* Former state Sen. Al Adams of Kotzebue;* CIRI President and Chief Executive Carl Marrs;* Former state Natural Resources Commissioner Esther Wunnicke of Anchorage and a member of the public policy group Alaska Common Ground;* Noted author and former Anchorage mayor Jack Roderick;* Lynden Inc. President Jim Jansen;* Former Alaska Permanent Fund Executive Director and current president of Alaska Permanent Capital Management Dave Rose;* National Bank of Alaska Chairman Ed Rasmuson;* University of Alaska Anchorage Chancellor Lee Gorsuch;* Anchorage businessman Bob Penney, who also is a member of the North Pacific Fishery Management Council;* Peg Tileston, environmental activist and board chairwoman of Alaska Common Ground, a nonpartisan public policy group;* Jake Adams, president of Arctic Slope Regional Corp.;* North Slope Borough Mayor George Ahmaogak;* Anchorage attorney Jeff Feldman;* Anchorage businessman Jon Rubini;* Chief Executive Jerry Hood of the Alaska Teamsters Union Local 959; and* Mike O’Connor, president of Peak Oil Field Services Co.The council members spent the bulk of the meeting March 1 organizing into work sessions and public hearings later this year. The governor said he expects a final report from the council by Nov. 30.Knowles said he is concerned about the Legislature’s appropriation of only $600,000 of his $1.9 million supplemental budget request to pay for the administration’s gas pipeline work this year."The fast tracking is critical," he said. "It could stall the project by a year if we miss this season’s work."Lt. Gov. Fran Ulmer told the council that expectations are high in Alaska because people see the proposed gas pipeline as a source of plentiful and inexpensive energy and new public revenues as well as an engine to drive the state’s economy.But Alaskans also want the project done right, which means applying for and securing scores of federal, state, local and Canadian permits, she said."That means a lot of studies, including ... an environmental impact statement, which will take 18 months, and a right-of-way permit, which will take nine months, if we’re lucky," she said. "Doing it right means we need good information, and that will take a lot of money."Ulmer said other pieces of the puzzle include public outreach and prudent management like involving the Canadian and U.S. governments early on in the process.Natural Resources Commissioner Pat Pourchot told the council that an Alaska Highway gas pipeline will meet all four of Alaska’s objectives -- jobs and community benefits, access to natural gas for Alaska communities, future development opportunities such as liquefied natural gas and petrochemicals and increased public revenues from a variety of taxes and royalties.In doing the project right, Pourchot said a work plan will be needed for gathering information during this summer’s field season.Pourchot said the Knowles administration has hired three expert research firms for advice on natural gas issues, including Cambridge Energy Research Associates of Massachusetts.Ed Kelly, Cambridge’s top natural gas researcher, outlined for the council the reasons for his belief that now is the time to develop an Alaska-Canada pipeline that could ship 4 billion cubic feet per day of raw gas."There’s a hunger for natural gas in the Lower 48 and an uneasiness about the future," he said, citing not only the voracious appetite Americans have for electrical power but also their aversion to coal, nuclear and more recently hydroelectric power sources.Kelly said current U.S. natural gas supplies are at a 20-year low and that plus a combination of steadily rising demand and uncertain supplies have aligned to present a strong opportunity for Alaska gas."If the economy continues to grow in a normal way, it will mean a 1.5 billion cubic feet per day increase in gas demand annually" for the foreseeable future, Kelly said.Add to that another 3 billion cf/d in demand from customers who want to burn natural gas today and can’t get it because of prices and 450 billion cf is needed for winter storage, he said.All signs point to U.S. natural gas demand growing dramatically in the years ahead. That means gas companies will have to find 350 trillion ccubic feet more gas in the next decade to support a 30 Tcf market, Kelly said. "The Lower 48 is reaching for the frontiers," he said.Alaska’s North Slope has 35 Tcf of known reserves and an estimated 100 Tcf in total reserves.Kelly said the risks of building an Alaska gas pipeline are currently outweighed by the advantages. "Think of the 4 Bcf/d in the context of a 62 Bcf/d market and rising," he added.


Confabs The Anchorage Chamber of Commerce is holding a bond issues forum at noon March 12 at the 4th Avenue Theatre. Anchorage Mayor George Wuerch and Anchorage School District Superintendent Carol Comeau will give presentations regarding municipal and school bonds appearing on the April ballot. The cost is $14 for members and $20 for others. For additional information, call 907-272-2401 or visit ( WOMEN$fund, a program of YWCA of Anchorage, is offering a free business circle from 6-8 p.m. March 12 at the Older Persons Action Group building, 323 W. Third Ave. The business networking group is for WOMEN$fund clients as well as interested businesswomen and provides information about banking, legal, accounting, insurance, marketing and other issues relevant to the small business person. For reservations, call 907-274-1524 or contact ([email protected]). The Greater Fairbanks Chamber of Commerce is holding its general membership luncheon at noon March 13 at the Westmark Fairbanks. Kevin Meyers, president and chief executive of Phillips Alaska Inc., is the scheduled speaker. The luncheon cost is $11.25. For more information, call 907-452-1105. The Greater Soldotna Chamber of Commerce is holding its weekly meeting at noon March 13 at the Riverside House, 44611 Sterling Highway. Robin West, refuge manager for the Kenai National Wildlife Refuge, will discuss its economic impacts. For more information, call 907-262-9814. The Greater Wasilla Chamber of Commerce is holding its luncheon presentation at noon March 13 at the Mat-Su Resort, 1850 Bogard Road. David Arnsdorf, president of the Alaska Manufacturers’ Association, and Charles Becker, director of the Alaska Export Assistance Center, will provide business spotlights on their organizations. Program fees are $3 for members and $5 for others. An optional lunch is available. For more information, call 907-376-1299. The Kenai Peninsula Small Business Development Center is sponsoring a seminar on financing a business from 1-4 p.m. March 13 at the Kenai Peninsula College Kachemak Bay Campus in Homer. The cost is $15. For more information, call 907-262-7497. The Internal Revenue Service, the Department of Labor and the Anchorage Small Business Development Center are conducting a free seminar on employer payroll taxes from 8:30 a.m. to 4 p.m. March 14 at the Department of Labor, 3301 Eagle St., Room 101. To register, call 907-274-7232. The Kenai Chamber of Commerce is holding its weekly meeting at noon March 14 at the Old Town Village Restaurant, 1000 Mission Ave. Kathy Scott of Project Impact and Debra Holle of the American Red Cross will speak on the 1964 earthquake. The luncheon cost is $10.50. For more information, call 907-283-7989. The Greater Palmer Chamber of Commerce is holding its weekly meeting at noon March 14 at the Palmer Moose Lodge, 1136 S. Cobb St. Linda Jo Klapperich, Junior Achievement of Mat-Su chairwoman, is one of the presenters who will speak about the organization. The cost is $9. For additional information, call 907-745-2880. The Resource Development Council for Alaska Inc. is presenting a program at 7:30 a.m. March 15 at the Petroleum Club of Anchorage, 3301 C St. Richard Cattanach, executive director of Associated General Contractors - Alaska, will report on Alaska construction in 2001. Breakfast for members cost $12 and $15 for others. For reservations, call 907-276-0700. The Anchorage Chamber of Commerce Business After Hours is slated for 5-6:30 p.m. March 15 at Costco, 4125 DeBarr Road. The event features a truckload display of Kirkland products, free refreshments and door prizes. For reservations, call 907-272-2401. The Alaska World Affairs Council is presenting a program at noon March 16 in the Hilton Anchorage Hotel. Ambassador Rajendra Abhyankar, consul general of India, San Francisco, will discuss "India and the United States." Lunch fees are $17 for members and $20 for others. For details, call 907-276-8038. WOMEN$fund is offering a two-week course entitled "Intermediate Quickbooks Pro" from 9 a.m. to 1 p.m. beginning March 17 at the YWCA office, 245 W. Fifth Ave. The cost is $60. For additional details, call 907-274-1524. The 2001 Alaska Transportation Careers Fair is scheduled for 10 a.m. to 3 p.m. March 17 at three locations: the Alaska Railroad, 327 W. Ship Creek Ave.; Ted Stevens Anchorage International Airport, North Terminal; and the Port of Anchorage, 2000 Anchorage Port Road. For more information, call 907-266-2674. The Prince of Wales Chamber of Commerce Trade Show is slated for March 17 in Craig. For booth rental information or additional details, call 907-826-3870.  

Anchorage fish plant continues re-start plans

ANCHORAGE -- The stalled Alaska Seafood International plant has a new board of directors and new hopes for beginning mass production of heat-and-eat fish dishes.The new board includes a representative of the state, which built the Anchorage factory in the late 1990s and which recently invested millions of dollars to buy nearly a quarter interest in the seafood company.ASI has been stricken for a year with financial problems, and its first stab at production, never anywhere near the factory’s capacity, was halted last August after only a few months.Since then, executives have scrambled for a rescue plan.The 202,000-square-foot fish factory is designed to turn millions of pounds of salmon, pollock, halibut and other fish into breaded, marinated and seasoned fish portions and meals for sale to big buyers who would market the goods under their own labels. State leaders touted the venture as an important advance and job maker for Alaska, whose seafood industry traditionally has shipped fish out of state either raw or with little advanced processing.The state-owned building was erected with a $50 million legislative appropriation. ASI, the tenant, came into the venture with financial backing from Taiwanese investors and bankers. But early last year the Taiwanese support crumbled, at least in part because of disruptive national elections in that country, state and ASI officials said.In January, officials announced that the company’s finances had been restructured, resulting in $14 million in new cash and a fresh commitment by the Taiwanese. Also, a state lending agency, the Alaska Industrial Development and Export Authority, became a 25.4 percent owner in ASI in exchange for $2.5 million and forgiveness or deferral of $8 million in rent.Jeff Bush, a state economic development official and AIDEA board member, is chairman of the new, nine-member ASI board. He said the plant can be salvaged.Among the challenges are efforts to find an investor willing to buy 15 percent of the company for $5 million. Bob Poe, executive director at AIDEA, said talks continue with an investment firm that specializes in buying and turning around companies in financial distress or in bankruptcy.Despite the January refinancing, ASI still lacks a line of credit necessary to buy raw processing materials, including fish, seasonings and packing materials, Bush said. The worry is that salmon runs begin in less than three months.A third priority, a "really big one," said Bush, is that ASI needs to reformulate a sales and marketing team to generate orders.Bush said he’s unsure when production can resume.

This Week in Alaska Business History

Editor’s note: "This Week in Alaska Business History" revisits events that shaped our past."Those who cannotremember the past arecondemned to repeat it."-- George Santayana, 1863-195220 years ago this weekAnchorage TimesMarch 13, 1981Consultant paints rosy picture of gas line prospectsBy Dave CarpenterTimes Juneau BureauJUNEAU -- The proposed Alaska natural gas pipeline will "almost certainly" be built but construction won’t start before 1983 and probably not until 1984, according to a Washington, D.C., consultant.Joseph H. Chomski, in remarks prepared for delivery before the Joint Natural Gas Pipeline Committee, painted a fairly rosy picture of gas line prospects."The Alaska gas pipeline project has had its problems, as all will admit," said the legislative panel’s legal counsel."It still faces many tough ones, but the events of the last year cast an undeniable aura of optimism," he said. "In no year has progress been greater than the last one."... The attorney said negotiations between North Slope producers and Northwest Alaskan Pipeline Co. officials in New York may result in an agreement on gas line financing within the next month.Anchorage TimesMarch 12, 1981Yukon Office Supply expands chain with four Hawaii storesBy Karen RansportYukon Office Supply has expanded to Hawaii, representing a new chapter in growth for the 30-year-old Alaska firm.Started by Jess Bovee and a one-man service department on Fourth Avenue in 1951, the firm grew to nine Alaska branches and 260 employees by 1980.Yukon Office Supply’s success is the result of a people-oriented philosophy and the blessing of good employees and management, president Steve Karakash said Thursday."We feel we have always been pioneers in office supply and will continue to be a young, dynamic firm," Karakash said.10 years ago this weekAlaska Journal of CommerceMarch 11, 1991Chevron delays Beaufort explorationBy Ray TysonFor the Journal of CommerceChevron USA has delayed plans to launch a $100 million exploration program this summer in the Beaufort Sea, putting another damper on what was shaping up to be an unusually busy offshore drilling season on Alaska’s outer continental shelf."As is often the case in this industry, we couldn’t get a quick agreement with our partners on what their interest in the venture would be, and to get them to commit to it," said Tom Cook, Chevron’s Alaska exploration representative.In November, Texaco USA postponed its plan to begin a three-year exploration program in the Chukchi Sea when the company refused to accept new state drilling standards. Texaco appealed its case to the U.S. Commerce Department, a process that could take up to two years.Alaska Journal of CommerceMarch 11, 1991Soft market for S.E. timberAlaska Journal of CommerceSoft markets are continuing for timber operators in Southeast Alaska. Overall production is probably down 15 percent compared with this time last year, but economists are sticking with the predictions of gradual improvement in prices in the third or fourth quarter of 1991.But a general recovery could also come a little sooner. Reconstruction in the Persian Gulf may add a "good chunk of new demand" for construction-grade timber, says Frank Seymour, timber specialist in the state Division of Business Development. "It won’t be big enough to lift the market by itself, but it will impact the market."Most of Alaska’s timber output goes to export markets, mainly in Japan.-- Compiled by Ed Bennett.

Bulletin Board

In gear Lt. Gov. Fran Ulmer has unveiled a new Links Program in which Alaska is partnering with other northern region groups to encourage sustainable tourism. Developed by a group of arctic tourism businesses in a process facilitated by the World Wildlife Fund Arctic Programme, the guidelines encourage local hire and purchasing of goods and services, respect for local cultures and minimal environmental impact. Businesses that agree to adhere to the voluntary standards of conduct will be entitled to display the program logo along with references to the program on their advertising materials. The Alaska Wilderness Recreation and Tourism Association will maintain a central Web site featuring businesses subscribing to the standards. Anchorage Hilltop Ski Area’s new day lodge was dedicated Feb. 24. Funding for the new $1.3 million facility came from a U.S. Department of Housing and Urban Development grant to the 2001 Special Olympics World Winter Games. Hilltop Ski Area served as the host facility and media center for the snowboarding competition and ski jump exhibition. Hickel Construction was the prime contractor for the new day lodge. Following the Games, the new multi-purpose facility will serve as a headquarters for the ski school, house retail space and storage of rental equipment, and provide a base location for Hilltop’s summer programs and camps. Kudos The National Asphalt Pavement Association has awarded Wilder Construction Co. of Anchorage a 2000 Quality in Construction Award for excellence in construction of an asphalt pavement. The company was presented the award in a special ceremony during the association’s 46th annual convention in Orlando, Fla. Wilder Construction won the award for its work on the Eielson Air Force Base runway reconstruction project. The runway serves as an alternative runway for space shuttles and is critical for U.S. Air Forces Pacific defense of the United States. The Houston Contracting Co. facility in Deadhorse has earned an Arctic Green Star Award for demonstrating environmental stewardship through a number of standardized initiatives. The Alaska Support Industry Alliance presented the award at its Feb. 23 breakfast forum held at the Petroleum Club. Houston Contracting accomplished a number of steps to earn the award including the implementation of at least six measurable programs and procedures to reduce waste, energy use and pollution. The BP-operated Endicott field on the North Slope has achieved Star status for health and safety excellence under the U.S. Occupational, Health and Safety Administration Voluntary Protection Program. Endicott is one of only three oil production facilities in the nation and the second BP-operated facility in Alaska to receive the federal agency’s highest rating. The BP-operated Central Power Station at Prudhoe Bay was elevated to Star status in November. Alyeska Resort and the Alyeska Prince Hotel recently received three industry awards for service. AAA Alaska has awarded the Alyeska Prince Hotel and the resort’s Seven Glaciers restaurant AAA Four Diamond awards for the second consecutive year. This is the fourth year for the hotel’s Four Diamond rating and the third year for Seven Glaciers. The hotel also was designated a Connoisseur’s Choice award winner for 2001 by "Resorts & Great Hotels, The Connoisseur’s Guide to the Best Hotels." Media Epicenter Press has published "Iditarod Fact Book - A Complete Guide to the Last Great Race." Little-known facts about the race and its mushers, the dogs and equipment, and villages along the Iditarod Trail are accompanied by official photos and sketches. Edited by Sue Mattson, the softbound book contains 160 pages, includes three maps and costs $12.95. For information, call 800-950-6663. Much obliged The National Science Foundation is awarding $9 million to the University of Alaska for the Experimental Program to Stimulate Competitive Research. The NSF funds support a three-year plan to make lasting improvements in UA science and engineering research infrastructure, and to help UA scientists and engineers compete for federal research dollars in the future. The NSF annual contribution of $3 million each year will be matched by $1.5 million annually in state and other nonfederal dollars, for a total of $13.5 million over the three-year period.  

Young to insist that gas pipeline wind through Alaska Interior

Alaska’s gas producers must choose a north-south route for developing North Slope natural gas, rather than an east and south route, Rep. Don Young, R-Alaska, told a public policy group in Anchorage on Feb. 21.Young, who chairs the powerful House Transportation and Infrastructure Committee, said he is optimistic that a gas pipeline to the Lower 48 will be built soon. But he told the oil companies that he is adamant that the pipeline pass through Alaska’s Interior rather than proceed east offshore to the Mackenzie Delta before turning south through Canada, he added."It’s important because of what it will mean to the state. Alaska needs cheap gas," the congressman told members of Commonwealth North.The three major gas producers, BP, Phillips Alaska Inc. and ExxonMobil Production Co., are conducting a review to determine which route the pipeline should follow. A decision is expected in the second quarter.Young said Alaska’s congressional delegation is committed to "fighting the good fight" to open the coastal plain of the Arctic National Wildlife Refuge to oil exploration and development."But the key to it is President Bush’s enthusiasm and dedication to an energy policy," Young said. "The only energy policy we’ve had for the last eight years is Bill Richardson, secretary of energy, on kneepads in Saudi Arabia."Young said he’s looking forward to the opportunities that will be open to him for the next six years as Transportation chairman to get things moving in the industry."I believe that is the transportation industry’s No. 1 problem in America today," Young said. "You cannot compete globally, if you can’t move goods quickly and efficiently."Excessive permitting for new projects and litigation has bogged down the industry and changes are needed to shorten the permitting process and discourage unnecessary litigation, Young said.For Alaska, he said that means state and local officials have an opportunity to advance the projects they need and expect help in Congress."You Alaska communities and the state have to be aggressive about your needs and make them known now, while I’m chairman of Transportation," he said.Young vowed to work for expanding the Alaska Railroad; improving the state’s airports; building secondary roads in smaller Alaska communities; constructing a bridge in Ketchikan and one for highway and rail traffic across Knik Arm; properly funding the U.S. Coast Guard so it can fulfill its missions; and revising the way Alaska wetlands are administered by federal agencies.Nationally, Young’s goals include revising federal transportation laws to promote road and infrastructure development; moving the staging of goods away from ports in downtown areas to relieve congestion; encouraging a mass transit demonstration project of a magnetic levitation train between Las Vegas and Los Angeles; expanding and improving air routes, particularly to arctic destinations; and reorganizing and modernizing the Federal Aviation Administration.

2nd Millennium class tanker soon to carry North Slope oil

ANCHORAGE -- Phillips Alaska Inc. is about to get its second Millennium class tanker to carry Alaska North Slope crude oil.The Polar Resolution was to be christened March 3 in New Orleans. It is built by Polar Tankers, the Long Beach, Calif.-based shipping unit of Phillips Alaska. The $200 million vessel is expected to arrive in Alaska the spring of 2002.The Millennium class tankers are the first new crude carriers built specifically for the Alaska trade in compliance with the Oil Pollution Act of 1990. The tankers are built with double hulls.The first of the four tankers, the Polar Endeavor, is expected to arrive in Alaska by May.Each of the new tankers is capable of carrying more than 1 million barrels of cargo.

Interior secretary to visit state soon

FAIRBANKS -- Interior Secretary Gale Norton said Feb. 22 that she would visit Alaska within the next two months and would visit "on a fairly regular basis" thereafter, she said.Norton also said it would be several months before she would appoint an assistant secretary of Indian affairs.Norton made her comment after a speech before the National Congress of American Indians’ executive council.Norton oversees the Bureau of Indian Affairs and the several agencies that manage federal land in Alaska.Joe Williams of Saxman, representing the Alaska Intertribal Council, also asked Norton when she would appoint an Indian affairs secretary.Norton said she has received numerous applications from highly qualified candidates. However, she said, the selection process was still in the "fairly early stages."Once a candidate is selected, he or she must go through a FBI background check and Senate hearings, she said. So even after the decision is made, it could be a few months before the person could start serving, she said.Ed Thomas, president of the Tlingit-Haida Central Council in Southeast Alaska, has applied for the job. He was in the audience and introduced himself to Norton after her speech.

Lender, investors help root budding businesses

Alaska entrepreneurs and businesses have complained for years about the lack of financing for business start-ups and early stage growth financing. The state’s banks have conservative lending policies, requiring collateral for loans and, in any event, are leery of firms that are just getting started.An effort by the Alaska Industrial Development and Export Authority, the state development financing corporation, to use some of its funds to attract venture capitalists to Alaska has had disappointing results."What we learned from that is the Alaska investment deals were too few and too small to interest most traditional venture capitalists," said Deborah Marshall, who heads InvestNet, a Juneau-based nonprofit that connects investors with Alaskan entrepreneurs.  The Alaska Growth Capital BIDCO Inc. team includes, from left, President David Hoffman, Jason Evans and Patrick Williams.PHOTO/Rob Stapleton/AJOCThe investment of AIDEA’s funds proved profitable, but only because of deals in Silicon Valley made by Polaris Fund, which handled the investments. The Alaska investments made by Polaris were break-even, or losers.David Hoffman, president of Alaska Growth Capital BIDCO Inc., a type of development bank, pointed out that most Alaska business owners would rather finance their early stage development with debt if they can."They’d rather not give up control if they can avoid it," he said. Alaska Growth Capital can do equity investments but most of its financings are loans, Hoffman said.Alaska Growth Capital was formed in 1997 to operate as a BIDCO, a form of development bank authorized by state laws in about 30 states including Alaska. It is a subsidiary of Arctic Slope Regional Corp. of Barrow,BIDCOs lend money mostly to small business start-ups and expansions and can take an equity position in the deal, which commercial banks in the United States cannot do.Alaska InvestNet, a nonprofit service formed two years ago, matches hopeful Alaska entrepreneurs with potential investors in Alaska and the Lower 48. InvestNet is operated by the Juneau Economic Development Council, but it maintains an office in Anchorage and its services are statewide.Both initiatives were largely initiated through efforts and financing from the Alaska Science and Technology Foundation. ASTF, a state agency formed to stimulate economic development, particularly in higher technology fields, is still involved in both efforts.ASTF has given InvestNet $270,000 in grants over three years. Three million dollars in loans from the foundation were combined with private investment, mostly from the Arctic Slope corporation, to provide the initial $7 million in capitalization for Alaska Growth Capital.Citing confidentiality, Marshall and Hoffman declined to identify details of specific deals except where the information has been made public by the businesses."Deals have come together, big and small," Marshall said. "I’m not privy to the details, other than what they choose to tell me."Alaska InvestNet’s main showcase for Alaska entrepreneurs is an annual conference where selected entrepreneurs make presentations to potential investors. This year’s Capital Investment Conference is planned for March 22-23 in Anchorage.These are successful, but Marshall is now supplementing them with smaller sessions held more frequently through the year. Typically, two selected entrepreneurs pitch their ideas in a breakfast meeting with potential investors."We pre-screen the investors. They have to have at least $1 million they’re willing to invest, so the entrepreneurs we work with know they’re dealing with people who actually have money," Marshall said.Likewise, the entrepreneurs are prescreened. Marshall goes through the business plans submitted to her and selects the best ones for the presentations.Entrepreneurs using the service pay a $250 yearly fee. Venture capital investors pay a $500 annual fee to participate. InvestNet receives no fee for deals that are made.Alaska Growth Capital has a different focus, but the goal is similar to InvestNet in early stage financing."We can do equity deals but we are mainly a lending institution, and we prefer that," Hoffman said. "We specialize in higher-risk loans to start-ups or firms in early stages of growth."We don’t necessarily require our borrowers to be in business, but a person starting a business must have experience in the field," he said.Unlike a conventional bank, Alaska Growth Capital’s loans don’t have to be backed by collateral, "although we like to see some collateral," Hoffman said. "What we look at mainly is the quality of the business plan and the projected cash flow."Rates for loans from Alaska Growth Capital aren’t cheap, Hoffman said. They reflect the higher risk.Alaska Growth Capital is now in its third year, and its lending may hit $10 million this year, after $6 million in the first year and $8 million in the second year, Hoffman said."It’s an amount of annual lending that can be sustained indefinitely with our present capitalization and our ability to leverage funds," Hoffman said. As other financial institutions do commonly, Alaska Growth Capital sells loans that are guaranteed by the U.S. Small Business Administration and U.S. Department of Agriculture rural development program."There’s a good market for guaranteed loans, and it frees up our capital to do more lending," Hoffman said.One fundamental difference between Alaska Growth Capital and conventional banks is the time its staff spends with prospective lenders, both before and after the loan is closed. The firm receives some government grants and much of this pays for added costs of serving remote communities and the hands-on assistance that is provided.However, relationships with commercial banks are crucial, Hoffman said. Alaska Growth Capital creates business for banks by helping new firms through their earlier stages, after which they turn to conventional sources of finance.Likewise, banks bring potential clients to Alaska Growth Capital, Hoffman said.Marshall said one of InvestNet’s key missions is education. Her group sponsors seminars on preparing strategic plans, how to value their firms and how to structure stock sales.


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