Jonathan Grass

Drone venture takes honors at small biz competition

The coffee shop across the street from your office, custom helicopter tours, Netflix. All of these ideas had to come from somewhere and Alaskan educators and businesses joined forces in an annual effort to encourage new entrepreneurs to get going. The earliest stages of new businesses — actually getting them off the ground — can be the hardest in the game. The Alaska Business Plan Competition, sponsored by a number by business and academic entities, aims to put some of these startups on the path forward. Just as importantly, it encourages them to get their ideas out in the open. Business and entrepreneurship professors Richard Wolk of the University of Alaska Southeast and Scott Fredrickson of Alaska Pacific University have been co-organizing this competition for years. Fredrickson said this is the first time many students have put a complete business plan together. Wolk said this makes for a valuable learning experience even to those who don’t win. “The important thing is to begin to build relationships between entrepreneurs and the financial community,” said Wolk. The finalists from 14 entries presented their ideas at the University of Alaska Anchorage on April 28 before a mixture of other young entrepreneurs, business professors and potential investors. First place — along with $1,500 — went to UAA students Cody Kubitz and Danika Alexander for the Kinetic Drone Group, an aerial surveillance and video photography company. It would use drone aircraft to survey land for everything from pipeline work to search and rescue missions to wildlife counting. It could also be used for events like the Iron Dog and Alaska State Fair. Kubitz and Alexander, both 23, will present the idea at the 49th State Angel Fund in August to try to get half of the $2.6 million startup capital. The rest would come from investors. Kubitz drew inspiration for the idea from his work as a fight data coordinator for the Federal Aviation Administration. “Alaska has always been a place to pioneer new technologies. This is especially important in aviation,” he said. Second place and $1,000 went to Nicholas Pless for his plan for Alaska Organics to locally grow produce using aeroponics, including vertical farming. The business plan also won an extra $500 for the People’s Choice Award. Entrepreneurs Jacob Taylor and Craig Bisgard took third place ($500) for their plan for a video game establishment called YouPlay. This would be a gaming café but the revenues would come from more than games, such as from competitions and energy drinks. Bisgard said rentals and on-site hourly game rates could get the doors open but concessions and parties are what make the money. He said the market in Alaska stems from a shortage of indoor winter activities. The two management students said they would put down about $40,000 to start it up but will need investors to contribute an additional $200,000. There is a higher tier at stake if business plans are built around a $10 million revenue level by the fifth year of operation, but none of the finalists were at that level. The organizers said that while only student can win cash prizes, anyone can enter and the competition and even partner with students. For example, Jeremiah Stephen is not a current student but made it the finals with his landlord service called Tenant Watch. Stephen describes it as a one-stop shop for landlords to make their businesses more profitable. It offers things like background checks, credit reports, eviction services and other resources. Tenant Watch has been in business since 1991. Stephen entered the competition to grow and find equity participation and business advising. Other plans came from students’ own personal interests. For example, Coffee With Care is an idea for a service agency for the disabled and elderly. This idea is the product of Ric Nelson, a business student who is himself disabled, and Danya McGuire, a social worker. The idea is for an employment and service agency that focuses on care and dignity. The “coffee” part of the name comes from an on-site coffee shop to add cordiality to the establishment and to add distance to the “disabled” label. McGuire said there is no other place like this in the state. “Basically, we want to see care for individuals and seniors improve in state of Alaska,” she said. They have been working on the idea for two years and estimate this venture would cost a minimum of $150,000. MBA student Danielle Reed based her concept for a new backcountry lodging establishment in Hatcher Pass on her and her husband’s own outdoor sports passion. The lodge, which Reed calls the Yurt Village, would mainly target outdoor enthusiasts to build more of an overnight-stay business in the area. She said this type of outdoor recreation contributes $2.5 million annually to the Alaska economy. After the finalists had presented, the third competition organizer, UAA business professor Al Herman addressed the group, saying, “Things do happen out of this event and I personally believe three or four here will get started.”  

Mining initiative moves Alaska Forward

Alaska Forward has developed a strategy to enhance the state’s economic structure. These are called industry clusters, and a committee has just met in Anchorage to get its next one moving forward: that of the mining industry. Industry clusters are sets of firms linked together by services, common customers, geographic areas, shared reliance on labor markets and other commonalities. They complement each other while remaining in competition and draw productive advantages from their mutual proximity. The implementation committee just met in Anchorage to determine the path forward for its mining cluster, the latest one Alaska Forward is engaging. Within this are six action initiatives to be addressed. Mike Satre, executive director for the Council of Alaska Producers, said the difficulty in mining clustering is that mines are spread out, but the work in support of the mining industry, such as those by private companies and the university, help establish the cluster. “Mining being an important part of Alaska’s economy,” he said. A large action initiative was for a workforce development plan to meet the state’s need for a sufficient mining workforce. The need for training students and workers and then keeping them in the state was a key factor. Training was deemed to be essential to provide these jobs to residents. The committee presented how additional mining classes could provide $35 million per year in Alaska wages. Tactical issues for workforce development involve the construction of training plans and the need for instructors. One tactic would be a training center centrally located to mining activity and prospective employers. This would be a cost-effective way to make use of limited instructors. Specific task training and standard basic training to include preliminary federal programs would be needed. The initiative takes workforce needs estimates into account. Such estimates for both mining construction and operations phases include 4,200 for Pebble, 4,000 for Donlin Gold, 900 for Niblack, 850 for Bokan Mountain, 2,400 for International Tower Hill, up to 350 for Chuitna and up to 125 for Wishbone Hill. Funding remains the primary problem for workforce development training. Partnerships, such as those though the University of Alaska, will be needed to help overcome this. Other funding sources could include state and federal grants, contributions and even international support. Other obstacles include lack of coordinated training, public perceptions on mining, Mine Safety and Health Administration regulations, geographic challenges and lack of industry focus. In fact, public perception on mining is another cluster initiative. The purpose is to develop a statewide communication strategy to position mining as a leader in responsible resource development. The committee states that opposition to this stems from public misconceptions that mining must damage one resource to produce another. An action plan would involve developing positive message and media, strategies to leverage initial messaging as a base for a focus on environmentally responsible mining and forming a speaker’s bureau with presentations in different regions. A third initiative is to improve the communication in the mining network and create a collaborative environment for all tiers of industry, producers, explorers and independent mines. An action plan suggests using social media and a mining network. A fourth initiative is to create a single comprehensive place-based website to encourage investment and development. This is to combat numerous websites that are deemed to be incomplete for Alaska’s mining industry. This would compose of both public and private sector phases. The final two action initiatives for mining are potential infrastructure development plus research and development. The infrastructure’s objective is to encourage systematic and rational investments, both public and private, to deliver power and transportation to the mining industry. Better research is needed to help Alaska set a world-class example of mine engineering and expertise. This includes processes for ventilation, remediation and tailings. Research is also needed with a special emphasis on cold climate mining. “I think that’s really what were focusing on is connecting or promoting mining interests and also looking at partnerships with the university in terms of creating some broader base support for the industry,” Satre said. Now that the action initiatives are moving forward, Satre said the next step will be to look at the other industry clusters to examine any crosscutting measures and common ground. “Really from here on out, the chairs, the co-chairs of the cluster group will work with the initiative champions to actually start moving forward on these various things,” he said. Alaska Forward is part of the Alaska Partnership for Economic Development, whose goal is to engage the public and private sector with strategies to improve economic conditions across a variety of venues in the state. This is where clusters come in. Brian Holst, executive director for the Juneau Economic Development Council, is part of the implementation committee. He said the ultimate result is to strengthen these industries in Alaska and to be more productive, which will increase innovation, productivity, employment and wages. Holst said the clusters are a relatively new concept and only four have been engaged. Besides mining, this includes logistics, tourism and clean energy. These are many more clusters than this for Alaska’s industries. Alaska Forward has several partners, such as the Denali Commission, University of Alaska, the governor’s office and several private enterprises. It received $100,000 in the governor’s fiscal year 2011 capital budget.

Legislature awards money for UA engineering buildings

The University of Alaska has been on a mission to increase its engineering students for several years now. That mission got a big push in the final hours of the legislative session, when the House passed the Senate’s capital budget that include more than $100 million for new engineering buildings at two campuses. To be complete, the governor must still sign off on the budget, but both campuses see this as a big step forward in the Engineering Expansion Initiative the university’s Board of Regents adopted in 2007. The Legislature awarded UA $58.6 million for construction on a new engineering building at the University of Alaska Anchorage. The University of Alaska Fairbanks got $46.3 million for its construction. Both of these amounts are roughly half of what each needs to complete the projects. University officials say the plan will most likely involve requesting the rest at next year’s session. Although the engineering buildings were not in the capital request from the Board of Regents, the projects were pushed through in the Senate Finance and received strong support from engineering firms and students. Much of this stems from the current facilities’ inadequacies. The projects include a mix of new construction and renovation of existing space. UAA’s building will be located across from the new Health Sciences Building. Mike Driscoll, UAA provost and executive vice chancellor, said the numbers have gone up dramatically over the last five to six years, and more space is needed. He said the current space is less than half of what’s needed to accommodate the college’s growing engineering program. The new building also will improve modernization of the space and enhance the labs to allow better hands-on studies. “The new facility give us somewhere like 60,000 usable square feet,” he said. The building itself will be a living experiment to showcase things like instrumentation, measuring, heating and cooling systems, and seismic activity potential to the engineering students. Driscoll said the hope is that construction can begin in next spring’s season after additional planning. It would still be a couple of years until the building is usable. The new UAF building will supplement the existing engineering facility, Duckering Building, adding 54,000 square feet, said Doug Goering, dean of the College of Engineering and Mines at UAF. He said Duckering currently has 80,000 square feet. There is the possibility for more space in the new one because one floor will be for future expansion. Goering said the additional space is close to what was determined to be needed, as programs and research expenditures have essentially doubled since 2005. He said the new building will have an open floor plan and some internal glass to increase visibility of how engineers work, which is something Duckering lacks the ability to do. The department also wants plans to build more study space, connectivity, and space for student teams to work and do special projects. Some of these projects include work on rocket and satellite design, civil engineering in bridge building competitions and work with the Society of Automotive Engineers. Goering said they are partway through the design now and construction could start in about a year. UAA’s plans include a code-required parking structure. UAF’s plan does not include such parking, which Goering said contributes to its lower cost. The construction is part of the University of Alaska’s initiative to increase undergraduates in engineering to fill an occupational gap. The university reports that most engineering jobs in the state are filled by non-residents. The Alaska Department of Labor projects an average of 50 new engineering jobs annually through 2018 and another 70 openings from annual turnover and retirement. The university has been focused on expanding its engineering program for some time, particularly its undergraduate engineers. The Board of Regents has called the Engineering Expansion Initiative its No. 1 new construction priority for academic programs. Engineering enrollment has increased by 53 percent between 2007 and 2010 in engineering undergraduates, the university reports. There were 72 baccalaureate degrees awarded in this field when the initiative came through in 2007, compared to 148 in 2010. Driscoll said UAA has more than 1,000 students enrolled in undergraduate and graduate classes. Goering said the university is on track to double its 2006 engineer students by 2014. The Legislature previously awarded $4 million to each campus for planning and design. Private gifts of more than $26 million for the engineering program initiative have come in from nearly 770 individuals and corporations since fiscal year 2007. UAF also able to garner $400,000 in general funds. “We’re very grateful for the engineering companies for all support they’ve given and recognizing the quality of graduates and wanting to see more of them,” Driscoll said.

Copper River Highway could be closed until 2015

Businesses in Cordova usually get a big boost in the summers from visitors to Childs Glacier, but that boost may be put on hold for a bit longer than they thought. The Copper River Highway, which runs from Cordova to the Million Dollar Bridge, is closed indefinitely just before Bridge 339. The state Department of Transportation and Public Facilities cites safety concerns necessitating the closure. The bridge can’t handle the increasing water flow beneath it. DOT spokeswoman Meadow Bailey said that when it was built in 1977, it was estimated there would be 18,500 cubic feet of water per second. This past summer, there were measurements of 85,000 cubic feet per second. The water led to increased erosion, which compromised the bridge structure. This was first noticed in 2009. Monitoring thereafter led to the closure in August. It was later determined that the way could not reopen until the bridge can be replaced. Public meetings with Cordova will help determine the path. Planning has begun on a replacement bridge, which would begin construction in 2015. Bailey said the estimated cost is $29 million. The state received funding for the design phase in the fall of 2011. Bailey said this replacement will be located near the current one. “We hope that we can take the (current) bridge down. There’s concern the bridge won’t last through breakup this year,” Bailey said. Still, this leaves areas of Cordova almost inaccessible for the time being. Crossing Bridge 339 gave access to Childs Glacier, a popular tourist attraction, as well as a popular multimillion-dollar campground owned by the U.S. Forest Service, plus lodging and tour businesses. There is also some proposed timber sales that way and a sonar counting station owned by the Alaska Department of Fish and Game. The campground receives anywhere from 6,000 to 9,000 visitors per season. In 2008, there were visitors from 23 countries and all but one state who traveled to Childs Glacier. The U.S. Forest Service and DOT each put $1 million into additions to the campground and day use renovations in 2007. Transportation options are being examined to keep the recreationists coming. Currently, the only viable option for cross the river is by helicopter, which is not economically viable for many travelers. Private businesses are looking at other access options, including boats and hovercrafts. But these must be done through permitting and regulatory processes first to even see if they are possible options. Martin Moe, executive director of Cordova Chamber of Commerce, said this is one of the area’s primary destination sites so an extended closure would have a significant impact that is already being felt. He said people have already started canceling or changing their trip plans. There have been about 10 inquires a week about the access since the first of the year. “Every time someone changes their mind, you impact lodging establishments and the city’s visitor tax base and entrepreneurial impacts,” Moe said. Moe said that alternate water route options to Childs Glacier could still happen but they will cost much more than driving a vehicle there. One thing the community is doing is working to develop an approach that builds visibility of Cordova’s other activities. Moe said the chamber is working with the Forest Service on this and could develop new marketing strategies. He said there other things to do plus six other glaciers besides Childs Glacier. “We’re working to try to provide as much access as we can, even if it’s in a different flavor,” he said.

King Cove access road is one step closer to fruition

A long-awaited road project at the far end of the Alaska Peninsula is one step closer to fruition. The U.S. Fish and Wildlife Service has issued a draft Environmental Impact Statement for proposed single-lane road construction connecting King Cove and Cold Bay. King Cove residents have pushed for this project since a resolution for the road was first passed in 1976, according to City Manager Gary Hennigh. The city has gone through several alternatives in the past for getting better transportation access, especially for emergencies. The proposed gravel road would be approximately 19.4 miles to 21.6 miles long and cross the Izembek National Wildlife Refuge. The road would cost about $24 million, while other alternatives in the draft EIS are more expensive. The EIS also analyzes swapping around 56,000 acres of land between the state and King Cove Corp. in exchange for about 206 acres from the federal government, which would be required under some of the alternatives. The exchanges are authorized under the Omnibus Public Lands Act of 2009. In a statement, Della Trumble, spokeswoman for King Cove Corp. and Agdaagux Tribe, said this type of land exchange is unprecedented. Now that the draft EIS is out, the next step is the public comment period lasting trough mid-May with meetings in five communities surrounding the refuge plus Anchorage. An analysis will follow. “Our plan is to have a final EIS released in the fall,” said USFWS spokesman Bruce Woods. This EIS will lead to a Record of Decision and the Secretary of the Interior’s public interest finding. “We’ve presented five alternatives in the draft EIS. We have not selected a preferred alternative,” he said. A selection will be made after the current comment period. The alternatives include two separate road alignments, hovercraft operations, ferry use between Lenard Harbor and the Cold Bay dock, or no action. The hovercraft and ferry alternatives wouldn’t require land exchanges but are considerably more expensive. According to the draft EIS, the lifecycle cost of the southern or central land exchanges for a road would be $23 million and $26 million, respectively. Hovercraft operations would cost $44 million and Lenard Harbor ferry operations and Cold Bay dock improvements would cost $70 million. No action would still hold a $26 million price tag for its lifecycle. The King Cove and Cold Bay communities have sought a connecting road for some time, primarily for airport access for health emergencies. In 1998, Congress provided the borough with $37.5 million in the King Cove Health and Safety Act. This was to provide airport upgrades, a health clinic and conservation of a marine road transportation system. A hovercraft was purchased and a road was developed. This still didn’t prove to be effective for the residents. “But the community has not found the hovercraft to be a complete solution to the problems, which is why they’ve come back again and asked for the road,” Woods said. King Cove officials and tribal leaders are united in their support of this step forward in a project they’ve been pursuing for years. Assistant City Manager Bonnie Folz said the road is definitely needed and sent a press release outlining their support of something they feel is necessary and overdue. Trumble states this has been a decades-long battle, during which the community has lost too many lives in the struggle to access the airport during emergencies. She also said the testimony during the EIS process shed light on how the Izembek wilderness was created “without any consultation from the people of King Cove.” “These injustices need to be corrected,” said Trumble. “We should be taken seriously by the federal government, and particularly the Secretary of the Interior, who has a trust responsibility to us. We have sacrificed too much already, and it is time to make it right.” King Cove officials state that without the transfer, transportation is limited to small plane travel that is not suitable or safe in emergencies. The other option is through U.S. Coast Guard rescue. The base in Kodiak is 430 miles away. A hovercraft transportation option was attempted but shut down last year due to costs. The release states that severe weather delayed a Coast Guard medevac on at least one occasion and 11 people have died during unsuccessful trips over the last four decades. Hennigh said these deaths were the results of weather-related plane crashes, including short flights between King Cove and Cold Bay. He said the road would eliminate this risk. Flight delays during emergencies are also an issue. “The road (to the Cold Bay airport) is and has always been the only safe, reliable transportation option for the life, safety and health of our residents,” states Aleutians East Borough Mayor Stanley Mack. “It is the only workable long-term solution.” The city isn’t alone in these thoughts. Alaska’s delegation all issued statements upon the draft’s release to praise the progress. “I voted for this land exchange in 2009, and it’s good to see that we’re making progress on a decades-long struggle,” U.S. Sen. Mark Begich said in his release. “As I’ve told Secretary Salazar, it’s time to finish this, build the road, and let the community get on with their lives. The King Cove Corp. is giving up 20 percent of its land for a simple gravel road. That shows how much of a priority emergency access to the airport in Cold Bay is.” U.S. Sen. Lisa Murkowski states the decision to pave the way for an Interior Department ruling is a “welcome one.” “When you consider the number of life-threatening accidents that have occurred due to the challenges of flying into King Cove during foul weather, I believe there is no greater good we could do than to provide safe road access to the all-weather airport at nearby Cold Bay,” she said in her release. “Conserving our natural spaces is important, but we have to balance that with the safety needs of local residents.” Murkowski encourages Alaskans to weigh in on the public comment period. Congressman Don Young also released a statement, saying, “The residents of King Cove have been waiting for over 20 years to build this road and today’s news is a step in the right direction. The next step in this process is for Alaskans to comment and I am confident that Alaskans will make their voices heard. Having worked with King Cove on this project for years, anything that prevents this road from being built and being built soon, is unacceptable to me.”

Alaska Railroad expenses, income flat in 2011

The Alaska Railroad Corp. released its 2011 annual report, and while the numbers don’t change dramatically over the previous year, those small improvements are a sign of momentum the company will try to maintain in an uncertain 2012. The audited financial statements show a net income of $13.4 million on total revenues of $185.7 million. The net income is virtually the same as last year’s while the revenues increased by $13 million. The railroad attributes this increase to a diversified customer base, meaning increases in barge-rail traffic and certain exports helped overcome declines in other business lines. Railroad Chief Financial Officer Bill O’Leary said coal exporting was one of the bigger contributors. “There’s a strong world market out there for Alaskan coal so the price was better,” he said. O’Leary said this demand also led to roughly 60,000 metric tons more coal being moved in 2011. The year’s worth was just shy of 1.1 million metric tons. Passenger revenues also grew by 8 percent over 2010, and this service had been declining in 2009 and 2010. While the passenger service only makes up around 12 percent of the railroad’s revenues, those sales still make a difference, particularly with the growth more on the railroad side rather than from partnerships with cruise agencies. O’Leary said growth of the GoldStar premium class service has also contributed to the passenger count. “We turned a corner in 2011, started coming back up again with our passenger growth of right around $1.6 million with 2011 compared to 2010,” O’Leary said. Not all revenues went up. Others, such as those from real estate areas like land leasing and dock operations, dropped a bit. While overall revenues increased, so did operating expenses, up 9 percent to $156.5 million. O’Leary said the same reasons that drove the expenses up also contributed to the higher revenues. One of these factors is higher fuel costs. Those costs drive up the expenses, which the company recovers through its fuel surcharge program. O’Leary is said these numbers are a good indication for 2012. He said this year should be a good one for revenues despite a difficult start due to the extreme cold in the Interior and heavy snow in Southcentral. “In 2012, we have budgeted earnings of about $15.4 million, and a lot of that is driven by growth in, very similar to 2011, growth in export coal and also our passenger lines of business” More cruise passengers could help with this, such as those from the return of Princess Cruises’ Star Princess to Alaska. This additional venue alone makes seven ships for Princess’ lineup and adds 48,000 passengers to the season. These projections, particularly in regard to passengers, could be thrown off after the summer. The U.S. Senate’s recently passed transportation overhaul would cut $30 million in federal funding for the railroad as the bill is currently written. These cuts would likely mean a restructuring of the passenger service. The House is working on its own version of the bill that would leave the funding intact. The current law has been extended through June 30, so the funding is at least safe until then. “We think there’s a long way to go in the process and we’re hopefully optimistic that things will be OK on that, that the House and the Senate, when they try to get together in their conference committee, will see the benefit of keeping the railroad in the status quo position,” O’Leary said. In a release, Alaska Railroad President and CEO Chris Aadnesen said, “Maintaining a solid financial footing and investing intelligently in our infrastructure are key to keeping our promises to the people of Alaska. This new year is no different. The Alaska Railroad will continue to be fiscal stewards and to advance projects and programs that benefit Alaskans.”

Ketchikan federal buildings sets precedent in biomass power

It’s not unusual to find people or businesses looking for environmentally conscious modernizations in a place like Alaska, especially if one can save a few bucks. Government entities show they aren’t immune to these ideals either, as Alaska sets a national precedent in biomass power. The Ketchikan Federal Building recently became the first federal building in the nation to install a biomass boiler system. The effort was administered by the U.S. General Services Administration (GSA), which manages federal buildings with the exception of military installations. The project came about when GSA began searching for alternatives to replace the outdated steam heating system and oil-burning boiler. The original plan called for installing another oil-based system, but GSA saw this as an opportunity for a green energy upgrade to meet criteria of the American Recovery and Reinvestment Act. They decided on a wood pellet system. “Southeast Alaska was looking to enhance their economic market for this type of pellet and there were other agencies, public and private, that were looking at biomass alternate fuel sources,” said Todd Gillies, the project management branch chief. GSA Public Affair Manager Stephanie Kenitzer said this will serve as a testing ground for green initiatives to see if it’s a viable option for other federal buildings in the country. There will be ongoing measurements and verifications of its progress. The $5 million project involved more than the boiler. It included conversion from a stream-heated system to hydronic heat, and an oil fire boiler. The pellets themselves are supplied by Sealaska, which is the only in-state source for large-scale commercial wood pellet use. Sealaska’s renewable energy program manager, Nathan Soboleff, said they had a hand in helping GSA decide on the pellets as their biomass of choice. The Ketchikan building’s project manager, Mike Rayburn, said wood pellets were selected as the building’s biomass option because of its efficiency and “quality control of what you’re putting in the boiler.” Soboleff said pellets also have more price stability. The project has been planned since the summer of 2010, shortly before Sealaska fired up the state’s first such boiler in its downtown Juneau building. The conversion should result in a significant savings to heating fuel, which typically runs higher than $4 per gallon in several areas within the state. The Ketchikan building used to burn through 9,000 gallons each year. “We’re anticipating saving around 4,000 to 5,000 gallons of heating fuel every year,” Rayburn said. Soboleff said that at a $4 per gallon price for heating oil, Sealaska saved more than $45,000 with its biomass boiler last year, which is significantly higher than what the Alaska Native corporation originally expected. The new system will run roughly 60 percent of the time for the first year, with the old oil-burning system covering the rest. This is because the new system is still in the proving ground phase and also to make sure both systems stay operational. The old system will continue in the building as backup. “We will hopefully go from 60 percent use to maybe 90 percent use,” Rayburn said. Increasing the usage also will be driven by the state’s pellet supply growth. Soboleff said the technology is still new in Alaska, but is growing. He said that besides Sealaska and this federal building, there are a few other large institutions within the state either considering wood pellets or have already begun initiatives, including the Forest Service Discovery Center in Ketchikan and U.S. Coast Guard in Sitka. Rayburn said the Ketchikan library is also considering it. Sealaska has the market cornered for these bigger-sized sales, with its primary customers being itself and now the federal building. Soboleff said they have also sold to the business owner who has the contract to fuel the Forest Service building and will also bid on a contract for the Coast Guard’s system once it’s up and running. Sealaska spokeswoman Dixie Hutchinson said the reason Sealaska has led the charge in demonstrating the state can support a commercial-size pellet need is to create enough need to establish a pellet manufacturing plant. Sealaska currently gets the pellets from Washington. “We see that as creating new jobs, a new economy and sustaining the current economy,” she said. While the local demand is not enough to support a full-sized pellet mill, Soboleff said interest will grow as more buildings use biomass. He estimates there needs to be a demand for 12,000 tons to 15,000 tons of pellets to sustain a manufacturing plant, with that number being on the low end. The Sealaska building consumes about 250 tons of pellets in a year, meaning several more commercial-size buildings would have to convert their systems to support an industry. “The good news is other parts of the world have created that kind of growth in just a couple of years,” he said. “You can experience that growth very rapidly.” The pellet market is starting to catch on here, albeit slowly. A few individuals are working on setting up production and distribution, although most will have to start too small for commercial sales. One of these is Superior Pellet Fuels near Fairbanks, which focuses mainly on residences. Soboleff said another small Southeast entity has purchased equipment to make pellets but the region already consumes more than this can provide.

Alaska senators, DOT pleased with transportation bill

The Senate passed a major transportation overhaul March 14 to put about $109 billion toward projects throughout the nation. While the bill itself may mean the end of a lot of funding for the Alaska Railroad Corp., other Alaska programs may come out ahead. The bill would put out $109 billion across the nation over two years with a healthy chuck of that increasing funds for Alaska’s divisions. The measure passed in the Senate with a vote of 74-22. Jeff Ottesen, director of the division for program development for the Alaska Department of Transportation & Public Facilities, said some standing funding sources could be reduced substantially in the transit portions of the bill but overall there could be significant increases. “In terms of funding, it’s an important bill,” he said. After coupling with fiscal year 2013 funds, the bill authorizes $1.025 billion for Alaskan projects for highways, bridges, roads and infrastructure. About $508 million in formula funds will be put into the highways. This is a welcome 13 percent increase over last year, Ottesen said. These funds will dictate subtle changes that require heavy focus on maintaining both pavement and bridges “Any increase is good on that front because it seems like we never have enough money for all the projects that we feel are necessary to do,” he said. Ottesen is pleased with the bill as it is written. He said Alaska’s transportation has been healthy since money earmarked under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, or SAFETEA-LU were re-distributed in the state after the act’s expiration in 2009. He said those re-distributions have exceeded $1 billion “and then what this new bill does in its current form is it would increase our funding even further.” Sen. Lisa Murkowski and Sen. Mark Begich were among those voting “yes.” Both senators see it as a way to bring some need money into state projects but have also pushed to bring even more. Murkowski previously told colleagues that the original version would undo the gains Alaska has made in previous legislations like SAFETEA-LU. “I’m glad we were able to build on Alaska’s historically high rate of return on federal transportation funding in this bill,” Begich said in a release. “This is a jobs bill. Through today’s vote we’ve secured funding for projects that will put Alaskans to work and keep our economy moving all around the state.” The Senate bill addresses several needs in the state. Nationwide, there is $67 million in ferry funds that account for distance. Alaska stands to gain $9 million of this if appropriated. “We’re kind of the big winner in that calculation because our distances are so great,” Ottesen said. The Indian Reservation Roads will get around $54 million annually the bill’s two-year lifespan. This is after fighting the original draft’s drop for these roads to $34 million annually. Murkowski and Begich both took issue with that part. Murkowski felt more funds could still be designated to Alaska Native highways. “While I appreciate the committee’s willingness to address and correct the funding inequity for tribal transportation in Alaska, I am disappointed that so many of my colleagues were determined to remove tribal participation in this program,” she said in a release. “But we could not let the perfect be the enemy of the good in delivering such critical needs to rural Alaska.” Although the Denali Commission won’t be getting funds, it will be given more flexibility to seek transfers from other agencies. The Alaska Railroad Corp. would end up losing $30 million in federal funds under the Senate bill. If this happens, projects and workforce would have to be cut. The railroad may also have to make adjustments to its passenger service if it continues. It would also default on around $137 million in outstanding Grant Anticipation Receipt Bonds. Ottesen said that while the Senate bill looks to be good in funding, the department has not yet digested the entire bill, mostly because there isn’t a clean version that’s very readable. He said the 800-page bill comes with a 200-page manager’s amendment that contains numerous amendments that can be difficult to translate. He hopes a new version will become available. Even so, he prefers this over what he’s seen in the House version so far, which could actually decrease some funding. He said this is because of the way the formulas are applied, Alaska would see the largest singular reduction as a percentage of all 50 states. He gave an example of the highway formula funds could go down 30 percent rather than raising 15 percent under the Senate version as written, explaining that the House version would not consider funds that were once earmarked to be part of Alaska’s base. Still there are things in the House version so far that Ottesen finds favorable, particularly in some legal changes. He gave an example of the environmental streamlining that would exempt smaller projects from that difficult and time-consuming process. Also, projects funded only with a little bit of federal money would not be subject to the National Environmental Policy Act. The Senate bill also streamlines environmental processes, which could also help projects move along more quickly. He said the overall streamlining efforts in the Senate bill only increase its attractiveness, as they make programs simpler to administer and get rid of many small categories that dictate how money is spent. “There’s a lot more latitude given to the state in where to spend the money,” he said. “There are fewer mandates of things we have to spend the money on.” Even though the Senate has approved its bill, it’s still incomplete legislation. The House is working on its own transportation bill that must go up for vote. If approved, both sides will have to agree on a compromise to present a bill for the president’s signature. Rep. Don Young’s spokesperson Luke Miller said details on this version aren’t yet finalized. However, he did note that the House bill will not contain earmarks. Young has publicly opposed the recent House policy prohibiting earmarks. Young did have some issues with the Senate bill. In an email response, he said the 18-month timeline is not enough and that regulations would still be written when the bill is set to expire and doesn’t give the state surety in planning significant projects. Although the House is also considering a short-term extension, Young said he would rather see Congress pass a long-term highway bill rather than an 18-month “gimmick.” Young’s office also replied that the congressman wanted to improve provisions for both the Alaska Railroad and the Indian Reservation Roads program, saying only 11 Alaskan tribes that will get increased funding for the two years and all tribes would overall be getting reductions up to 50 percent. Young also states the House version would pay for the ferry program to ensure more reliability in maintaining funding levels rather than getting appropriations from the national ferry program. He said the Senate bill also Young said the Senate bill will “effectively bankrupt” the Highway Trust Fund within two years. He also said it erases much of the progress made under SAFETEA-LU from 2005 through 2009.

Senate transportation bill could mean drastic cuts for Alaska Railroad

A surface transportation reauthorization package that passed the U.S. Senate March 14 is making the Alaska Railroad Corp. nervous. The U.S. House has its own version for transportation reauthorization that wouldn’t affect ARRC as currently written. Senate Bill 1813 creates a new funding program for freight that essentially replaces provisions that provide Federal Transit Administration funds to this railroad. If passed, those funds could drop from $36 million per year to $6 million. This new legislation would update the previous surface transportation law and leaves most of this funding out as currently written. ARRC President and CEO Christopher Aadnesen said the previous bill included this railroad by name as a 60 percent recipient of these FTA formula funds. “The way the bill’s being re-written in the Senate, we are not included,” he said. If the railroad does lose the money, drastic cuts will have to be made according to a statement from the company. One consequence would be reevaluation of the rail’s year-round passenger service. Of particular significance is that ARRC is the last American railroad to offer both freight and passenger service. This is partially due to the federally mandated Positive Train Control, a safety measure that the current funding system has helped develop. ARRC would also need to reduce capital investments from $50 million per year to $14 million per year. These investments are used to maintain infrastructure. Workforce cuts may also be imminent. Finally, ARRC would be forced to default on roughly $137 million in outstanding Grant Anticipation Receipt Bonds. This bond package from 2006 and 2007 funded the accelerated track rehabilitation program. The annual allocation currently pays $15 million toward this but the cuts would only free up $6 million annually. Such a default would increase difficulty in obtaining future grade credit ratings for financing without a third-party guarantee and would increase interests costs above market. The default could also hurt credibility for other bond recipients. Aadnesen went to Washington, D.C., last week to meet with legislators and fight the bill. The Alaska delegation, Federal Transit Administration, Federal Railroad Administration, and representatives from the House and Senate were on the list. The current FTA funds are based on a formula for passenger service miles that all eligible American public passenger rail providers use. Aadnesen isn’t sure exactly when the bill would take effect if passed. He said the company still needs to plan for the worst and prepare as if it could happen within a few weeks. If passed, the budget reduction would take place at the start of the next fiscal year Oct. 1.

Spring break program gives construction students an edge

There is no beach trip for 19-year-old DeAnna Amox this spring break. She has something else on her mind: beating the boys at the carpentry game. Amox, a senior at Bartlett High School, is one of 20 students from the Anchorage School District spending their entire break learning the trades as part of a cooperative effort called the Spring Construction Institute. These students — all in the Alaska Department of Labor and Workforce Development’s Senior Job Club — work with trained personnel in both classrooms and hands-on practice to develop skills in carpentry, electrical wiring, weatherization and more. “I like it. It’s fun,” Amox said. “Probably a lot of kids my age think it’s crazy but I’m used to going to school every day anyway so why not do this and get something out of it?” The students there intend to get some valuable training and perhaps a job boost out of it. Shaydi Dejesus, career guide with Labor Department’s Youth Job Center, said the students get an advantage in developing advanced skills and at no cost to them. She said these skills only add to the training they get at school programs like King Career Center and allows them to become more well-rounded trades workers and pursue employment in these high-growth fields. “These are the next generation of workforce leaders,” she said. While there, students can earn general training certification. This is one of five certification opportunities for Senior Job Club members. The students are all juniors or seniors in the Anchorage School District. The spring break course is careful not to duplicate training they’ve already received. The course is voluntary but it’s no cakewalk. It’s structured to be like a job site and those teens are giving up a lot on their spring break, as are the instructors. Classes run 8 a.m. to around 5 p.m. with only 30 minutes for lunch, just like on the job. These days ran from March 9 though March 17 with only a Sunday off. They must pass tests through both practical work and on paper, as well as going through classes and safety procedures. James Elam, who teaches plumbing and electricity at King Career Center, said there is a great deal of math involved in the trades. They must demonstrate applied knowledge of the fractions, geometry, algebra, angles and decibels needed on a job site. “There’s a lot more to it than just pounding nails,” he said. It’s Alaska Works Partnership personnel that do the training. A school district representative is on hand plus a Labor Department representative to help with the job readiness aspect. This is where Dejesus comes in. The Youth Job Center helps them develop resumes and career plans, particularly with a hiring event in April for the Senior Job Club members. There will be 75 employers there. “They generally have nearly a 100 percent hire rate,” Dejesus said. Dejesus said there are 125 Anchorage students in the Senior Job Club. Those students comprise the pool of candidates for the spring break institute and the job fair. “Once they leave, we have good grasp of their personalities and how to get them into those positions,” she said. Elam said the students here are very motivated because they know what they want to do. He said they might not choose college but want to enter trades to be productive members of society. He said becoming a skilled tradesman requires a high level of knowledge in and of itself and many will also do apprenticeships. The best way many of them learn is through that hands-on practice. “These are good kids,” Elam said. “Even if they don’t have the best grades, with a tool in their hands, they will outshine the valedictorian every day of the week. For the most part, these guys are very motivated so their skill level improves very quickly.” The Spring Construction Institute is a collaborative effort by the Labor Department’s Youth Job Center, Construction Education Foundation and Alaska Works Partnership. It’s also coordinated in part by Anchorage School District. The funding starts at the state department and works its way to subcontract the Alaska Works Partnership to provide the free training. That zero price tag is more than welcomed by high school students. Amox is still deciding on what direction she’ll pursue for her future but said she knows that if she can get into carpentry if she wants to since she’s “taking the right classes.” Liridon Papraniku, 18, knows that he wants to pursue electrical work and wanted to use spring break to broaden his tradesman skill set through carpentry. The Dimond High School senior has been interested in electrical work most of his life and wants to give himself a leg-up in getting a job. “My main focus is electrical work but I’m trying to get as much knowledge in carpentry as possible,” he said. He said he’s learned a lot from the class and that the instructors there take time to make sure everyone gets it right. Papraniku intends to try to get into the International Brotherhood of Electrical Workers or perhaps go to the Alaska Vocational and Technical Education Center. Papraniku and Amox both take carpentry classes at King Career Center. For Amox, the competitive challenge of the program makes it all that much more worthwhile. She’s one of only two females in the class and loves showing the guys that she can do the work as well as they can. She said carpentry is a male-dominated profession and many tend to assume that females doing this work need help but she likes to show that she can actually do it better. The department also holds mini-institutions during the year for other certifications like forklift safety, builders levels and lasers and North Slop training. Amox has been to the North Slope lesson and is thinking about doing others. Dejesus said the program started in 2006 as the Summer Construction Institute and was moved to spring break in 2008.

Chili's franchiser suddenly closes three restaurants

Employers and customers were baffled last weekend when they went to any of the state’s three stand-alone Chili’s restaurants but could not get past the front doors. Duke Investments LLC, the franchise partner responsible for these stores, after much financial trouble abruptly closed all three. The restaurants were in Anchorage, Wasilla and Fairbanks. This leaves the Chili’s Too in the Ted Stevens Anchorage International Airport as the only remaining fixture here with the Chili’s name. Chili’s Too is managed by a separate entity and is not associated with Duke Investments’ troubles. Franchiser David Duke could not be reached by AJOC or other media outlets. While Duke could not be reached, public records indicate this was a company in trouble. Most notably, the franchise operator petitioned for Chapter 11 bankruptcy in September 2009. Records indicate Duke was $200,000 in arrears at the time of confirmation for the voluntary petition. U.S. Bankruptcy Judge Herbert Ross cited several financial issues in a June 2010 ruling, including cost overruns on a building for the Fairbanks location and increased difficulty in paying employees and Brinker International, the company that owns Chili’s. Records show Duke was having trouble meeting rent, payroll expenses and operational costs. According to the bankruptcy filing, he arranged a 42 percent interest loan from Advance Restaurant Finance, which only increased difficulties and did not reduce his debt. Maintaining leases seemed to add to the problems. Brinker did not comment on specific surrounding the closures. The company issued a statement saying, “We recently made the difficult decision to terminate the franchisee rights previously held by Duke Investments. Alaska has been a valuable market for our brand for more than a decade and we will continue to evaluate options to bring guests their Chili’s favorites.” Landowners who leased the properties for Chili’s in Anchorage and Wasilla said the reason behind the closure was that Duke Investments was unable to maintain the finances. JCN Development, which owns the Anchorage lot, could not be reached. Its attorney Tim Verrett said the closure was brought on by difficulties in keeping up the finances that resulted in a federal lawsuit. A February decision by U.S. District Judge Ralph Beistline resulted in a temporary restraining order and preliminary injunction allowing Brinker to effectively end the partnership. Chili’s is owned by the Texas-based Brinker International. Duke brought it to Anchorage in 2002. Additional stores followed in Fairbanks and Wasilla in 2005 and 2008, respectively. Now that the restaurants are gone, one question left is what to do with the properties the restaurants leased. One landowner is considering starting Chili’s anew. John Emmi owns the property of the Wasilla restaurant, which shares property with his other business, Grandview Inn and Suites. Emmi said he saw the closure coming and is now trying to keep the place going by looking into reopening that Chili’s under a new franchise. He said this would involve a deal with Brinker or finding a pre-approved vendor. Either way, he hopes to have it open again soon. If no deal is reached, he will seek a new tenant. Brinker states it intends to help the employees find work. The three restaurants likely employed about 200, according to the bankruptcy filing. Brinker spokeswoman Julie Flowers did not have an exact number, although a typical operation could employ between 75 and 100 people. Duke could not be reached for an employee count. The Fairbanks property is owned by Alma Wellsprings LLC. A Statement of Change dated December 2010 shows that Duke himself was the registered agent there but transferred it to Steven O’Hara of Anchorage. O’Hara could not be reached for comment. This is not the first national-brand franchise to go out of business unexpectedly. In 2008, employees showed up for work at Alaska’s only Hooters only to find the doors locked.

Industry Day event connects contractors with agencies

You won’t find Industry Day on any federal holiday schedules, but it’s still a big day for small contractors. Actually, it’s not a holiday but a networking event to help expose small businesses to bigger outfits and perhaps give them some information on upcoming contract opportunities. The Associated General Contractors of Alaska will sponsor Industry Day for the third time on March 21. It will take place at the Captain Cook Hotel in Anchorage from 9 a.m. to 6:15 p.m. Registration starts at 8:30 a.m. This is a chance for small businesses to network with larger ones while working to strengthen partnerships with the various agencies and organizations. Kimberley Gray of AGC said there are two major opportunities for Industry Day. One is to give an insight into what coming up that can be bid on. Another is to meet other departments and learn specifics about these private companies and state and federal agencies in attendance. The event is open to all small and large businesses. This includes Section 8(a) small disadvantaged businesses and Historically Underutilized Business Zone firms. “We’re trying to help the contractors in terms of everyone, from suppliers to general contractors, to meet the agencies,” Gray said. The U.S. Army Corps of Engineers will be a major participant. The Corps’ deputy for small business, Ivonne Drake, said the Corps will hold a workload presentation with project managers on hand to address questions. “This is for small companies and for big companies,” Drake said. “We want anyone to be able to ask any questions of the Corps.” Although the forecast may fluctuate, AJOC previously reported that the Corps has $460 million worth of construction projects for fiscal year 2012 with $325 million in military construction. Other participants include the U.S. Small Business Administration and the Procurement Technical Assistance Center. Speakers on behalf of the Corps will include Alaska District Commander Reinhard Koenig, Programs and Project Management Division Chief Larry McCallister and Contracting Division Chief Christopher Tew. They will speak during the morning sessions. Agency meet-and-greets will follow with a panel featuring Davis Constructors and Engineers, Osborne Construction Co., Watterson Construction, Kiewit Building Group, Neeser Construction Inc. and Unit Co. Gray said this panel will let smaller companies get a feel for what these contractors need and how to get in touch with them. Other sessions include those on post-award contractor responsibilities, avoiding litigation and presentations from SBA. The last Industry Day was packed with about 100 participants, and Gray is expecting no less than a sell-out crowd again this time.

Environmental groups challenge Port MacKenzie rail plan

The nonprofit environmental groups Cook Inletkeeper, the Sierra Club and Alaska Survival are challenging the Surface Transportation Board’s approval of the Port MacKenzie Rail Extension. The three groups oppose the federal board’s November decision to construct the 32-mile rail line to connect the port to an existing rail near Houston. They have filed a legal challenge to the 9th Circuit Court of Appeals to review this decision, which took around three years to pass. The Matanuska-Susitna Borough and Alaska Railroad Corp. are filing to intervene in the Petition for Review. The final legal complaint hasn’t been determined yet. The groups are still deciding on an exact tactic, which they said will likely tie into an environmental issue. The groups haven’t yet cited a specific point in their filing, but Bob Shavelson, director of advocacy at Cook Inletkeeper, said this is coming. A notice from the Mat-Su Borough states that, based on the Petition for Review, officials expect it will involve environmental policy even though the Surface Transportation Board approved an Environmental Impact Statement. Shavelson said that while environmental issues – especially on salmon streams – are certainly a concern, the main point is to get in a legal tactic to slow down or stop construction. “That’s because you don’t have a legal handhold to challenge a project just because it’s a bad project. You have to fall into one of these little categories,” he said. Mat-Su Public Affairs Director Patty Sullivan said the economics surrounding the extension have been studied extensively by the Institute of Social and Economic Research, University of Alaska Fairbanks and Northern Economics. “The ISER cost benefit assessment alone gives the rail link extraordinarily good returns on the infrastructure investment. The benefit to cost ratio ranges from 1.9, based only on transportation savings, up to 40, with the mineral production as stimulated by the rail link,” she said in an email response. She said UAF Economic and Engineering Geologist Paul Metz projects mineral development with a cumulative gross metal value of $173 billion, which would generate taxes and royalties and fees to the state of $300 million per year over a 60-year period. She added that two lessees have made the rail part of their long-term development plans. One company will be importing ultra-low sulfur diesel, which will be loaded onto railcars and distributed to the Interior. The second company will focus on large project logistics importing armour stone, steel, machinery and pipe. Alaska Railroad Corp. spokesman Tim Sullivan said the borough would be the best to comment, as this is a borough project. In an earlier email response, Sullivan said the petition to review the Surface Transportation Board’s decision won’t affect construction as of yet because the court has not ordered any stops. Sullivan wrote, “Construction is ongoing, and beginning in March construction will proceed on the first five miles of rail embankment heading toward the city of Houston. When completed the 32-mile rail link will bring Alaska economic diversification, state revenues, and thousands of jobs.” There has already been at least $92 million collected for the expansion through different appropriations. The borough is seeking an additional $60 million from the state to complete two-thirds of the project. The full completion will cost another $120 million. Sullivan said that in-state expenditures during construction are estimated at nearly $200 million. Construction activity is projected to generate 1,700 to 1,900 temporary construction jobs. Shavelson called this a “smokescreen” by the borough in saying the project will create jobs and prosperity but not providing enough numbers or information on it. He said there are no numbers on the operating costs and believes the expansion will never pay for itself. The opposition stems from concerns about the project as a whole. Shavelson describes the rail expansion as a “boondoggle” project that is wasteful and unnecessary. Shavelson said the biggest problem was that the borough has not clearly identified what it will cost to operate, making it a potential loss of public money. He said the expansion isn’t even necessary because the railroad already goes to tidewater in Anchorage, Seward and Whittier. “This falls clearly under the category of build it and they will come,” Shavelson said. He also said the project could increase shipping costs due to shipping around the Gulf of Alaska and offloading costs at the port. Emily Fehrenbacher, associate regional representative at the Sierra Club, agreed, saying the rail expansion is another big project taking in a lot of money but feels they haven’t necessarily seen the economics are going to work out in sustaining it. “Especially since this project is only going to one big industry, which is the coal industry so we’re concerned about public funding going to benefit one industry,” she said. She said another concern was that the project was rushed through without enough discussion to nearby communities, such as safety, dust, quality of life and access to recreation trails. She said these are still broader concerns rather and the actual filing will still consist of a narrower tactic. Shavelson said this project is another in a long line of big Alaska projects that the organization sees as overblown. He cited the Port of Anchorage, Knik Arm Bridge and Goose Creek Correctional Center as projects that have cost too much or been unable to show transparent operating costs. “We’re concerned about Port MacKenzie because if you look around, that area is a treasure trove of boondoggles and this is just another one,” he said.

Sno-way! Mother Nature pounds city streets, budgets

Snow ain’t free. It costs a lot of money to remove and pile up the vast amounts of snow that Mother Nature has blessed (some would say cursed) much of Alaska with this winter. The state’s and several cities’ snow removal budgets are busted, tallying well above the usual costs set aside to keep up with nature’s weather-related smack downs. The National Weather Service reports higher than normal snowfall for many areas throughout the state. Some storms have made national news, like when the snow reached the rooftops in Cordova. What doesn’t make the headlines is just how individual cities are having to find the money to pay for work to deal with those unexpected snow levels. Anchorage has received more than 108 inches of snow through Feb. 24, close to the 132-inch record set in the 1950s and well above the 74-inch seasonal average. And more snow was in the forecast in the early days of March. The municipality says that if all the removed snow were piled into a five-acre lot, it would reach 250 feet – about the height of a 28-story office building. The J&L Towers building in midtown Anchorage is 14 stories high. That’s a lot to clean up, and that doesn’t count what plow crews have moved off the roads, creating those head-high snowberms off to the sides. With labor, overtime, contractual services, fuel and everything else, Anchorage is looking at clean-up costs of $8.1 million between October and Feb. 12. Last year’s costs were only $4.9 million and that covered October through April. The municipality’s six dump sites are filling up, although officials say there is still plenty of room. “They are at a capacity greater than I’ve seen in over 20 years of working here,” said Dan Southard, public works superintendent. The city is currently exploring an unusual tactic by examining an ordinance to expedite the permitting process for private dump sites. Cheryl Frasca, director of office of management and budget, said there is sufficient money in the budget for the extra, unforeseen costs. Adjustments will have to be made to next winter’s amounts during the annual budget amendment process in April. Frasca said the issues will be addressed to try to avoid shortfalls in next winter’s funding. This can be addressed through a number of measures in April, such as the mill rates for property taxes. And while Anchorage has seen twice as much snow than normal, some places have been even hit harder. In a much-publicized event, Cordova was hit with 278 inches – 23 feet – as of Jan. 31. Cordova normally sees 56 inches in a given winter. City Manager Mark Lynch said all the costs associated with this winter’s pummeling aren’t yet compiled, and could take a month or so. He does know the costs were well above the budget. The city has easily spent at least $500,000 so far this year; the normal snow removal budget is only $25,000. “Beyond that, we really don’t know totals,” he said. The state is currently assessing the damage and costs in Cordova. Lynch said the Federal Emergency Management Agency was supposed to come in late February to make an assessment and the U.S. Small Business Administration may be able to offer some business assistance. Nearby Valdez has been hit with 377 inches rather than the normal of 241 inches. Almost half of that came down in December alone. Valdez street foreman Terry Larson said the city went $720,000 over budget on removal this season. Although the city was prepared, the snow dumps are filling up. Larson said some residents have been panicking though, and hiring contractors that use the city dumps, a tactic that is legal. Juneau has experienced almost twice as much snow as normal at this point, according to the National Weather Service. A Juneau official could not be reached but radio station KINY reported the city has spent at least $50,000 in snow removal overtime and material costs, stretching the budget already. City Manager Rod Swope told KINY the city will need to request a supplemental appropriation if the funds cannot be found in the existing budget. Ice more than snow bollixed things up in Nome. The city made national news with its winter drama involving an unprecedented mission to get vital fuel into the iced-off city after severe winter storms prevented the usual barge delivery. Vitus Marine LLC chartered the Russian tanker Renda to deliver the 1.3 million gallons of fuel with the charter costs running between $10,000 and $15,000 each day from mid-December through early February. Typical fuel costs for the ships were also up to $10,000 each day. Vitus Marine CEO Mark Smith said that other variable costs for compliance, port calls, insurance and oil spill response regulations, response and prevention measures have direct costs to the mission that don’t get reflected in that daily rate. “This was definitely the way to deliver fuel. There’s no question it was way less expensive than flying it in,” he said. The cost of the Healy, the U.S. Coast Guard icebreaker that cleared the way for the Renda, was not available, but a Coast Guard spokesman said the costs were already accounted for in its regular operating budget. Nome officials said the snow removal budget likely will surpass $90,000 this year, about $9,000 above the budgeted amount. And that’s assuming there’s not another big storm. The story in Fairbanks is different than most, however. The Interior city has seen only 38 inches of snow, compared to the typical 54 inches. But that doesn’t mean its work crews have been spared any headaches. The city’s was hit with an especially strong, and long cold front — notable even for Fairbanks. The cold actually kept snow removal equipment locked up for long stretches, thus slowing down the snow removal schedule. Mike Schmetzer, Fairbanks public works director and city engineer, said the equipment isn’t used in very cold temperatures, minus 30 degrees or colder, and that put the city about five weeks behind in removal. Fairbanks is used to little snow falling at once, a few inches at a time. Recently, the city got hit with about 9 inches of snow in one swoop. Fairbanks general foreman Brad Carlson said the vehicles are still finishing up with what’s left on the ground, and more is snow likely in early spring. Schmetzer said the lack of total snowfall sort of balances out the costs of not removing it as quickly, and so costs are right on track where they should be for a typical winter. Even with winter’s worst behind us, maintenance is still going on. Dump sites have had to get creative in making room, even running heavy machinery across the tops to compress things down a bit. “We’re still hauling day and night,” Anchorage’s Southard said. Come springtime, all those piles will turn into something else, something many are not looking forward to. Southard said this will all be a lot of water to deal with before long.

CH2M Hill launches program to teach welding

Eighteen-year-olds Dakota Rudolph and Andrey Zagorodniy had spent all week behind protective gear as sparks flew by their faces or burning through metals with enough heat to turn a laptop into fertilizer ash. Both agreed: it beat a classroom, especially if it leads to a job. These two were part of CH2M Hill’s structural welding pilot program to help prepare young people to take on welding roles with the company. Two sets of classes of 20 students each used the Anchorage fabrication shop for a week to get hands-on exposure to welding, I-beams, scissor lifts and rigging training to cover the same things they will encounter on the job. The program is free and voluntary for the young folks. For many of them, it didn’t take much convincing. “This is definitely a lot of fun but this is what I love to do and greatest thing in the world. Next greatest is finding a job that’s going to pay you to do it,” Rudolph said. The two teens have a good feeling this experience will help with that. Passing students come away with structural certifications for one-inch plates and are also entered into a continuity log for six months and so can weld for CH2M Hill as opportunities come up. The program is for beginning welders but not necessarily for newcomers. Rudolph and Zagorodniy both are in the welding program at Colony High School, one of the participating partners in this venture, along with the King Career Center, the Alaska Vocational and Technical Education Center and Northern Industrial Training. Students like Rudolph and Zagorodniy have been learning the basics through Colony High’s welding program for a few years now. But their classroom experience has been just that. The idea is to expose them to a real work environment while receiving instruction from seasoned welding professionals. They do the same work they would be expected to on a job site and they’re expected to follow the same safety standards, especially after an intense safety training when they first come in. “They’ve given us a chance to use all their resources,” Zagorodniy said Throughout that work, they were coached by CH2M Hill welders, instructors and safety officers. Resource Manager Sara Gould said when a project manager stopped by to give instructions on what it’s like on a site, the students’ curiosity was so encouraging that this manager answered questions a whole hour longer than scheduled. “Our goal is to have good folks who have expressed interest, and not just the young people who think they want to be welders, they’ve already started somehow,” said David Hopkinson, CH2M Hill vice president of construction. This is why the company looked for students in schools who have made some strides in the profession. Workforce Development Manager Trevor O’Hara said of the majority of those in the program are still in high school. A few are recent graduates. He credited the school as being generous in freeing up the time for them. The program was also timed during the construction slow season, so the fabrication area would be clear and professionals would be more readily available. The participants hope that once things get busy in the summer, so will they. While there are no job guarantees, students are added to a list of available employees for when opportunities arise. Sparking a job plan O’Hara and Gould brought this pilot program into being. O’Hara has been tasked with creating new initiatives like this to focus on Alaska hires and other resources. “Of those plans, this was the one that really stuck,” Hopkinson said. “It’s one we thought we could do well. It’s one that we have the facilities, we have the people, the professional craftsmen that can actually do the training.” O’Hara said an advantage of starting with a structural welding program lies in both the demand for workers plus, the measurability of results. He said the tests involving vertical and overhead positions plus stick and wire are clear-cut ways to determine passing levels. The results are even X-rayed and checked through a third party to make sure students can do the job. Hopkinson said that moving them out of a classroom and into a fabrication shop helps introduce them to the demands of the oil and gas industries, safety standards and must-know features of the work, such as basic rigging and material handling. With this training, students from these four partners will be able to start work immediately as positions become available. Hopkinson said there is a gap in the industry and in Alaska hires, so the purpose is to prepare young people to fill jobs for the next several years. He describes the problem as a “70/30 gap,” with the average jobs filling with about 70 percent local hires over the last several years, but the more skilled labor jobs are more difficult to fill locally. Also, a lot of qualified people are leaving the state. “In this case here, after two class we’ll probably have 18 people certified. That’s 18 welders who weren’t here yesterday,” he said. O’Hara said that even though welding work is cyclical, the demand is there for such skill sets. “I’ve been in this industry for about nine years in the personnel side of things and I’ve seen where you cannot find enough structural welders or other trades as well, so we’re a trade-deficient nation and Alaska is no exception,” he said. With this program under their belts, Rudolph said they expect to be able to jump into work full-time this summer when things pick up. Rudolph would like to stay with CH2M Hill as a welder for at least a few more years to build up some savings before college or whatever else may lie ahead. He said welders make a good living, which is part of the driving force of his volunteering for the program. Rudolph and Zagorodniy are already certified through the Colony program, and this program will allow them to get additional qualifications through CH2M Hill. With the added skills and certifications, they expect to be able to hit the ground running when the work comes around. Rudolph said there’s more to the job for him. It’s become a true passion; it even helped him bring up his grades. “Welding’s definitely turned me around,” he said. The company spent about $1,000 per student for this program. O’Hara said this pilot program was a gamble, but more so with the work factor than the financial investment, since jobs are not immediately available and time will tell how that changes once summer rolls around. “This gamble’s saying yeah, we’re going to have the work or we will in the near future to out them to get them employed,” he said, noting that the company is careful not to overstep by giving false job promises. “Our company needs to gain the work as well,” he said. Hopkinson has been pleased with the results, saying 70 percent of the students have moved up enough to jump into a real work environment. Now that the pilot part is done, the question remains: what’s next? The administrators will evaluate how the students worked out and decide if another program will be in store. Hopkinson said a continuation could consist of another welding program. Another option is a similar program for pipefitting, which also is in high demand. “The long and short of it is this is one of those little operations that can turn into a great outreach,” O’Hara said.

Girls Scouts pave way to future scientists

Jania Tumey has had a keen mind for science since longer than she can remember, and she’s only 12. But Tumey has a not-so-secret weapon she’s been using to make the most of her interest. Tumey has been a Girl Scout since kindergarten. She’s now in sixth grade at Rogers Park Elementary School in Anchorage. She’s planning on getting into biology once she reaches high school. But she’s not waiting until then. She participated in the Girl Scouts of Alaska’s recent Women of Science and Technology Day, which provides young ladies access to scientific professionals for some hands-on learning. These professional women come from diverse scientific backgrounds, including engineering, health care, chemistry and veterinary science. And a recent report from the Girl Scout Research Institute states these are interests shared by most girls Tumey’s age. Girls Scouts are well known for their must-have cookies, but the nonprofit organization offers several programs and hands-on learning opportunities for young girls beyond hawking cookies once a year. “I think being a Girl Scout gives you a lot more opportunities like going to the Women in Science event,” Tumey said. “I probably wouldn’t have been interested in science if I had not been to Women in Science.” Apparently, this is a common theme. The report states that while most women are interested in science, technology, engineering and math — referred to in industry and education standards as STEM — women are still underrepresented in these fields. The study finds that 74 percent of high school girls nationwide are interested in STEM fields, yet still are not encouraged enough to enter such fields. It also states that girls interested in these fields tend to be high achievers and are more confident, with many wanting to make a difference in the world. Girl Scouts of Alaska communications manager Anne Gore said the girls, once they gain interest, generally will continue these interests through college. “We were really excited to see this come out and what it does is sort of confirms what we observed in girls being interested in science and math,” Gore said. “We’ve seen other studies that say girls aren’t interested, but this shows they are.” Marge Stoneking, CEO for Girl Scouts of Alaska, said two major things stood out to her in the report. One is that what their work in girls-only STEM projects are working. “Because we now see an increased interest in STEM by girls, and that’s not been found in studies to date,” she said, referring to studies outside the organization. She said the focus over of such studies over the past 10 years has been about how to get girls interested in STEM, while this shows that the Girl Scouts involvement has worked and they are already interested. “And what were doing specifically in Girl Scouts with the Women in Science program in connecting women scientists with girls is particularly effective in helping us get to the next level, which would be having more girls or women go into STEM careers,” Stoneking said. The other thing that struck her was that the demand for STEM jobs, particularly in engineering and technology, won’t be able to be met by men alone. She said this goes nationwide, but is especially true in Alaska. She said she finds it significant that in a natural resource state like Alaska, college students can get a variety of engineering and science degrees, yet many companies still have to look elsewhere to fill engineering jobs. “And so here we have this whole untapped resource of girls who are interested in STEM if we can get them to the next level to choose STEM careers,” Stoneking said. The issue lies in perceived gender barriers that prevent girls from turning science or technology that’s already in their interests into careers. The report states that girls really are interested in math and science, which goes against past studies that stated girls who do well academically are still not interested in these areas. Gore said the study highlights that these girls may be interested in STEM, but may choose other careers that they know more about. She said this may also factor into girls having to work harder than men in STEM fields, which may be a factor in their career decisions. The Women of Science and Technology Day is a program that has combated such discouragement by giving the girls a realistic idea that females in science and math can do these things. The girls themselves connect well to the presenters, asking them what their jobs are like and what it took to get there Tumey said the women she’s met seem really good at their professions and they look happy doing it. “Girls Scouts is using this to focus that there are women who are succeeding in these fields,” Gore said. Of course, what’s a Girl Scout event without fun being involved? Tumey experienced agriculture and moose studies, but one of the most memorable was building structures out of paper, only they had to be strong enough to support a person. “I think it taught us a lot of different jobs that we could have,” she said. “If you love animals or if you love building.” Though she has time to decide, Tumey thinks she’ll opt toward the building part, perhaps architecture, but she hasn’t ruled out marine biologist since she enjoys working with animals. In fact, she’s working on a science project on ocean acidification for both a school fair and a state science fair. Tumey’s been going to the event for several years, which is good for her since, as she says, she’s really serious about her science projects and goes beyond the Girl Scouts to enhance her interests. She’s met scientists through her mother’s reporting work with Reuters. Alice Michaelson, 14, always knew women were involved in such work, but said she knew it by assumption. She never got to see them in action until the Scouts. Michaelson is in eighth grade at Goldenview Middle School, also in Anchorage, and has also been in Girl Scouts since kindergarten and has attended the event for several years. This time, she got to learn about scuba diving and bird treatment. It left an impression, as she said she’s definitely been considering going into a scientific field after this. If anything else, she said it sounds fun. Women of Science and Technology Day takes place in communities both large and small across the state each year and reaches more than 2,0000 girls while involving about 200 women in the science-based professions. This event itself is growing too. The Anchorage day hosted an unprecedented 120 professionals, more than the 77 volunteer presenters last year. Stoneking said STEM is particularly significant focus for girls in the fourth- through eighth-grade ages because that’s an age when many tend to drop out of Scouts, but is also the timeframe when many become interested in their futures and begin eliminating career options. Girl Scouts are for girls in kindergarten through 12th grade, with different participation levels that are appropriate for different age groups.

FAA to implement ADS-B nationwide within a decade

A small aviation company is making big strides in getting its technology to become an industry standard. A long-awaited reauthorization from the Federal Aviation Administration adds widespread installation real-time safety technology in 2020. Comprised of about a dozen employees, less than half of which are full-time, ADS-B Technologies has been working on the technology since it was conceived in the mid-1990s. The most advanced version was perfected in Alaska in the early 2000s. “We like to say that it represents the next generation in air traffic control surveillance technology,” said ADS-B Technologies President Skip Nelson. “It is literally the FAA’s mandated replacement for radar by 2020.” Nelson said many inputs have been made all over the world, but it wasn’t until the Alaska operations took over — with a special emphasis to increase efficiency and decrease accidents in rural areas — that the final design could be perfected. “During just one two-year period, Alaska went from being the most dangerous place to fly in North America to one of the safest,” Nelson said. The Anchorage Economic Development Corp., which has been involved with ADS-B Technologies, said the deployment has led to a 43 percent reduction in Alaska aviation accidents. ADS-B, or Automatic Dependent Surveillance-Broadcast, goes beyond existing radar technology by using the conventional Global Navigation Satellite System constellation to send positions to the aircraft while simultaneously and continuously sending information like call sign, craft type and flight status and to any ground station or other aircraft equipped to receive it. The system is always on and requires no operator intervention. “ADS-B is perhaps 1/20th as expensive as radar to both build and maintain and several times more accurate and reliable,” Nelson said. There are now more than a dozen ADS-B ground stations across the Southwest, Norton Sound, Southeast and Southcentral areas of Alaska. The FAA plans to install more than 40 ground stations across the state, from the Aleutians to the North Slope. Nelson said a $1.7 billion contract was awarded in 2008 to install more than 700 stations throughout the national airspace system over the next several years. ADS-B Technologies has now developed the next generation in the system to increase this efficiency the remote areas using NextGen Space-Based technology. The ADS-B Link Augmentation System uses the Louisiana-based Globalstar Inc.’s satellite system to track and control aircraft in real time. ALAS allows precision tracking in virtually any terrain in any location. Globalstar’s third satellite launch for this was in December, bringing it three-quarters of the way to the 24-satellite goal. ADS-B’s next phase is to compete for a national contract to get the infrastructure ready for a 2020 implementation. A recent FAA announcement to use ADS-B technology with Over-the-Horizon technology, which is the same as Space-Based, could mean an almost $1 billion investment in Alaska, according to AEDC. Nelson sees this as an advancement in state industry breadth. He said the right investments could turn Anchorage into a “little Phoenix” in terms of high-technology industry. Aside from AEDC’s help, two members of Alaska’s delegation have thrown considerable support behind the technology, as has the World Trade Center Alaska, Nelson said. Congressman Don Young is an ardent supporter of ADS-B technology and has fought for it over the years during multiple rounds of appropriations. He said he’s especially proud that the technology was developed and honed in Alaska. “The fact of the matter is that ADS-B technology has improved aviation safety across the world and shows what kind of impact technology can have on saving people’s lives,” he said. Sen. Mark Begich is also a staunch supporter. “ADS-B Technologies is at the forefront of efforts to modernize aviation and air traffic control around the world. They are a true testament to the ability of high-tech to thrive in Alaska,” Begich said. “Congress just passed a comprehensive FAA reauthorization bill, which will accelerate the transition from outdated ground-based radar to a more accurate satellite tracking system. Automatic Dependent Surveillance-Broadcast is at the heart of this effort and was first proven in Alaska as part of the Capstone program. I’m glad leaders in this technology are based in Alaska, where this important program started.”

Education construction spending gets boost in 2012

Construction spending for the schools gets another boost this year, and there are several projects to account for it. The Associated General Contractors of Alaska and Institute of Social and Economic Research forecast that education-related construction spending will get a 15 percent boost over last year to the tune of $408 million. AGC’s forecast states the increase comes from a $397 million state bond package passed in 2010 in addition to more local school district spending. The Matanuska-Susitna Borough School District wins a large prize at the local level with a five-year $214 million bond package and no shortage of projects to put it toward. Six new construction projects will go forward for the district. Most notably, there will be new school building construction with additional work on athletic field improvements, heating and ventilation work, generator replacements, bathrooms, signage and various other infrastructure needs. The Mat-Su district’s biggest project will be building its first middle and high school combination at the Knik-Goose Bay Road area. “That will help alleviate the crowding at Wasilla Middle and High School,” said district spokeswoman Catherine Esary. A new Valley Pathways building will be built using a modified design previously used at Su Valley Jr/Sr High School, which was lost to fire in 2007. Valley Pathways is an alternative high school serving about 250 students and is located on borough-owned land that was just re-zoned into the Wasilla area. Also on the list is a new Iditarod Elementary and a permanent building for the Mat-Su Day School, which currently uses portable classrooms on borough property but co-located with the District Operations & Maintenance Department. Mat-Su Career and Technical High School will be getting a phase III addition as well. The investments are subject to up to 70 percent of debt service reimbursement by the state. “The bond passed substantially and so we believe that that’s an indication that Mat-Su Borough voters are in support of education. They see the return on their investment. They see that our schools are doing a good job and they want to provide the best facilities,” Esary said. The Anchorage School District will place a $59 million bond proposition on the municipality’s April ballot with an anticipated 60 percent to 70 percent debt reimbursement for most projects. If passed, work will begin this year. Such work includes $23.9 million for life extension projects for schools based  on the district’s new facility condition index. Projects could include fire alarm upgrades, roof replacements, mechanical system work, lighting upgrades and other site improvements. The bond includes $23.8 million for career and technical education improvements with slightly more than half going toward a new structure for West High School. The rest will be to upgrade the programs at this school and allowing other middle and high schools to develop or enhance their own programs. Also, the bond includes $2.4 million to improve Girdwood K-8’s infrastructure, space and condition to meet educational needs, which it currently doesn’t and is overcrowded. Finally, the district must match $9.1 million to receive a $21 million state grant to renovate Service High School. The scope if this project has been reduced following two previously failed bond proposals. The Fairbanks North Star Borough School District also has quite a bit of projects this year that come from previous bonds and legislative action. Projects throughout eight schools will cover about $17.3 million, according to Assistant Superintendent Dave Ferree, who said this amount is up a little bit from the past couple of years. Ferree said the biggest one is phase III renovation at Barnette Magnet School that will cost $9.5 million, followed by a $3.1 million gym renovation at Lathrop High. Other projects covering septic and sewer systems, lighting, siding replacement, power and mechanical upgrades will each cost around $1 million or lower, some of them half or less. In the Juneau School District, work on Gastineau Elementary’s commons and gym renovations will finish up this summer, followed by its playground. Auke Bay Elementary renovations will immediately follow, allowing simultaneous construction. Building won’t be limited to K-12. The University of Alaska Anchorage will be doing hefty additions. The Seawolves will be getting a new 196,000-square-foot sports arena. It’s estimated to cost $82 million and to be completed in 2014. The school of engineering will get a new 72,000-square-foot building for $55 million while the old one is renovated for $11.5 million. A 500-car parking structure is included in the project for an additional $17 million. The whole thing could be completed by 2015. Lastly for UAA, a new Mat-Su Valley performing arts center should start this year and be completed in 2014 for $15 million. The 35,000-square-foot structure will house a 500-seat theater and classrooms. AGC reports that education spending’s biggest leap was between 2005 and 2006, which had a 107 percent increase due to expansive state grants and local bonds that virtually guaranteed reimbursement by the state for certain percentage of the repayments. The pattern leveled out more until 2008, which saw a 20 percent drop due to lower state spending on the K-12 level and less university spending. The forecast has gradually gone up since.

State, ISER seek better student data

The Alaska Commission on Postsecondary Education is teaming up with the Institute of Social and Economic Research to learn more about students. Specifically, to keep learning about them once they get to college. The commission and ISER, along with the labor and education departments, have applied for a $4 million grant from the National Center for Education Statistics to build a longitudinal database to track student data from preschool through college. The groups say better student tracking is crucial and could prove invaluable in shaping student pathways and improving public policy. If the grant comes through, the entities will collaborate on establishing a database to keep track of student data continuously throughout students’ educational careers. The idea is to gather information about where students are from, what they study and how they progress through secondary school and then continue researching as they go through college. “It would able us to identify what programs are most successful in assisting students to achieve success throughout their school and into their career lives and enable us to target resources at those programs that are most likely to make a difference,” said Stephanie Butler, director of program operations at the Alaska Commission on Postsecondary Education. There could also be potential to examine demand for students concerning their secondary background. “The big thing that we want to be able to do is answer the question what’s happening to our students. Are they succeeding? Where are they going?” said Diane Hirshberg, associate professor of education policy with ISER. Butler said tracking data through the course of their educational career can also answer questions about return on investment for interventions for student financial aide and if those students are more or less likely to go to college. Another example is do particular school programs encourage students to stay in the state or leave. Butler said the answers to questions like this can really inform state policy decisions. And the answers may be linked to courses or schools kids were in years earlier. The grant would be for three years. The entities involved expect to hear an answer by late spring and could have the database started by the summer if approved. The idea for this longitudinal database has been around for several years. Butler said the Labor Department has done a lot of work in this area. She said the newly released Alaska Performance Scholarship outcomes report functions as a proof of concept on what type of information could be provided to the administration and legislators with such a system. “It also represents a wonderful and money-saving collaboration between multiple state agencies,” Butler said. Alaska currently has similar database for K-12 students. However, it does not extend past that point, meaning student activity in college and in the workforce cannot be measured in correlation with what they did in secondary school or, for that matter, to se if there is any correlation. The current data tracks where students are enrolled, courses and standardized test scores, as well as data required for federal reporting. This includes information about the schools, such as Adequate Yearly Progress and graduation rates Hirshberg said the difficulty lies in linking up to different systems and understanding where students are and how are they’re doing. She said this is a big step toward being able to fully answer the question of how the state and various educational systems are succeeding in preparing K-12 students and what happens to them once they get that high school diploma. The database also doesn’t work easily with any post-secondary information. For example, student identifiers in the public school system doesn’t carry into higher education. Hirshberg said researchers would like to find out if students from certain areas gravitate toward particular UA campuses, pursue education outside the UA system or immediately enter the workforce. While students do have Social Security numbers, she said the system prefers not to use these, in an effort to protect confidentiality. “So it’s really an opportunity for us to understand how we’re doing and perhaps better plan our programs, better evaluate the effectiveness and better serve students in Alaska,” Hirshberg said. The new system would link the post-secondary to this data and track it across different systems. It’s intended to evaluate individual student growth and movement, as well as through different career and educational programs around the state. Hirshberg said the additional resources would also allow ISER to study the existing K-12 data more, which Hirshberg said is necessary, especially in terms of exploring if there is a link between student mobility and student success since moving around to schools in various parts of the state is not uncommon in Alaska. “I think that unified database is going to allow for a lot more understanding for how students progress around the state,” she said. Butler said the hope is to someday extend the database into the Department of Labor and Workforce Development to measure student trained in Alaska against those who stay here for their careers. Butler said the grant will really speed things up in linking the data while ensuring all of the protections are in place to protect student identities. Hirshberg said it will take agreement and active collaboration from all parties to make this work.

Anchorage construction to see moderate growth in 2012

Anchorage is in for some moderate construction growth next year, as predicted by ECI/Hyer Architecture and Interiors. Principal architect Brian Miessner recently addressed the 2012 forecast to BOMA Anchorage. Miessner said Anchorage’s construction could be on the rise again after a recent slump. 2011 showed a total of $404.9 million in permit values through November. This is a slight increase over 2010, when total values fell drastically from the previous year. Sixty percent of those building permits were for new construction projects, compared to 53 percent for new construction in 2010. “Which is a surprise because last year we didn’t see a lot of construction when I was doing this forecast,” Miessner said. Almost a third of those new construction permits were for commercial buildings, compared to a quarter being for new commercial permits in 2010. Only 20 percent of 2009’s permits were for new commercial construction. “So we seem to have turned a corner in commercial construction and that is played out with the level of activity we saw last year,” Miessner said. Miessner sees several trends developing, such as more smaller developments as larger projects from the past decade come to a close. An 84,000-square-foot crime lab is one example. It’s expected to be completed in July this year at an estimated construction cost of $68 million. Another trend is a decrease in private home construction to make way for a hot rental market. Miessner said this paves the way for a lot of smaller projects with rentals in mind. Miessner said he’s also seen a lot of homeowners getting ready from backfill opportunities from many of these big projects from the 2000s with many homeowners investing heavily in getting their homes looking good for that backfill. He cited the old veterans affairs clinic moving out of the Alaska Regional Hospital campus, clearing around 98,200-square-feet of possible leasing space for investors. Nearby housing rentals would be open for new workers there. Anchorage will be riper with smaller-scale projects than large ones. Renovations like those at the Sears Mall relate to forecasted projects for more cosmetic renovations to attract investors to the city. Such renovations will be especially prevalent in retail establishments. “There’s this pattern across town: owners trying to look better than the others and it’s because there’s more inventory on the market,” Miessner said. Other smaller projects slated for this year include a depot office for the railroad, a new downtown medical office, new offices on the south side and Verizon’s new switching center for its entrance into the Alaska cellular market. Bigger projects include the Anchorage Neighborhood Health Center and Alaska Native Tribal Health Consortium’s new buildings, both scheduled for completion this year with estimated construction costs of $17.2 million and $24 million, respectively. Construction on the Blood Bank of Alaska’s new facility will also get under way with an estimated cost of $36.8 million. It’s scheduled for completion in the fall of 2014. The forecast accounts for startups on the University of Alaska Anchorage’s new sports arena and engineering school facilities, each costing an estimated $82 million. No contractors have been selected yet. A smaller project will be work on a new performing arts center. The other big projector is for military construction. Miessner said there are 12 planned projects costing a total if $355 million, which he said is about 10 percent less than was spent the year before. Further military spending decline may be in store. “The bigger difference is when we look out in future years, the queue doesn’t exist anymore,” he said. This refers to the backlog of projects in the past that are no longer there due to defense budget cuts. There are several road projects but three in particular the firm is keeping an eye on, believing these could spark further development. These projects include continuing work on 40th Avenue, which Miessner said could open enormous investment potential. Another is on 88th Avenue in South Anchorage that one by Midtown Park. Outside Anchorage, the main projects that catch the firm’s attention are the State Archives in Juneau, a large clinic in the Kenai Peninsula and some UAA projects around Soldotna. Managing member Ted Jensen of Reliant LLC talked about the city’s Class A building construction. These buildings are generally bigger, have nicer finishes and are more expensive than Class B buildings. Jensen said new Class A office market will soften in 2012, but there will still be a healthy vacancy rate that will increase. This projects from the trend of companies moving their operations rather than new tenants coming in. He said this new supply with limited demand could slightly increase the Class A vacancy rate to just over 7 percent in a year’s time. Jensen said 200,000 square feet of Class A construction in Anchorage will go online in 2012. Most of these buildings will be to suit specific tenants. Only the Three Cedars Office Building will be speculative. Class A projects will include the Anchorage Neighborhood Health Center, the Glenn Olds Hall addition at Alaska Pacific University, the new Alaska USA building, the Alaska Native Tribal Health Consortium addition and the Dankor building in midtown.

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