Construction

USDA pumped $2.1B into state in last 8 years

A small federal office has quietly injected more than $2.1 billion into Alaska over the past eight years with almost no impact to the national debt. The U.S. Department of Agriculture Office of Rural Development has done that through its 35 programs that help fund everything from water and sewer systems in the most remote villages in Alaska to startup businesses in every corner of the state. The Rural Development Alaska progress report covering President Barack Obama’s time in office lists 236 communities in which the office has funded projects. Appropriately absent from that list is Anchorage, given the agency’s rural focus. Despite providing $2.16 billion in loans and grants since 2009, outgoing USDA Rural Development Alaska Director Jim Nordlund said one of the biggest hurdles for his staff is getting the word out that they are here to help. “It’s always been a constant challenge for us as an agency to let the public know, let Alaskans know, particularly rural Alaskans, what we do,” Nordlund said. “Everybody thinks USDA only deals with farms and farmers, but that’s not exactly true.” The office has managed to fund $775 million in housing projects, another $683 million in telecom and electric infrastructure development and nearly $300 million in water and environmental work over that time while being net neutral to the federal Treasury, as Nordlund is quick to note, because more than 75 percent of the $2.16 billion issued was in the form of loans. In Alaska the Rural Development programs are one of the biggest things the Agriculture Department does — outside managing two of the three largest national forests, of course. Nationwide, the Rural Development wing of the USDA has a loan portfolio of about $215 billion, which would make it the eighth-largest bank in the country, he added. The focus on loans is something Nordlund, a longtime Alaskan, said needs to happen more generally in Alaska particularly given the state’s massive reoccurring budget deficits that have evaporated almost all state grant programs. He acknowledges that some situations require grant funding or subsidies due to a lack of revenue for loan repayment but also said his staff often presents a loan option to an entity only to be turned down because the group wants free money. “I just think that as a state we need to be more creative in terms of looking at leveraging money, being creative with the use of loans, marrying loans and grants and tax credits in order to get projects done,” Nordlund said. “It’s that kind of creative financing and leveraging that’s going to have to happen in Alaska given the times that we’re facing and a lack of pure grant funding.” Nordlund added that he has seen a shift — slowly and reluctantly — among those looking for funds to accept that reality as the state’s fiscal situation has deteriorated rapidly over the past two years. Last year the Rural Development Office issued a $165 million loan to the Yukon Kuskokwim Health Corp. for a new clinic and hospital expansion in Bethel, the largest Community Facilities Program loan in the history of the program nationwide. And the loans are being paid back. According to Rural Development Business Programs Director Renee Johnson, Alaska’s $119 million Business Loan Guarantee Program finished 2016 with no delinquencies to report. The program has a 3.3 percent delinquency rate nationwide; and Johnson credited the Alaska results to the expertise and lending practices of the government office’s private lending partners. As a presidential appointee, Nordlund will be leaving the Rural Development Office when the Obamas vacate the White House. He said he hopes his successor can continue the work the agency has done over the past eight years and especially build on efforts to make home mortgages more accessible to village residents, a means Nordlund sees as crucial to improving rural Alaska’s housing stock. “There’s nothing more unique than rural Alaska,” he said. “The opportunity to serve rural Alaskans has really been a great honor and I’m going to miss this job a great deal but that’s just the way it goes.” Elwood Brehmer can be reached at [email protected]

Gov’s budget would cut Alaska Construction Academies

The Alaska Construction Academies might see a steep decline in funding next year if the Legislature accepts Gov. Bill Walker’s proposed budget cuts. The governor’s fiscal year 2018 budget, released Dec. 15, proposes a $600,000 reduction in general fund dollars for the Alaska Construction Academies, an Alaska Department of Labor and Workforce Development program that offers free basic construction training to high school students and adults in Anchorage, Juneau, Ketchikan, Fairbanks, the Mat-Su Valley and on the Kenai Peninsula. “This will also greatly reduce the number (of) Alaskans trained through ACA unless the department can identify federal and/or private funding to help backfill this reduction,” the budget detail states. The reduction leaves approximately $1.2 million left in the program. As a result, the Construction Education Foundation would be dissolved and the department would take over the administration of the sub-grants, which fund the individual construction academies, according to the budget detail. The Alaska Construction Academies have undergone cuts from the Legislature for the last several years. In the fiscal year 2015 budget, the Department of Labor had a $3.4 million budget allocation for the construction academies. The following year, in fiscal year 2016, the department had a $2.5 million allocation for the program, and in fiscal year 2017, the funding dropped by about $700,000. The biggest share of funds for the program have come out of the general fund in the past. The Construction Education Foundation is the nonprofit body receiving the funds from the Department of Labor for the program, said Kathleen Castle, the executive director of the Construction Education Foundation. The funds are not specially dedicated, but they are typically included in the budget, and the Department of Labor provides the funds to the foundation for the purpose of running the construction academies, she said. The academies got their start 11 years ago when the industry leaders noticed a lack of trained people in the workforce. Industry representatives worked with the Legislature to get some state funds for an education program to give workers some of the basic skills they would need to enter the construction industry, Castle said. “If … (a company) gets (workers) up to speed so they could read a tape measure and do some basic things, there was so much going on that they would get them up to speed and then they would move on,” she said. “…We were talking about the fact that there were so many people coming out of our high schools who didn’t know how to read a tape measure or anything.” At the time, there was more work available than many companies could handle. Oil revenues were high and the state financed large projects through its capital budget, sometimes in the billions of dollars. Even though the economy in the Lower 48 struggled after 2008, the economy in Alaska was still growing as oil prices rose, so more people moved to Alaska and created construction work as well. However, that’s not the case today. As oil prices have declined from more than $100 per barrel at the end of 2013 to a little over $50 today, the state government has been scrambling to try to bridge the gap created in the general fund. Walker’s proposed budget, which the Legislature is set to begin considering when the regular session begins next Monday, allocates $100 million for capital projects. The governor’s director of the Office of Management and Budget, Pat Pitney, told the Kenai Peninsula Borough Assembly in a presentation Jan. 3 that this is the basic amount required to meet the federal match. “That only covers match for federal items — housing, water, transportation, energy and so forth,” she said in the presentation. “It’s an unsustainable long-term capital budget. It’s really pretty too bad when $100 million is essentially no capital budget beyond meeting our match requirements.” The Associated General Contractors of Alaska’s annual construction industry forecast, compiled by economist Scott Goldsmith, projected the value of construction industry spending would decline by about 18 percent in 2016. So far, it looks like that prediction came true, said John MacKinnon, the president of AGC. However, in context, the industry was projected to grow about 18 percent in 2014 due to increases in oil and gas, Department of Defense and increased state projects. MacKinnon cited the Legislature’s passage of several industry bills providing stability for investors as the reason for the 2014 investments. “So much of that bulge, that investment uptick in spending was a result of the confidence that investors had,” he said. Now, with the downturn, some contractors are beginning to look for work outside the state if they can. Bids for projects are getting lower as contractors increasingly need work. State numbers don’t account for reductions in hours, which are decreasing for many workers, MacKinnon said. Highway work is fairly stable, but most of the reductions are coming from the private side, he said. What investors are looking for is stability, he said. “We’re seeing less money out there for work on the vertical side, less government investment in facilities. … That precipitates private investment,” he said. “When private money doesn’t have confidence in the investments made by government, then they pull back. There’s a growing lack of confidence in taking care of our fiscal mess.” On the Kenai Peninsula, the construction academy has a strong relationship with many of the employers. Now in its ninth year, the Kenai Peninsula Construction Academy provides classes like carpentry, plumbing and electrical work. All of the teachers in the program are licensed in what they are teaching, said Bob Hammer, the program coordinator for the Kenai Peninsula Construction Academy. “All of my teachers are business people,” said Hammer, a former carpenter who teaches the carpentry classes. “The electrician is a licensed electrician, same with the plumber.” Some of the budget reductions have already played out for the construction academies. They used to partner with high schools all over the state. This year, the construction academies have no contracts with the high schools, Castle said. Hammer said he is working on partnerships with the school district to keep high school students connected with the education. It’s important to get that point across to high school students — it’s hard to do anything without an education today, he said. Things are tougher for the employers as well. He has worked with them in the past to place graduates of the program into jobs, but there are fewer jobs now to give, he said. Even though the industry is on a downturn right now, it’s always important to get young people into the trades, he said. Even though there’s an estimated downturn for new construction, there is always infrastructure work. Some of the academy attendees, who range in age “from 18 to 40,” Hammer said, have expressed interest in other types of trades to diversify their skills. Recently, the academy expanded to offer classes in diesel mechanics as well, he said. “(The work) doesn’t stop the plumbers and the electricians,” he said. Castle said the intent of the cuts was not to eliminate the construction academy, but to have the coordinators look elsewhere for funding. The Construction Education Foundation is doing so but has not had to do so in the past, she said. “We’ve … been so lucky to have this heavy priority on the part of the state to fund our program,” she said. “It’s really a Catch-22 — the industry has been privileged by having all of these dollars for workforce development. “The industry hasn’t had to pick up the tab for it. Here we are where we’re seeing a decline in the state dollars, but it’s such a downturn time for the industry that’s it’s not a time to ask the industry. Especially when so many companies are laying people off.” Reach Elizabeth Earl at [email protected]

Anchorage settles for $12.6M with port contractors

Anchorage has settled out of court for $12.6 million with three subcontractors in the city’s failed port expansion project while a lawsuit against other players in the complex drama continues. Most recently on Oct. 19, Terracon Consultants Inc. and the Municipality of Anchorage filed a motion in U.S. District Court of Alaska notifying the court that Terracon had agreed to pay the municipality $1.95 million. Terracon reviewed a 2008 evaluation report of the Open Cell Sheet Pile dock design that the municipality claims was faulty. The settlement document notes that CH2M, which filed a third-party complaint against Terracon in November 2014, has not filed a claim of fault or breach of contract by Terracon. On Aug. 30, Quality Asphalt Paving, or QAP, agreed to pay the municipality $5.15 million to resolve its role in the lawsuit. QAP was hired along with its project partner MKB Constructors in 2008 by the Port of Anchorage Intermodal Expansion Project manager and former Koniag subsidiary Integrated Concepts and Research Corp. to install the Open Cell Sheet Pile dock support structure at the port. The Open Cell Sheet Pile is a proprietary design of the Anchorage engineering firm PND Engineers, which is also a defendant in the municipality’s suit filed in early 2013. PND contends the dock design failed due to faulty installation by QAP and MKB, while the contractors and the city argue the design wasn’t suitable for the Anchorage port from the outset. Judge Sharon Gleason dismissed QAP from the suit Oct. 17. Similarly, MKB settled with Anchorage for $5.5 million in June. All three settlements release the subcontractors from liability to the municipality, but not fault in the lawsuit trial, set for next April. ICRC and PND did not oppose QAP’s dismissal from the suit based on that understanding. PND filed a third-party complaint bringing MKB and QAP into the legal tangle in April 2015. CH2M, an international engineering firm which has dropped “Hill” from its name, is an original defendant in the lawsuit along with ICRC and PND through its purchase of VECO, a consulting firm that also evaluated the port design. In January 2014, the municipality hired CH2M to manage the ongoing and smaller scale $480 million Anchorage Port Modernization Project, which will eventually lead to the installation of a more traditional pile-supported dock structure, similar to what is currently in place. The $12.6 million in settlement funds will be split, with $7.6 million going towards the modernization project costs and $5 million being reserved for future port litigation expenses, according to Anchorage Port Director Steve Ribuffo. To date, the municipality has spent $25.4 million on the second port project from the $126.7 million left over from the nearly $439 million in local, state and federal funds raised for the expansion project. CH2M also issued the study in February 2013 that determined the Open Cell Sheet Pile was unsuitable for use at the Port of Anchorage. PND has repeatedly rebutted that study. In January Gleason ruled that MKB and QAP were subject to the lawsuit despite a 2012 settlement in which ICRC agreed to pay the U.S. Maritime Administration, or MARAD, $11.1 million to resolve a $17 million contract dispute. Because ICRC hired MKB and QAP, the subcontractors unsuccessfully claimed they were released from liability through ICRC’s settlement with MARAD. The municipality, however, was unaware of the 2012 deal at the time it was made, according to an October 2012 letter from then-Anchorage Mayor Dan Sullivan to MARAD Administrator David Matsuda in which Sullivan wrote he was “surprised and disappointed” to learn of the $11.1 million agreement. MARAD, a federal Transportation agency, was brought into the project in 2003 by the municipality to manage construction and be a vessel to acquire federal funding. Anchorage also sued MARAD in early 2014 in Federal Claims Court. Municipal attorneys have said the city is hoping to recoup up to $340 million from the two lawsuits. Originally intended to update and expand the Port of Anchorage’s aging docks, the expansion project was fraught with control and communication issues nearly from its outset. Those issues were manifested in construction problems and led to work being stopped partway through in 2010, which was never resumed. Elwood Brehmer can be reached at [email protected]

Housing First gets more money, but still in hole

A project to put a roof over Juneau’s most vulnerable residents just received a federal grant for $600,000. The U.S. Department of Housing and Urban Development awarded the money to Central Council of the Tlingit and Haida Indian Tribes of Alaska through its Indian Community Development Block Grant program. “We’re excited; $600,000 is a lot of money,” Myrna Gardner, Central Council’s business and economic development manager, said on the phone Monday. “Central Council is a stakeholder in the community. Regardless if it’s a tribal citizen or a community citizen, it’s still our people in Juneau and Southeast Alaska, and if they’re homeless and need help, we want to be a part of that,” she added. The 32-unit Housing First project will cater to Juneau residents who have barriers to housing stability, including individuals experiencing homelessness, mental health issues, developmental disabilities, chronic alcoholism and other substance-related disorders. The project aims to provide housing and resources without the caveat of sobriety or other preconditions of treatment. Anchorage and Fairbanks already have such housing. Central Council worked in partnership with the Tlingit-Haida Regional Housing Authority and the Juneau Housing First Project when it applied for the HUD funding. This was Central Council’s second attempt at the Indian Community Development Block Grant. “We really felt bad the first year when we thought we did a strong application and we weren’t successful, and so we were really crossing our fingers, dotting the I’s, crossing the T’s, checking everything and strengthening our application because we wanted to be a part of Housing First. We wanted to support it,” Gardner said. In order to not touch any of the $1.8 million bridge financing the City and Borough of Juneau appropriated to the project last year, Housing First still needs to fill a funding gap of about $1 million, said Mariya Lovishchuk. Lovishchuk is executive director of Juneau’s shelter and soup kitchen The Glory Hole, which is one of the five partner agencies working on the project. In order to do that, Lovishchuk hopes the second time is a charm for another grant application through the city. “The (Housing First project) board is planning on applying for another Community Development Block Grant,” she said. “You can apply for $850,000. We’re going to strategize with the city exactly how much to apply for because we really want to make sure we get it this time. We applied last year and we didn’t get it.” The Community Development Block Grant Program is a state program that provides financial assistance to communities for public facilities and planning activities that address health and safety issues, and reduce the costs of essential community services. Communities statewide compete for funding. Historically, the city has applied for these grants on behalf of nonprofits, said the city planning manager Beth McKibben. “In late summer we solicit proposals from the community,” she said. “It is my understanding that this year, Housing First is the only entity that has expressed interest in applying for a community development block grant.” McKibben said an application on behalf on Housing First would likely be more competitive this time around. It’s due in early December. “My understanding is that some of the things that were found to be deficiencies in their application last year have been rectified. For instance, they have more matching funds this year. Community Development Block Grant likes there to be lots of other funding available,” she said. In addition to the HUD grant, the Housing First project has received funding from the Alaska Housing Finance Corporation, City and Borough of Juneau, Alaska Mental Health Trust Authority, Juneau Community Foundation and Rasmuson Foundation. The land came from Tlingit-Haida Regional Housing Authority. Housing First broke ground in May on Allen Court in Lemon Creek and continues to make steady progress. The foundation is in, many of the constructed modules are up and the first wing is nearing completion, said Lovishchuk. Close to half of the $600,000 HUD grant will go toward building a medical clinic inside the building. Front Street Community Health Center is expected to move there. The Indian Development Block Grant to Central Council was one of 13 grants totaling just over $7 million that went to Alaska Native organizations. The funding will produce or preserve nearly 70 units of affordable housing and help fund the construction or renovation of several community facilities. Other Southeast grantees are the Organized Village of Saxman and Petersburg Indian Association. Nationally, HUD has awarded a total of $56.5 million in block grant funds to 77 Native American communities across the country. The Juneau Housing First project is expected to be completed May 2017. Lisa Phu can be reached at [email protected]

$27M in federal funds flow in for water projects

The U.S. Department of Agriculture Office of Rural Development is allocating $27 million for water and environmental programs around the State of Alaska after USDA-RD Undersecretary Lisa Mensah made the announcement on Aug. 30 at the Yukon-Kuskokwim Health Corp. in Bethel. The Alaska Native Tribal Health Consortium, Alaska Department of Environmental Conservation and the City of Bethel are among several agencies and organizations to receive grants and loans for rural sanitation and water projects. “I think that the funding being provided is significant,” said ANTHC Director of Project Management David Beveridge following a hectic day of traveling from the Bush to Bethel and back. “It is a huge investment in rural Alaska. It changes the quality of life and public health … homes that lack indoor plumbing have a health disparity as compared to those in the Lower 48.” Beveridge cited, for example, how much likelier it is for a resident to catch pneumonia and other illnesses when the only toilet available is a honey bucket. In many cases, however, honey buckets are the first and only resort because high ground water and permafrost pose technical challenges to building an outhouse or hooking up a septic system. In addition to cost, “there’s a question mark of how to get it done,” Beveridge said. The state is continually looking at alternatives via a pilot program, the DEC’s “Water and Sewage Challenge.” In 2011, more than 5,800 households in rural villages did not have a safe water supply. Five years later, although more households do have access now thanks to rural investment, the DEC estimates 3,300 homes in about 30 communities still lack indoor plumbing. In addition, Alaska currently has 18 designated StrikeForce counties, defined by the USDA as areas where more than 20 percent of the census tract is living in poverty. Since 2009, more than $2 billion has been invested in Alaska communities, with funds earmarked for water and sanitation projects, electric, housing, training programs and general facilities in rural areas. To receive a USDA-RD grant, the State of Alaska is required to make a 25 percent match. A complete list of grants awarded can be found on the USDA website. Following are details of two major projects out of the 55 projects to receive grants from this round of USDA-RD funding. Unalakleet, $6.62 million, DEC Powers Creek, heading north along the shoreline and located several miles from the city, is Unalakleet’s main water source. As storms roll in, soil rolls out, exposing the transmission lines buried on the beach to waves with immediate repercussions and repairs. “That is a temporary solution which only lasts until the next big storm,” said DEC Facility Programs Manager Bill Griffith. Griffith noted that the line did not have problems for more than two decades, but recently has been having issues every few years. It will not be possible to protect the transmission for too much longer, he said. In fact, the water source is projected to be lost completely in the very near future. Without a water source, there is no Unalakleet, a Bering Sea community with a population of 712. Because short-term measures leave residents in a precarious position, Unalakleet is unable to do long term planning, economic development or plans for basic housing. In response, the DEC evaluated various alternatives for the community and found that moving the transmission inland would not be as feasible as trying to develop well fields that are closer than the current source of water. “The problem is we do not know if we can find enough water to meet the demands,” said Griffith. Estimating seven wells may be required, the DEC is planning on drilling and testing sites this winter. Bethel, $1.7M grant, $913K loan The City of Bethel does not have pipes to empty toilets, so 80 percent of residents have holding tanks beneath their houses. Sewer trucks with hoses remove the refuse, taking all the human waste to a facultative lagoon, possibly the largest one in North America. One problem for Bethel is that the decades-old lagoon has never been dredged, and its jetty — literally a service driveway the trucks must use to make deposits — is crumbling away. “The lagoon is a complex project with many financial contribution sources all acting in a collaborative manner,” said Bethel City Manager Ann Capela, referring to funding being provided by various state, local and federal agencies including the U.S. Environmental Protection Agency, DEC, Indian Health Services, the state, and the City of Bethel. The entire renovation, totaling a little more than $8 million, must be completed under one umbrella project. “Once you start taking sheet pile off and digging around? The ground hasn’t been touched for 30 years. We do not know how the dirt will react,” Capela said. “We’re talking summertime, permafrost and soft sand, so we have to be prepared for any reaction from the ground.” In addition to lagoon renovation, three sewer trucks will be purchased to replace older models that have since been discontinued. Replacement parts for these models are not even available because the manufacturer is no longer in business. Two of these trucks are set to roll off the barge at the end of September. Design and engineering plans will begin in winter, with digging and construction scheduled to start in the spring of 2017. The Alaska Native Tribal Health Consortium is the recipient of 18 grants for multi-phase and stand-alone projects in rural communities around the state. These are four of the organization’s projects: Eek, pop. 256, $5.9M for water and sewer This is the latest of several grants to continue a multi-phase ongoing project. Currently no homes are connected, but the first set of homes is scheduled to be online by summer 2017. According to the ANTHC, one more application for funding will be required to finish out the project. Saxman, pop. 411, $3.22M for wastewater Wastewater in Saxman, a City in Ketchikan Gateway Borough, is currently discharged from three ocean outfalls. The grant will be used to eliminate these outfalls by installing sewage pump stations into the borough wastewater system. Kiana, pop. 369, $2.33M for water and sewer This grant for water and sewage services in Kiana, a City in the Northwest Arctic Borough, will service a number of homes in a subdivision that currently lacks access. Design starts this year, with 2018 construction likely. Golovin, pop. 161, $1.48M, water and sewer Last phase of a continuous project to provide indoor plumbing for homes in Golovin, a community east of Nome.  

Tustumena replacement accelerated to FY2017 funding

It’s looking like the M/V Tustumena could be headed for an earlier-than-expected retirement. The Alaska Department of Transportation and Public Facilities has moved up its federal funding request to pay for the 52-year-old Tustumena’s $237 million replacement from “after fiscal year 2019” to federal fiscal year 2017, which begins Oct. 1. The Seattle-based marine engineering firm Glosten finished designing the new 330-foot vessel in January. “It’s just a matter of awarding (the construction) contract and before we can do that we have to have funding for it,” Deputy DOT Commissioner Mike Neussl said. DOT made the change in the first amendment to its 2016-2019 Statewide Transportation Improvement Program document, which essentially prioritizes all of the department’s prospective construction projects and the plans to fund them. About $216 million of the $237 million for the new ferry will be federal money, with the remaining $21 million paid for with requisite state matching funds. The Alaska Marine Highway is part of the national highway system and therefore qualifies for Federal Highway Administration funds for road construction projects. Those federal dollars typically require a minimum state match of approximately 10 percent. The public comment period for the STIP amendment document ended Aug. 19, and barring changes will soon be incorporated into the overall construction plan, which was finalized last November. In the case of the Tustumena replacement, the funding request was advanced via a mechanism that allows the state to fund the project up front and be paid back over subsequent years if the project is approved by the FHWA. The STIP amendment calls for the state to fund the several-year project up front with $54 million in paybacks in federal year 2019 and another $108 million from the feds after 2019. Replacing the 296-foot Tustumena, which serves Homer, Kodiak Island and ports on the Alaska Peninsula and the Aleutians has become increasingly pressing as the aging ferry has shown more and more wear from years on the system’s most taxing route. Cracks near the bow in the structure of the vessel have forced the U.S. Coast Guard to put travel restrictions on the Tustumena, Neussl said. That means it won’t be hauling legislators and their wares from Whittier to Juneau this January. “The legislative cross-gulf run is not on the winter schedule, which was just released,” Neussl said. “We have an alternative plan to truck those vehicles to Haines and haul them from Haines to Juneau on the regular Lynn Canal ferries.” Replacing the Tustumena is all-but mandatory, despite the state’s $3 billion budget deficit, because it is the only vessel in the 11-ferry fleet with a vehicle elevator to match the docks on its route. “Nearly every port from Homer out to Unalaska-Dutch Harbor is a (privately owned) fixed-height dock,” AMHS General Manager  John Falvey said. “There are no floating docks out there. That would be a massive infrastructure change to keep all those communities in service with a new floating drive-on drive-off dock.” Additionally, the new vessel will carry 53 vehicles to the Tusty’s 34, which will add needed car deck space between Homer and Kodiak, Neussl noted. According to Glosten, the latest ferry design should reduce drag on the vessel’s hull by 20 percent and lead to notable fuel savings as well. Doug Ward of Vigor Alaska said during the MTAB meeting that the state’s twin 280-foot “Alaska class” day ferries being built at Vigor’s Ketchikan shipyard are about three to four months behind schedule for both to be done by October 2018. He attributed the setback in the nearly four-year build schedule to the contract employees the company hired not taking a liking to the Southeast Alaska community. “We had a lot of turnover in 2015,” Ward said. Vigor hired journeymen level shipbuilders from the Gulf Coast to teach generally younger, unskilled resident workers in the trade. However, the fair weather workers “don’t last very long in Ketchikan,” Ward commented. “We are a little bit behind schedule and I’m feeling pretty good that we’re going to be able to catch up and hopefully turn a profit,” he said. In May, Gov. Bill Walker’s office announced Port Alsworth 7th grader Malea Voran and Eagle River sophomore Taylor Thompson had won a statewide essay contest for Alaska students to name the Alaska class ferries, which will be the M/V Tazlina and the M/V Hubbard. State law requires AMHS ferries be named after Alaska glaciers. Elwood Brehmer can be reached at [email protected]    

CIRI, Golden Valley progressing on Fire Island Wind expansion

In about a year there could be a few more wind turbines dotting the horizon west of Anchorage, thanks to a Fairbanks utility. Golden Valley Electric Association and Cook Inlet Region Inc. jointly announced Wednesday that they have agreed to the framework of a deal that would double the number of wind turbines on Fire Island just off Anchorage in Cook Inlet. About a $50 million project, Phase 2 of CIRI’s Fire Island Wind project would add another 11 large turbines to the group that was installed in 2012. Golden Valley CEO Corey Borgeson said in an interview that his electric utility and CIRI have reached a term sheet but are still negotiating the finer points of what is ultimately an extremely complex purchase and sale agreement. He said he fully expects a contract to be finalized and added that he would “welcome the other utilities in joining” Golden Valley to purchase power from Phase 2 of the Fire Island project. “(The agreement) is not done yet but we’re very optimistic and committed to bringing this independent power producer online,” Borgeson said. CIRI, the Southcentral Alaska Native regional corporation, has been actively and publicly soliciting the Railbelt utilities to partner to expand its wind farm since the first 11 turbines came online in September 2012. Chugach Electric Association agreed to a 25-year deal to purchase power from Phase 1 of Fire Island for 9.7 cents per kilowatt-hour. The framework deal currently being discussed calls for a 25-year purchase agreement with an electricity price escalating from a base price potentially as low as 5.6 cents per kilowatt-hour, the joint release states. A final agreement would require approval from the Regulatory Commission of Alaska. CIRI’s push to get Phase 2 built is do in large part to its ability to capture a 30 percent federal Business Energy Investment Tax Credit for the capital cost of the project. CIRI Senior Energy Development Director Suzanne Gibson described the rough deal CIRI is working on with Golden Valley as “sort of our last gasp at getting (the tax credit) while the getting is good.” According to the joint release, CIRI expects to secure financing for the Fire Island expansion this fall and have the turbines up and running by October 2017. The Consolidated Appropriations Act signed last December, a federal spending bill, extended tax credits for numerous types and sizes of renewable energy projects, including Fire Island. Gibson said as long as it is completed by the end of 2017, CIRI expects to receive the incentive, as opposed to the original end of 2015 deadline. Phase 1 of Fire Island was also spurred by a $25 million state grant to fund most of the cost for the underwater transmission line to connect the wind farm to Anchorage. Gibson said the prospect of a significantly lower price for Phase 2 power is due in large part to infrastructure  — operations and maintenance buildings, roads, transmission lines — and personnel that are already in place from Phase 1. “It won’t be as expensive to add 11 more (turbines) from an operational standpoint,” she said. The 11 turbines on Fire Island today are 1.6-megawatt General Electric turbines. The new, more efficient turbines will be able to generate up to 1.85 megawatts each, if the project is seen to fruition, according to Gibson. The 15 percent increase in generating capacity should allow Phase 2 to provide about 54,000 megawatt hours of power per year, enough to power about 7,500 homes, she said. Borgeson and Gibson both said they believe CIRI and Golden Valley have gotten this far towards a deal now because several new gas-fired power plants in the Railbelt that have come online in the past couple years allow for better integration of highly variable renewable power. They also concurred that a general move towards better cooperation between the area utilities — power from Fire Island would have to move through the networks of three utilities plus the state-owned northern intertie before reaching Golden Valley — will help make the project possible. “We’ve created a (generating) system that’s robust and will allow for the expansion of renewable projects, which is great,” Gibson said. The Railbelt utilities presented their efforts to maximize efficiencies and minimize costs to the RCA during a Wednesday morning meeting when the Fire Island announcement was made.   Elwood Brehmer can be reached at [email protected]

Budget cuts manifesting through shuttered state services

From Kotzebue to Ketchikan, the State of Alaska is closing offices and programs as funding runs out. The Department of Labor and Workforce Development announced Aug. 15 that it would be closing AVTEC’s Anchorage campus immediately due to state budget cuts. Formerly the Alaska Vocational Technical Center, AVTEC is Alaska’s primary public vocational and technical college. Its main campus is in Seward. AVTEC’s Allied Health Program, which trained nurses and nursing assistants, is the casualty losing the Anchorage extension. “It is frustrating and disappointing to close a campus that trains Alaskans for rewarding careers in a fast-growing industry like health care. The department’s and AVTEC’s budgets have seen big cuts in the past couple years and we simply can’t afford to keep the Anchorage campus open,” Labor Commissioner Heidi Drygas said in a release announcing the closure. Heather Beaty, director of the Alaska Workforce Investment Board said in an interview that the Allied Health Program run out of Anchorage usually enrolled about 100 nursing assistant students each year. The registered nurse program was shuttered after the 2015 class graduated and the licensed practical nurse program was “put into abeyance” last November, Beaty said. “We’ve been looking for other funding sources to bring that program back online and had people on a waiting list hoping that we could do that, but the continued cuts to the budget caused us to close down all of the Allied Health programs at the campus here in Anchorage,” she said. There were 30 people on the LPN program waitlist, according to the Labor Department. AVTEC’s overall budget peaked in fiscal year 2013 — as did most state agency and program funding — at $16.1 million. By 2015 AVTEC’s budget was down slightly to $15.6 million and this fiscal year, 2017, it received $14.9 million from the Legislature. Beaty said closing the Allied Health Program saved the popular school $705,000 per year, but also meant cutting four full-time instructors. There are no plans to consolidate the program into the Seward campus. “If things changed I’m sure the department would reexamine (the Allied Health Program) because occupations in health care are growing fast and in high demand,” Beaty said. “It was a painful decision to have to close this program because they’re good careers for Alaskans with good wages and opportunities for advancement but we cannot afford it at this point.” As a whole, the Department of Labor budget has shrunk 16 percent from $195.5 million in 2013 to $164.4 million this fiscal year — more than half of which is designated federal money. The decline in Labor’s unrestricted General Fund, or UGF, budget has been sharper. The department has absorbed nearly a 40 percent UGF budget cut since 2013 and a 37 percent cut over the past two years to its current $15.3 million UGF level. The State of Alaska has run budget deficits driven by a loss of General Fund revenue in the $3 billion range the past years and a the drastic and sustained drop in oil markets indicates little end to the deficits in sight with status quo state spending and revenue. Gov. Bill Walker vetoed approximately $870 million from the 2017 budget June 29 after legislators failed to pass the key elements of his administration’s broad fiscal plan to balance the state budget by 2019. His line item vetoes did not directly impact the specific services highlighted in this story. It’s the UGF cuts that led to the Aug. 11 announcement that the Labor Department would be closing the Kotzebue Job Center to save $166,000 annually. That office was scheduled to close Aug. 19. Labor Commissioner Drygas said in a formal statement that the department would continue to assist Kotzebue residents who used the job center through online services. According to Beaty, 413 individuals utilized the Kotzebue Job Center in 2015 and it received 2,200 total visits from residents of the town of about 3,200 people. Job centers in Barrow and Seward were closed last year to save a total of $316,000 per year, a department release states. Beaty said individuals make use of the job centers for “anything from just coming in to do job searches online or filing for unemployment insurance or working one-on-one with our staff for more extensive training and support.” The “more extensive training and support” often includes assessments for appropriate training programs, updating resumes and sharpening interview skills among other things, she said. Beaty added that the department has tried to make sure Alaskans, particularly in rural areas, still have some access to employment resources. “In the case of Kotzebue we’ve donated a few of the computers that were in our office to Maniilaq Association (a local social service nonprofit) so that we can ensure the public still has access to those computers and the Internet connection to get online with our services,” she said. “In Seward, the job center was actually located on the AVTEC campus so that room is still open to the public with computers and a phone that they can use to connect with our Kenai Job Center staff for personal assistance.” Beaty also said she is not aware of any other closures on the immediate horizon, but if budget cuts continue in the 2018 budget the department will have to continue eliminating services and programs. “It’s a tough reality but these are the effects of this budget climate,” Beaty said. On Sept. 15, the Ketchikan Regional Youth Facility will close its doors and 15 full-time Division of Juvenile Justice employees will be let go, the state Department of Health and Social Services announced also Aug. 15. “Youth in detention will now have to be sent further away from their home communities and hard-working state employees will lose their jobs when the facility closes,” DHSS Commissioner Valerie Davidson said in a statement. “But given the financial realities we face in our state, we know closing the Ketchikan facility is necessary.” Young Alaskans at the Ketchikan facility will be transferred to the Johnson Youth Center in Juneau, according to a DHSS release. Juvenile Justice Director Rob Wood said low utilization — certainly a good thing when the topic is youth detention — contributed to closing the Ketchikan center as well. The Ketchikan Regional Youth Facility got $1.86 million in the 2017 budget that includes legislative intent language to convert the facility to an adolescent substance abuse and behavioral health treatment center. The $1.8 million was on par with previous year’s allocations. “It wasn’t being used being used enough as a detention center, so we were looking to see if we would be able to create a treatment program out of it that would have some Medicaid support and it just didn’t work out.” The Ketchikan center has had eight to 10 beds available for the past decade, but on average only three or four of those beds have been used most days, according to Juvenile Justice Division data. Statewide, juvenile detention and treatment facilities had capacity for 257 youth in 2015, down from 295 in 2006.  However, even as the number of available beds has decreased, so has the percentage of beds being used. Utilization of state youth detention and treatment facilities has fallen from about 85 percent of available space in 2006 to less than 70 percent in 2015. “We’ve just had low utilization largely because we’ve got a fairly small juvenile crime rate the last few years,” Wood said. “It’s hard to maintain programs that cost $1.9 million per year when you have those low numbers.” Elwood Brehmer can be reached at [email protected]

Employers begin programs to develop industry ‘cross-skills’

Alaska employer and training groups are taking another step in a long-sought goal: identifying “cross-industry” skills that will allow workforce training to focus on entry-level capabilities useful across several related industries such as petroleum, mining and maritime. It has not turned out to be a simple task, said Dave Rees, a retired BP workforce manager who chairs the Business Education Compact, a forum for employers and the job training community. Identifying cross-industry skills is a project taken up by the Business Education Compact as state and federal funding for training has become scarce. It’s now important to stretch dollars farther, and employers are being asked to contribute more of their own funds. Employers typically do focused, occupation-related training once a new employee is hired, but they need workers coming in the door with certain abilities and, ideally, preparation in some skills needed for the occupation. These are things traditionally left to public education and, at a very basic level, to parents. For starters, “We need people able to get to work on time, be unimpaired and have no criminal record. It’s really important that kids in high school know these things,” said Kris Norosz, government affairs director for Icicle Seafoods, a major Alaska seafood employer. Icicle, with its roots in Petersburg, hires many seasonal process-line workers needing only basic skills, but Norosz said the company also hires a wide variety of skilled professionals. Because many jobs are year-round the company prefers to recruit locally, where the company has plants. There are often difficulties in getting skilled workers at the places and times they are needed, she said. “Every industry has it choke points,” and for seafood companies it’s often in fields like refrigeration engineers, can line mechanics, electricians and port engineers, she said. These are jobs that pay well and are often year-around. In all technology-related occupations, which also tend to pay well, new recruits need math, science and computer skills along with soft skills like interpersonal communication and teamwork, which are seen as increasingly important by employers. All of these are common to most career paths, and all are typically taught in at the high school level. But things get more difficult at the next step in teaching entry-level skills in fields like instrumentation and maintenance. “There are a lot of career pathways that are now identified in specific occupation fields, but not across fields,” Rees said.  Even within one industry, such as oil and gas, separate skill preparation is still done for many kinds of technicians and operators. There is not enough that overlaps. Training for some occupations have obvious overlaps. Heavy equipment operators, for example, are employed in surface mining and in civil construction, Rees said, but even the equipment operator field can get specialized and computer skills are increasingly important with vehicles more reliant on “smart” information systems. Job fields like equipment maintenance are becoming more complex, too. Traditionally most heavy equipment was diesel-powered, but now electric-powered heavy equipment, as well as passenger vehicles and trucks, are becoming more common. In the future maintenance people will be diesel mechanics as well as electrical technicians. This illustrates the cross-skills gap, the need for trainers to teach both fields in one program. McDowell Group, a Juneau-based consulting firm, has been retained to help identify common skill-sets but an initial McDowell report published this spring wasn’t able to go far enough, said Kari-Ann Carty, executive director of the Alaska Process Industries Careers Consortium, or APICC, a group that helps coordinate technical training. A second report by McDowell is being commissioned that will zero in on some of the central questions. It will be published next spring, Carty said. Much of McDowell Group’s initial research was focused on federal job codes that describe occupations, but the second report will include results from interviews that should be more helpful, Carty said. The intent is to have McDowell Group publish updates of the report annually, she said. The federal job codes, which are often relied upon in government-funded training, are more related to specific craft skills. The real world of the workforce is one of employers wanting flexible multi-skill training.  Carty said one model for integrated training attracting attention is a “holistic” approach developed by Vigor Industries and the Alaska Construction Academy in Ketchikan and being done with local Southeast Alaska high schools. “This is well-rounded and flexible, involving multiple technical skills like welding and electrical. It is built around ship-building,” which is Vigor’s business, but students are finding jobs in a wide variety of Alaska maritime-support companies, many in other parts of the state, Carty said. Doug Ward, Vigor’s business development director, said his company targets Alaska recruits for its shipyards in Ketchikan and Seward because hiring locally, which also requires training, results in reduced turnover. The company has found that many skilled workers it recruits for Ketchikan from the Lower 48, where Vigor has other shipyards, find the adjustment to Southeast Alaska’s rainy climate difficult. The local-recruitment is having results for Vigor. “As of this week, we have 185 workers (in total) between ‘new build’ (the new Alaska-class ferries being built in Ketchikan) and repair, and 167 of those are local. We have 70 local workers dedicated to the new ACF ferries,” Ward said. Vigor is helping school districts in the southern Southeast region with pre-apprenticeship programs and the company also offers internships, he said. “In Ketchikan high school students take courses designed around the NCCER  (a national skills certification program) Core Construction Skills, like in welding, and participate in Maritime Career Day. In Wrangell, students are designing speed boats in AutoCAD and then building them,” Ward said. Internally, Vigor works with entry-level employees to upgrade to middle-skill and journeyman levels. Vigor and other marine-related companies are also working on industry-wide skills-training initiatives and in 2014, working with the University of Alaska, published a Maritime Workforce Development Plan, a requirement for industry-specific training to be recognized in many federal programs. The effort was also aimed at getting maritime recognized as a distinct industry in Alaska because many workers in marine-related fields are identified in other industries such as transportation or seafood, and this reduces the awareness of the industry’s importance in the eyes of the public and government officials. To date maritime employers have organized themselves into a loose alliance that includes companies like Crowley and Icicle along with Vigor, but the group is also aligning and may become a formal part of APICC, Carty said. To date APICC has been primarily focused on process control skills in the petroleum, mining and wastewater industries (seafood plants also rely on process controls) but the integration of maritime skill requirements, like vessel maintenance, will broaden the organization. This is important because APICC is an employer organization that is mostly privately-funded, and its purpose is to ensure that the training community, which includes the university and, more broadly, the schools, knows what employers need. This is new because until now employers have not been broadly or deeply engaged in any organized way. Too often, training policies and priorities have been influenced by federal and state labor agency officials and others, and while well-intentioned this doesn’t result in focused efforts. “We need to ensure that workforce plans are employer-driven so that employers know they can get the skill sets they need with new employees,” said Norosz. Tim Bradner can be reached at [email protected]

INSIDE REAL ESTATE: When buying or renting, how much is ‘pretty’ worth to you?

Buyers zip through online websites looking for the home of their dreams. They discard homes based on the exterior photo and move on to a dozen or sometimes a hundred different properties. At open houses, probably 50 percent of those who thought they were interested in the home, simply drive right by it, rejecting the outside appearance of the home. So, yes, pretty does matter whether it’s for a single family home and for a small investor looking to make his first duplex or four-plex investment. Anchorage’s housing stock is old. Really old. Not only does it suffer from economic and cosmetic obsolescence but it doesn’t always look that good, either. In the world of botox and LA inspired cosmetic surgeries, “pretty” adds value, but giving a home a new facelift can be expensive and return on value is usually 50 percent or less. What “pretty” does provide, however, is a faster marketing time or a slightly higher rental rate. However, probably nowhere in our housing stock is a “facelift” more important than in our local rental market, where the vast majority of which was built in the 1970s and 1980s. With a vacancy factor of 3.9 percent, a creep up from 3.5 percent in 2015, the vacancy rate is still below the national average but the average Anchorage rental rate for an apartment has only increased by $5, signaling a stall in rates while at the same time the existing housing stock needs that facelift. While on the other hand, builders and investors are hesitant to build and buy brand new rental units. In order to compensate for the higher cost of construction versus existing square footage values, units have to be built smaller but also “pretty.” Apartments built in the 1980s usually had two bedrooms and one bath in about 1,000 to 1,200 square feet. Today, there is considerable demand for three bedrooms and two baths packed into 1,000 square feet. You can count on the “micro” rental unit coming to Anchorage in the not too distant future, although it may be larger than the 200-square foot units recently approved by the New York City zoning commission. Small has value. Less square footage to heat. Better and more efficient mechanical systems. Better insulation. Less reserves for maintenance and repairs the first five years. As our market readjusts itself from the last few years of appreciation, more and more buyers will turn to owner-occupied duplexes and four-plexes. They will like the 27.5 years of depreciation and the pro-rata write off for insurance, advertising, office supplies, landscaping and utilities. But, like any other buyer, they will want to buy “pretty.”  Connie Yoshimura is the Broker/Owner of Dwell Realty. Read more columns by Connie at www.cyalaska.com. Contact her at 907-229-2703 or [email protected]  

Budget cuts take bite from job training programs

Budget cuts to state and university training programs have become a major concern for industry leaders who worry about the “graying” the workforce in Alaska’s key industries, and having enough future skilled workers. The concern is across-the-board, from oil and gas to mining, maritime, seafood — you name it. The skilled-worker gap is actually a problem now, even with the state facing economic uncertainties. “In many Alaska industries, from oil to mining, construction and health care, jobs remain difficult to fill due in part to a lack of qualified Alaska workers. All of these industries have challenges hiring in Alaska and must therefore recruit employees from outside the state,” Juneau-based McDowell Group, a consulting firm, wrote in a workforce report published this spring. Meanwhile, the state Department of Labor and Workforce Development, which coordinates much of the state and federal money for training, has seen its budget cut sharply, from $33.4 million in state funds two years ago to $22.4 million in the current year, state Labor Commissioner Heidi Drygas said.  State funds to three rural regional training centers, in Kotzebue, Nome and King Salmon have been cut sharply, as has money for the Alaska construction academies, which are in larger communities, Drygas said. The rural training center cuts are particularly unfortunate, she said. “These are areas with high chronic unemployment, and the training is focused mainly on jobs available in those region, like health care, construction and transportation, where workers now come mainly from other parts of the state,” Drygas said. There are other funds available to these centers, which are operated by nonprofits, but the state funds provide a base for operations. “They helped keep the doors open,” Drygas said. For major employers, however, a worry is that the rollercoaster ride down of commodity prices in resources like oil and gas and minerals may discourage young people from pursuing training they’ll need for jobs that will sprout again when the commodity cycle turns up. For example, there have been layoffs in petroleum and young people may see this as a sign that there’s no future in the industry, says Dave Rees, a retired BP workforce development manager who now chairs the Business/Education Compact, a forum for employers and people engaged in workforce development. “Young people may be discouraged, thinking that there will be no jobs. That’s not true, because there will always be people needed to operate the oil fields,” he said. “It is estimated now that a substantial part of the North Slope operations workers will retire in the next 10 years,” he said. The skilled technicians needed to replace those workers should now be in craft or university programs or taking classes in high school to get prepared, Rees said. In its report, McDowell Group said 6,566 resident workers in the oil and gas industry are expected to reach retirement age in the next five to 10 years.  The trend is similar in mining, where 47 percent of mechanics, 51 percent of mining materials engineers and 65 percent of mining machine operators are 45 or older, McDowell Group said. But even if young people are interested in careers in petroleum or mining they may see fewer opportunities for training due to reduced funding. The process feeds on itself because fewer applications made to training providers, whether private, union or university, will force training administrators to shrink or even cancel programs. Translated, this means that when an upturn comes trained Alaska workers won’t be available. Rees believes that employers will have to step into this void themselves, funding more entry-level preparation and basic workforce training. “We won’t be seeing a lot of state or even federal funding in this new era of tighter budgets,” he said. Entry-level career preparation and vocational schooling were functions traditionally provided in public education in high school or the university and previously, employers concerned themselves mainly with focused training once a new hire is on the job with a basic set of skills. Basic preparation was left to schools of various kinds. This model is changing, however. Workplace technology is more complex, requiring proficiency in computers, math and communication, both verbal and written, as well as skills generally related to an occupational field. With budgets under stress, schools and the university may be less able to provide these. The problem is nationwide. “Across many industries and across the nation a lot of employers face shortages of skilled workers even with rising unemployment. Workers that are available don’t have the skills,” McDowell Group said in its report. Alaska employers began waking up on this about 10 years ago, becoming more active in promoting career awareness in middle schools and vocational programs in high schools, and funding for advanced training in universities. Employers in key technology industries, such as oil and mining, realized also that they had to cooperate and find ways to share information, which can be sensitive because companies’ views of future business and workforce needs are highly proprietary. Training providers needed estimates of future needs because without these they couldn’t gear up to meet employers’ needs. At the same time students had to gain confidence there would be jobs in the end, or at least good chances, at the end of several years of training. Ways were found to do this. One initiative, led by the oil and industry, was the Alaska Process Industry Careers Consortium, or APICC, an alliance of industries that operate plants using process controls, were formed to work together and with training providers. APICC was formed to provide a mechanism for companies using process control technologies to work together, share information and work with training providers, and it has become a model for other industries. One outcome of the effort was creation by the University of Alaska of a two-year associate degree in process technology, which has been highly successful. About 200 have been enrolled in the process technology program in recent years at three of the university’s campuses, with about 70 to 80 graduates per year. Most of the graduates were snapped up by various companies, many looking to replace retiring skilled operations staff. APICC’s success spawned similar efforts in other industries such as in mining, where the human resources committee of the Alaska Miners Association is active. A maritime industry working group has been formed. Both are becoming involved in APICC, so that this organization could wind up serving several industries. Organizations that can facilitate collaboration are good because companies, and even industries, have not been good at translating the demographics of their workforce into projections for future needs, Rees said. “How many welders are we going to need? How many people in their 20s and 30s are now in training to replace retirees?” Rees asks.  Getting data has been difficult. One industry, health care, is considered better at projecting and recruiting for its needs for higher-level professionals like physicians and skilled nurses, Ress said, but even health providers face challenges in recruiting lower-skill workers including certain types of medical technicians and administrative workers. One health care initiative was the successful nursing program at the University of Alaska Anchorage. Individual companies have their own initiatives, meanwhile. Continental Motors, in Anchorage, has an active apprenticeship program in automotive maintenance. Another firm, Vigor Industries, operator of the Ketchikan Shipyard in Southeast Alaska, has its own training program in place and works with the local high school on a pre-apprentice vocational programs. Calista Corp., the regional Alaska Native corporation for the Yukon-Kuskokwim Delta, is meanwhile developing a maritime-related apprenticeship program with transportation companies like Crowley and Lynden Transport, which supply fuel and other services in the region. In another initiative employers in the technical industries, working through APICC, are identifying skills that are commonly needed across several industries. Once these are identified the available training funds can be focused, which could be  very efficient. Training, meanwhile, does pay off and sometimes fairly quickly. “A pipeline training program organized several years ago in Fairbanks by contractors provided training to 1,646 individuals and three years later 80 percent of these people were still working,” McDowell Group said in its report. Wage income for these workers increased 30 percent, or a total of $13 million in new income after the training. the report said. All employers also agree in encouraging career interest and readiness programs in schools, and volunteers from many companies spend time in classrooms talking about their industries. “All employers encouraging schools to develop programs on work readiness,” like being timely, dressing appropriately and learning communication skills, said Cary-Ann Carty, APICC’s executive director. The traditional vocational classes in many high schools have fallen victim to budget cuts but many school districts offer programs in centralized facilities, like King Career Center in Anchorage. APICC has further extended the idea by helping high schools and the university organized dual-credit classes in high schools where students can take certain classes and earn university credits toward an associate degree in process technology. Alaska Resource Education, a nonprofit widely supported by industry, works in elementary and middle schools to promote children’s interest in science and technology, and plans to expand into the high school levels. Rees said such career-awareness programs in schools pays dividends for employers because they help young people know if they are even interested in a field before starting training or apprenticeships. “It’s very inefficient for everyone if a young person gets into training or an apprenticeship and then decides the field is not a good fit. It’s better to find this out before hand through career programs in schools,” he said. Tim Bradner is a correspondent for the Journal. He can be reached at [email protected]  

INSIDE REAL ESTATE: Redevelopment may not solve affordability problem

Mark Twain said, “Buy land because they don’t make any more.” I always believed that but recent changes in housing may make that statement no longer as true as it once was. Robert J. Shiller, Professor of Economics at Yale, wrote an interesting article in July 2006 about the devaluing of land over several decades. Because land is the largest single cost component of any housing structure, does that mean the cost of housing will ultimately decrease in Anchorage and create more “affordable” housing, the topic of conversation that seems to be on every citizen’s mind, along with our balmy weather and the Permanent Fund Dividend?  Shiller categorized land into three residential groups: country, suburban and urban. The first was country such as Midwestern farmland adjacent to suburban areas that has been transformed into large lots for single family homes like what is currently occurring in the Mat-Su Valley. These lots are usually larger than one acre and have minimum utilities to them (gas and electric) and function with well and septic systems. The second category was suburban land with public water/sewer and publicly dedicated and maintained roads, which is like the type of residential communities in southeast and southwest Anchorage. These lots are usually 6,000 to 10,000 square feet and are close to schools, shopping and entertainment. Urban land is his final definition and is where new land, i.e. the opportunity for more housing, is being created. This urban redevelopment with increased density is what is occurring in South Addition, one of the oldest subdivisions in Anchorage. Most South Addition lots were platted in a grid configuration with alleys and front streets and most were built out with single-family homes despite the underlying zoning of R2 (low density multi-family). Now, these single-family structures, built mostly in the l950s, are being replaced with duplex and four-plexes to be sold as individual townhouse style condos. Thus, creating more usable “land.” This urban new land is right in keeping with both the millennial and aging baby boomer home buyers who have a strong desire to be near community activities, cultural events, trails, parks and eclectic eateries. It does not, however, solve the “affordability” issue Anchorage faces in its housing as redevelopment is expensive and land prices are high on a per unit basis, costing as much as $125,000 per unit. Even the micro 200-square foot units being built in other urban cities are most likely not going to solve Anchorage’s shortage of affordable housing as the majority of baby boomers and “millies” still have a love affair with their F-150 long bed pick-up truck and snow machine. That’s why Alaska is different than Portland, Seattle or Minneapolis.        Connie Yoshimura is the Broker/Owner of Dwell Realty. Read more columns by Connie at www.cyalaska.com. Contact her at 907-229-2703 or [email protected]

Anchorage LIO owners file $37M claim against Legislature

The owners of the Anchorage Legislative Information Office building filed a claim for just more than $37 million against the Legislative Affairs Agency on July 8 as the Legislature prepares to buy other office space in Anchorage. In a 19-page claim signed by longtime Anchorage real estate developer Mark Pfeffer, who is the manager of the building owner group 716 West Fourth Avenue LLC, $37.01 million is being sought from the Legislative Affairs Agency. The figure is the amount the owners invested in the six-story Downtown Anchorage office project in 2014. The claim technically goes to Kodiak Republican Sen. Gary Stevens, because he currently chairs the Legislative Council. As chair of the council, Stevens is the de facto procurement officer for the Legislative Affairs Agency, which handles business matters for the council and the full Legislature. According to State of Alaska claims process, Stevens has 90 days to decide on the claim. If he denies it, the claim then goes to an administrative law judge within the Department of Administration and then before the commissioner of Administration before heading to Superior Court as a lawsuit. This spring, the council voted to buy a Midtown Anchorage office building owned by Wells Fargo bank at a price of up to $12.5 million. The money was included in the otherwise bare bones capital budget and Gov. Bill Walker did not veto the appropriation when he signed the budget on June 29. However, the governor did urge legislators to find another, more cost-effective option for Anchorage offices. Stevens Chief of Staff Katrina Matheny said the claim does not immediately change plans to purchase the Wells Fargo property and that it has been turned over to Legislative Legal Services for review. Stevens originally hoped to finalize a purchase agreement for the building by July 15, but scheduling conflicts have likely delayed signing the deal for about a week, she said. Stevens was traveling and unavailable for comment, according to Matheny. Public pressure to get out of the 10-year, $3.3 million per year lease for the downtown space while the state grapples with yearly multi-billion dollar budget deficits pushed the council to consider other options starting late last year. Last December, the council voted unanimously to not continue to fund the lease and to explore the cost of moving to the nearby state-owned Atwood Building versus a purchase of the LIO. The council later voted to purchase the building for $32.5 million based on a cost analysis that found it to be cost competitive over 20 years compared to moving to Atwood. After Walker said he’d veto that appropriation, saying it would be inappropriate to spend the money given the state’s bleak financial situation, it emerged that Wells Fargo would sell its Midtown building for $12.5 million and the council voted May 2 to rescind its offer on the LIO and purchase the Wells Fargo building. In March, state Superior Court Judge Patrick McKay ruled the lease invalid because the council violated state procurement code when it signed the deal for the building project in 2013. Rep. Mike Hawker, R-Anchorage, chaired the Legislative Council at that time and signed off on the deal, which totaled $44.5 million. The Legislature invested $7.5 million in the redevelopment project. “Under Alaska law, despite the (Superior) court’s order, the Legislature cannot impose the entire cost and burden of its flawed procurement process, and the effort and expense contractually required of 716, on 716’s shoulders,” the claim states. “Public policy and the need for the public to have faith in the state’s contracting obligations require that the Legislature bear the cost and consequences of its decision to abandon the (Anchorage) LIO building.” Pfeffer has said repeatedly that the building, finished in late 2014 and occupied by the Legislature shortly thereafter, was custom-built to meet the Legislature’s needs. “We still believe we can achieve a pathway to savings and are disappointed that we are forced to take this step. We are willing to work with the Legislature to achieve savings but without the Legislature’s cooperation, we have no choice but to seek legal recourse,” 716 spokeswoman Amy Slinker wrote in a formal statement. In May, shortly after the Legislative Council announced a preliminary deal to purchase the Wells Fargo building, Florida-based EverBank wrote a letter to the Legislative Affairs Agency demanding the state follow through with its lease obligations upon which the bank based its $28.6 million loan to 716 for the LIO. “In the future, if the McKay (court) order is upheld, EverBank will present its claim against the state,” an attorney for the bank wrote to the council.

DNR transition at top takes place amid budget challenges

When outgoing Natural Resources Commissioner Marty Rutherford gives the keys to incoming commissioner Andy Mack, she will be handing over a major state agency that is, considering the state budget, in pretty good shape. Rutherford is a 27-year veteran Department of Natural Resources administrator who retired June 30 after having served for years as deputy commissioner with several stints as acting commissioner, the most recent since March with the departure of former commissioner Mark Myers. She first became the deputy boss at DNR in 1991, leaving in 2005 after a falling out with then-Gov. Frank Murkowski. She returned to her old job in December 2014 when Gov. Bill Walker took office. The Legislature treated DNR relatively easy this year when it wielded its big budget axe and that’s partly because of legislators’ respect for Rutherford and partly because the agency was hammered hard in the preceding two years. Some good news is that some of DNR’s revenue-generated core divisions, like the Division of Oil and Gas, are going into next year with its funding and staff relatively intact, although there were come cuts. Incoming commissioner-designee Mack, who takes the helm July 1, is known for having good political skill, which will be sorely needed over the next few years because the state’s financial situation won’t be getting better any time soon. Unlike many state agencies the DNR has the ability to generate some of its own funding, through fees. “We’re basically in the economic development business,” Rutherford said, and that includes raising revenues where it’s possible, including selling t-shirts and hats with state logos to support state parks. “No idea is off the table,” deputy commissioner Ed Fogels said, including ideas like renting out unused parking space at the state’s new geological materials center in Anchorage, a former Sam’s Club. Here’s the budget picture for DNR: State undesignated general funds approved for the agency by the Legislature for fiscal year 2017, the budget year starting July 1, totals $62.47 million. That’s down from $70.3 million in fiscal year 2016 ending June 30, $77.92 million in 2015 and $83 million in 2014. “We’re losing 17 positions next year and that’s on top of 76 positions lost last year. It’s a reduction of 10 percent of our workforce over two years,” deputy commissioner Ed Fogels said in an interview. Some good news is that the agency has been able to preserve its core divisions, particularly those that bring in money. The Division of Oil and Gas, for example, took a $139,000 hit this year and lost three positions. The bite was deeper last year for the oil and gas division, however. Other divisions took deeper cuts, however. The Division of Forestry is down $752,000 and two positions. The commissioner’s office was cut $335,000 and two positions. “This is going to affect our ability to deliver services,” Rutherford said. “In the divisions of forestry, mining, land and water management, there are cuts to support staff. This is going to slow down our work.” In the Division of Land and Water Management, which is cut $363,000 and two positions, there will be an effect on the processing of state land and water-use permits. This is an area where the DNR, and the Legislature, applied extra resources in 2011 to catch up on a backlog of land-use permit applications. The agency may be able avoid some piling up of applications by unified permitting procedures and electronic permitting, Fogels said. In other divisions, DNR is moving to find new fund sources so that agencies can become more self-funding. “If people use it, they should help pay for it,” Rutherford said. One example is in the state Parks Division, a small part of DNR but one that is popular with the public, which is already partly self-funded through campsite and visitor fees. The parks division will still take a $99,000 reduction this year. However, a planned increase in park and camping fees will allow the division to pay about half of its costs, Fogels said. The remainder could eventually be covered through new revenues from sales of state park t-shirts, caps and other paraphernalia with the state park logos and other designs, he said. Most state park systems in the U.S. help support themselves through sales of memorabilia, and now Alaska’s will do so, too. State park managers are now working on designs and ordering materials. Fogels said the objective is not to compete with the private sector. The state will be a wholesaler, selling the goods through retailers. Continued development of the state parks and campgrounds, however, could become very profitable for the state. The new K’esugi-Ken campground in Denali State Park, on the Parks Highway, will be open by Memorial Day 2017 with 32 campsites and, weather permitting, stunning views of Denali. “This is one of the best views of Denali along the Parks Highway, and it’s going to really pull people. We expect it to be very profitable,” Fogels said. More public-use cabins, for which fees are charged, are planned in high demand areas, too. “My goal is to get the Parks Division completely off state general funds,” Fogels said. Similarly, the state Division of Geological and Geophysical Services, another part of DNR, wlll be charging for access by companies to use its geologic materials center, which is an expensive facility to maintain. This is common in other states, but has not been done in Alaska. The division is taking a $53,000 cut this year. Rutherford is concerned about the state Forestry Division, which is taking a larger reduction. Cuts this year will eliminate a forester position in the small Haines State Forest in Southeast, and that, plus other reductions, could impair the state’s timber sales program in the region. The Southeast timber sales are profitable for the state, Rutherford said, and are also important for the few sawmills that remain in the area. State-owned forest lands are now the most important source of wood for these mills because harvests in the Tongass National Forest are sharply down. A bill passed by the Legislature this spring to allow the state to do negotiated long-term timber sales will help these mills secure a steady supply of wood. Previously the mills had to bid competitively in shorter-term sales, which meant that purchasers selling state timber as logs into export markets could usually outbid the local mills, which make products. In Interior Alaska the state supplies wood for small mills and biomass for heating from the Tanana State Forest. Rutherford is worried about the Forestry Division’s cuts in firefighter training. Last year saw a hugely destructive forest fire season and it’s too early to predict this year. “If we’re unable to have our own trained firefighters we have to import firefighters from other states,” she said. That not only drains money out of the economy — seasonal firefighting is a big source of jobs for rural Alaska — but it can slow response time. The federal government pays firefighting costs on its own lands, mainly in the Interior and northern parts of the state, but Alaska is responsible for state lands, which are also mostly near communities. Last year the state spent more than $75 million on firefighting. One division in DNR, the Division of Agriculture, has been a kind of step-child in previous years, but the division, and the industry it serves, is actually doing well, though Alaska farming is small-scale, Rutherford said.  The Matanuska-Susitna Borough has long been a source of fresh vegetables for Southcentral Alaska communities and the advent of weekend farmers’ markets had added a new profit center for local growers, though it is small. The new director of the Division of Agriculture, Arthur Keyes, is a local farmer himself and an entrepreneur who also developed the vibrant weekend farmers’ markets in Anchorage. The success for Alaska growers will be in niche markets, Rutherford said, like growing and shipping peonies for seasonal out-of-state markets. Even in Delta, east of Fairbanks, where the state unsuccessfully attempted to develop a large barley farming project in the 1980s, farmers still grow the grain for local markets and are making and selling new products. Bryce Wrigley, one local farmer, is making a barley flour that he sells in Fairbanks and Anchorage stores. His company is Alaska Flour Co. Rutherford said one of the Agriculture Division’s most important functions is the plant materials center that provides seeds for local grasses and plants that are important for land rehabilitation and restoration. Providing disease-free seed potatoes for Alaska growers is another function. This unit was under the budget axe this spring in Juneau. The state House cut $335,000 from the Agriculture Division, essentially eliminating the unit, but the Senate restored the money for one year. “In the next year we’ve got to figure out a way to raise funds for the plant materials center,” Fogels said. Rutherford said the ability to grow grass and other plant seeds in the state is important for keeping invasive plant species out. “Growing our own eliminates the need to import seeds for Alaska growers,” she said. It’s when seeds are imported that invasive species are introduced, mixed in with the out-of-state seeds. The state-owned and prisoner-operated Mt. McKinley Meat & Sausage plant in the Mat-Su, which provides the Southcentral region’s only approved U.S. Department of Agriculture inspection service for meat sales, was also given a reprieve by the Legislature. It was to have closed in July but lawmakers are allowing it to stay open while negotiations are underway with a local nonprofit that could take over ownership and operations. Tim Bradner is a correspondent for the Journal. He can be reached at [email protected]

USDA advances $16M in rural energy development grants

In an era of state cutbacks, every federal penny counts. U.S. Department of Agriculture-Rural Development Alaska State Director Jim Nordlund announced on June 23 that nine grant applications from Alaska totaling $16 million are moving to a final review process. The USDA’s High Energy Cost Grant program is intended to help families and individuals in areas with extremely high per household energy costs, which is federally classified as any community that pays 275 percent of the national average. Alaska has some of the highest utilities costs in the nation at just less than 18 cents per kilowatt-hour, according to a March 2016 report from the U.S. Department of Energy. The national average is 10 cents per kilowatt-hour. In rural Alaska communities, this number grows even higher. The grants fall under the USDA Rural Development program, which has granted more than $2 billion in housing, community facilities, businesses, energy, water and sewer and telecommunications projects in 226 rural Alaskan communities since 2009. USDA specifies the funds may be used to acquire, construct, extend, upgrade or otherwise improve energy generation, transmission or distribution facilities. The USDA received grant applications between $400,000 and $3 million from Alaska Power & Telephone Company, Alaska Village Electric Co-Op, City of Grayling, City of Pilot Point, Alaska Native Tribal Health Consortium, NANA Regional Corp., New Koliganek Village Council, Asa’carsarmiut Tribe and Naterkaq Light Plant. Each project still has to pass an environmental review before approval. Nordlund said he was uncertain on how long the process takes, but staff estimated 60 days as typical for some previous projects. “It really depends on the project,” said Nordlund. USDA’s program picks up some of the slack from a drop in state funding geared toward the same purpose. “Because of the state fiscal crisis, the money for things like that fund and other efficiency programs has dropped precipitously over the last two years,” said Chris Rose, executive director of the Renewable Energy Alaska Project, a coalition of over 70 business and power producers, conservation groups, and electric utility companies focused on energy efficiency development. The Alaska Renewable Energy Fund passed in 2008 at the behest of REAP and others similarly focused groups. Since then, the state has appropriated over $250 million into the fund, which in turn produced another $200 million in federal and state matches for feasibility studies, designs, and construction. The 50 projects currently completed with these funds will displace 30 million gallons of diesel per year, according to the Alaska Export Authority estimates. Nordlund said proposals are increasing for the federal program, both in quantity and in quality. “I think we’re seeing a lot more interest,” said Nordlund. “I’m seeing a lot more creativity in the projects that come in. I think what you’re seeing is more sophistication in the proposals, because we’re starting to build a core of engineers and developers in this state who understands what works and what doesn’t work in the state of Alaska. They’re getting to be better prepared.” Most of the nine awards foster development a few key technologies. The three largest grants of $3 million apiece to Alaska Village Electric Co-Op, Alaska Power and Telephone Company and Naterkaq Light Plant will go toward wind energy development projects.  “If you were to collapse them into categories,” said Nordlund, “every one of them either has something to do with wind generation, waste heat recovery, solar, battery technologies, electric thermal stoves, or biomass, which in English is like heating with wood.” Health organizations like the Alaska Native Tribal Health Consortium, granted $690,388, will use the money for water treatment, lowering one of the larger power costs in remote places. “A good cornerstone of health is good water,” said Steve Weaver, director of the Division of Environmental Health and Engineering at ANTHC. “We’re looking at putting solar panels on eight water treatment plants in eight remote communities that use diesel fire generators to provide electricity. We expect solar to offset their power costs by 15 percent over time.” Jason Custer, a business development representative from Alaska Power and Telephone, estimates the project will reduce cost to 15 cent per kilowatt-hour in the heavily diesel-dependent communities it services. In Alaska Power and Telephone’s case, the $3 million makes the total $10 million project financially viable. Cost reductions are key to the program, but Rose said the ebbs and flows of oil and gas pricing are enough concern on their own for utilities companies and their customers.  “We don’t have any control over fossil fuels, even though we produce them here in the state,” said Rose. “We don’t have control over the price of diesel. We don’t have control of the price even of the natural gas we use here in the Anchorage area.” With renewable sources, he said, even if the price doesn’t go down it will at least be more predictable. “For a lot of these communities, the most important thing is that it’s stably priced. Once you put in a renewable energy project, you can much more predictably see what the cost of power is going to be in the future.” As with oil and gas, Alaska’s renewable energy development can give direction for national and international projects of the same scope and purpose. Navigant Consulting, an energy consulting firm, produces studies related to renewable energy. Alaska ranks top of the line in at least one category.  “Their definition of microgrids includes islands that have renewables in them,” said Rose. “By that definition, Alaska has more small islands with renewables integrated into them than any other place in the world.” Rose said his group is already working with Outside communities to help adapt Alaska-bred methods. “We believe we can export these technologies,” said Rose. “There are people we’re working with in island communities in the Caribbean and the Pacific who we believe want the same technology.”   DJ Summers can be reached at [email protected]  

INSIDE REAL ESTATE: Anchorage home market shifts from sellers to buyers

According to the Multiple Listing Service, residential active listing inventory in the Municipality of Anchorage bumped up to over 900 units for sale in April and May, similar to the available inventory in 2010, turning the Anchorage market into more of a buyer’s market than a seller’s. Just a year ago, inventory was in the 600 for sale range for the same months. At that time, frustrated buyers dealt with competitive multiple offers on homes with some offering more than listed price. Not so today where homes are selling for 98.23 percent of adjusted list price and that percentage does not include any buyer-paid closing costs by the seller. Adjusted list price means any reduction from the original listed price, and that percent sale to original list price is 95.98 percent. Anchorage is a small market with 2,860 single family homes selling in 2014 and 2,993 in the past year. It is hard to generalize and put percentages on any specific home or subdivision but midway through 2016, the trend is pretty clear. Inventory is up but sales are still strong. Through the first five months of this year, there have been only 69 fewer sales than in 2015 for the same time frame. So with inventory up, the approximately same number of buyers have more choices and are taking more time to make a decision. This is reflected in longer days on the market with the six-month average of 51 days on market compared to 44 the past 13 months.  Sellers, whether builders or private parties with pre-owned homes, need to do more to make their homes attractive. That includes fresh touch up paint, cleaning out the garage so that it appears more spacious and the important lawn and landscaping care. First impressions are the most important. If the exterior of the home is not attractive and well cared for or looks exactly like the same of every other home on the block, that buyer is going to drive right by, whether they are with their realtor or by themselves. An unkempt lawn or dead bushes make a negative impression that is not retrievable. Once the home is in market condition, it is all a matter of price. Sellers need to look not what the home down the street sold for six months ago but what is currently on the market that competes with the home they are selling.  Every home has attractive features which is why the sellers bought the home in the first place. Although Zillow and Trulia are for many buyers the first online stop, they don’t provide enough detail as to what was an important feature to the seller and prospective buyer. Buyers shopping only online may miss out on the home of their dreams. This summer is one of our best for sunny skies and warm temperatures. If you’re looking for a new home, get in your car, on your bike or walk around the neighborhood where you would like to live. You might be surprised at what you find. Connie Yoshimura is the Broker/Owner of Dwell Realty. Read more columns by Connie at www.cyalaska.com. Contact her at 907-229-2703 or [email protected]  

INSIDE REAL ESTATE: Test your knowledge of the Southcentral real estate market

1. Has the average sales price of Anchorage homes increased or decreased year-to-date when compared to the 2015 average price? 2. By what percentage has this increase or decrease occurred? 3. Has the number of residential sales for the first four months of 2016 increased or decreased when compared to the same time last year? 4. How many home sales have occurred in the first four months of 2016 as reported in MLS? 5. In the last six months, how many million-dollar homes listed in MLS have sold? 6. What price range has the highest percentage of inventory? 7. How negotiable do most sellers have to be in order to sell their home?  In other words, what is the percentage sales to original list price the past six months? 8. What is the average sales price of an Eagle River single family home and is that higher or lower than Anchorage? 9. How many homes priced over $749,999 are for sale in Eagle River vs. Anchorage? 10. What is the average sales price of an Anchorage condo? 11. How many condos are for sale in this price range? 12. How many condos are for sale over $400,000? 13. Have Anchorage residential building permits increased or decreased YTD when compared to last year? 14. What is the average listed price for a home in the Mat-Su Borough? Connie Yoshimura is the broker/owner of Dwell Realty. Read more columns by Connie at www.cyalaska.com. Contact her at 907-229-2703 or [email protected]     Answers 1. Decreased        2. 2.5%, wiping away the 2015 appreciation rate of 2.27%       3. Minimally decreased. 52 fewer home sales       4. 722 5. None 6. $500,000 to $749,999, 21% of all MLS Anchorage inventory       7. 4.33% less than original list price.       8. $362,688, almost identical to Anchorage’s at $360,978        9. 4 in Eagle River; 75 in Anchorage       10. $213,070 11. 29 12. 33 13. Decreased.  Still waiting for the MOA to post April and May permit info but rough data indicates a continued decrease in activity    14. $284,400    

Congress approves $561M for Alaska military construction in FY2017

Missile defense and fighter jets could be a just-in-time boon for Alaska contractors feeling the effects of low oil prices and state budget cuts. The U.S. House and Senate each passed appropriations bills May 19 to fund a dozen projects totaling $561 million worth of construction activity in Alaska. Most of that money will go to Interior military installations to upgrade the country’s missile defense system and prepare for the arrival of two squadrons of F-35 fighters to Eielson Air Force Base in 2020. The Senate’s $139.4 billion packaged appropriations bill addressed military construction, Veterans Affairs, Transportation and Housing and Urban Development spending for the 2017 fiscal year that begins Oct. 1. The $81.6 billion House bill funds Defense infrastructure and VA programs. Despite differences in other areas, the bills are nearly identical in terms of military construction funding for Alaska. “The decision to base two squadrons of F-35s, totaling 54 aircraft, at Eielson Air Force Base and position Long Range Discrimination Radar at Clear Air Force Station were major victories for Alaska and the nation. Not only will these systems play an immense role in defense of our nation, they also mean a significant boost to our economy and our local communities,” Rep. Don Young said in a May 19 statement. “Today’s House-passed Milcon-VA Appropriations Act lays the groundwork for these two important basing decisions and further supports the needs of our military men and women.” Sen. Lisa Murkowski added language to the Senate bill in the Military Construction-VA Appropriations Subcommittee encouraging the Defense Department to “conduct outreach to contractors located in Alaska and experienced in Arctic construction techniques in the execution of the military construction program for Alaska,” according to a release from her office. The intent language also urges DOD to maximize local workforce participation and coordinate that work with the state Labor Department and the University of Alaska to provide training for the pending construction work. The language was pulled as the bill moved through the committee process, but was ultimately reinserted in the legislation that passed. Despite Alaska receiving more military construction funding than any other state in the appropriations package, the projects are security investments for the entire nation, Murkowski said in a release. “This funding bill not only allows us to obtain the resources that we need to support our military efforts, such as preparing for the arrival of the F-35s at Eielson Air Force Base and building the Long Range Discrimination Radar at Clear; it also represents a resurgence for Alaska’s construction industry and thousands of new full-time jobs at a time when Alaska’s economy needs it most.” Murkowski’s office estimates the projects could spur nearly 2,700 new construction-related jobs and more than 1,600 permanent positions. Missile Defense Agency Director Admiral James Syring said during a February talk to the Fairbanks Chamber of Commerce that more than $325 million will be spent over the next six years installing the Long Range Discrimination Radar at the Clear Station near Nenana. That work will require a 350-person man camp starting next year, with peak occupancy and construction in 2019, he said. Syring added that the missile defense and detection upgrades in Alaska are all aimed at expanding the country’s defense mechanisms against North Korea. He said he would expect local contractors to get much of the work at Clear Air Force Station at least. Elwood Brehmer can be reached at [email protected]

INSIDE REAL ESTATE: As you may have guessed, Anchorage home listings on rise

As you might have suspected, Anchorage inventory has continued to increase over the past few weeks. Spring and early summer is the time of year when sellers like to put their homes on the market and our uncertain economic outlook has no doubt helped increase Anchorage’s inventory. A snapshot of a week’s inventory of available homes in May when compared to the same time in 2015, shows a 64 percent increase in active for sale single family homes. On May 2, 2015, there were 428 homes for sale; on May 2, 2016, there were 702. Not all Alaska communities are showing such a dramatic increase in inventory and some inventories have actually declined. Wasilla, as you might expect, has had a 32.36 percent increase in inventory, an increase from 343 to 454. Kenai had a 55 percent increase, from 60 to 93. Chugiak has increased from 30 homes to 49 and its neighbor, Eagle River, has gone from 134 homes for sale to 171, an increase of 27.61 percent. Big Lake, originally a cabin and recreational community, has developed into a year-round community with larger lakefront homes. It’s had a 39 percent decline in available homes. There are now only 37 homes for sale compared to 61 a year ago. You can expect that market to further tighten up as the summer recreational season takes hold. Likewise, Homer has had a 14 percent decline in available homes, from 114 to 98. Homer and Halibut Cove have established their communities as the go to place for upscale visitors as well as Alaskans. Sitka and Seward are also stable with little or no movement up or down. So it’s a mixed bag of supply and demand. It’s hard to explain why Talkeetna and Willow have a decreasing supply of homes for sale while Wasilla, the hub of the Mat-Su, has had such an increase.  However, neither Anchorage nor Wasilla has reached a saturation point of oversupply. Anchorage, in particular, is still a long ways from the high water mark of 1,299 homes for sale in June 2007. Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-229-2703 or [email protected]

Senate approves $1.6B state construction budget

JUNEAU — The Alaska Senate has voted 16-4 to send the state’s $1.6 billion capital construction budget to the House. The $1.6 billion budget is in many ways a bare-bones appropriation and went unchanged from a version previously approved by the Senate Finance Committee. Of the budget, $1.3 billion will be funded by federal dollars administered by the state. Only $77.5 million will be spent in undesignated general-fund dollars as matching funds needed to unlock that federal money. The remainder of the budget will be funded with various other state accounts. “It’s tough times; it requires tough decisions, and the Senate has risen to the occasion,” said Sen. Anna MacKinnon, R-Anchorage. Most of the budget is allocated for transportation-related construction projects, which are matched at better than a 9-to-1 rate by the federal government. The biggest point of contention in the budget was the lack of a $7.2 million appropriation for the Kivalina school in the Northwest Arctic Borough. Gov. Bill Walker had requested $7.2 million to finalize the settlement of a lawsuit alleging unequal treatment between rural and urban school funding. According to an analysis of the settlement provided by the Alaska Department of Law, the state must provide $50.4 million for a new Kivalina school. Last year, the Legislature appropriated $43.2 million for the school. Walker’s request would have covered the remaining amount, but it was removed by the Senate Finance Committee. “Our attorneys last year gave us a different number,” MacKinnon, co-chairwoman of the finance committee, said in a floor speech. In a memo dated May 13, 2016, legislative counsel Megan Wallace wrote MacKinnon to say that the state is obliged to fund only $43.2 million. While the Legislature could choose to provide more money, Wallace concluded, “the Legislature’s decision whether to appropriate those amounts cannot and will not lead to any violation of the consent decree.” Instead of additional money for the Kivalina school, the capital budget includes a statement declaring that the Legislature believes it has already met the requirements of the settlement. That language and the removal of the Kivalina money was opposed by members of the four-member Democratic Senate minority and Sen. Donny Olson, D-Nome and a member of the Senate majority. Olson represents Kivalina in the Senate. The budget also includes $12.5 million to purchase an Anchorage office building for use by the Legislature. Speaking on the Senate floor, Sen. Gary Stevens, R-Kodiak and chairman of the Legislative Council, implied that the purchase is the best of a series of bad options for the Legislature. It cannot purchase its existing downtown Anchorage building because of a veto threat from the governor. It cannot continue to lease the downtown building because the lease was ruled illegal. Moving into the state-owned Atwood Building would require renovating that structure and finding interim space for lawmakers while the renovations take place. The Senate Minority offered an amendment to strip the $12.5 million from the budget, but that was rejected 4-16. Members of the Senate Majority said that on a square-foot basis, the $12.5 million purchase will work out to 57 cents a square foot. Sen. Bill Wielechowski, D-Anchorage, retorted that on a square foot basis, the new building is so large that every Anchorage legislator would be getting 2,000 to 3,000 square feet of office space. “Do you really need 2-3,000 square feet per legislator?” he asked. Members of the Senate majority also rejected amendments that would have de-funded the Knik Arm Bridge and Bragaw Road extension projects in Anchorage. The capital budget moves to the House for consideration.  

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