Fairbanks retailers adjust to life alongside Home Depot

FAIRBANKS -- Less than two months after The Home Depot opened in Fairbanks, some existing local hardware stores are making operational changes to compete with the mammoth-sized retailer.Those proactive measures include stocking specialty supplies used by rural Alaskans, adding log cabin and metal shed kits, opening a sporting goods section and beefing up tool accessory lines."It’s getting to be a pretty fierce market out there," said Robert Towler, manager of the locally owned Samson Hardware. "You have to modify your business, because when they come to town, things change If you make the changes necessary in your business, it’s not a problem working right along side of them."The Home Depot opened a 118,000-square-foot facility in Fairbanks Feb. 28, a standard size store for the retail chain that touts more than 1,300 stores in North America. Retail sales in the fiscal year 2001 were $53.6 billion, according to the company’s Web site.With about 145 employees currently on staff, The Home Depot oversold its inventory by 120 percent during the first few weeks of operation, said Fairbanks store manager John Romeu."We were out of stock and missing product for three or four weeks. Some things we can get very quickly, but some things take three weeks or more," he said. "Our supply lines are now flowing."A combination of newness to the community and availability of products that weren’t easily attainable contributed to the strong opening, Romeu said."There’s well over 40,000 items that we sell, and previously you would have to go to maybe five different stores to find those items," he said. "We’re exceeding our expectations. It’s pretty phenomenal as far as the amount of business we’re getting here."Some area retailers in Fairbanks have taken specific steps to compete with the giant retailer.Samson Hardware, operating at its downtown location on the north side of the Chena River since 1904, caters to the rural Alaska lifestyle. Popular items include logging tools, traps and snares, stoneware crocks, canning supplies, galvanized wash tubs and wringer washers."It’s harder to find those kind of items," Towler said. "We carry a lot of stuff that for most people living in the Bush, is readily available here."Providing those specialty items along with a knowledgeable sales staff that typically greets customers as they enter the store are keys to the small store’s ability to compete beside The Home Depot, Towler said.So far, the impact of the giant retailer is difficult to measure, he said, due to the typical seasonal slow period."We’ll be able to gauge it better a little later in the year," he said. "Our history is that the first three months of the year is pretty slow."Ace Hardware/OK Lumber, another locally owned hardware store located in downtown Fairbanks, also places emphasis on customer service."Above anything else, when you come into our store, there’s someone to help you right away," said store manager Phillip Newton.He’s recently added an extensive sporting goods section, carrying archery, ammunition, firearms and fishing gear applicable to Interior Alaska uses. "There’s not any bass lures here," he added.Ace has also added small log cabins and metal sheds to its inventory."It’s all being done to react to the market changes," he said. "We’ve definitely seen a small loss in customer activity, but as the newness of the Depot wears off, I expect to see our customer activity back to where it was previously."The Fairbanks branch of Alaska Industrial Hardware Inc. views the big box retailer’s opening as a benefit to the community and to their own business, said store manager Ross Dow."If anything, it helps consumers because we can get a little more aggressive with the tool representatives to get prices lower," he said. "We also have a different client base. We serve construction and heavy work projects --contractor oriented -- and The Home Depot is more do-it-yourself, home improvement stuff."Yet he is concerned about the fate of other smaller suppliers in Fairbanks, based on his observations when large national retailers first entered another Alaska market. "In Anchorage, I saw a lot of my favorite stores to shop at, like Mom and Pop operations, shut down because they could not compete."Richard Tilly, a Fairbanks contractor and president of the Interior Alaska Builders Association, said the new supplier is a "good asset for the community."But for his own business needs, Home Depot’s self-service atmosphere and the initial lack of stock discouraged him."I’ve been to the store a half-dozen times for one client, and I’ve having a tough time getting return phone calls about whether they have the stuff, or if they can get it. That’s part of their learning curve," he said. "In my opinion, they are not so much overall cheaper I don’t anticipate that they will put anyone else out of business."Patricial Jones is a free-lance writer living in Fairbanks. She can be reached at ([email protected]).

Around the World April 28, 2002

STATECook Inlet oil platform fire forces evacuationsANCHORAGE -- Three of the four people injured April 20 in a fire on an oil platform in Cook Inlet have been released from the hospital.The fourth was flown to the Harborview Medical Center in Seattle as a precaution, said Roxanne Sinz, a spokeswoman for Unocal.The fire forced the evacuation of workers from the King Salmon Platform in Trading Bay on the west side of the Inlet, about 55 miles southwest of Anchorage. The 200-by-200-foot platform sits in 110 feet of water and has 24 wells. Sixteen are active. Unocal owns about 53 percent of the platform and Forest Oil owns the rest.According to Sinz, a stream of natural gas ignited as workers installed a new pump in a well to boost production.Sinz said company personnel put out the blaze. The fire was declared out about an hour after it began, said Alaska State Trooper spokesman Greg Wilkinson.There were 52 workers on the platform. Of those, 33 nonessential workers were evacuated, Sinz said.Sinz said the cause of the fire remains under investigation.Alaska-Russian Far East flights receive approvalANCHORAGE -- Russian officials have agreed to grant new air routes from Alaska to three cities in the Russian Far East, Gov. Tony Knowles announced April 15.Carriers can now offer scheduled flights from Anchorage and Nome to Anadyr, Provideniya and Lavrentiya under a new two-year bilateral agreement signed last week."Although we’ve had charter service for years, this is the first time we’ve had the opportunity for scheduled flights," said Jeff Berliner, a Russian trade specialist with the Alaska Department of Economic and Community Development.Bering Air has been making several charter flights a week, mostly to Provideniya, Berliner said, and three other airlines -- Evergreen Aviation Inc., Northern Air Cargo and Era Aviation Inc. -- have expressed interest in flying from Alaska to the Russian cities in the Chukotka region.The pact also allows some Russian airlines to offer flights between cities in the Russian federation and cities in the Lower 48 if the flight also serves a city in Alaska.NATIONAlaska Air reports net loss of $34.4 millionSEATTLE -- Alaska Air Group Inc. on April 19 reported a first-quarter net loss of $34.4 million, or $1.30 per share, beating Wall Street’s expectations by 23 cents a share in an industry still struggling from the Sept. 11 attacks.The results compared to a loss of $33.1 million, or $1.25 a share, for first quarter 2001.Analysts surveyed by Thomson Financial/First Call predicted losses of 98 cents to $1.80 per share, with a mean of $1.53 per share.Revenue for the quarter was $496.9 million, compared to $516 million in the same period last year.Alaska, parent company to Alaska Airlines and commuter airline Horizon Air, has done better than most airlines following Sept. 11. It has not announced layoffs, while others have been forced to lay off thousands and cut flight schedules by as much as 20 percent.Alaska Airlines’ passenger traffic increased 2.8 percent in the first quarter, on a capacity increase of 0.9 percent, the company said. It attributed the increase to its decision to add flights to Washington, D.C., and Mexico.-- Compiled from business wire services.

Title Wave Books plans new store, coffee shop

Operators of Title Wave Books, an Alaska-owned bookstore, are preparing to move this spring, tripling their size and launching an Alaska version of the national-book retailer formula of mixing titles and espresso.In May the Anchorage bookseller will move from its current 11,000-square-foot location at 1068 W. Fireweed Lane to a 34,000-square-foot space in the Northern Lights Center at 1200 W. Northern Lights Blvd. Kaladi Brothers Coffee Co. will use 1,800 square feet to run a cafe.Current renovations at the Northern Lights Center in Midtown Anchorage mark the latest in a flurry of recent upgrades. Last fall owners of The Alaska Club Network began renovating the former Alaska Marketplace store. That space now houses the Alaska Club West and the Alaska Club for Women, which opened in February. Earlier this year, Recreational Equipment Inc., the tenant at the opposite end of the mall, started a $2 million remodeling project that will add 1,000 square feet to the 36,000-square-foot store.REI expects to finish up this spring. Title Wave is scheduled to reopen at its new location May 18, said Julie Drake, who owns the bookstore with her husband, Steve Lloyd.Although Title Wave has primarily sold used books, the new store will feature new and used titles. An area with a stage will feature musicians, author signings, readings, book clubs and children’s story time, Drake said."It’s kind of our dream bookstore," Drake said.The expanded store also will allow Title Wave to accept more used books."Right now we turn away books because of lack of space," she said.The couple has operated the store for 11 years. Sales have climbed since opening and tallied $1.4 million last year, according to the company. During Title Wave’s tenure, two large national bookstores opened in Anchorage, Borders Books & Music and Barnes & Noble Booksellers - each with cafes serving coffee drinks and light fare.Title Wave customers encouraged Drake and Lloyd to boost the selection of new books as well as add events. After more than a year of searching for retail space, the bookstore operators signed a lease at the Northern Lights Center in March.Hickel Investment Co. operates the mall.Bill Gee, Hickel Investment vice president and broker, praised the renovations by the new and current tenants."It’s nice," he said. "We’re very pleased with it."Gee also believes Title Wave will fit in well with other health-related tenants, The Alaska Club and REI.Renovations include tearing down a front wall that had created a walkway in the mall, Drake said.The current store employs 21 workers, but the new location will probably need a staff of 35 to 40, including part-time workers to clean and prepare used books for sale, she said.Title Wave will close its current location May 12 to begin moving, Drake said.The book seller also plans to catalog its stock during the process."One of the biggest parts of our move is that we’re putting our entire inventory on computer," she said.Opening in time for the summer visitor season was a key consideration, she noted. "People who like traveling and books tend to visit bookstores," Drake said.Online sales are another major aspect of the business. Title Wave, which started selling books via the Internet about seven years ago, sells to large companies like Amazon.com and Powell’s Books, Drake said.At the new Title Wave, Kaladi Brothers Coffee plans to add four full-time and six to eight part-time employees, said owner Tim Gravel.Gravel expects to open the cafe in mid-May. It will seat 40 to 50 diners and have Internet access from up to seven Apple iMac computers.Kaladi Brothers Coffee already operates four Anchorage locations plus one store each in Soldotna and Wasilla. The new Title Wave location is ideal for the coffee retailer, which had previously considered other sites in West Anchorage, he said.Title Wave’s Lloyd asked the coffee company operator to run the new bookstore’s cafe.Gravel is enthusiastic about the two companies working together.

Satellite phones could aid pilots

By all accounts, the Federal Aviation Administration’s new Capstone project will improve aviation safety in Alaska.But the avionics system, which is designed to track aircraft in skies where radar doesn’t reach, is limited in its coverage in remote areas.Scottsdale, Ariz.-based General Dynamics Decision Systems last month demonstrated it can fill the void by using a satellite-telephone technology that failed to attract phone customers but may be ideal for tracking airplanes.General Dynamics, funded with a $50,000 grant from the FAA, conducted a proof-of-concept demonstration March 13 at Merrill Field as aircraft association representatives and federal, state and military officials watched. Using a mobile satellite telephone to transmit its position, a single-engine Cessna 180 was flown from Merrill Field, along the Knik Arm of Cook Inlet, past Pioneer Peak and into the Knik Glacier valley. The airplane, owned by the University of Alaska Anchorage, also was fitted with Capstone equipment that relies on other airplanes or ground-based transceivers to relay information.When the airplane passed Pioneer Peak, the area’s deep valleys and high terrain caused the Capstone’s line-of-sight tracking to cease, as expected, FAA officials said. The General Dynamics system continued to track the airplane. While the navigation system proved successful, General Dynamics and FAA officials say small-aircraft owners may have to wait several years before the technology is affordable."The costs are not there yet," said John Hallinan, FAA’s Capstone program manager in Anchorage. "It’s still a little bit out of reach today."Already it costs about $14,500 to outfit an airplane with the existing Capstone equipment, according to Ellis McElroy, FAA’s Capstone business manager in Anchorage. Two hundred small commercial airplanes in Bethel and in the Yukon-Kuskokwim Delta have been outfitted with the equipment, funded by the FAA. A contract for another 200 units is being finalized this month for airplanes in Juneau and nearby Southeast communities, McElroy said.General Dynamics’ system would add significantly to the cost of the existing Capstone system, but neither the FAA nor the company would speculate on how much.General Dynamics uses the Iridium Satellite LLC communications system. Iridium, the world’s first satellite-phone service, has been plagued with financial problems due to, among other things, low demand by mass-market customers who disliked the bulky $3,000 telephones. Connection charges were up to $7 a minute.In addition to aviation, Iridium’s new owners have marketed the technology to the government and remote industrial customers.While the $5 billion, 66-satellite Iridium system may have little phone-user appeal, its application to aviation offers technology once available only to large commercial and military aircraft, said Michel Gelinas, program manager with General Dynamics.Gelinas said the system is perfect for aviation and would likely save many lives since an airplane can be tracked continuously from anywhere on Earth."This will remove the ’search’ out of search and rescue," Gelinas said. "The pilot is never out of reach."If the technology is approved and adopted by the FAA to augment the existing Capstone system, costs could come down significantly.In time, he said, "It should be affordable to the majority of aircraft owners."FAA’s McElroy said his agency is still studying the possibility of incorporating General Dynamics’ system into Capstone."In no way have we guaranteed to put it to use," McElroy said.But the system is being seriously considered, especially since it could be used instead of expensive ground-based Capstone transceiver stations that would have to be built in remote areas.Only three such stations currently exist, and five more are coming on line later this summer, McElroy said. A total of 230 stations would have to be built to cover the entire state."We’re looking at the most bang for the least buck," McElroy said.

Measure brings spill response plans in line with law

A bill that brings state law into line with regulations defining the "best technology" for oil spill containment and cleanup has passed the Legislature and is on the way to Gov. Tony Knowles.Senate Bill 343 was introduced in late February by Sen. John Torgerson, R-Kasilof, to deal with an Alaska Supreme Court decision handed down earlier that month that struck down regulations adopted in 1997 by the state Department of Environmental Conservation.The decision affects oil spill contingency plans that DEC has approved for oil and gas producers, fuel distributors and operators of bulk fuel storage tanks and transportation companies that move fuel oil.Current law, which has been on the books since 1981, requires that the best technology be used by firms engaged in producing or moving oil. In 1997 DEC adopted regulations that defined the term.But in a lawsuit brought by a citizen, the state high court overturned the 1997 regulations on the grounds that they were not technically in compliance with the existing statute. SB343 solves the problem, changing the statute so the regulations are in compliance, according to Larry Dietrick, head of DEC’s oil spill prepardness section.If the bill had not passed, some 160 spill contingency plans approved since 1997 under the new regulations might have been invalid, Dietrick said.Legislation on construction codes would permit two types of testsThe House Labor and Commerce Committee has approved a bill that would repeal regulations adopted by the Division of Occupational Licensing requiring tests be given on the International Mechanical Code instead of the Uniform Building Code as required by existing statute. House Bill 399 would allow the division to give tests for both.In September the Department of Public Safety adopted regulations specifying that the International Mechanical Code replace the Uniform Building Code in state fire protection regulations.Regulations later adopted by the Division of Occupational Licensing were to conform the tests for mechanical administrators to the new code adopted by the Public Safety department. However, the statute guiding the division mandates use of the Uniform Code. House Bill 399 gives the division flexibility.While the International Mechanical Code is specified in state regulations, many Alaska municipalities still require the Uniform Building Code. The Uniform Building Code spells out specific procedures for contractors to follow, whereas the International Building Code states goals and gives engineers more leeway in the design phase.Extension of deteriorated property tax reduction nears passageA bill sponsored by Rep. Vic Kohring, R-Wasilla, to extend a current law allowing muncipalities to defer property taxes on certain types of deteriorated property has been approved by the Senate Labor and Commerce Committee. House Bill 389 has already passed the State House.The legislation is important to an Anchorage developer attempting to secure new financing for redevelopment of the aged Mac- Kay Building in downtown Anchorage. Without passage of HB389, the law allowing the property tax deferral would have "sunset," or ended, this year. Kohring’s bill would extend it to 2005.Bill allows seafood processors to charge room and board to workersThe House Labor and Commerce Committee has approved House Bill 504, which would allow seafood processors to charge workers in remote processing plants for room and board.State law now allows room and board to be charged in communities where there are alternative living accomodations, but in isolated areas the companies were not allowed to do so. The legislation would change that.The Knowles administration strongly opposes the legislation, state Labor Commissioner Ed Flanigan told the House committee. But a spokeswoman for Icicle Seafoods, which operates mainly in Southeast Alaska told the committee the change is needed to help processors cope with poor economic conditions in the fishing industry.Committee moves bill allowing small health insurance groupsRep. Norm Rokeberg’s House Bill 315, allowing small businesses and nonprofit corporations to form employee insurance pools to contract for group health insurance, has passed the House State Affairs Committee. The bill is now in the House Labor and Commerce Committee. The bill affects for-profit and nonprofit corporations with two to 300 employees.Rokeberg, R-Anchorage, had originally proposed that these groups join insurance groups with state employees, but regulations barred that. The current version of HB315 would allow establishment of separate groups.By joining a group with larger numbers of people enrolled, small businesses and nonprofits could lower their costs for employee health insurance, Rokeberg said.

Kinross, Placer Dome share operating costs

FAIRBANKS -- The owner of the Fort Knox gold mine north of Fairbanks has agreed to combine operations with another company in the Porcupine district of Ontario, Canada.Kinross Gold Corp., owner of Fort Knox, and Placer Dome will combine mines and mills. Capital and operating costs also will be split.Placer Dome will own a 51 percent stake in the Porcupine Area Joint Venture. Kinross will own a 49 percent share.Placer Dome will contribute its Dome mine and mill. Kinross will contribute the Hoyle Pond, Parnour and Nighthawk Lake mines and the Bell Creek mill."This will achieve the ultimate synergies for our Timmins area assets that Kinross has been striving to attain over the past several years," said Robert Buchan, Kinross chairman.Buchan said the company wants to lower its operating costs and economically process a Parnour pit and other resources while exploring and developing other projects near Timmins in southeast Ontario.Jay Taylor, president of Placer Dome, said the joint venture between the two companies should prove financially beneficial."The Dome mine’s 13,000 tons-per-day mill combined with Kinross’ large, highly prospective land package will maximize the returns to the shareholders of both partners," said Taylor.As of Dec. 31, Kinross’ reserves in the Porcupine area totaled 1.1 million ounces, while Placer Dome’s reserves in the area totaled 1.3 million ounces.The venture is subject to financial research by both sides and approval of each company’s board of directors.Placer Dome last summer signed an agreement with NovaGold to grant a 70 percent interest in its Donlin Creek prospect, 60 miles northeast of Aniak. Placer Dome had spent five years exploring in the area. NovaGold announced in January that Donlin Creek holds at least 23 million ounces of gold.

Coeur D'Alene Mines disputes audit letter

Looming financial uncertainty at Coeur D’Alene Mines is lifting, company managers are saying, and Coeur’s plan to develop the big Kensington Mine gold project in Southeast Alaska is proceeding as planned.Coeur’s auditors, Arthur Andersen LLP, stated in a letter that because of ongoing losses it had "substantial doubt the company could continue as a going concern." The letter was cited in the company’s annual report, issued last month. In it, Andersen raised questions as to whether Coeur can meet required debt payments due this summer.The Idaho-based mining company is working on ways to meet the payment, and despite the auditor’s letter Coeur is in a healthy financial and cash flow position, according to Rick Richins, senior vice president of Coeur Alaska Inc., the company’s Alaska subsidiary. Richins is in charge of the Kensington Mine development.Arthur Anderson’s findings, completed a month ago, were based on 2001 earnings and assumed gold prices in the range of $275 per ounce for 2002, Richins said. Gold has recently increased to $300 per ounce, he said.Coeur has also cut costs and increased production at mines it operates in Idaho and Nevada and is bringing on two profitable new mines in Chile. Corporate debt has also been reduced by half, Richins said.Meanwhile, work to obtain permits for the Kensington Mine continues. The U.S. Forest Service, lead agency in the supplemental environmental impact statement, will begin the public "scoping" process in early May, and public hearings will be held this summer in Juneau and Haines, the two communities nearest the mine.The Forest Service has retained Tetra Tech of Denver as an environmental impact s tatement contractor. The company is experienced in mining projects and its staff includes specialists who worked on previous permits for the Kensington project, Richins said.The U.S. Environmental Protection Agency has assigned people to work on the EIS team and, most significantly, has indicated it will complete a draft discharge permit by the end of the year, about the same time the Forest Service should complete its environmental review, Richins said.In 1992, the last time Kensington went through the permitting process, EPA didn’t finish the discharge permit until 18 months after work on the draft EIS and other permits was completed.Coeur is also completing the applications for U.S. Army Corps of Engineers and state Department of Natural Resources permits for a marine docking facility at Cascade Point, on the south side of Berner’s Bay near the end of a highway to Juneau.The company is working on financing for a road extension to connect the dock to the existing highway, Richins said. This would allow mine workers to commute from Juneau to the job site via the highway and a ferry.Economics of the Kensington project continue to look favorable with a new development plan being proposed in the supplemental impact statement."Capital costs have been reduced from $211 million to $157 million, and we believe additional savings are possible," Richins said.The mine has 1.75 million ounces of gold reserves proven by drilling and an estimated 5 million ounces of gold resources indicated by modeling of the known ore body, with an estimated average ore grade of 0.21 ounces of gold per ton. That’s an improvement from previous estimates of 0.139 ounces of gold per ton, Richins said.

Gold miners rejoice, but zinc prices stay low

There’s both good news and bad news these days for Alaska’s miners.The good news is that gold prices are rising after a long slump and recently crossed the $300 per ounce threshold. That’s an important psychological threshold for the industry, according to Paul Glavinovich, a veteran Alaska minerals geologist.The bad news, however, is that another metal important for the Alaska mineral industry, zinc, remains in the dumps. At 36 and 37 cents a pound, zinc is at the lowest price in years and possibly at its lowest level ever when prices are adjusted for inflation, Glavinovich said.There are signs, however, that the zinc market may be headed toward better times. With prices so low, other zinc mines are closing and taking production off the market, Glavinovich said. By mid-2003 prices may be recovering, he said.Meanwhile, Teck Cominco Inc., operator of the big Red Dog lead and zinc mine in Northwest Alaska, has reported operating losses at Red Dog. Estimates are $30 million, according to sources in the mining industry."That’s a big loss for Red Dog," said Steve Borell, director of the Alaska Miners Association. "The mine won’t shut down, but they have to cut costs as much as possible." It will also chill Teck Cominco’s ambitious plans to develop new ore deposits and mines in the area, Borell said.Glavinovich said Cominco is unlikely to shut down production at Red Dog, despite the loss, because the costs associated with suspending operations would be very high."They would have to shut down for several years to really save any money. A one-year shutdown wouldn’t do them much good," he said.The company intends to stick to its goal of producing 1.1 million tons of zinc concentrate in 2002, Glavinovich said.An uptick in gold prices may help the company at a new project in eastern Interior Alaska, the Pogo gold mine. Pogo is still in its permit-seeking phase, and Teck-Cominco is now working on additional modeling of possible water discharges, according to Carl Hanneman, manager for the Pogo project.Pogo, 38 miles from Delta, east of Fairbanks, would be an underground mine if developed. The mine has an estimated 5.5 million ounces of gold resource. Using a 0.1 ounce per ton cutoff, the mine has an estimated 9.9 million tons of ore.Pogo has an upside potential because the resource estimate does not include gold from a new ore body discovered below two others that have already been explored. Construction costs at Pogo are estimated at $250 million.Production continues at the Fort Knox gold mine near Fairbanks, which set record levels for gold output in 2001 with additional ore from a nearby gold deposit, True North, that is now being mined.Fairbanks Gold Mining Co., a subsidiary of Kinross Minerals and owner of Fort Knox, is planning the development of two additional adjacent ore bodies. The recent upswing in gold prices will help Fort Knox.The Greens Creek Mine in Southeast Alaska also set record production volumes in 2001 and production continues at high levels.Greens Creek benefits from its mixture of metals, mainly silver, gold and zinc. While zinc prices are now low, gold and silver prices are higher, which helps the profitability, Glavinovich said.There were times when zinc prices were higher and gold and silver was down, and zinc helped Greens Creek’s bottom line, he said.Borell, at the Alaska Miners Association, said several factors have converged to help boost the gold market.The most important is that European central banks have completed a series of sales of gold bullion that had been conducted over several years, and which depressed the market, he said.Second, gold buying in Japan is in a sharp upsurge. The government there recently changed the way it backs bank savings and other securities, and more Japanese are investing in gold as a financial hedge.With an uptick in the market, mining companies are also cutting back on advance sales of gold production, a technique used to secure a set price. That effectively takes future production off the market.The upturn in gold buying is not so much purchases of gold bullion but increased investment in gold mining companies and mutual funds specializing in gold mining stocks, Borell said.That’s good news for mining companies trying to raise capital for exploration in Alaska, he said. The "junior" mining companies, which are very aggressive in exploration, traditionally raise exploration capital through equity offerings.They also work in partnerships with major mining companies, Borell said. With gold prices up, the major mining companies have more cash to invest, and the result is more exploration activity.

Selling home on your own can prove costly

Late night television and local radio programming is rife with infomercials and advertisements touting how easy it is to buy and sell your houses, buildings and businesses all by yourself and save staggering amounts of money to boot.They can be rather insulting to those of us in the real estate industry because they attempt to make us sound unnecessary, unethical and expensive.But the fact is, you really can do it yourself successfully.Cynically speaking, however, you can also fix your own car, generate your own electricity, defend yourself in court, trade your own stocks and never visit a doctor. You could probably do your neighbor’s job too.One day, when everything is perfectly computerized and digital, you probably won’t need a real estate agent. But for now, for the rest of us, we need the help, and that help is going to cost us.So, before you go spiraling off in your declaration of independence, ask yourself, "If it’s really so easy, then why aren’t all real estate transactions conducted without an agent?"You might also ask yourself if you would want to eliminate the real estate agent and take on all of his or her responsibilities when you are already bogged down with your own life in general, and especially if you haven’t done it enough to do it right or do it well?Then, listen closely to your answers because we professionals in the industry are often patching up real estate transactions gone sour behind the well-meaning do-it-yourselfers. Keep in mind that I’m referring to all professionals in the industry including agents, attorneys, loan originators, title officers, processors, surveyors, tax assessors, appraisers and inspectors. But I’m referring specifically to the agent because he or she is the center in this wheel.Nationally, only three to five of every 100 home sales consists of successful "For Sale by Owner" transactions. The vast majority of those that attempt it end up hiring an agent within the first 30 days after they have realized the true cost, time and demands required for marketing and showing a home.Locally, the statistics indicate 15-17 percent of FSBOs are successful. While there are a lot of reasons for this, one of the main ones is that we have a robust seller’s market with relatively low inventory. This can be quite tempting for sellers to strike out on their own because it looks easier than it is. But even the owners that sell their own homes usually sell to a buyer who has an agent paid for by the seller.The truth is that the vast majority of all real estate transactions are completed with agents involved on at least one side of the sale, and for this reason, most transactions go very smoothly. But sometimes they don’t.One recent seller took the advice of a local FSBO program on pricing his home. Several programs will give you limited service for a set fee. He put an ad in the paper and sold it within three days. When the appraisal report came back he learned that he priced his home too low but was still committed to that price.Sure, he might have saved 6 or 7 percent in brokerage fees but he lost a lot more than that to the happy buyer because his FSBO consultant didn’t know the market well enough.In a similar incident, a very excited couple heard of a perfect home on the market For Sale By Owner in their neighborhood. The sellers told them that they didn’t want to pay any brokerage fees and proceeded to negotiate down the asking price by $9,000, which made the buyers feel special. A market analysis revealed that the starting price was already about $10,000 too high. And yet, it’s going to be sold at the same market price to the buyers whether or not they have an agent paid by the seller.Recently a buyer made an offer on a duplex that was accepted with a counteroffer to increase the earnest money. Both buyer and seller agreed verbally and the only thing lacking was the buyer’s signature on that change. In the meantime, the seller sold the duplex to a second buyer to get a higher price and quicker closing. He now has two accepted offers on the same property at the same time. Which party in this potential lawsuit would you like to be?Not all sellers innocently try to save money on real estate commissions. Some choose to "overlook" disclosing pertinent and sometimes legally required information to buyers because doing so might lower the final sales price or prohibit a sale indefinitely because they can’t afford to fix a deficiency. How would you protect yourself without the watchful eye of an expert?Agents usually take on quite a bit of risk in marketing your house for sale or driving you around looking at homes to buy. They pay for everything up front and often don’t get paid until the day it is recorded, which makes him or her, actually, quite a bargain.On the other hand, you could do it yourself.Ken Jelinek is an associate broker with RE/MAX Properties in Anchorage. He can be reached at 907-257-0196.

Railroad should weigh safety before removing cabooses

On April 7 the Alaska Journal of Commerce published an article reporting the Alaska Railroad’s plan to phase out the use of cabooses and the employees who staff them. The article, which relied exclusively on quotes from railroad’s management, left a number of false impressions, and is inconsistent with earlier railroad press statements.Following the Gold Creek derailment, Bill Sheffield, then chief executive officer of the railroad, along with Ernie Piper, who was quoted extensively in the Journal article, went to Juneau and placated the Legislature by promising to put cabooses on fuel trains. They made good on their promise and there have been no derailments of fuel trains with cabooses.The one derailment we are aware of since then was a train without a caboose.Despite what the article said about the planned future technology which the railroad will use to ensure and enhance safety, the fact is that the technology being utilized by the railroad right now is the same technology that was in place at the time of the Gold Creek derailment.Based on that alone, the railroad’s decision to phase out cabooses is, essentially, a decision to accept increased levels of risk in return for decreased operating costs. Unfortunately, the risk is not only to the railroad but to the general public.The primary hazardous substance being transported is fuel, and, if it is spilled, it affects Railbelt communities and waterways by putting hydrocarbons in the water table and in the rivers. Hazardous waste is harmful to fish and people.We have been told by the Alaska Railroad that, with respect to ton miles traveled, Alaska has the highest percentage dedicated to hazardous materials of any railroad in the country. The argument that other railroads have seen fit to dispense with cabooses should be considered in the context of the risks that those railroads faced when they did it.If we have more ton miles of hazardous materials than any other railroad in the country, it makes sense that we would be more cautious about removing cabooses.The article states that the railroad has a $60 million program to replace 694 manual switches. That is not how we understand the program. Our understanding is that the $60 million will be spent to create new sidings every 20 miles along the track corridor, and the sidings will be operated with automated switches.At present, the railroad has exactly one siding that is operated with automatic switches. The siding is at Hurricane and is not fully reliable. Employees who use the switch have stated that the amount of time when the switch is not functioning properly is between 40 and 60 percent. None of the employees of the Alaska Railroad would bet their future on automated switches.The railroad analogized cabooses to the canary in the coal mine. We presume that the canaries were not removed from the coal mines until the technology that replaced them was installed and reliable. Our concern about the railroad’s proposed elimination of cabooses is that the technology that will effectively replace a caboose is neither installed nor reliable.Again, removing the caboose simply increases risks. We understood after Gold Creek that there really wasn’t an acceptable level of risk when it comes to dumping fuel into salmon streams. What’s different now?Why does a caboose make a train more safe? The railroad has already acknowledged that it adds additional sight and sound monitoring to the traveling train. Furthermore, railroad employees will tell you that sense of smell can be critical. Railroad employees often smell trouble before they see it or hear it.The railroad stated in the April 7 article that it currently uses cabooses on its work trains and on long gravel trains where an extra set of eyes and ears is preferred for monitoring the cars ahead. A long gravel train is in the neighborhood of 75 cars and stretches about 4500 feet.In current negotiations, the railroad has indicated its intent to run fuel trains as much as a mile long with no cabooses. Apparently, an extra set of eyes and ears in a caboose is not preferred in those situations. Obviously, a gravel train derailment is a safety issue, but it’s not the kind of environmental disaster we had at Gold Creek.Historically, a caboose was required under labor agreements between the Alaska Railroad and the railroad union. That is no longer the case. The railroad union’s contract does not require the use of a caboose on any train. The contract does establish a crew size which varies from train to train. The union has expressed a willingness to reduce the mandatory crew size, currently three, on those trains that now require it if it is done over time and if current employees receive adequate protections.The parties are at impasse over wages and benefits and mediation is planned. In the meantime, to the extent the railroad is asserting that the elimination of cabooses and the reduction of railroad crews can take place in the immediate future with no decrease in safety, the union believes, very strongly, that it is simply not true. In Alaska, crew size and cabooses mean safety.It should not take another Gold Creek disaster before this is fully and completely understood. And just because the leadership and control of the Alaska Railroad has changed, it should not be forgotten.Mike Weatherell is general chairman of the United Transportation Union. He can be reached at 907-279-7117.Editor’s note: In preparing our report on cabooses, the Journal placed a call to the United Transportation Union but it was not returned by our deadline.

Senators consider highway funding option

JUNEAU -- The heads of the state transportation departments in New Mexico and Colorado assured Alaska senators April 11 that so-called GARVEE bonds are a prudent way to accelerate major transportation projects.GARVEEs, or "grant anticipation revenue vehicles," are debt that is repaid with a state’s annual stream of federal highway funds. It allows projects to get built sooner than the traditional method of waiting for federal funds to be awarded.The administration of Democratic Gov. Tony Knowles has proposed a GARVEE package of about $400 million.The state would use about 10 percent of its annual $400 million in federal highway funds, or about $40 million, to make payments on the debt.The House passed the GARVEE bill last year. But the reception has been cool in the Senate, partly because of concerns raised by the Associated General Contractors of Alaska about the experiences with GARVEEs in New Mexico and Colorado.At the April 11 hearing, the Senate Finance Committee heard a ringing endorsement of GARVEEs from Pete Rahn, secretary of the New Mexico State Highway & Transportation Department, and Tom Norton, executive director of the Colorado Department of Transportation. Both were appointed by Republican governors."We believe it’s been a phenomenal investment for the state of New Mexico," Rahn said by teleconference from New York City. "We’re exactly -- I want to reiterate, exactly -- where we wanted to be six years ago when we undertook this process. ... New Mexico contractors have had more work than they’ve ever had during their lifetimes."While "a vocal few" contractors have been worried about fluctuations in work and about out-of-state competition for big projects, Rahn said his primary concern is for taxpayers. By building a 118-mile, four-lane highway all at once, thanks to GARVEEs, New Mexico cut costs from $1.3 million per mile to $700,000, he said."Use bonding as a financial and management tool to make your program move in a better, more efficient, more effective way," Norton urged the committee. He called it "the most conservative financial approach."But Dick Cattanach, the executive director of Alaska’s AGC, said he remains opposed to GARVEEs."DOT is barely able to manage the project level that currently exists," Cattanach said. "Passing this bill will not change that problem. We have to find a mechanism to get the project through DOT and on to the street."Joseph Perkins, state Department of Transportation & Public Facilities commissioner, responded that the department has spent the full federal funding every year, indicating that there were no potential projects left behind.As for GARVEEs, Perkins said the ultimate test is the financial market, which has been willing to buy GARVEEs issued by several states.But Cattanach called GARVEEs "a zero sum game" that merely moves projects forward without increasing the total over time. "Do all of these have to be accelerated? ... We’re creating artificial peaks and valleys."The federal funding for Alaska isn’t secure, Cattanach said.At a time when President Bush has been pushing for reductions in the federal highway program, Alaska gets $6 for every $1 it pays in federal gasoline taxes, the best ratio in the nation, he said. "The fact that we get six times what we pay in is an issue of contention with other states."Frank Dillon of Anchorage, executive vice president of the Alaska Trucking Association, supported GARVEEs in general but said some projects would be better funded through general obligation bonds that go to a public vote.

Korean coal talks proceed

Talks between Usibelli Mines Inc. and Korean utilities that purchase coal from Alaska are continuing. Meanwhile, Japan is showing some interest in the coal."We hope a successful conclusion is reached, so our coal exports to Korea will continue," said Greg Wolfe, head of the state’s Division of International Trade.The customer for Usibelli’s coal, Korea Electric Power Co., has been partially privatized and split into several regional power companies, Wolfe said. That means coal purchases are no longer coordinated through one company.Meanwhile, the state has been approached by potential new Japanese customers for coal, he said."Over the last six to nine months we’ve had inquiries from both major Japanese trading companies and industrial end-users about possibilities of purchasing coal," Wolfe said. "It’s the first time in years that we’ve had interest from Japan."Wolfe could not disclose the identify of the potential purchasers.Last year Usibelli mined 1.54 million tons of coal from two producing coal deposits at its mine near Healy, the Poker Flats and Two Bull Ridge pits.About 699,000 tons of coal were exported to Korea last year. The coal was shipped by rail to Seward and loaded on bulk coal carriers for ocean shipment.Usibelli’s Poker Flats pit is almost exhausted, with reserves for only two more years of production, according to a recent report published by the state Division of Geology and Geophysical Surveys. But development work at Two Bull Ridge pit is almost complete, and permits for development of the nearby Rosalie deposit are expected soon, the report said.

Council adds Gulf of Alaska communities to IFQ program

ANCHORAGE -- Federal fisheries managers April 10 granted entry to Gulf of Alaska communities into the lucrative halibut and sablefish quota share program previously available only to individual fishermen."These communities have been shut out of the fishery," said David Benton, chairman of the North Pacific Fishery Management Council."They’re down on their knees. They need help, and we are going to try and make it happen."The council’s vote was unanimous.The program, not expected to be effective for at least 18 months, will apply to 42 communities, from Metlakatla to Sand Point. Each has a population of fewer than 1,500 people, no road access to larger communities, direct access to saltwater, and a documented history of participation in the halibut and sablefish fisheries."All they are trying to do is carve out a living," said council member Robin Samuelsen of Dillingham. "They’re not trying to get rich."Samuelsen said the downturn of wild-salmon markets and the oil industry, coupled with little tourism, has left coastal communities in dire economic shape. "What’s happening to people in coastal Alaska is like going into the rainforest with a bulldozer," he said."If we don’t get any help, our community is going to die," said Carl Christianson, one of several residents of Old Harbor who testified. Christianson said fishing revenues in his village are so poor that his son can’t even make payments on his boat.Duncan Fields, representing the Gulf of Alaska Coastal Communities Coalition, has been working with the council for four years toward a community quota share plan."I believe that this is exactly what the halibut and sablefish (individual fishing quota) program was intended to do," Fields said."The community purchase provisions are not a departure from the principles of the existing program but a further refinement of the current program."

Business Profile: Harding ESE Inc.

Name of the company: Harding ESE Inc.Established: 1969Location: 601 E. 57th Place, AnchorageTelephone: 907-563-8102Major focus of services: In Alaska the company’s services include civil engineering, environmental investigation and remediation, transportation planning and design, environmental planning and permitting, solid waste facility planning and design, geotechnical engineering and construction administration, inspection and testing.History of the company: The firm opened its Anchorage office in 1969 as Harding Lawson Associates, providing geotechnical engineering services mainly for the oil and gas industry. In 1987 the company began offering environmental investigation and remediation services. Other services were added later, including transportation engineering, environmental planning and construction administration.The firm opened a Fairbanks office in 1999. In October 2000, Golden, Colo.-based MACTEC Inc. purchased Harding Lawson. MACTEC’s other companies included Environmental Science and Engineering. Harding Lawson and ESE were combined to form Harding ESE. MACTEC employs 4,300 people and operates 118 offices in the United States and Puerto Rico. In Anchorage MACTEC also operates an office specializing in technical service staffing.Harding ESE employs 25 people in Anchorage and six in Fairbanks.Current projects in Alaska: Harding ESE is designing Mountain Village airport improvements plus preliminary engineering and environmental assessment for the Copper River pedestrian and bicycle path, both for the state Department of Transportation and Public Facilities. The company handles projects around the state including remediation of North Slope reserve pits for the oil and gas industry and environmental compliance support for Alyeska Pipeline Service Co. Another project is a joint venture with Anchorage’s Wilder Construction Co. for demolition and site restoration of a Tok fuel terminal for the U.S. Army Corps of Engineers. Harding ESE’s Alaska staff have spent two years designing projects in Saipan, an island in the South Pacific, and now are handling construction administration for a new solid waste landfill and transfer station there.Top accomplishment of the company: The Alaska staff has been nominated for the Corps’ construction contractor of the year for a joint venture with Wilder Construction. Paul Ramert, Alaska managing principal, also praised Harding ESE’s ability to adapt to changes and growth.Major players: Paul Ramert, Alaska managing principal, and Jason Ditsworth, senior project engineer, Harding ESE Inc.Ramert is a lifelong Alaskan and civil engineer. He started at the company 15 years ago and has held several posts before being appointed to his current title. Ditsworth, senior project engineer, has lived in Alaska for 16 years and has worked seven years at Harding ESE. He is a chemical engineer by training and a registered civil engineer.-- Nancy Pounds

This Week in Alaska Business History April 21, 2002

Editor’s note: "This Week in Alaska Business History" revisits events that shaped our past."Those who cannot remember the past are condemned to repeat it."-- George Santayana, 1863-195220 years ago this weekAnchorage TimesApril 21, 1982Interstate banking bill OK’d in Houseby Bill WhiteJuneau - A bill to let Outside companies own Alaska banks passed the House on Tuesday night after extensive debate about whether banks should be subject to the state’s antitrust law.The approval on a 35-5 vote makes an end run around a similar measure mired in a Senate committee.Rep. Terry Martin, chairman of the House Labor and Commerce Committee, said a banking lobbyist approached him last week to see if his panel would consider tacking the measure onto a bill about savings and loan associations that has already won Senate approval.Under legislative rules, the revised bill would go to a joint House-Senate conference committee.Martin held two hearings on the bill and sent it to the full House on Monday.If the bill receives final passage, Alaska would be the first state to allow full-scale interstate banking.Anchorage TimesApril 21, 1982ARCO to trim Alaska spendingCapital Investment still to set recordby Dave CarpenterFacing a softening world oil market, Atlantic Richfield Co. said Tuesday it will be affected significantly, since domestic oil and gas exploration and production accounts for nearly two-thirds of the ARCO budget."There will be cuts in Alaska, but I don’t think as much as in other areas because of the long lead time involved," said Susan Andrews, ARCO Alaska Inc. spokeswoman. She said there’s "no way" to slow work at this late date on construction modules that will be shipped north for Prudhoe Bay and Kuparuk development on the North Slope this summer.Robert Wycoff, executive vice president for Atlantic Richfield’s oil and gas group, acknowledged earlier this week that the company "won’t be quite as aggressive" in developing the new Kuparuk field.No Alaska figures were immediately available, said Wycoff. "We’re spending an enormous amount of money up there (in Alaska), and we will continue spending an enormous amount."10 years ago this weekAlaska Journal of CommerceApril 27, 1992Alaska Seafood Center is proposedBy Ed BennettFor the Alaska Journal of CommerceTwo vastly different proposals which, if successful, could bring more of the fishing industry’s dollars into Anchorage, are quietly moving forward. But neither project is certain, and one of them, the Alaska Seafood Center, would require $50 million in state-backed revenue bonds for funding.The Alaska Industrial Development and Export Authority has requested authority to issue those bonds as part of its annual budget process in the Alaska Legislature. AIDEA must get legislative authorization for all loans exceeding $10 million. According to AIDEA spokeswoman Katelyn Carrigan, the $50 million authorization is currently in the House version of the agency budget but not in the Senate version. She said there has been no opposition.According to a summary of the project provided to AIDEA by the developers, the Alaska Seafood Center proposal would cost a total of $146.4 million. Of that, $62.7 million would be spent to build a 245,000-square-foot building to house five processing lines, a cold-storage locker capable of storing 45 million pounds, and related facilities. The developers claim 450 jobs would be created by the project.Alaska Journal of CommerceApril 27, 1992Joint venture with Russians hopes to clean up their polluted environsBy Margaret BaumanAlaska Journal of CommerceAurora Borealis, a joint venture of Russian and Alaska firms, hopes to begin this summer to slow massive pollution from Russia’s oil industry, officials say.The joint venture of Environmental Services Limited of Anchorage and the Russian geological enterprise Polaruralgeology has been negotiating a contract with the Jarega Oil Mine, near Ukta in the Komi Republic, to treat wastewater from the facility, said Jim Kross, president of ESL."We’ve got a final plan to treat the wastewater from this facility," he said. The facility produces 15,000 metric tons of wastewater a day from the complex."It will take two years to do the construction for what the joint venture hopes will be the first of a series of projects," he said.-- Compiled by Ed Bennett.

New radar system will detect icebergs

New iceberg-detecting radar is being built for Prince William Sound, near ground zero of the nation’s worst oil spill.The $1.3 million radar system, slated to start operating later this year, will allow the U.S. Coast Guard and shippers to better track ice calved from the Columbia Glacier. The glacier for the past 30 years has been retreating rapidly and producing icebergs in Valdez Arm and Prince William Sound, threatening tankers loaded with crude oil that are departing the trans-Alaska oil pipeline terminal in Valdez.Ice was believed to be a contributing factor in the disaster of the Exxon Valdez, which altered its course because of ice in Valdez Arm. The tanker ran aground in 1989 on Bligh Reef in Prince William Sound, spilling some 11 million gallons of Alaska crude oil."This will advance safety tremendously," said Cmdr. Payton Coleman, commanding officer of the Coast Guard’s marine safety office in Valdez.Currently, the Coast Guard and shippers rely on ice-related information passed on by mariners passing through the area, usually by radio. From that information, the Coast Guard determines whether a tanker ship can sail or if it is restricted to daylight-only voyages.About five times annually, Valdez Arm and Prince William Sound are closed to tanker traffic because of ice. Daylight-only restrictions because of ice in shipping lanes happens frequently, Coleman said.Ice reports from mariners are far from ideal, Coleman said."Sometimes the information is old," Coleman said. "Ships get out there and the ice is worse than expected."And tankers sometimes are needlessly tied up in port waiting for ice to clear when the ice has moved aside hours earlier.Ships’ radars can pick up icebergs and accumulation of ice but not at the level of exactness of the new system, which is under construction at Reef Island, about two miles east of Bligh Reef in Valdez Arm.A tower already has been erected. Electronic equipment and a new radar should be installed and operating this summer, Coleman said.Funding for the radar came mostly from federal funds with much in-kind support from state and federal agencies, shippers, the military and the oil industry.Alaska Tanker Co. shipped the tower from the Lower 48 free of charge. The Army used its helicopters to place it on Reef Island. Alyeska Pipeline Service Co., a consortium of oil companies that operates the trans-Alaska oil pipeline, is providing power to the island, Coleman said."Taxpayers are getting a great deal," Coleman said.Marilyn Leland, deputy director of the Prince William Sound Regional Citizens’ Advisory Council, said the project’s price would have nearly doubled without the support of the various agencies and businesses. RCAC is an oil- industry watchdog group funded by Alyeska.Leland said everyone involved believes the radar system will make shipping safer in Prince William Sound."It’s pretty cool," Leland said of the ice-detecting radar. "It’s a really good tool that will give real-time information on what’s going on out there with the ice." Coleman called the new system a "Cadillac" of radars. The system will enable the Coast Guard and shippers to see large pieces of ice or the accumulation of smaller bits."We’re not going to see every piece of ice out there," Coleman said. "It will give us enough data to make good management decisions."Chunks of ice, some weighing as much as millions of tons, calve from the Columbia Glacier. Coleman said the biggest pieces of ice are usually trapped by a moraine, which is the accumulation of rocks deposited from the glacier. The large pieces break into smaller bits, which escape into Valdez Arm and Prince William Sound. "We don’t get icebergs the size of shopping centers like they do in the North Atlantic," Coleman said, adding that the biggest are generally 30 to 50 feet long. "That’s plenty of size to be concerned about," Coleman said.While ice didn’t directly cause the Exxon Valdez disaster, it was a "contributing cause," Coleman said.The only other "major marine casualty" in the area directly related to ice was in 1994, when an inbound, unladen oil tanker sustained severe damage when it hit an iceberg while en route to the trans-Alaska oil pipeline terminal, Coleman said.Ice in the shipping lanes is projected to worsen, according to research published last year from the University of Colorado at Boulder. In findings representing 25 years of study of the glacier, Mark Meier, an emeritus professor at the university’s Institute for Arctic and Alpine Research, concluded that the Columbia Glacier will continue to increase its rate of recession during the next decade, possibly retreating as much as 10 miles and creating a new fjord.The glacier was 41.3 miles long in 1977 and was retreating 1.3 miles per year, according to Meier’s research. By 1999, the glacier’s length had decreased to 33.5 miles, but its speed at the terminus had increased to 5.5 miles per year, more than 80 feet per day.

Fairbanks fuel tax may go on special ballot

FAIRBANKS -- Supporters of a 2-cent-a-gallon fuel transfer tax initiative submitted more than 2,000 signatures April 10 to the Fairbanks North Star Borough clerk.Supporters say the tax would raise about $24 million annually that could be used to lower property taxes by up to 40 percent.Mona Lisa Drexler, borough clerk, will determine the validity of the signatures. Backers needed to submit 1,689 valid signatures. If Drexler determines there are enough signatures, a special election could be set for June.A group of Fairbanks and North Pole residents who call themselves A Bright Future For Fairbanks is behind the measure.Williams Alaska Petroleum Inc., one of two refineries in North Pole and the company potentially most affected by the tax, opposes the measure. Company officials say it would frustrate economic development in the community."It sets a signal that Fairbanks is willing to single out a given industry,"said Jeff Cook, a Williams Alaska spokesman.The company also says its jet fuel sales, from which tax advocates say the bulk of the tax proceeds would come, would be exempt by state law from the proposed tax. Tax advocates dispute that.Though Williams Alaska opposes the measure, it is one of the entities that would see the most property tax savings if the fuel transfer tax is approved. Alyeska Pipeline Service Co. and the Fort Knox gold mine are the other two.Meanwhile, the Borough Assembly may take up the issue and trump any special election.Assemblyman Tim Beck has said he will draft an ordinance for the assembly to vote on a fuel transfer tax if planning for a special election gets under way. He wants to save the borough the expense of a special election, which Drexler estimated at $32,000 to $36,000."If the assembly adopts something substantially the same, then the petition becomes void," said Drexler, the borough clerk. "There is no election then."

The Alaska Club co-founder heads up fitness association

A businessman who led banking institutions in Alaska and helped start The Alaska Club has been elected president of a worldwide fitness center association.Last month Tom Behan was elected president of the International Health, Racquet & Sportsclub Association. Based in Boston, the nonprofit organization represents health and fitness facilities, gyms, spas, sports clubs and suppliers. The association has more than 6,000 club members and 500 associate members, including all types and sizes of fitness clubs.Behan has served as one of nine board members for the past three years. He looks forward to the new role, an 18-month term which begins Jan. 1."For me personally it’s a tremendous opportunity to give something back to the industry that has given so much to me," he said. "I have the opportunity to work with people around the globe who have a similar passion for the benefits of health clubs."Compelling industry stories stand out in Behan’s memory, of people losing weight, lowering their blood pressure or boosting self-esteem.Behan is a partner and co-owner in The Alaska Club Network, which includes 13 facilities in Anchorage, Eagle River, Fairbanks, Juneau and Wasilla. From 1972 to 1984 he was president and chief executive of Alaska Pacific Bank. He was chief executive of the Alaska Housing Finance Corp. from 1988 to 1991.In 1986 Behan and another Alaska businessman, Andrew Eker, acquired the first Alaska Club location on East Tudor Road, formerly the Teamsters’ recreation center. They bought the Anchorage Racquet Club on Bragraw Street in 1989.The two men realized the merits of multiple locations and began a systematic expansion. In 1994, they bought the Fairbanks Athletic Club. By 1997 they had purchased the Alaska Athletic Club’s locations in downtown and Midtown Anchorage plus one in Fairbanks. That year, they opened a center in South Anchorage. Then, in 1998, the company bought two World’s Gym locations, one in West Anchorage and another in Eagle River.A Wasilla location was added in 2000. Last fall the company merged with JRC Inc., which operated two Juneau fitness centers, boosting its membership to 40,000. Earlier this year the company relocated its West Anchorage facility and added an adjacent center called The Alaska Club for Women. Today The Alaska Club employs more than 700 people.Although Behan said The Alaska Club has no immediate plans for further expansion, he said the company always considers possible upgrades.Many of the features at clubs, like group exercise classes and resistance training with weights, are also popular internationally, Behan said. Although most of the international association’s clubs are in the United States, the membership includes centers in Europe, Asia and Latin America.The trade association is active in public policy and lobbies lawmakers on health and small business issues.As association president Behan intends to practice business skills learned in Alaska, like encouraging top executives to participate in leadership."I think the strength of the management is incredibly important," he said.Behan now lives in Arizona and travels worldwide as an association board member. He credits The Alaska Club’s success to the efforts of Eker, now president, John Marchetti, vice president of administration and finance, and Robert Brewster, vice president of operations.

Subsistence plays economic role

The advisory vote in Anchorage on April 2 catapulted the issue of subsistence back onto the front pages of newspapers throughout Alaska. Subsistence has been a compelling and urgent issue in Alaska for well over 20 years.The word, subsistence, has become a lightning rod for a multitude of issues. These issues include Native rights, cultural tradition, both Native and non-Native, and psychological needs. The debates raging over each of these issues are important and meaningful. However, it seems that all too often the basic economic issues of subsistence are lost in the uproar.As a businessman, I like to look at subsistence simply from the perspective of economics and business. Subsistence is a primary "industry" throughout rural Alaska. It is certainly a part of the personal economy of many urban dwellers, but it is clearly a more important "industrial sector" in rural Alaska than in urban Alaska.In relative terms, subsistence has become much more important economically in recent years as the salmon and the forest products industries have cratered. The salmon industry has been the backbone of the private sector economy in village Alaska for generations, and the current devastation in that industry is truly breathtaking.A friend of mine from Dillingham recently told me that salmon prices for the 2002 season will be just about the same as they were in 1965. At the same time, the cost of boats, equipment and fuel have probably gone up 10 times. Additionally, many fishermen have significant debt from loans they took out to purchase limited-entry permits. It is not uncommon for fishermen to owe $150,000 on a loan used to purchase a permit that now has a market value of $25,000In the face of this level of devastation, it is important that Alaska public policy makers do everything they can to shore up the private sector economy of rural Alaska. Government programs that funnel dollars into the Bush can help, but what we really need is self-sustaining, truly private- sector economic activity. From my perspective, nothing fits the bill like subsistence. This industrial sector is very attractive for several business and economic reasons: It requires a relatively low level of capital investment - the cost of a boat or a snow machine versus the cost of a factory or an oil well; There is a highly skilled and motivated local-labor force that is available to do all of the required work; This industrial sector produces 100 percent value added; subsistence is a process in which a local raw material such as a moose is harvested, processed and distributed to the final consumer with no need for additional value added from anyone outside of the village; and The resource base is sustainable.Our state government needs to do something to respond to the full-fledged rural economic apocalypse that is now occurring, just as government always responds in times of acute crisis. It is important, though, that we respond to the crisis in a fiscally conservative fashion.We can’t afford to throw dollars at hare-brained ideas for rural development. We should take a very businesslike approach and support those things that have been proven to work.Subsistence, more than anything, has been clearly proven to work as an economic system. What we need to do as responsible Alaskans is to give a clear preference for rural harvesters of subsistence resources when there is not enough to go around to everyone. This action would have huge economic benefit and such a law would not require the expenditure of a single dollar out of the strained state coffers.My personal belief is that this subsistence preference should go to anyone who participates in the life and economy of a rural community, regardless of ethnic background. This perspective makes sense for people who look at subsistence as an economic system.Because subsistence is so economically attractive, I am in favor of not only preserving it but also expanding it. I don’t necessarily mean that subsistence users should go out and take more fish or game. What I mean is that we should develop an integrated state and federal natural resources policy that promotes the development of self-sufficient local economies. This type of integrated public policy might result in specific programs such as the following: Each villager has the right to harvest a certain number of house logs from state or federal lands. Government subsidized rural housing contracts will contain a huge preference for contractors that use locally harvested logs. This same preference would apply to the selection of contractors for schools or community buildings. Health regulations that prohibit the commercial production of traditional smoked salmon strips in villages would be eliminated. I have never heard of a single case of anyone ever getting sick from eating village-produced strips. Home heating-oil subsidy programs for low-income families would be modified so that a subsidy would only be provided for the purchase of locally split cordwood in communities that have a local wood supply. Small-scale placer mining operations that employ village workers would be exempted from certain onerous environmental regulations.Instead of fearing subsistence, we should embrace it as a wonderfully efficient economic system that provides a powerful tool for responding to the economic crisis in rural Alaska. If you remove the emotion and politics and look strictly at the economics, subsistence is a system that should warm the hearts of both tight-fisted conservatives and bleeding-heart liberals.David Hoffman is president and chief executive of Alaska Growth Capital. He can be reached in Anchorage at 907-349-4904.

Gasification could drive development of coal

Alaska’s coal resources are immense. Forty percent of the nation’s coal is estimated to be in Alaska, the vast bulk of it on the North Slope.Much of this will remain inaccessible and undeveloped for years to come, but several billion tons are accessible and could be developed as markets develop on the North Slope and in Interior and Southcentral Alaska.Cost and logistics pose tremendous hurdles, but potential developers have some new and innovative approaches.Arctic Slope Regional Corp., for example, is working with Teck Cominco Inc., operator of the Red Dog Mine north of Kotzebue, on a possible mine-mouth power plant at a coal deposit ASRC owns 90 miles north of the mine.Teck Cominco is interested in new sources of power for a future expansion of mining activity in the region and a possible new ore processing technology the company is developing.The plans are delayed, for now, because recent low zinc prices have slowed the mining company’s plans for expansion, but ASRC and Teck Cominco continue to work on the power plant.A power plant could help get an Arctic coal mine into production, paving the way for exports of coal from the region.Meanwhile, across Cook Inlet from Anchorage lie 2 billion tons of coal, enough energy to fuel the Alaska Railbelt electric grid for hundreds of years.The coal in the Beluga coal field has been known for decades. Tens of millions of dollars have been spent on exploration, development planning, environmental work and permitting. Despite all that, the coal remains in the ground.However, the owners, the Texas-based entrepreneurs, William H. Hunt and Richard Bass, and Placer Dome, a major mining company, would like to see the coal developed and are working on multiple approaches. One is to follow the ASRC strategy of developing a coal mine to fuel electrical generation. That promise is enhanced as the cost of natural gas rises.If natural gas is priced at $2.25 to $2.50 per million British Thermal Units, coal sold for $1/MMBtus to a new coal-fired power plant could generate electricity for about the same price to the consumer, according to Bob Stiles, president of DRVen Corp., which manages the Chuitna coal project in the Beluga coal field west of Anchorage for its owners."Chugach Electric is already paying about $2 to $2.25, so we’re getting close to where coal is a competitive option," Stiles said.The more intriguing possibility, however, is a plan that would bypass the need for a conventional coal-fired power plant through gasification of the Beluga coal, so that it could be used in the existing Chugach Electric power plant at Beluga.Stiles’ group is studying that option. The natural gas-fired turbines at Beluga would need some modification but none insurmountable.A side benefit is that the coal gasification unit could be matched with a modest gas-to-liquids unit that could make 5,000 to 10,000 barrels per day of "clean" diesel fuel, soon to be required in Alaska. The two systems would work well together because the gas-to-liquids unit would provide an outlet besides the power plant for coal gas. The unit could absorb the swings in seasonal gas demand for power generation.The U.S. Department of Energy and its consultants are researching the gasification and gas-to-liquids combination. Stiles believes it holds promise not only in Beluga but also the huge, isolated coal deposits on the western North Slope.

Pages

Subscribe to Alaska Journal RSS