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.

Stevens seeks 'consensus on ideas' to help ailing fishing industry

KODIAK -- "If I’ve stepped on some toes today, it was intentional," said Alaska Republican Sen. Ted Stevens in his final remark to a gymnasium full of rapt listeners at the recent salmon summit in Kodiak.As keynote speaker for the day-long event that focused on the state’s ailing salmon industry, Alaska’s senior senator told the 40 summit participants and audience of about 200 that he would do all he could to help, but he made it clear that it’s up to Alaskans to get the job done."My purpose in coming here today as your senator is to ask for your help," he said. "Your congressional delegation needs your consensus on ideas. We want to assist you on any good ideas that promote change and benefit Alaska’s coastal communities."Stevens said everyone is painfully aware of the fights between fishing groups and the "blood feud" between harvesters and processors. "The brutal truth is that our coastal communities cannot survive unless we decide to work together for a common goal and use our strong sense of Alaska community to find solutions that will restore health to our fisheries," he said."Anything I say is meaningless if our communities are divided and Alaskans refuse to work together. We are too small to combat the global forces we face if we are fractured into small groups with no common vision."It is now common knowledge that the dramatic growth and glut of farmed salmon during the past 15 years has marginalized Alaska’s wild-fish production and has taken away traditional markets.Stevens said the crisis in the salmon industry has crept into our lives slowly - by changes in globalization of national economies, rapid transportation that moves goods across borders with greater frequency, and advances in fish farm technology."None of us can reverse those forces," he said. "But my great hope is that Alaska will be able to change with these times. This will take vision, courage and, above all, discipline. Our future depends on creation of more markets for high-value Alaska fish products. Our goal must be to have Alaska fish available and on the menus of every city in the nation and ultimately in every major market of the world."Stevens said he has been talking with U.S. Department of Transportation officials about creating a system of regional airports that will ensure rapid access to transcontinental and international transportation for all fish products. He is also discussing ways to develop new packaging and marketing systems for Alaska seafood because "we have fished for and packaged our seafood in almost the same way for decades."Stevens said the first barrier is lack of knowledge about customers and distribution systems. The second barrier, and perhaps the most difficult to conquer, is resistance to change.For the short term, Stevens said several concepts can be pursued at the federal level to add stability while Alaska moves toward market independence. The congressional delegation will seek seed money to develop markets for high-value fish products and to identify and create new products.Second, they will try to increase federal purchases for schools and other institutions.Third, the delegation can strengthen the fishery finance program within the federal Department of Commerce for low interest, direct loans to fishermen and processors to modernize equipment for high-value production."I become increasingly angry over the way Congress responds to fishing communities," Stevens said. "We now fund almost $7 billion in agricultural assistance to farm communities, yet our nation’s fishermen are barely afforded access to low-interest loans, which we routinely pay back."Regarding long-term solutions, Stevens said, "I ask you to consider certain principles when formulating your ideas. Any proposals should foster the ability to bring local, small-boat fishermen into developing markets with fish products they can realistically hope to market. In other words, proposals should have a sense of community built into each concept."Stevens cautioned: "My guiding principle in working with you remains the same. This is not a political issue. Anyone who tries to put politics into seeking these solutions will fail."In closing, Stevens said that he believes part of the long-term solution for Alaska’s seafood industry might stem from strange bedfellows - the Arctic National Wildlife Refuge and natural gas. These developments will create a substantial revenue base for Alaska, and Stevens suggests designating part of the money to the protection and enhancement of fisheries."The day will come when oil and gas revenues will not be available," Stevens said. "When that occurs, we will have our permanent fund, but we should also have in the meantime dedicated funds for preserving and protecting the revenue base of this state forever, and that is the fisheries resource. It is the resource that will sustain our state far into the future."Kodiak-based free-lance writer Laine Welch can be reached via e-mail at ([email protected]).

Higher oil prices reduce, but don't eliminate gap

JUNEAU -- Higher-than-expected oil prices have trimmed the state’s recurring budget deficit but not enough to avert a fiscal meltdown in 2004, according to the spring revenue forecast.The Department of Revenue projects North Slope oil will average $20.50 per barrel in fiscal year 2003, which begins July 1, and $19.50 per barrel in fiscal year 2004. That’s compared to a historical average of $17.50. The 2003 projection is up $1.70 from the department’s fall forecast.Oil is the revenue source for nearly 80 percent of state general fund spending.Assuming stable budgets, the department now expects the fiscal gap to come in slightly under $1 billion in 2003 and slightly over in 2004. The Legislature, without new revenue, could plug those gaps by drawing from the dwindling Constitutional Budget Reserve."At those projections, the budget reserve will run out of money in October 2004," said Wilson Condon, Revenue commissioner, in a written statement. "The higher (oil) prices are certainly good news, but they reduce the total three-year draw from the budget reserve by only $143 million for fiscal years 2002-04."

Around the World April 21, 2002

STATEFairbanks mine, State seek reversal of orderFAIRBANKS -- Fairbanks Gold Mining and the Alaska Department of Natural Resources have asked that a Superior Court judge reconsider his request for an economic impact analysis of the True North gold mine.Both parties say that DNR performed a study of the mine’s economic impact prior to issuing the mine’s right-of-way permits."We feel that DNR did a good job," said Tom Irwin, vice president of Fairbanks Gold Mining. "DNR will put together an appropriate packet of response to prove it."Superior Court Judge Charles Pengilly told the state to conduct the economic analysis of the mine in a decision handed down late last month. The group Neighborhood Mine Watch filed a lawsuit appealing the permits issued for the mine, located 30 miles north of Fairbanks.Pengilly asked DNR to address how noise and lights from the mine’s ore hauling trucks, which operate 24-hours a day, would affect tourism businesses near the mine.DNR said in its reconsideration request that, before it issued the permits, it acknowledged that aurora borealis viewing businesses would be affected by the light and noise of the ore trucks. The department called for such measures as moving the haul road away from the businesses, the request said.A third of Glacier Bay fishermen turned downJUNEAU -- The National Park Service has turned down more than a third of the people who wanted compensation for commercial fishing closures in Glacier Bay. But the agency expects some successful appeals and says it will pay out the entire $23 million in the compensation fund.A federal law in 1998 phased out commercial fishing in Glacier Bay. Today, only part of the bay is open for commercial fishing for three species and only by certain fishermen for the rest of their working lives.Congress later authorized $23 million to compensate fishermen, crew members, processing workers, businesses and communities that had made money from Glacier Bay fisheries.The applicants approved so far will be awarded about $20.25 million, leaving $2.75 million for any successful appellants, the park service said."We have a lot of appeals out there, so that gives us a few million to absorb some of the appeals," said Ronald Dick, who manages the compensation program for the park service.The bay is the centerpiece of Glacier Bay National Park and Preserve, and it was the source of about $2.4 million in seafood harvests a year, according to an economic study prepared for the park service. The bay’s fisheries were particularly important to fishermen and processors in small communities nearby, such as Hoonah and Pelican.Fish observer program extended through 2007ANCHORAGE -- Federal fishery managers voted April 15 to extend through 2007 a regulation requiring observers on groundfish vessels. The rule had been due to expire at the end of this year.The North Pacific Fishery Management Council also gave the National Marine Fisheries Service authority to station its own observers aboard the vessels and at fish plants that process North Pacific groundfish or halibut.The change will strengthen the relationship between NMFS and the observer companies to ensure sufficient management controls, according to the agency.NMFS observers could be sent out in addition to or instead of contracted groundfish observers. Allowing NMFS workers to act as observers also will help develop sampling projects, solve perceived sampling issues and create vessel- and plant-specific sampling profiles, NMFS officials said.Violations observed by NMFS staff aboard a vessel would be reported to the vessel captain, and could result in enforcement action, the same procedure now in place for the contracted observers.NATIONMarch consumer prices rise by just 0.3 percentWASHINGTON -- Consumer prices rose by a modest 0.3 percent in March despite sharply higher costs for gasoline and other energy products. Industrial activity shot up by the largest amount in two years.The latest snapshot of economic activity paints a picture of an economy on the comeback from a recession that began in March 2001.The advance in the Consumer Price Index, a closely watched inflation gauge, compared with a 0.2 percent increase in February, the Labor Department reported April 16. The latest CPI report was a better reading on inflation than the 0.5 percent rise many analysts were expecting.In another report, the Federal Reserve said industrial output at the nation’s factories, mines and utilities rose by a bigger-than-expected 0.7 percent in March. That matched the rise registered in May 2000, before the battered industry fell into a long slump.Reagan airport given green light for flightsARLINGTON, Va. -- With new security measures in place, Reagan National Airport has been authorized by the Department of Transportation to run the same number of flights that it did before Sept. 11."We believe Reagan National is one of the most secure, if not the most secure, airports in the country," said Bill Mosley, department spokesman, April 15.The new safety precautions include pre-flight screenings for aircraft crews, expanded police and canine patrols and random passenger checks with hand-held metal detectors.The department’s decision means the airport is authorized to restore service levels to those in place before the terrorist attacks, about 800 flights to 69 cities. Reagan had been the last commercial airport in the nation to face such restrictions.Other limitations remain in place, though. Planes with more than 155 seats are barred from Reagan because of the airport’s proximity to the capital, Mosley said, and a curfew restricts flights between the hours of 10 p.m. and 7 a.m.WORLDCorporate bankruptcies rise 5 percent in JapanTOKYO -- Corporate bankruptcies in Japan rose 5 percent in March, the third straight monthly increase, a private research agency said April 12.The number of bankruptcy cases in March amounted to 1,788 cases, according to the report by Teikoku Databank.For the fiscal year that ended March 31, bankruptcies rose 5.9 percent to 20,052 cases, marking the second worst year since 1984 when 20,363 companies failed, the report said.Japan is struggling to shake off a decade-long economic slump that began with the collapse of the property and stock prices in the late 1980s.Teikoku Databank also said that failures of companies listed on stock exchanges jumped to 21 in the most recent fiscal year from 15 the pevious year.General contractor Sato Kogyo, which collapsed with debt of 449.9 billion yen ($3.41 billion), and First Credit, which left behind liabilities of 260.5 billion yen ($1.97 billion), were among the largest listed company failures in March.-- Compiled from business wire services.

Commuter uses his plane to avoid traffic jams

On his daily commute between Big Lake and Anchorage, Bill Kramer barely has time to finish a cup of coffee."I have to drink it fast because it only takes 12 minutes," said Kramer, who for the past five years has made the five-day-a-week commute in his Cessna 185 or Super Cub.By automobile, the trip would take him an hour and a half one-way on a good day.That’s time he’d rather spend with his wife and three children.Kramer, owner of Industrial Roofing Inc. in Anchorage, said he and his family made the move to the Matanuska-Susitna Borough from Anchorage in 1997. The move was based on the quality of life there and his ability to aviate daily into Anchorage, he said."I wouldn’t do it if I lost three hours of my day to commuting," Kramer said.His home at Horseshoe Lake, about 3 miles west of Big Lake, has its own runway and lake access.His Cessna is on floats and wheels and his Super Cub is on skis and wheels, allowing him to fly in nearly any condition. He doesn’t have to scrape windows either, since he has a hangar at his home. He simply fires up an airplane, hits the garage door opener and off he goes.Kramer, 43, said commuting by airplane is not cheap, but it isn’t as expensive as most people think. He burns about 10 gallons a day in aviation fuel, which costs about $2.25 a gallon.That’s a bargain, considering the extra time he can spend with family and at the office. Plus, he said, flying is his passion.He believes it’s safer, too, since he does not have to drive on slick roads, dodge moose, or put up with road rage."I couldn’t handle the fingers flying and the aggressive get-out-of-my-way attitude of drivers," he said.There are a few other airplane commuters, but the only aircraft he normally sees on his daily commute is the radio station’s traffic plane, which is sponsored by Matanuska Maid and painted to look like a bovine with wings."That old milk cow is about the only one up there I have to miss," Kramer said.Below, along the Glenn Highway, Kramer can see the long line of traffic, which has gotten worse in just the few years he’s been commuting by air.According to state statistics, 8,000 people commuted by automobile between the Mat-Su area and Anchorage in 1999. By 2005, the study said commuters will swell to 9,500.Another 8,000 folks come in from Eagle River daily, and the study predicts that number to jump to 8,700 in four years.At Merrill Field, Kramer has a hangar and a truck, which he drives across town to his office, a trip that takes longer than his flight.Kramer praised Merrill Field for keeping runways open, free of snow and ice."I’ve never not been able to land there," Kramer said.With the skyrocketing growth in the Mat-Su area, Kramer believes more people will begin flying to work."As the area builds up, more people will be enticed to do it," Kramer said.

State gives OK for psychiatric facility

The state health and social services commissioner has granted approval for Providence Alaska Medical Center’s proposal to build a new $21 million psychiatric facility.Providence officials are considering several sites for the facility, which must be completed by the end of 2005."We’ve got a lot of planning to be done now," said assistant administrator Vince Huntington.Providence received notice March 28 of the commissioner Jay Livey’s conditional certificate of need approval following a review by the state health department.The project would expand Providence’s mental health services to meet community needs. It would also help the hospital deal with emergencies.The new facility will allow Providence to convert its existing 27 beds for mental-health services to medical-surgical beds. That would reduce the need to divert some emergency patients to other facilities due to a lack of rooms, said assistant administrator Susan Humphrey-Barnett.Diversions also can occur because of lack of staff, she said.Providence in Anchorage is certified by the state for 345 beds.Although Providence officials originally outlined a 60-bed facility in their certificate of need application, the state approved 52 psychiatric beds with space allotted but not completed for the remaining eight beds.Providence may license and operate those eight beds after the hospital maintains an average occupancy rate of 85 percent for two years in its beds for adolescents, state health officials concluded. They said they made the change to encourage less-intensive forms of treatment.Alaska lacks some psychiatric services that precede inpatient care, said David Pierce, state certificate-of-need coordinator. "Because those services are not there, (patients) get inappropriately placed in the hospital," he said."The purpose of this is to encourage development of lower-level services like residential care and different community-based options," Pierce said.The report cited a need for short-term residential care for children released from residential treatment centers who are adjusting to their homes and communities. "It is believed that this lack of service results in a large readmission into acute care," the report said.During the review of Providence’s proposal, the state said a key concern was the fact that more than 400 children are sent outside Alaska every year to receive residential psychiatric care.In fiscal year 2001, Medicaid paid for inpatient mental-health care for about 1,403 children and adolescents. Of that total, 758 were served in acute inpatient psychiatric facilities, 221 in residential care in Alaska and 424 in residential care outside the state.The state could see additional residential treatment services in the next two years. North Star Behavioral Health System is pursuing plans to build an 18-bed hospital and 60-bed residential treatment facility for children in Wasilla.Providence originally asked for a 60-bed psychiatric facility to treat children and adolescents, although discussions with the state led to including adult beds for designated evaluation and treatment services.The state approved the project for 18 adult-designated evaluation and treatment beds, 10 adult voluntary beds, 16 adolescent beds and eight beds for children.Providence administrators are pleased with the approval."We’re reasonably satisfied with the certificate of need," Huntington said.A construction timeline for the new facility is still in the works. In January Providence administrators were considering six sites near the Anchorage campus. However, more sites are under study, Humphrey-Barnett said.A site could be selected following negotiations with the Alaska Mental Health Trust Authority and the University of Alaska for land adjacent to the hospital, Huntington said.Although project completion is several years away, state approval marks a milestone for Providence officials."The real value of this is it’s a very key factor in the master plan," Huntington said. "It gives us options to expand the facility."

State sales tax would affect municipalities

If a proposed 3 percent statewide sales tax now being considered by state legislators is enacted, how would it work?As in other states with sales taxes, the tax would be automatically computed in transactions by merchants. In Alaska municipalities with sales taxes, the state would collect the combined taxes and send the local government a check for its share.It’s a convenient arrangement for businesses that is followed in most states with sales taxes. Merchants only have to fill out one sales-tax report."A 3 percent state tax would bring in about $240 million in new revenue at tops and maybe less," said Deputy State Revenue Commissioner Larry Persily.The tax would also cost about $3 million to $5 million each year to administer, according to estimates by the department.If the current version of House Bill 303 becomes law, the state will become the collector and administrator of the combined state and local sales taxes. Only the exemptions listed in the state measure will be allowed in the combined state and city tax, Persily said.In its current version, HB303 allows exemptions for only a few things, such as medicines, health care and some services, like construction. The proposed state tax does not exempt food. The portion of any transaction over $2,000 will be exempt from tax.The exemptions could become a problem for cities like Juneau, which taxes sales of utilities like electricity, water and sewer, Persily said. Juneau’s utility tax is a major source of local revenue that would be lost if HB303 becomes law."Each municipality has its own list of tax exemptions, limits and rules, such as a cap on the maximum amount of a single purchase subject to sales tax, to ease the burden of purchasers of big-ticket items like automobiles," Persily said."There is no uniformity across the state. In this respect, merchants would likely appreciate a state-governed sales-tax program, with one set of rules statewide," he said.However, municipalities would be free to enact their own, additional sales taxes on transactions exempted from the state tax, such as utilities in Juneau’s case, Persily said.The same is true for a local hotel-bed tax, or a local alcohol or fuel tax.But these taxes would be administered by the municipality and would require an additional sales-tax report for merchants to file in addition to the state tax. "It would be a pain," Persily said.If the current version of House Bill 303 becomes law, some Alaska communities will have the dubious distinction of having some of the highest, and possibly the highest, combined state and local sales taxes in the nation.Wrangell, in Southeast Alaska, currently has a 7 percent sales tax. With a 3 percent state tax added, the combined rate of 10 percent could become the highest in the nation, according to data collected by the Department of Revenue.Petersburg, Kodiak, Cordova and Kotzebue now have 6 percent sales taxes. A 3 percent state tax could bring the combined total to 9 percent.A survey by the department showed some areas of Oklahoma with combined sales taxes as high as 9.75 percent, and jurisdictions in Louisiana with combined rates as high as 9.5 percent.Persily said the revenue effect of exempting transactions over $2,000 is difficult to estimate. Consumers may be tempted to alter purchasing habits to beat the tax, "bulking up" their purchases of supplies or other goods so that sales invoices reach or exceed $2,000, he said.About one-third of Alaskans live in communities with a sales tax, according to data compiled by the Department of Revenue. Ninety-seven cities and boroughs that levy sales taxes collected $125 million in fiscal year 2001, or about $600 per capita among residents of those communities.However, the state’s two largest municipalities, Anchorage and the Fairbanks North Star Borough, do not have a sales tax. Anchorage has never had a sales tax, and Fairbanks repealed its tax after the state began sharing large amounts of oil and gas revenues in the early 1980s.

New Alaska Canine Cookies emerges from bankruptcy

An Alaska businessman is restarting a manufacturing company, Alaska Canine Cookies Inc., after it faltered and filed for Chapter 7 bankruptcy last year.Tom Sheffrey bought the Alaska Canine Cookies dog biscuit recipe and business name last October, and in mid-November he began the renewed venture.A client from his computer-service business told Sheffrey Alaska Canine Cookies was up for sale and encouraged him to buy it. "I heard about it, and I knew it was successful," Sheffrey said.The Alaska-manufactured pet treats were off the market for six months following the bankruptcy filing last spring, he said. Now the new owner has restocked Alaska retailers with Alaska Canine Cookies and has ramped up production to meet demand for the upcoming visitor season."It’s a killer product. Dogs love it," Sheffrey said.Alaska Canine Cookies, which once distributed its products nationally, started small, then gained increased recognition before hitting financial trouble.In 1996 Shaun Calhoun started the company, developing the recipe and baking dog treats at her home before moving to an Anchorage facility. The following year the company received the manufacturer of the year award from the Made in Alaska program.At one point the company employed 28 people and distributed products to all 50 states and six countries, she said. "When I had the business, 90 percent (of our market) was in the Lower 48," Calhoun said. San Francisco and Manhattan were strong markets for Alaska Canine Cookies, she recalled.A year ago an injury forced Calhoun to take time away from the business, which eventually led her to file for Chapter 7 bankruptcy, she said.Alaska Canine Cookies filed for bankruptcy in Anchorage on May 3. Calhoun listed personal and corporate assets of around $94,000 and $308,280 in debts and liabilities, according to court documents.The company defaulted on two loans from its lender, Alaska Growth Capital of Anchorage, eventually owing $197,557 including interest for loans in 1999 and 2000, the documents showed. Top creditors included landlord Hilligas Co., credit-card companies and FedEx.Calhoun was disappointed the venture failed, despite gaining a contract from a national retailer just before filing bankruptcy.Now she hopes Alaska Canine Cookies’ new owner Sheffrey will help the company bounce back and prosper."I want the company to succeed," she said.Although it was a bittersweet return to the business, Calhoun has taught Sheffrey some dog-biscuit baking basics.The company touts its pet treats as all-natural. Main ingredients include whole wheat flour, canola oil, eggs, honey, oat bran, wheat germ and brewer’s yeast.One batch produces 88 pounds of bone-shaped biscuits, Sheffrey said. Bakers can yield between two and four batches daily, or up to 350 pounds of Alaska Canine Cookies, he said.Sheffrey has hired three distributors to stock the products at several outlets in Alaska, including animal-food and pet stores, veterinarian’s offices, gift shops, Sam’s Clubs and Williams Express stores.Sheffrey has discovered Alaskans remember Alaska Canine Cookies, and many retailers are eager to stock the products."Product recognition is big," he said.Selling the product across Alaska is the first step, and while Sheffrey eyes expanding sales beyond the state, he’s willing to wait."I would like to go national eventually," he said.The businessman paid cash to acquire the company, shying away from taking out a loan. Funding for any expansion must come from profits, he believes."The business has to pay for itself," Sheffrey said.Currently, Alaska Canine Cookies employs one full-time worker plus two part-time employees.Later this spring the company will move from its 900-square-foot location to a 1,600-square-foot site with a garage door to ease the transfer of ingredients and products, he said.Many of the original products will be the same, and the company will carry the same packaging, he said. However, Alaska Canine Cookies won’t yet offer a former item, treats for cats, Sheffrey said. Felines can be "persnickety," refusing some kinds of food, he said, adding that demand could eventually merit production.Sheffrey added a new product in December, similar to the top-selling $1.50 Lollipup, a single biscuit dipped in white yogurt frosting. Pet owners typically broke the pet treat in pieces to feed their dogs, he said. The new item offers three small treats for the same price.The longtime Alaskan, who retired from IBM after 30 years, believes his business experience will allow Alaska Canine Cookies to thrive. Sheffrey started a computer-service business and for five years has operated an Alaska State Fair food booth called Caesar Salad Palace with his son.The popularity of Alaska Canine Cookies’ pet treats works in Sheffrey’s favor."I have no problem knowing the product is successful," he said. "It sells itself."One concern, though, is the possibility of slow sales resulting from a lackluster visitor season, Sheffrey noted. However, the new manufacturer is confident in his ability."I have experience in business," he said. "I don’t see how I could fail."

Around the World April 14, 2002

STATEFCC to return millions to Native partnershipsFAIRBANKS -- Alaska Native partnerships that bid on wireless telephone frequencies last year will get 85 percent of their multimillion dollar investments back while the U.S. Supreme Court considers a dispute over the auction.The Federal Communications Commission last month decided to keep some of the down payments while the court case plays out.Alaska Native Wireless, with major financial backing from AT&T, put down about $555 million in January 2001 to back up its $2.8 billion in successful bids on the right to use certain wireless frequencies. It will get $472 million back from the FCC.Doyon Ltd., Sealaska Corp. and managing partner Arctic Slope Regional Corp. put $260 million into Alaska Native Wireless.The frequencies were previously held by NextWave and another, much smaller company, Urbancomm. Those companies couldn’t pay the FCC and went bankrupt. The FCC held a second auction, but NextWave challenged its right to do so. The Supreme Court took the case last month.The FCC refund should help Alaska Native Wireless develop phone service in the cities where it has won undisputed licenses, Conrad Bagne, chief operating officer of Arctic Slope Regional Corp., told the Fairbanks Daily News-Miner April 3.Bagne said the company received those licenses April 2. The licenses grant the right to use frequencies in Fairbanks, Juneau and Ketchikan, along with 13 other mostly smaller communities, primarily in Western states.Judge orders state to study effect of mineFAIRBANKS -- A Fairbanks Superior Court judge has ordered the Department of Natural Resources to study what effect the True North gold mine may be having on neighboring tourism businesses.The decision by Judge Charles Pengilly stems from an appeal by Neighborhood Mine Watch of the gold mine’s state permits.Mara Bacsujlaky, executive director of Neighborhood Mine Watch, calls the decision a clear victory.The ruling does not shut down the mine, located 30 miles north of Fairbanks, said Bob Loeffler, director of the Department of Natural Resources’ Division of Mining, Land and Water.Last March, Fairbanks Gold Mining finished construction of the True North project, which included building a 10-mile ore haul road between True North and Fairbanks Gold’s mill at the company’s Fort Knox mine. Sixty-ton trucks haul ore to the Fort Knox mill 24 hours a day, seven days a week.That has been the heart of the problem, said Bacsujlaky and mine neighbors.Cost of repairing line climbs to $20 millionFAIRBANKS -- The cost of repairing the trans-Alaska pipeline and cleaning up a 286,000 gallon oil spill caused by a bullet hole has climbed to $20 million, according to the Alyeska Pipeline Service Co.The company has nearly finished cleaning up the oil spilled north of Fairbanks last October after a Livengood man allegedly shot a hole in the pipeline with a high-caliber rifle.All that remains is less than 1,000 gallons trapped in the gravel pad of the pipeline’s access road, said Kalu Kalu, Alyeska project manager."We’re pumping it into barrels," he said.About $6 million of the $20 million cleanup bill was for labor costs and another $6 million will go toward the treatment and recovery of crude collected from the contaminated soil, Kalu said. The rest went toward equipment and remote camp costs.About 176,000 gallons have been recovered and re-injected back into the pipeline, Kalu said.BP plans to limit tour access to Prudhoe BayFAIRBANKS -- BP Exploration (Alaska) Inc. plans to suspend commercial tour access through the Prudhoe Bay oil field to the Arctic Ocean this summer, citing security concerns.But the state owns the land and the lease says the Department of Natural Resources has to sign off on access limitations, said Mike Abbott, Gov. Tony Knowles’ legislative director.State officials will go along if the restriction is warranted, Abbott said, but they want to discuss the matter with BP first. "If there is a legitimate security concern ... we want to know about it," Abbott said.Tour companies such as Fairbanks-based Northern Alaska Tour Co. say losing access to the Arctic Ocean will hurt their business.The rugged Dalton Highway is open to the general public as far north as Deadhorse. Half a dozen tour companies have agreements with BP to cross the Prudhoe Bay oil field to the Arctic Ocean.Tourism survey shows improvent in bookingsANCHORAGE -- A new survey indicates the tourism season ahead may not be as bleak as was anticipated last fall.The Alaska Travel Industry Association released a late-March survey of its members April 8, showing an overall 13 percent drop in tourism bookings compared with a year ago.While that decline would be significant, especially for small businesses, the drop is not as sharp as the travel group had projected.After the Sept. 11 terrorist attacks, the association forecast a catastrophic 60 percent decline in visitors unless it received $12.5 million in state funds for an emergency marketing campaign. Travel analysts tied the anticipated drop-off to concern about flying and uncertainty about the economy.The early estimates turned out to be overstated.Surveys in December and February showed 23 percent and 24 percent declines respectively. The latest results from 256 respondents point to some recovery.The hardest-hit sectors, according to the latest survey, include hotels, wilderness lodges, cabins and air taxis. Hotels reported bookings down by 28 percent.Some segments of the industry have not only weathered the crisis but are doing better than last year. Day cruises and charters reported a 3 percent increase in bookings for the coming season. Recreational vehicle rentals jumped 12 percent. Companies that provide tours and activities in multiple locations in Alaska reported a 23 percent climb in reservations, according to the survey.-- Compiled from business wire services.

Alyeska Pipeline cutting jobs, may close pump stations

Alyeska Pipeline Service Co., operator of the 800-mile trans-Alaska oil pipeline, has embarked on a major restructuring that includes workforce cutbacks and possible dismantling of four of 12 pump stations.Alyeska aims to cut costs of transporting Alaska North Slope crude oil by 30 to 50 cents a barrel within five years, according to company President David Wight.Alyeska announced plans April 3 to eliminate 300 positions, cutting its staff by 150, or 15 percent, to about 900 workers this year, and reducing its contractor rolls by 150 workers, or about 10 percent.The reductions in staff positions will take place at the company’s offices in Anchorage, Fairbanks and Valdez.The jobs will be eliminated by the end of the year primarily from administrative, management and support positions, company officials said.Wright said the company wants to eliminate duplication between the three offices and centralize some operations.Of the 150 positions being eliminated, about 50 are in Valdez, 60 are in Fairbanks and 40 are in Anchorage. Some jobs will be moved from Valdez to Anchorage and Fairbanks, but those numbers won’t be known until staff selection is complete, the company said.Wight said the changes will not impact the company’s maintenance system for the aging pipeline, which will celebrate its 25th year of operation in June.Alyeska, which is owned by six oil companies, is currently seeking renewal of its 30-year lease for the pipeline’s right of way from state and federal regulators. Its current lease expires in 2004.In reorganizing its operations, Alyeska is considering removal of four shut-in pump stations, which cost $1 million a year each to maintain, and dismantling unneeded tanker berths and oil storage tanks at the Valdez Marine Terminal.The pipeline was designed to transport 2 million barrels per day of crude and natural gas liquids, which it did from 1979 until 1988. Since then, oil flow has dropped to about 1 million barrels a day."Our energy business in Alaska is right at the edge of competitiveness," Wight told the Alaska Support Industry Alliance last month in Anchorage. "Alaska has huge energy resources, but to make new oil fields on the North Slope economically viable, costs must be trimmed and Alyeska must play a key part in that reduction."If new discoveries are made on the North Slope, Wight said the remaining pump stations could be reconfigured to transport up to 1.5 million barrels a day of oil through the pipeline. Chemical drag-reducing agents also would help.

Royalty gas bill put on shelf for a year

The Alaska Department of Natural Resources has decided to put on hold until 2003 its efforts to get state lawmakers to allow the sale of royalty gas from the North Slope.Royalty gas is the share of total gas production owned by the state. Although the state often receives cash from oil and gas lessees for its royalty share, it has the option of taking its royalty in-kind and selling it.DNR plans to complete the preliminary process of approving the Anadarko-Alberta Energy contract, but will postpone presenting it to the Legislature this year because Alaska lawmakers may not have enough time to adequately consider the sale, DNR Commissioner Pat Pourchot told members of the Resources Development Council April 4."I see this contract and the documentation that will accompany it as a model for this royalty gas sale and future sales," Pourchot told the Alaska Oil & Gas Reporter after the breakfast meeting.He said DNR also opted to postpone taking the royalty-sale contract to the Legislature this year because of the potential impact of federal gas legislation on the measure. A gas pipeline bill is being debated this spring in Congress.State regulators selected the Anadarko-Alberta Energy bid from four offers because it met all of Alaska’s requirements for a royalty gas purchase. It also would generate $252 million more than the market value of the gas over 25 years, Pourchot said. The other bidders were Chevron Co. USA, Williams Alaska Petroleum Inc., and Alaska Power and Telephone of Tok.

General aviation opposes relocation of parking

Planned construction of two multimillion-dollar maintenance buildings at the Ted Stevens Anchorage International Airport is meeting heavy resistance from general aviation operators.At issue is what is known as "Charlie" parking, a 157-space aircraft lot that airport officials want to transform into buildings that would displace all but 30 parking spaces for general aviation.The move is opposed by the Alaska Airmen’s Association, the Aircraft Owners and Pilots Association and the Alaska Aviation Safety Foundation, organizations whose memberships feel light aircraft would lose a valuable foothold at Anchorage International.Construction is slated in May for the Quick Turn-around Facility, a 24,000-square-foot building just west of Charlie parking that would be used for the storage of sand and de-icing equipment and as a refueling facility.Cost of construction is estimated at about $6 million, according to airport officials.During the summer of 2003, a $24 million, 75,000-square-foot Field Maintenance Complex is slated for construction. The existing facility, which is used to store and service some 320 vehicles used to clear snow and maintain runways, is too small and does not meet city-code requirements, according to airport officials.The old facility in time probably would be razed and offered as lease space for an airport-related business, said Corky Caldwell, airport operations manager.Airport studies said that having the two new facilities closer to the airfield is safer and cheaper.Currently, maintenance vehicles must cross a taxiway and Postmark Drive to reach the airfield. Airport officials said maintenance vehicles have been in accidents with private vehicles on the road and suffered numerous close calls with airplanes and cars.Placing the two new buildings on the opposite side of Postmark Drive and the taxiway would save about $1 million a year in personnel and equipment costs because of shorter distances maintenance vehicles would travel during snow removal operations, according to time and distance studies performed by the airport. The shorter distance to the runways also would mean shorter runway closures in bad weather since snowplows could reach the runways faster, according to the studies.To replace lost parking at Charlie, construction is slated this spring on a new $3.4 million "Echo" lot, about a mile north near the Lake Hood gravel strip. The 700,000-square-foot paved parking lot is 10,000 square feet larger than Charlie parking and will accommodate about 120 airplanes, according to airport officials.Charlie space leases for $40 a month, while the planned Echo parking would be $55 because of electrical hookups, according to airport officials.Caldwell said surveys have shown that relocating aircraft from Charlie to Echo will put most pilots where they want to be. Charlie parking historically averages only about 100 spaces leased out of its 157-airplane capacity.Pilots typically face long waiting lists for parking near the Lake Hood Strip, and the new Echo parking should bring relief, Caldwell said.Further, several aircraft owners who use the airport’s Alpha and Bravo parking areas have expressed interest in relocating to Echo parking, which would free up parking for aircraft whose pilots prefer to fly off an Anchorage International runway, Caldwell said.Several other improvements are planned for the 1,000 or so general aviation airplanes at Anchorage International and nearby Lake Hood, including taxiway upgrades and much work at the seaplane base, the world’s largest."We certainly recognize general aviation’s importance to Alaska," Caldwell said. Thomas Wardleigh, board chairman of the Alaskan Aviation Safety Foundation, said airport officials are simply catering to large commercial airlines and pushing general aviation operators out.Wardleigh said there is a need for the new maintenance and storage facilities, but other places at the airport are better suited."We’re not trying to be obstructionists," Wardleigh said. (Charlie parking) is optimum for general aviation aircraft and we’d like to keep it."Thirty remaining airport parking spaces at the Charlie lot, Wardleigh said, is "not anywhere close to enough."Wardleigh’s comments were echoed by Dee Hanson, executive director of the Alaska Airmen’s Association, and Tom George, Alaska regional representative for the Aircraft Owners and Pilots Association.Charlie parking is used by private operators and small- commercial operators such as guides and flight schools. Wardleigh said relocating aircraft at the new Echo parking would require all instrument-rated flights to taxi a mile to Anchorage International and cross public roads three times.Wardleigh said it takes pilots about six minutes now to taxi from Charlie parking to an Anchorage International runway. The relocation would add about 15 minutes to that trip, he said.The additional taxi time alone would cost a student pilot an additional $2,000 to get a license, Wardleigh said.Another concern, Wardleigh said, is the additional noise that would be created by moving more airplanes out near the Lake Hood strip.He said the nearby Turnagain neighborhood already is extremely sensitive to aircraft noise and a large school and a church are directly beneath the approach and departure flight paths.Airport officials say most of the pilots who would be relocated at Echo parking already are using the Lake Hood strip so no significant noise increases are anticipated.Having personnel, maintenance vehicles, sand and de-icing equipment located closer to the airfield lessens the chance of runway closures in inclement weather, Caldwell said. Runway closures, which cost the airport revenue and delay passengers, also force large commercial aircraft to shift flight paths over residential areas, according to airport officials.

This Week in Alaska Business History April 14, 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 14, 1982Kerttula expects rail plan to emergeAssociated PressJUNEAU -- A plan for running a state railroad will probably roll out of the Alaska Legislature this year, Senate President Jalmar Kerrttula, D-Palmer, said Tuesday.Kerttula’s prediction came after the Senate Transportation Committee approved his 55-page bill creating an Alaska Railroad Authority to run the Alaska Railroad."I think this bill has a very good chance of becoming law," Kerttula said.A separate bill pending in Congress would turn the federally owned Alaska Railroad over to the state. State lawmakers want the railroad, but they want some land ownership questions answered before the operation is transferred to the state.Anchorage TimesApril 14, 1982Salmon recalls end, state officials saysAssociated PressJUNEAU -- A series of recalls of Alaska canned salmon that began after apparent botulism poisoning in February appears to be over, a top state officials says."All the salmon that was in any way potentially suspect has been recalled, and these cans will now be inspected through a newly tested ’dudding’ process before being returned for sale," Commissioner of Environmental Conservation Ernest Mueller said in a press release Monday. "Unless new or different defects are found, the recalls are over."The recalls expanded to cover eight Alaska canneries and more than 50 million half-pound cans of salmon last week.The cans were suspect because of holes or other defects believed to lead to the possible formation of deadly botulism.The death of the Belgian man after eating Alaska canned salmon apparently infected with botulism led to an embargo on Alaska salmon in Europe.10 years ago this weekAlaska Journal of CommerceApril 20, 1992MAPCO Express takes it to TesoroBy Ed BennettFor the Alaska Journal of CommerceThe already-crowded retail gasoline market in Anchorage will see still more competition by fall with the addition of four more outlets by MAPCO Express Inc.The company says the cost of building the combined gasoline stations and convenience stores, and the remodeling of two existing Anchorage outlets, will total about $12 million. Dick Birkinshaw, MAPCO’s regional manager for Alaska, estimated the six projects will require 20,000 hours of construction work and will create about 55 full-time jobs when complete.The four new outlets will bring the number of MAPCO stores in the Anchorage bowl to 16. The company also operates one store in Eagle River, another in Wasilla, and three in Fairbanks.Tulsa, Okla.-based MAPCO entered the Anchorage retail market in 1987 with the purchase of the Topper’s chain. In so doing, it immediately challenged Tesoro Alaska Petroleum Co., which had supplied most of the Topper’s outlets. With the closure last June of the Chevron refinery in Kenai, MAPCO and Tesoro are the only Alaska retailers who still refine their products in state.Alaska Journal of CommerceApril 20, 1992KTUU-TV attracts interestBy Margaret BaumanAlaska Journal of CommerceWord that KTUU-TV Channel 2 Broadcasting Co. is for sale for $22 million is already attracting interest in the Seattle area, says Greg Zaser, president of the popular Anchorage television station."We have had a couple of parties come to us and show a lot of interest," said Zaser, whose station has a corner on the market for news programs and carries 18 of the 30 regularly scheduled prime-time programs most popular with people aged 25-54.Prime-time ratings show KTUU with five times the audience of competitors for the early edition local-news shows and six times the audience of its lone competitor for the late-edition local news."We would hope to find an owner that has the integrity we have had and the commitment to the community we have had," said Zaser in a telephone interview from his Bellevue, Wash., offices. The owners have hired Earl Reilly Enterprises in Washington state as brokers to arrange interviews with prospective buyers.-- Compiled by Ed Bennett.

Plane ownership will rise slowly

Anchorage’s general aviation fleet should rise by about 1,000 aircraft by 2020, but slightly fewer people per capita will own private airplanes by then, according to a new study by the state Department of Transportation and Public Facilities.State officials are forecasting an increase of general aviation aircraft from 4,027 in 2000 to 4,985 in 2020, an increase of just over 1 percent annually. Registered aircraft per 1,000 Anchorage residents will decrease slightly, from 15.5 to 15 people who own airplanes, according to the state’s Area General Aviation System Plan.The plan, which is still in draft form, will be used by state and Federal Aviation Administration officials to identify needs for general aviation facilities and services in the Anchorage area.The study was funded by a $450,000 federal grant. The system plan began in 1998.A final report is due out this year, said Diana Rigg, a state transportation planner in Anchorage.General aviation is defined as aircraft other than military or commercial scheduled operations. Types of aircraft used in general aviation range from corporate multiengine jets to ultralights.Anchorage accounts for 39.4 percent of the state’s 10,237 general aviation aircraft. Alaska’s largest city currently makes up 1.8 percent of the nation’s 221,213 general aviation aircraft, according to the study.The number of general aviation aircraft in Anchorage grew from 2,994 in 1980 to 4,027 in 2000. But the percentage of Anchorage-based aircraft slid from 41.8 percent in 1980 to 39.4 percent in 2000, the study said.In 1980, there were 210,300 registered general aviation aircraft in the United States. At that time, Anchorage made up 1.4 percent of the total, compared to 1.8 percent in 2000, the study said.Aircraft ownership in Anchorage has fluctuated from a high of 17.2 registered aircraft per 1,000 people in 1980 to a low of 13.9 per 1,000 residents in 1996, the study said.

Hardware store plans for fall opening

Alaska will gain its second major new hardware store this year when Lowe’s Home Improvement Warehouse inaugurates its South Anchorage store this fall.The new store is scheduled to open in August or September, said Tawn Earnest, spokeswoman for the Wilkesboro, N.C.-based retailer.Lowe’s joins Home Depot with new stores opening in the state in 2002, each launching second stores in addition to existing stores in Anchorage. Home Depot opened a store in Fairbanks in February.Roger Hickel Contracting Inc. of Anchorage, which served as general contractor on the Fairbanks Home Depot, currently is building the new Lowe’s. The new store, located at the corner of the Old Seward Highway and O’Malley Road, will be the fourth national warehouse hardware store in Alaska.Construction should be completed by mid-July, and company officials will then spend the next several weeks installing and stocking racks, hiring employees and handling other work in preparation for opening, Earnest said."This is first Lowe’s we’ve built in Alaska," she said.When Lowe’s bought Eagle Hardware & Garden in late 1998, it acquired the Eagle store in Anchorage. Subsequent renovations at that store modified it to feature the Lowe’s motif, she said.Construction on the new store hit delays following the acquisition of the 21.5 acre site in January 2001. The store was originally expected to open in January 2002. Competitor Home Depot also proposed a new East Anchorage store last year but later canceled those plans.Current site work on Lowe’s began last October.A new Lowe’s store usually totals about 150,000 square feet, including 28,000 to 30,000 square feet for a lawn and garden center.Stores of this size typically employ 175 to 200 people with 85 percent of those employees working full time.

Pilots bumped from Lake Hood

With her new float slip at the Lake Hood Seaplane Base, Janis Meldrum has joined one of the most exclusive clubs in Alaska. And she only had to wait a decade to do it. "I’m practicing the secret handshake," Meldrum joked. "It makes me somebody now." Meldrum is one of two dozen airplane owners in the last three months to earn float-slip space at the state-owned seaplane base, the largest such facility in the world. She and her fellow pilots were able to lease slips thanks to new enforcement measures that have terminated several old leases. It is perhaps the largest purge of slip space in the seaplane base’s 63-year history. Meldrum got on the wait list at Lake Hood in 1993, and received notification in March that she could lease a space. She plans to put her Cessna 180 on the lake in mid-May when the ice melts. Despite the near 10-year wait, Meldrum considers herself lucky. Many folks who lease one of the 361 float slips at Lake Hood waited 18 years or longer for an opening.

Forest Oil Corp. drilling uncovers more reserves

ANCHORAGE --The fourth exploration well drilled by Forest Oil Corp. from its Cook Inlet platform indicates the Redoubt Shoal field holds 100 million barrels of recoverable oil, a company official said.Earlier estimates showed the company could pump out 50 million barrels or so, said Gary Carlson, head of Forest’s Alaska operations."Each time we drill farther down ... it’s bigger than we anticipated," he said.The well just completed went 20,203 feet, some of that laterally, the deepest such angled hole ever drilled in Cook Inlet, and the limits of the field still weren’t reached, Carlson said. The limits of the drilling rig were reached, though. Total depth was about 13,000 feet measured straight down.A fifth well will be started soon to define the western limit of the field and determine the extent of a significant gas deposit discovered in the Number 4 well.The platform was installed in about 45 feet of water in June 2000. It was designed to work as an exploration platform and then be converted into a production platform if oil was found.Production is expected to begin by the end of this year, and the field could eventually produce in the neighborhood of 25,000 barrels a day.

Disability plans can discriminate

Does your group disability plan discriminate against your most valuable employees? Many plans do, and the employer usually is unaware of the situation.Long-term disability insurance replaces a portion of the income of an employee who is unable to work for an extended time due to an accident or illness such as cancer. Most large employers provide a medical plan to cover the majority of costs for the necessary medical treatment in either of these situations.But what about the paycheck the employee is no longer receiving? The employee’s need for cash to cover expenses such as mortgage payments, groceries and childcare usually remains unchanged. However, the flow of cash into the household changes drastically. A severe illness or injury can also result in the need for daily living care, also known as long-term care, which may not be covered under a medical policy. The high cost for such care can deplete an employee’s savings and retirement funds.A typical group-disability plan will pay disabled employees 60 percent of their pre-disability income up to a maximum benefit, $5,000, for example. An employee will begin receiving this benefit after having been disabled for a specified time, typically 90 or 180 days.For most employees, this plan design is adequate. In some instances, however, especially in professional organizations such as attorney firms or medical clinics, the maximum benefit is well below 60 percent of the monthly income for a segment of the group. This reverse discrimination can leave a large gap in coverage for your most valuable employees.How real is the threat of disability to these highly compensated employees? According to a 1998 study by the National Institute on Disability and Rehabilitation Research, 17.2 million people - one in 10 of the working-age U.S. population - had disabilities that interfered with their abilities to work.In 1994, adults 25 to 64 experienced a total of more than 184 million injuries or illnesses that required medical attention or restricted activity or both. In 1996, 4.4 million U.S. workers were receiving Social Security Disability benefits.Here’s a hypothetical example of how limited disability benefits affect highly compensated employees. ABC medical clinic has 40 employees: 10 physicians plus registered nurses, licensed practical nurses and office staff. The physicians each earn an average of $200,000 per year; the rest of the employees each earn an average of $50,000.ABC provides a group long-term disability plan that pays 60 percent up to $5,000 per year. This plan is adequate for all the employees except the physicians. The physicians earn an average of $16,666 per month; therefore, a 60 percent income-replacement benefit would be $10,000. However, because of the $5,000 limit, the most valuable employees, those who generate income for the clinic, would receive only 30 percent of their monthly income.What can you do about this situation? Most employers assume that the answer is to increase the maximum benefit on the group policy to $10,000. However, in many cases the insurance company imposes restrictions that make it impossible for the employer to provide the desired benefit.One option is to purchase individual disability policies for the affected employees to provide the additional income protection. Many insurance companies will offer a discounted rate for the individual policies if a minimum number of policies, usually three or more, are written. The discount can be as much as 25 percent.Using individual policies to avoid discriminatory group disability plans provides advantages: The individual premium typically is guaranteed not to increase after the policy is issued. Group premiums can and do change annually. Individual policies are portable, so employees can "take it with them" if they leave the company; group plans are contingent on continued employment. This approach allows employees to select riders that will increase benefits as their incomes increase, without having to undergo new medical exams. Over time, individual plans can help to stabilize rates for the group plan.If you sponsor a group disability plan, it’s a good idea to review the plan provisions periodically to be sure it still meets your business needs.Terry Allard is an account executive at The Wilson Agency LLC in Anchorage and president of the Alaska Association of Health Underwriters. She can be reached by e-mail at ([email protected]).

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