CED Series: Attracting economic growth

In 2011, Charlotte went bananas. City officials in North Carolina launched a marketing campaign to entice Chiquita Brands International (aka Chiquita Banana) to relocate from Cincinnati and make Charlotte their new headquarters. Amidst photos of bananas framing city signage, a #bananasforCLT hashtag on Twitter, and yellow bow ties, the government offered $22 million in incentives over a period of 10 years to seal the deal. Economic developers often use incentives and marketing tactics to encourage companies to relocate or expand to their communities, a practice both costly and competitive. A key tenement of economic development, it has recently evolved to include attracting and retaining workers. Charlotte was successful in their bid, anticipating 400 new jobs and $14 million of investment. Although the resulting jobs numbers weren’t quite as expected (134 local hires, 141 transfers from Cincinnati, and 28 recruitments from outside) city officials cited $11 million in construction, new residents buying homes and paying taxes, and charitable contributions as a worthwhile return on investment. Last year, Amazon made headlines as cities lined up for the opportunity to host HQ2, the company’s second North American headquarters. The expected antics ensued: Newark and New Jersey offered nearly $7 billion in tax incentives, Birmingham, Ala., constructed giant Amazon boxes around town, Phoenix did something with a cactus that didn’t really work out, and Mayor Sly James of Kansas City purchased 1,000 items from Amazon and used the reviews to promote his town. Even Anchorage got in on the action, citing easy outdoor access, university graduates, and lack of traffic in an online application. From the 238 proposals submitted, Amazon selected 20 cities for round two and is currently making the rounds to select the location for their expansion. Anchorage didn’t make the cut. The Ted Stevens Anchorage International Airport is the fifth largest cargo hub in the world. (Photo/Chris Arend Photography/Alaska Division of Economic Development) Economic developers in Alaska are generally skeptical of our ability to compete head-on with other states to attract Fortune 500 companies. When considering what might work in Alaska, Bill Popp, CEO of the Anchorage Economic Development Corp. says that his team is focusing on opportunities at the Ted Stevens Anchorage International Airport. “We’re looking at distribution facilities for pharmaceuticals, supply chain logistics, there’s potential in high-end electronics and aviation parts distribution,” he explains. “When you consider that Anchorage has the fifth-largest cargo airport on the planet with hundreds of wide body jets and the opportunity for foreign carriers to exchange cargo here, there are a lot of possibilities. The challenge is getting them past the cost of construction and the cost of labor.” If labor is expensive and in short supply, what can we do to attract more workers to Alaska? Economic developers have recognized a shift in who attracts whom: Instead of talent following companies, companies have started following talent. Back in 2005, author Thomas Friedman told us that “It’s a Flat World, After All” and since then, it’s flattened even further. We’re now competing on a global scale. As availability of qualified workforce continues to plague Alaska businesses, attracting talented new workers to our state, along with growing our own, is essential. People are more mobile than ever before, and can choose where to travel, work, and pursue an education. Attracting potential workers that would appreciate the Alaska lifestyle could help solve the labor shortage. There’s also the matter of “boomerangs”: young Alaskans who leave the state (often for education) and find themselves wanting to come home after graduation or launching their careers outside. Born and raised in Anchorage, Chase Christie moved to San Francisco shortly after graduating from the University of Oregon in 2004, and started a career working in solar energy. After 15 years in the Bay area, he was eager to return home but knew he needed to find the right opportunity. When an Anchorage-based solar company offered him a job, he jumped at the chance. He says the proximity to the outdoors is just as great as he remembers, but that the city has changed a lot, too. “Anchorage has evolved in so many great ways since I was a kid. There's a more developed art and music scene, there are great restaurants, things that I didn’t appreciate when I was younger that I do now make the city really special and so unique.” Christie is here to stay. “I have a friend from New Hampshire who moved here in 1999 and he says it best: ‘I’ll move somewhere else, just show me someplace better.’ And I couldn’t agree more.” Moira Gallagher manages Live. Work. Play, AEDC’s grassroots effort to make Anchorage the No. 1 city in America in which to live, work, and play by 2025. She frequently considers how to attract more people to our state, and laughingly says, “I’ve actually thought about putting signs in sweaty subways during the summer — something along the lines of ‘Guess what? In Alaska it’s 68 degrees and sunny in the middle of the summer’ — an appeal of Alaska being it never gets too hot!” There are opportunities aplenty to continue developing a lively and vibrant downtown core in Anchorage. (Photo/Ken Graham Photography/Alaska Division of Economic Development) Despite our advantages, she says that there are two challenges to attracting new workers to Anchorage: lack of affordable, high-quality housing and lack of a dynamic urban core. “When people live downtown they bring vibrancy which is great for existing businesses and attracts new businesses,” she said. “People want entertainment, restaurants, music, public art. The greatest cities in the world have walkable, lively, happening downtowns.” That said, Anchorage offers an appealing combination of city and wilderness. “Our outdoor recreation is second to none. We have more acres of parkland than any other city in America,” she said. “You can get on your bike and be in the Chugach foothills 10 minutes later. In the winter, you can ski Kincaid Park on the lighted trail, or go to the downtown tree-lighting ceremony. In the summer, visit your favorite fishing hole at Ship Creek or ride miles of bikes trails. And the people here are great.” Both Gallagher and Christie have significant others who relocated to Alaska. Gallagher says her husband is from New York and “loves that Anchorage feels like a small town, yet is large enough to support big-city amenities like the performing arts and multiple general hospitals,” while Christie says his Berkeley-born girlfriend “has a job that she absolutely loves, finds she’s inspired by the people she works with, and sees living in Alaska as a long term opportunity.” Speaking of relationships, are you wondering how things turned out between Charlotte and Chiquita? Chiquita was purchased by a Brazilian company in 2015 and shortly after, packed their bags and departed Charlotte… even after the yellow bow ties, clever hashtags, and $22 million in tax incentives (some of which will be refunded, but still!). Now that’s bananas. Gretchen Fauske is marketing-minded economic developer fueled by a passion for entrepreneurship, innovation, and small business. As the associate director for the University of Alaska Center for Economic Development she is responsible for leading the entrepreneurship, marketing, and outreach efforts of CED as well as providing strategic leadership for both CED and the UAA Business Enterprise Institute.

Pebble owner loses potential major investor

The company spearheading the Pebble mine is again long on mineral prospects but short on cash after another major potential funder turned away from the project, according to a release from Northern Dynasty Minerals Ltd. Vancouver-based Northern Dynasty Minerals, the sole parent company to Pebble Limited Partnership, issued a statement early May 25 acknowledging that its framework investment agreement with First Quantum Minerals has been terminated. In December, the two Canadian mining firms announced they had reached an option agreement under which First Quantum made an initial $37.5 million payment to Northern Dynasty with plans to make three more similar payments totaling $150 million over four years. At the end of that period First Quantum would’ve had the option to buy a 50 percent stake in Pebble Limited Partnership for $1.35 billion. First Quantum operates six primarily copper, gold and zinc mines worldwide. The pre-development Pebble prospect is Northern Dynasty’s sole project. The initial $150 million was intended to fund the permitting process for Pebble, while the subsequent major investment would have helped develop the mine and its extensive support infrastructure. First Quantum was originally supposed to decide whether or not it would invest in Pebble beyond the $37.5 million payment by April 6, according to the framework agreement. The companies first pushed that deadline back to April 30 and later to May 31. Groups opposing Pebble quickly began pressuring funds with investments in First Quantum to divest their interests in the company if it were to get involved in the Pebble project long-term. Those same groups were able to spend Memorial Day weekend celebrating Northern Dynasty’s announcement. “Today is a victory for Bristol Bay’s tribes,” United Tribes of Bristol Bay President Robert Heyano said in a prepared statement. “Our voices are being heard everywhere from our villages to the boardroom at First Quantum. Quyana (thank you) to First Quantum for listening to reason and divesting from this toxic project. No project is worth more than a culture or a way of life. It’s fitting that this announcement comes right on the cusp of fishing season, where Bristol Bay will once again harvest millions of salmon for the world.” Pebble Partnership leaders have long acknowledged they need to secure another major investor partner before the mine can be built, so what the revelation means for the future of Pebble and Northern Dynasty is unclear. Pebble CEO Tom Collier downplayed the significance of failing to reach an agreement with First Quantum in a formal statement following the Northern Dynasty announcement. Collier said he is continuing on with “business as usual” because he is confident the junior mining company will secure the funding it needs to complete the project’s environmental impact statement. “Pebble remains one of the nation’s most important undeveloped mineral resources. It is on state land and is an important economic asset for Alaska,” he said. “Our project is well defined and we are going to continue communicating with Alaskans about why we believe in the opportunity it represents.” A spokesperson for First Quantum could not be reached for comment. Northern Dynasty held $27.9 million Canadian, or roughly $21 million U.S., in cash on March 31, according to its first quarter financial report issued May 15. At the same time, it had also accrued $13.5 million Canadian in near-term liabilities and total liabilities of $68.7 million Canadian. Northern Dynasty stock closed trading May 25 on domestic markets at 47 cents per share, down 33 percent from its prior closing price of 70 cents per share. The company is also traded on the Toronto Stock Exchange. London-based mining major Anglo American withdrew from Pebble in 2013 after spending more than $540 million exploring the copper and gold deposit. In 2014, fellow British mining firm Rio Tinto donated its 19 percent ownership in Northern Dynasty to the Alaska Community Foundation and the Bristol Bay Native Corp. Education Foundation. Bristol Bay Native Corp. has helped lead the fight against Pebble. BBNC President Jason Metrokin said First Quantum “ultimately came to the right conclusion about the Pebble project”. “I commend First Quantum for exiting the Pebble project,” Metrokin added. “As we have said repeatedly since formally opposing the proposed mine nine years ago, Pebble mine is the wrong mine in the wrong place. The people of Bristol bay and the majority of Alaskans will not trade salmon for gold.” In early April, a group of 50 conservation and outdoor recreation companies and organizations sent a joint letter to First Quantum leaders imploring them to stay out of the Pebble project. Further, a group of Alaska Native leaders from the Bristol Bay-area traveled to First Quantum’s May 3 shareholder meeting in Toronto to deliver a similar message. California Treasurer John Chiang, a trustee to the state’s $360 billion-plus Public Employees’ and Teachers’ Retirement systems, sent a letter to First Quantum leaders Jan. 29 urging them to stay out of the Pebble project because CalPERS officials believe sustainable business practices are fundamental to long-term value growth for shareholders. According to Chiang, the Pebble project would risk the sustainability of fisheries in the Bristol Bay region as well as the fund’s investment in First Quantum. At the time, CalPERS held 4.3 million shares of First Quantum amounting to 0.62 percent of outstanding stock in the company as well as bonds in First Quantum with a maturity value of $2.3 million. Additionally, Environmental Protection Agency Administrator Scott Pruitt, generally seen as a bane to conservation advocates, issued a surprising statement Jan. 26 expressing his “serious concerns” about the impacts of mining activity in the Bristol Bay watershed. As a result, Pruitt said the EPA would not finalize its proposed withdrawal of the 2014 proposed determination to prohibit a large mine in the Bristol Bay region through its Clean Water Act Section 404(c) authority. Pruitt stressed that his decision would not impact Pebble’s environmental review under the National Environmental Policy Act, or NEPA, but it kept a cloud of uncertainty over the project that Pruitt was expected to remove. Pebble Limited Partnership filed its wetlands fill permit application with the U.S. Army Corps of Engineers Dec. 22. The initial application outlined plans to fill 3,190 acres of wetlands at the mine site. While not specific to any mine plan — a point Pebble and parent company Northern Dynasty minerals have stressed — the Bristol Bay Watershed assessment published by EPA in 2014 concluded a mine that would fill more than about 1,100 acres would be too damaging to fish habitat to allow. ^ Elwood Brehmer can be reached at [email protected]

Sitka Police chief named to marijuana board

The Marijuana Control Board will have its third police chief sitting in the designated public safety seat after the appointment of Jeff Ankerfelt of Sitka, Gov. Bill Walker’s office announced May 24. Walker appointed Ankerfelt to the seat that has been vacant since March. Ankerfelt volunteered to serve on the five-member board because he said he “believes it provides an opportunity for law enforcement to engage in the community and update” the understanding of marijuana. Travis Welch, who was appointed to the seat earlier this year, resigned in March after losing his job as North Slope Borough police chief. Welch was named to the seat following the January resignation of Soldotna Police Chief Peter Mlynarik. Walker’s office says there were two applications for the seat. Ankerfelt’s appointment is subject to legislative approval, but he will be able to serve until that vote in the 2019 session. The appointment, which was effective May 14, comes as the board is poised to once again debate proposed rules that would allow for consumers to partake of marijuana products on site at authorized shops. But Ankerfelt said he will not be able to attend the June 13-15 meeting in Anchorage because it falls on the same day as his daughter’s graduation from college. His first meeting attendance will be at the Aug. 15-16 board meeting scheduled for Denali National Park. Although it had a quorum of four members and a refined proposal after two years of work on the subject, the board decided to put off its vote over on-site consumption at its last meeting until it had all five members present. Ankerfelt was appointed police chief Nov. 1, 2016, after serving two years on the Sitka Police force. Prior to that, he was the deputy police chief of Brooklyn Park, Minn., where he served for 23 years. He’s also a graduate of the FBI National Academy. “While at the FBI academy I met the former police chief of Sitka. He would call every now and then and say he had an opening in the Sitka police department and would I like to come,” Ankerfelt said. “My wife and I talked about how you only live once. It’s been a great decision.” Since taking leadership of Sitka’s police department, Ankerfelt said he has kept a community and “customer service” focus to promote quality of life issues. “At the forefront, if there are people in community that suffer from substance abuse, mental health and homelessness, we get people the care they need from counselors or the medical profession,” he said. “It’s important to feel they are one and together with police. The more information we exchange the more we can change the future of crime and victimization.” According to the Sitka radio station KCAW, Ankerfelt launched a monthly or bi-monthly donut social he calls “coffee and donuts with a cop” as community outreach. This is an event “where people can come over and chat with us. We’re going to be focusing on problem solving, so when we do have a 911 call, we’re going to take a look at it and look at ways to prevent bad things from happening in the future.” Ankerfelt said his goal on volunteering to serve on the Marijuana Control Board is to help assist marijuana businesses in moving forward the “way the community wants.” Police departments lose an opportunity if they continue to fight marijuana, which is legal in Alaska, he said. “Law enforcement shouldn’t continue to stand in the way in terms of what a community wants in legalization. There’s an opportunity cost to our police department when they fight something that I don’t think needs to be fought. We have our hands full with heroin and other drugs. To fight marijuana gets in the way of benefits that marijuana has been shown to bring to people,” Ankerfelt said, citing seizure medicine, for example. “To the extent I can move that forward and challenge some of perceptions in law enforcement, I want to do that.” Sitka has been supportive of the marijuana businesses there, Ankerfelt said. Seven businesses operate in the town of about 9,500 population, including three retail stores and four cultivators. Ankerfelt joins a board that is required to be diverse in its make-up. The board is made up of representatives from rural Alaska (Chairman Mark Springer), public health (Loren Jones of Juneau), two industry members (Brandon Emmett of Fairbanks and Nick Miller of Anchorage) and a public safety member that is required to be actively working in the field. This is the third police chief in the position, Springer noted. “Someone actively involved in law enforcement is the description of the seat,” Springer said. “I can see how they might be conflicted given the federal look at it. At the same time, a police officer in Alaska is there to enforce Alaska laws. It shouldn’t be that big of an issue.” In light of Ankerfelt’s inability to attend the June meeting, the onsite consumption regulation will be postponed for voting until the August meeting. Emmett, the board member who crafted the latest onsite consumption regulation, with Loren Jones, said he had planned on the vote occurring in June. The proposal is to allow retail businesses to open an adjacent and separate area for people to consume marijuana products. Currently, it is illegal to smoke marijuana in a public setting and officials see an additional need to provide a place for tourists. “I want all five board members there when this thing gets voted on,” Emmett said. “It’s been such a topic of debate that I wouldn’t want it to fail on a tie. We owe the public a five-member vote. The government put together a board of five members, and I feel the public is relying on all five positions to make a decision for the state.” Even if the onsite consumption regulation were approved in June, businesses couldn’t open for customers until after the new year, he said. “Even if we were to approve it, there would not be enough time passed before final regulations to be signed for the businesses to have onsite consumption prior to Labor Day when the tourists leave. It’s still going to be next summer,” he said. The route toward signing it into law would go from passage, to public comment for 30 to 60 days, and then back to the board for either amendments or adoption, Emmett said. If there are amendments, it goes back out for public review for another 30-60 days. Once passed by the board at the end of that period, the new regulation would need the lieutenant governor’s signature. “It hasn’t taken very long for the lieutenant governor to sign these and they do get enacted quickly. If everything goes smoothly, we will be looking at January or February,” Emmett said. The next MCB meeting is June 13-15 in the Atwood Building in Anchorage. ^ Naomi Klouda can be reached at [email protected]

Pages

Subscribe to Alaska Journal RSS