Jonathan Grass

After origins in pipeline days, AVTEC goes gourmet

SEWARD — Not all classrooms use books. Some have knives and heat. That’s everyday life at the culinary program at AVTEC, Alaska’s Institute of Technology, and is what encouraged 18-year-old Jenna Mahoney of Homer to enroll. Mahoney learned about the program while at a state technical competition, and it happened to fit her interests. She said she might like to start her own catering business someday and professional training was important now, especially when that training can be learned through her scholarship. AVTEC culinary students spend about a year or more going through the entire range of food preparation. They must learn the basic skills from how to use a knife to nutrition, purchasing, and eventually learning gourmet preparations. The program is made up of two elements: the culinary and the baking programs. This gives the option of two directions for advanced certification. AVTEC uses trained and experienced chefs for its instructors. Two new instructors have just joined the program. Chip Dunlap will take over the advanced classes and Jamie Hall will take over the introductory courses. The baking and pastry operations are taught by the department head, Elizabeth Johnston. Students can go either direction, which each take eleven months. However, students who tack on baking and pastries to the end of a culinary program can earn that advanced pastry arts certificate in six weeks. The halfway mark is the point at which the students decide if they want to pursue culinary arts or advanced pastries. At the end, the students run their own restaurant on the AVTEC campus that’s open to the public for eight weeks. They do it all, from creating the menu to pricing to service and reservations. “It’s kind of showing off what they’ve learned,” Johnston said. Students who enter the program live in Seward for almost a year or longer while earning their advanced certificates. Johnston said this program is actually one of the shorter ones in terms of the culinary arts. Many associate’s degrees in cooking can take two years. Johnston said the institute has an agreement with the University of Alaska Anchorage, which also has a culinary arts program. She said AVTEC students can register at UAA with highly discounted rates and can apply their credits to avoid having to repeat classes. “They can get their associates in one year instead of two by going through us first,” she said. The program has two starts a year with an average of 17 students at each start. Johnston said it’s normal to lose a quarter of these by the program’s end. Like an educational program, most students are concerned with what happens after completion. Johnston said they go to work in a number of places, many of which are in-state. Some students are currently in Wasilla restaurants. Others work in kitchens on the North Slope or in the ferry system. Johnston said one graduate even worked aboard a research vessel in Antarctica. The cooking program was one of AVTEC’s earliest programs, but it started off very differently. Cooks were trained there for jobs on the pipeline and Johnston described it as “scrambled eggs 101.” In the early 1990s, people started looking for skilled chefs rather than standard cafeteria fare and so the program got a lot more gourmet to meet this demand. This included American Culinary Federation certification to compete with top cooking schools. Now students learn everything, such as advanced buffet foods, fruit-carving, sausage-making, cheese-making, hors d’oeuvres and other fancy delicacies. The pastry side consists of basic breads and muffins to sugar-blowing and chocolate-tempering. The site itself has just gotten some renovations. The bakery was gutted and new equipment was brought in. This meant new deck ovens with steam injectors and specialized for hearth breads. “They’re really in the new century of equipment,” Johnston said. The students are making good use of this equipment. Tuzday Witt of Fairbanks has always had a passion for food. The 24-year-old said she’s always loved cooking but was never able to make certain dishes at home. She will finish the culinary program and plans to continue straight into the baking part. “I want my food to taste better than at restaurants,” she said. People of all ages and career stages travel to Seward for the culinary program. AJ Barkis recently turned 68 and thought this would be a new challenge for him. Barkis spent 20 years in the Navy and then practiced law in Washington for many years. Barkis said professional cooking was always on his bucket list. He even looked into cooking during his Navy years. He said that after comparing culinary programs in Washington and Oregon, this was the one with the most “bang for the buck.” “Now I’m doing what I love,” he said. Barkis has taken notice of many eateries around the state. Now that he’s retired from law, he’s considering joining in this business somehow with anything from a small shop to a cart or kiosk.

UA embarks on improvement plan before centennial

The University of Alaska’s 100-year anniversary is coming up soon. As part of an effort to maximize what the students are getting before the centennial, UA is implementing an initiative called Shaping Alaska’s Future 2017. A major part of this is the Strategic Direction Initiative, or SDI, which is now entering its next phase of development. The SDI takes input from inside and outside the university about what direction the university needs to take. A series of listening sessions were conducted for about a year. The idea is to identify and resolve problems in the system while developing ways to be responsive to state needs. SDI is also a way to ensure accountability through measurable feedback. The collected input will be used to develop strategies for the university to become more aligned with needs of its students, faculty and the state. Strategies developed will be unique to different campuses as opposed to a blanket approach. UA President Patrick Gamble said SDI started out as a way to update the university’s strategic plan but quickly evolved into a separate initiative. Gamble described the difference by saying a strategic plan is guide on what to do, and that UA operations were already pretty standard, while SDI is more of a way to figure out how to do things better. He said it’s a change of direction rather than a complete redo of the university’s function. “So we went from a what to a how,” he said. SDI addresses many national and local student issues, such as getting more students into college while keeping it affordable. These ideas mean everything from credit transferability to student advising. Still, this directive of helping students get what they need goes beyond classes and gets into workforce development in things like mining, heavy equipment mechanics and other fields. “What we’re aiming at goes across the entire spectrum of what the university delivers,” Gamble said. Gamble said there are currently 143 measures before legislatures in 35 states that deal with directing where higher education is going. He said Alaska doesn’t want to be one of those states where the legislature intervenes. He said the SDI will help show the university is accountable and recognizes the need for change on its own. SDI development The SDI process began with 80 listening sessions across the state. Staff gathered input from students, faculty, staff, alumni, professional groups and business communities about the university’s performance. Additionally, a consulting team reported on areas to look at. “We gathered information from just about everywhere we could find it,” Gamble said. The data from these sessions, combined with internal knowledge of issues to address, made for a large amount of data to go through. The data was then organized into themes. This process took roughly a year. The five themes that resulted are: student achievement and attainment, productive partnerships with Alaska’s schools, productive partnerships with Alaska’s public and private industries, research and development to help build and sustain Alaska’s economic growth, and accountability to the people of Alaska. These themes may still evolve, depending on new information and solutions. Gamble said issues that he kept hearing about were as graduation rates, retention, remedial education for students coming out of high school, and nontraditional students. Gamble said there are many areas such as these that the university is trying to improve upon while holding down costs and maintaining value and educational quality. “It just occurred to me that many of these issues were things that could be worked and worked for the better,” he said. He said it made a lot of sense to evaluate if a university-wide effort would be the best approach to many of these issues rather than tackling them individually. He said this seemed like a good way to improve the continuum. Gamble said being all about student needs was a cornerstone of these listening sessions. “What we want to do is get better at the business of service and be less bureaucratic in the process,” he said. The next part will involve the faculties, deans and chancellors’ teams taking all of this categorized information and look at breaking out specific issues and problems to help differentiate fundamental problems from just the symptoms. This will commence as the summer ends and more faculty members are available. The final part will be the development and implementation of solutions. Gamble said an exact timeline for each phase is difficult because there’s no precedent for SDI. He described SDI it as a “design-build” process in which it’s developed step-by-step as it goes along. He said that once solutions to problems are identified, there may be several ways to get to such solutions. He said many people then get involved to decide the right path forward from the student’s perspective. This means it must be affordable and cannot take very long, which can eliminate several paths. Campuses Each campus has its own needs and conducted its own listening sessions. “What we’re doing right now here at (University of Alaska Southeast) is we immediately began to look at the stuff we got from our listening sessions and some of the things we got we could immediately start work to fix them, said UAS Chancellor John Pugh. He gave an example of being able to immediately fix efficiency in responses in student services. Pugh said students not finishing college as fast as they should is both a local and a national issue that’s come up. UAS has developed a program called Stay On Track that encourages students to take 15 or more credits per semester to finish in a reasonable amount of time. The other part is incentivizing students by offering $500 tuition waivers if they take the 15 or more credit hours. Pugh said this has been very successful and that about 40 percent of students who were taking more than 12 credits but les than 15 have decided to take the extra credit hours. Pugh said the McDowell Group just did a study of present UAS students plus those who had dropped out or transferred to help determine issues. “They want better pathways helping them to get finished. They want better advising to help them get finished,” said Pugh. Pugh said the whole university has also jumped heavily into remedial education, which is where improving student achievement before college comes in. The listening sessions identified several workforce programs that will come into play at UAS as well as the other campuses. These include fisheries education. The university has a fisheries technology program in Ketchikan and trains people to work in the hatcheries. UAS is also working with companies like Coeur d’Alene Mines Corp. and Hecla Mining Co. to help train students at the mines. Pugh said Hecla gave $300,000 to help prepare the program and start a high school program, which started last year. “When we say partner with the industries, you can see we can really respond to the workforce needs of Alaska,” he said. Pugh said the schools will try to line up budget requests with what develops in phase two of SDI. Part of these requests will be for advising and a general funded director of the mine training center in Juneau. Pugh said the university UAS had just done a strategic plan, which is required for accreditation. He said they came up with similar themes to the resulting SDI ones. “It’s got a lot of similarities and I think it will, in a sense, re-energize people to keep working on it,” he said. University of Alaska Anchorage Chancellor Tom Case said UAA is also participating in fisheries and mining. Other areas UAA is focusing on is partnerships in bringing K-12 students to the campus as often as possible and to interact with high schools. “That learning continuum really needs to start very early,” Case said. UAA has also increased its number of advisors and put a focus on training and educational opportunities. Case said advising comes in two parts. One is in the student services area, which involves financial aid, processing, initial advising and counseling. The other part is the academic programs. Case concurred with Gamble in getting students to graduate as quickly as they can. He said that “on time” graduation varies with each student and depends on their other responsibilities and locations. “What we aim to do is work with each of them to the best we possibly can to make a plan that works for them and then remove all the roadblocks we possibly can to allow them to graduate in the time that’s right for them,” he said. Case said UAA’s new engineering building also ties into SDI because engineering is a high priority for the state. UAA and UAF are both building new engineering buildings. UAS also plays a big role through pre-engineering courses. Case said UAA has a statewide lead in health care education and therefore opened a brand new college of health last year. He said they are now working on medical training and education for physicians, physician assistants and nurses. Case said that the way students are learning has changed, and this is something that will be addressed with SDI. He said traditional methods must make way for new technologies and distance-learning options.

Forum offers ideas to control health expenses

Health care spending in Alaska reached $7.5 billion in 2010, according to Commonwealth North. The public policy organization hosted a forum in Anchorage on July 26 to offer some ideas on ways the private sector can step in to help bring that number down. Here’s a summary of their presentations: Alyeska Pipeline Service Co. Tim Adamczak, compensation and benefits manager at Alyeska Pipeline Service Co., described the consumer-driven health care program, or CDHP, that his company has used to help prevent health care costs from getting too high. CDHP is a high deductible plan in which the company funds the first part of that deductible. That means medical bills are completely covered until that prepaid deductible is used up. Adamczak said the idea behind this program was to try to drive participants, both active and retired, to search and evaluate the costs between providers. “Try to go out there and have a limited number of dollars. Try to go out and find the best value that you can find for the quality you’re looking for,” he said. Adamczak said there’s been a growth of people entering into this CDHP program. He said these people that took on CDHP typically didn’t have many medical expenses and could stay within the $1,000 that Alyeska pays. Alyeska originally implemented this program along with its traditional health care plan. However, as health care costs continued to rise, Alyeska moved everyone into the CDHP in 2010. With this plan, Alyeska handles the feedback, claims and appeals internally. Adamczak said that one issue that does arise with this plan is that customers can find difficulty in asking doctors what the costs will be. He said there can be embarrassment or shyness issues that interfere with going to unfamiliar doctors for cost information. “So that’s got Alyeska looking into employee advocacy programs,” he said. These advocacy programs are relatively new, but Adamczak said they have had a significant effect. He said health care vendor reports indicate that customers are saving money by using employee advocacy. He said these advocacy groups also specialize in cost-in-quality analyses, which are a crucial factor in reducing health care costs. He said these also help customers ask about medical costs. Adamczak said advocates also generate administrative savings for Alyeska, which has reduced man-hours. “We don’t force people to choose the lowest cost, but what we’re trying to do is make wise consumers,” Adamczak said. Another new development in the program is to automatically refer three preferred Seattle-based providers for major surgeries and procedures so people can get information about health care cost differences. Adamczak said nurse navigators have also generated a lot of savings by helping coordinate customers with providers. Providence Health and Services Tom Hunt, physician chief executive at Providence Health and Services, said the hospital spends between $30 million and $35 million per year on health care costs, which is a 10.5 percent rise over the last decade. He said employee absenteeism is another factor of health care costs that can be overlooked. Interventions to prevent this include a nurse practitioner-run urgent care clinic that started a few years ago. This provides care for acute issues, which Hunt said slowly bled into some primary care services. He said these on-site primary care services are no charge for now. Hunt said most employees still prefer their individual primary care providers. Another cost-savings measure is a wellness program. This includes a biometric/health risk assessment process. Hunt said this analysis led employees to get lower premiums on their health care insurance. Other wellness program services include health coaching, care coordination services, weight loss program, diabetes and nutrition consultations and other wraparound services to help cope with illnesses. Providence also provides employees with a free gym. Hunt said another new policy that helps is to only hire non-smokers. Hunt said the results are promising as body metrics like weight, blood pressure and body mass index are all improving from 2009 to 2011. “We saw good, maybe not statistically significant, but it’s certainly a good trend towards the decrease of all those numbers,” he said. As for costs, Hunt said that the hospital would have expected a approximate 22 percent rise in direct care costs during those three years but kept it to 6.6 percent. “Just in the last year on the order of about $340 per person,” Hunt said. He said the reduced absenteeism has also helped save costs. Hunt said this is a break-even program because the cost of it is roughly equal to the cost-avoidance of work loss plus the value of that care that would have been sought in the community instead on in-house. Providence has more changes. Like Alyeska, Providence is changing the health plan to a CDHP. Hunt said this will be a “radically different paradigm” for the employees. The health plan is also being reviewed for utilization review and better case management for high-cost employees. GCI GCI’s current employee health care costs rose 103 percent between 2003 and 2011. The company has looked at a number of solutions for its employees over the last several years. GCI Vice President Kathy Carr said systemic inefficiencies like higher administrative costs, complicated billing systems, and two-to-one ratios of specialists to primary care physicians all contribute to higher health care costs, which she said are expected to double in the next five years. “We can’t just do nothing and think those costs are going to remain the same or go down,” she said. “We’ve got to do interventions.” GCI has implemented health plan and administrative changes along with new programs to help combat this. Carr said 55 percent of the health claims exceed $25,000. This is why GCI has introduced programs to introduce healthy behaviors to help reduce costly chronic conditions. GCI has offered employee health fairs and weekly benefit messages. In January, the company implemented new risk assessments, biometric screenings, disease/condition management coaching and telephonic health improvement coaching. Other new programs include centers of excellence and financial incentives. These prioritize prevention over illness to help reduce costs. “So we were focused on the results-based payments rather than just participation,” she said. GCI is now also offering a results-based voluntary healthy futures wellness program. Through this program, the company asks employees if needed to participate in coaching sessions based on online health assessments and biometric screenings. These are to aid in possible plan restructuring. Carr said there has been great participation in these sessions, and a lot of that is due to senior management getting behind them. “Employees really, at the end of the day, I think appreciated that opportunity,” she said. GCI also offers rebates on 2012 premiums to employees who participate in the program. Employees can receive up to $108 per month as health care contribution credits if they participate in all three: risk assessment, biometric screening and coaching if needed. NANA Kevin Thomas, NANA vice president and chief financial officer, said Alaska’s higher costs, lower discounts and networks and fewer number of providers compared to the rest of the country contribute to higher health car costs here. He said NANA, the Alaska Native regional corporation for Northwest Alaska, has in-state health care costs per employee that are more than double those for out-of-state employees. Some of the company’s specific costs drivers are claims data, governance and oversight of plans, employee bases and group sizes available, risk profiles, demographics and employee lifestyles. “Understanding your medical costs and how they’re being spent is probably the most critical thing,” he said. NANA has implemented some targeted improvements, such as dialysis management programs and chronic disease management programs. Thomas said these have resulted in significant savings. He said lower costs in governance areas must come from company-wide commitments. “Information and education for both the executive group and the employees is critical, but there needs to be enterprise-wide buy-in,” he said. NANA does this through a benefits committee that consists of employees who are impacted by these decisions. Thomas recommended combining as many employees as possible into the same group to help spread risks across the larger group to help negotiate with insurance carriers and administrative services providers. He said employers must decide if they want to buy rack insurance, which does not tolerate any risk and so must rely on insurance companies’ needs for business. The other option is assuming more risk and self-insurance the majority of medical claims while putting in appropriate stop-loss levels for individual and aggregate claims. Thomas said employers need to understand an contain costs, consolidate employee groups, determine appropriate risks for a company and try new things in order to fend off rising health care costs. He said being constant with a company’s core values is just as vital. “We have to all accept that health care costs in Alaska will be a challenge,” he said.

Congress passes bill that preserves most railroad funds

The threat hanging over the Alaska Railroad Corp. has been lifted. Congress passed a 28-month surface transportation bill on June 29 that allows the railroad to keep the majority of its annual federal dollars. The surface transportation bill that passed the Senate in March would have reduced annual funding to the Alaska Railroad from $36 million to about $6 million annually. Losing the funding would have induced a technical default on capital improvement bonds sold in 2007, led to immediate layoffs and would have put passenger service in jeopardy as well. “When a company goes through a threat like this, it is the affect it has on the employee population and productivity is really damaging, and we are all breathing a sigh of relief here,” said ARRC President and CEO Chris Aadnesen. “And this will allow us to recover from that, take all the bandages off and go forward trying to focus on business and do the best job for the state like we’re supposed to and put this behind us.” Under the new bill, ARRC will get about $31 million per year in Federal Transit Administration funds through fiscal year 2014 compared to the $36 million it received since 2006. Aadnesen and others have fought to preserve the funds since the Senate bill passage. Aadnesen said all of the employees, union workers and shippers have been locked into trying to retain the funds for months. “That’s just about all we’ve done,” he said. The new law replaces the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, or SAFETEA-LU, that passed in 2005 when Alaska Rep. Don Young was chairman of the Transportation Committee. This law, which has been extended nine times since expiring in 2009, specifically names ARRC to receive federal funds because it is allocated funds for 60 percent of its track miles compared to 10 percent in a 2000 transportation bill. In the Senate, this was considered an “earmark” and was not included in the bill that was sent to the House. Young, who served on the conference committee, was successful in retaining most of the railroad funds. “My priority from day one as a member of the conference committee has been Alaska,” Young said in a release. “The Senate-passed highway bill hung Alaskans out to dry and would have had drastic implications all across the State. Whether we’re talking about vital rail funding in the Interior, ferry funding in Southeast or Tribal Transportation funding in rural Alaska – the Senate-passed bill would have severely impacted Alaska.” The preservation of the majority of the funding is a rescue beacon to many of the railroad’s services. One of the top looming threats for the last several months has been the uncertainty as to the future of the passenger service. ARRC is the country’s last entity to own its track and offer both freight and passenger service. The federal funds on an ongoing basis will allow the railroad to move forward with positive train control. This is a federally mandated safety measure ARRC must complete by 2015 in order to maintain passenger service. The railroad has spent about $40 million on the $100 million project. “The future of the passenger service is to continue growing as if this threat never happened,” Aadnesen said. Something else that will be spared is employment. Aadnesen said the new bill should prevent further job losses or restructuring. “If we had lost those federal funds, there would have been a lot of employee layoffs,” Aadnesen said. “It would have been a tragic thing for the railroad.” ARRC recently eliminated 52 jobs due to lost production from the Flint Hills refinery in North Pole and the harsh winter. Aadnesen said these positions were unrelated to the threat of losing federal funds. Most of the eliminated positions were from attrition rather than layoffs. The annual funds will also enable continued payment on a $137 million balance in federal bonds. The funds currently received under SAFETEA-LU will pay off the bonds through February. The new bill will guarantee ARRC’s ability to continue paying these bonds, which have debt service costs of about $16 million annually. The passage of the earlier Senate bill had resulted in a possible technical default because the original payment parameters had been threatened. Moody’s then lowered the railroad’s credit rating. Aadnesen said this continued guarantee of payment will hopefully enable the credit rating to be raised back up to its previous level. There will still be some changes ahead. Aadnesen said that having $5 million less per year will result in some reductions to capital projects. The railroad will be prioritizing these projects to decide what can be spent. ARRC Director of Strategic Planning Bruce Carr said the $31 million comes from a formula change in the new bill. The formula is based on different apportionment amounts than SAFETEA-LU. Carr said FTA will be working on this for the next several weeks to come out with a new register. He said that $31 million per year has been assured in the meantime. Other provisions The bill aids more than the railroad in Alaska. There is $924 in formula funds for Alaskan highways, roads, bridges and infrastructure projects in fiscal years 2013 and 2014. This amount is slightly lower than in the Senate bill. Young’s spokesman, Luke Miller, said the conference committee version gives an advantage for ferries over the Senate version in that it guarantees money from the Highway Trust Fund rather than going through the Congressional appropriations process each year. The formula for ferry funds places additional emphasis on route miles, which is an advantage for the Alaska Marine Highway System. The agreement also keeps tribal transportation funding stable at $46 million per year and restores the High Priority Program funding at $30 million per year. The High Priority Program was not included in the Senate bill. “When it’s all said and done, this bill isn’t perfect, but I was able to dramatically improve the bill and restore funding to several crucial Alaska programs,” Young said. While both Sens. Lisa Murkowski and Mark Begich voted for the original Senate bill because it aided major highway developments for the state, they lauded the conference committee’s legislation to largely maintain the railroad funds. “I’ve always said potholes are not partisan and the bipartisan work to complete this bill leads to a balanced agreement that will create jobs and move our economy forward,” Begich said in a release. “Congressman Young did a great job on the House side while Senator Murkowski and I worked to ensure Alaska priorities from the Senate bill were included.” In her release, Murkowski said, “Alaska is still a young state with high priority needs, whether through our rural roads linking communities, the critical economic and geographic role played by the Alaska Railroad, or our Alaska Marine Highway connecting many communities unreachable otherwise. I worked diligently with my Senate colleagues on Capitol Hill to push our priorities — and I am pleased that Alaska’s needs have been addressed on both sides by our delegation.”

Southcentral sales, prices still strong

Prices are lower and homes stay listed longer, but the major Alaska real estate markets are still performing well compared to the rest of the nation. So far this year, 1,065 residential properties have sold in Anchorage with an average price of $281,179 and an average 72 days on the market. There have been 487 units sold in the Matanuska-Susitna Borough at an average price of $220,464 and an average 99 days on the market. Multiple Listings Service data shows that residential sales statewide dropped sharply after 2007 before rebounding in 2009. As the number of units sold in Anchorage has dropped by roughly 1,000 since 2007, the average time on the market for a property has increased from 52 days to 70. Average sales prices have dropped from $3,195 below listing price to $4,745 below listing price. Mat-Su is a strong real estate market due to its growing population and limited space in Anchorage. The average sales price in Mat-Su is $220,464 and units stay on the market an average of 99 days. This is a slightly higher price than in 2007 but homes tend to stay on the market 20 days longer on average. Don Dyer, Mat-Su economic development director, said houses there stay on the market longer because there’s less of a constrained market than in Anchorage. He said Anchorage has more jobs but less housing availability. “Mat-Su has more deals and variety to look at,” he said. Kevin Cross of Cross and Associates of Keller Williams and the president of the Anchorage Board of Realtors said Mat-Su Valley areas will continue to see housing growth with the infrastructure build-up. He said permitting problems in Anchorage will also drive the Mat-Su housing market. Housing took a bigger hit in the Fairbanks North Star Borough. Average sales prices have dropped about 23 percent and are now staying on the market about a month longer than in 2007. However, so far this year, time on the market in Fairbanks is down by almost 20 days versus 2011. Homes are also selling closer to listing price than they were in 2007. According to the Alaska Housing Finance Corp., the average sales price for single-family homes fell 0.7 percent statewide. The average 30-year interest rate is near a record-low of 3.6 percent. Although interest rates dropped, loans dropped as well. Both single-family and condominium loans remain below the 10-year average. Total lending activity fell statewide during the second half of 2011 in terms of number of loans, loan dollar amounts and sales volumes. While single-family home prices fell slightly, average prices for multiple-family homes and condominiums went up a bit. Average loan amounts rose just slightly faster than average sale prices. These lower sales prices combined with low interest rates helped affordability. Four out of every five loans in the second half were for single-family units, while the number of loans fell 9 percent over 2010. Anchorage had the highest average sales price for single-family homes in the state and had more than half of the single-family loan activity. Juneau’s average price rose 3 percent to $312,197, the second-highest value in the state. The lowest average sales price was in the Kenai Peninsula Borough at $226,994. Anchorage had 53 percent of the state’s loan dollar volume, followed by the Matanuska-Susitna Borough at 16 percent for the top two spots in the state. In terms of all buildings, sales rose 4 percent on average in the second half of 2011 over the previous year. Juneau climbed 3 percent in average sale prices for single-family homes and the Bethel Census Area rose 8 percent in average sale prices for single-family homes. The total dollar value of loans for all building types statewide fell about 10 percent to $1 billion while the average loan amount went up 4 percent to $253,783. The average loan-to-value, or LTV, ratio was 88.6 percent for all buildings statewide. This is a slight increase over the second half of 2010. The average LTV for single-family homes went up to 91.6 percent statewide. In other properties, condominium loan activity dropped 24 percent in the second half of 2011 over the second half of 2010 while sales prices went up. Multi-family loan activity dropped 44 percent while the number of units financed went up 18 percent. The Alaska Affordability Index indicates that housing became more affordable statewide in the second half of 2011, according to the Alaska Housing Finance Corp. Single-family homes were the most affordable for Mat-Su residents who were employed in Anchorage. The Juneau Borough was the least affordable of the surveyed areas. According to the Alaska Department of Labor and Workforce Development, single-family home loans have dropped nearly 40 percent statewide between 2006 and 2011 while the average home sales price has gone up about 5 percent. Cross said a lack of housing inventory combined with record-low interest rates are making buyers more aggressive, and that’s building the market back up. “This is one of the best housing markets we’ve seen in five years,” he said. Cross said 46 percent of single-family homes in Anchorage have been purchased or offers have been tendered within 30 days lately. Cross said extremely low vacancy rates also increase housing competition and that more people are finding it cheaper and easier to buy rather than rent. This can affect inventory, however. He said sales in Wasilla and Palmer are down just more than 10 percent because there’s less inventory rather than fewer buyers. Vicki Portwood, executive officer for the Anchorage Home Builders Association and the Alaska State Home Building Association, said Alaska is still a good market with a low foreclosure rate. “In Alaska 34 percent own their home free and clear with no mortgage payment. That’s higher than national average,” she said. Portwood said Alaska has a foreclosure rate of less than 6 percent and that number has remained steady. She said a possible attributor to this is that Alaska homes don’t lose property values, which may cause fewer people to speculate on the market here. Dyer also said the market looks to be improving. He said there have been lots of sales and refinancing after 2009. “In Alaska, buying is different. Realtors are pretty smart about it,” he said. He said Alaska realtors tend to secure financing and credit-worthiness first because the state has fewer realtors per buyer, which necessitates efficiency.

Akiak gets $4M power upgrade from rural energy program

Every remote Alaskan community knows reliable power is vital. The tiny city of Akiak knows what it’s like to experience a power failure, but a gift from the Alaska Energy Authority may help ensure it won’t have to again. Akiak is a city of about 350 people in the Bethel Census Area. It is a predominantly Alaska Native community with a strong Yup’ik population that relies on subsistence and fishing. According to the 2010 Census, there are 90 occupied housing units in the community. AEA has just sent four new power generators to Akiak. Each one can produce 210 kilowatts at a time and can run parallel to help ensure reliability. AEA Program Manager Kris Noonan said the community requires around 200 kW during the winter peak so the system can meet regular usage and any unexpected peaks or single generator problems. A single generator can tackle the regular needs and a second will automatically go online during spikes. Having four means a backup for each. A 44-foot long, 88,000-pound module houses the engines. This module is made from noncombustible steel construction and contains a fire suppression system. Noonan said the total project cost a little more than $4 million in a combination of Denali Commission and state funding. The module represents about half the cost with more of the funds going to fuel lines and a heat recovery system. AEA is working on a completely new electrical distribution system as part of the project. Akiak’s upgrade is part of AEA’s Rural Power System Upgrade program that began in 2000. Noonan said they’re about halfway through their list of rural communities with power needs. Noonan said Akiak has had numerous outages and that the current equipment is very old and worn out. “Akiak needed help keeping the power on, especially in winter,” he said. Ivan M. Ivan, Akiak’s city administrator and tribal chief said the new generators are just what the city needs. He said the last upgrade was a heat exchange system in 1990 and the power plant that has supplied the city’s energy is not a stable source. Ivan remembered the struggles during a blackout lasting nearly two days last February and said trips to the nearby city of Kwethluk were required. Ivan said that the city wasn’t prepared to handle the older systems when they were installed, and the system itself was old and inefficient. Ivan said Akiak has doubled its use of heating fuel in the last three years, sometimes going through 500 gallons of fuel in four days. Diesel prices can run more than $6 per gallon around there, although Ivan said the vendor helps the city out with customer rates. “Every revenue we had went to the purchase of fuel,” Ivan said. Ivan said the bottom line is that the new generators will save fuel costs. Brian Gray of Alaska Energy and Engineering designed the system. He said engine selection is the most important thing to find engines with the right fuel efficiency. Gray said the marine configuration for these engines produces twice the amount of usable heat by capturing exhaust. He said it will offset 18,00 gallons of heating fuel per year. The system is comes complete with an automated day and night cycle. The generators can be monitored remotely from Anchorage. This allows AEA to run diagnostics before sending out technicians in case of a problem. “This is so modern I cant believe it,” Ivan said “It’s like being in the movies.” Akiak will be responsible for the system’s upkeep through its own operators. AEA worked with the city to put a business plan together. AEA showed off the module during an open house in Anchorage on June 13 before it was shipped to Akiak. Ivan expressed his appreciation to the state legislature and AEA for recognizing the city’s need.

Alaska delegation cheers decision to hold off F-16 move

The U.S. Air Force is holding its proposed action to transfer the F-16 squadron from Eielson Air Force base in Fairbanks to Joint Base Elmendorf-Richardson in Anchorage. Secretary of Defense Leon Panetta has directed that the Air Force not take action until Congress has completed action on the fiscal year 2013 authorization and appropriations bills. This was especially good news for Sen. Mark Begich, who is on the Armed Services Committee and has been leading the charge against the move. Begich has stated that the Air Force has not been transparent about how the move would save costs. Air Force Chief of Staff Gen. Norton Schwartz sent Begich a letter today that confirms the decision. In the letter, Schwartz states that the Secretary recognized that the House-passed and Senate Armed Services Committee-reported versions of the FY 2013 National Defense Authorization Act would reject or defer the squadron transfer. In compliance with the National Environmental Policy Act, a housing study will be completed before a final decision is made about the proposed transfer. Begich has said that Anchorage’s capacity to house the personnel is a real issue. Begich has led numerous efforts to halt the transfer, including introducing legislation with Sen. Lisa Murkowski to bar the transfer, authoring legislation to put a one-year moratorium on the move and holding up the promotion of a three-star general. Begich said he will now release the hold for Lt. Gen. Herbert “Hawk” Carlisle. “This is some of the best news I’ve had the chance to deliver to Alaskans: that the Air Force has recognized its proposal to move the 18th Aggressor Squadron was not well-vetted and analyzed, and that there is certainly no support in Congress for such action,” Begich said in a release. “Eielson plays a vital role in the nation’s defense and I’m committed to defending that role.” Begcih said downsizing Eielson will adversely affect the Pacific rim presence as part of the military’s global strategy. “I believe Air Force officials have recognized they have not completed their homework for such a major move,” Begich said. “And they have hit continual roadblocks in Congress as multiple communities have faced this type of restructuring. I continue to believe moving the F-16s from Eielson is a misguided idea, and I’m thrilled the Air Force is backing off this bad idea until we pass defense bills.” Murkowski and Congressman Don Young have also criticized the proposed move and worked on legislation to fight it. “Along with many Alaskans, I am pleased to learn that the Pentagon is delaying the decision to move the F-16 Aggressors from Eielson Air Force Base to J-BER. But while today’s announcement provides us with breathing room, we need to use this time and opportunity to make today’s victory a permanent one for Alaska and the nation’s defense,” Murkowski said in a release. Murkowski said the move wouldn’t have saved the money the Air Force claimed. She also questioned the move’s compatibility with the military’s focus on the Asia-Pacific region. “I think today’s news is vindicating in that we’ve all been heard. The Pentagon knows there are flaws in its reasoning. They see that they need to listen to Congress on this. And they see the wisdom and resolve of Alaska’s military community statewide,” she said. In May, Young passed a bipartisan amendment to the National Defense Authorization Act for Fiscal Year 2013 that would ensure further cost and benefit clarity for such military moves. “I welcome today’s announcement by the Air Force and I am pleased they have decided to suspend their plans to move Eielson’s 18th Aggressor Squadron. As I have long maintained, the Air Force had a responsibility to present all the facts and prove to Alaskans that moving these F-16s was the right thing to do both for the nation and for Alaska,” Young said in a release. “As every Alaskan knows, the military and Alaska have a strong and mutually beneficial relationship. Moving forward, I intend on continuing to work with the Air Force, the rest of the Delegation, the Governor, and local officials to come up with a long-term energy plan for Fairbanks and the surrounding region. Eielson Air Force Base is too important to our national defense for us to continue to neglect the high cost of energy – especially when it seems to be the driving force behind these proposed force moves,” he said.

CIRI Fire Island wind farm nearing completion

After more than a decade of planning, the Cook Inlet Region Inc. wind project for Fire Island is close to powering up. Fire Island Wind LLC, a CIRI subsidiary, has all but finished constructing foundations for 11 wind turbines for a commercial-scale wind farm. This will be the first of its kind in Southcentral. The next major step will be installing the towers, which are waiting to be barged from Anchorage to Fire Island. CIRI, one of 12 Alaska Native regional corporations, will start barging tower and turbine components from the Port of Anchorage to Fire Island in the first week of July. The barge will travel at high tide and then offload at low tide. Ethan Schutt, CIRI’s senior vice president of land and energy development, gave a project update during a “Make it Monday” forum hosted by the Anchorage Chamber of Commerce on June 25. “You will start to see some towers going up,” he said. Roads, turbine pads and electrical infrastructure are nearly complete. Shore-side and submarine transmission lines will be complete by the end of the month. Construction is also under way for connecting roadways as well as an underwater transmission line from Fire Island to the Railbelt electric grid. Once completed, CIRI should begin producing commercial power before the end of the year. More than two-thirds of the contractors working on the project are Alaskan companies. These turbines will produce a combined output of up to 17.6 megawatts of electricity. Chugach Electric Association, or CEA, has agreed to purchase up to the full amount produced here for the next 25 years starting Jan. 1, 2013. The utility will pay a flat net price of $97 per megawatt-hour. CIRI is expected to supply the utility with 48,500 megawatt-hours annually, or enough to power 6,000 homes. The farm is expected to be completed between August and September. Schutt said once the entire system is up, it will be transferred to CEA’s control. CEA will own and operate the line after it’s completed and commissioned. This means the transmission lines can be used to power a number of other entities besides the wind project. The transmission line connecting the wind farm to the Railbelt electric grid cost about $27 million. A $25 million state grant paid for most of this. The total wind farm cost is about $65 million, with about $18 million from federal cash grants in lieu of tax credits under the American Recovery and Reinvestment Tax Act of 2009. CIRI Corporate Communications Director Jim Jager said CIRI’s involvement is what allows the federal grant because it is only available to private tax-paying entities. Because it’s based on a tax credit, tax-exempt entities like public or co-op owned utilities cannot get it. This includes CEA. Jager said the entire federal grant is being used to offset project costs to reduce customer rates rather than going to benefit CIRI. This wind farm is expected to supply about 4 percent of CEA’s load and offset 500 million cubic feet of natural gas consumption. Schutt said that CEA rates will rise but the wind farm only accounts for a tiny percentage of that because of the small amount the wind power will contribute to the overall energy grid. “Whatever change you see is not going to be largely caused by this project,” Schutt said. He said the rate increases customers can expect will mostly come from a new Southcentral power plant, debt servicing and fuel contract replacements. The idea for the wind farm began in the mid to late-1990s when CEA decided to diversify its energy supply. Ninety percent of Southcentral’s power comes from natural gas reserves. CEA did a comprehensive review of the region for potential sites for wind power generation. Fire Island, which CIRI owns, was at the top of that list. Various regulatory and other issues slowed down progress over the years from securing agreements with utilities to permitting. One recent example was the Federal Aviation Administration’s problem with the wind turbine’s potential interference with the area’s Very High Frequency Omni-Directional Range, or VOR, used for plane navigation. The problem was solved when a new VOR was installed at Ted Stevens Anchorage International Airport last year. The Fire Island VOR was decommissioned this year. Jager said aviation regulations can be among the hardest for wind generators.

Native organizations lifting Interior economies

Native organizations are giving the Interior major lift, according to a new study conducted by Doyon Ltd., Tanana Chiefs Conference, Fairbanks Native Association and the Interior Regional Housing Authority. An economic impact report reveals that Interior Native organizations are a significant contributor for the region, accounting for nearly half a billion dollars in economic impact and the fifth-highest employment. About 70 Native organizations were surveyed, including 42 tribal governments, 25 village corporations and some regional nonprofits. Of those, 26 are for-profit organizations and the rest nonprofits. Using 2010 data, the survey found that Interior Native organizations spent $178 million in the region with 46 percent of that on goods and services from Alaskan businesses. Indirect spending brought the total economic impact to $307 million. Dividends from villages and regional corporations to shareholders added $3.7 million to regional household incomes. These organizations paid $3.8 million in property taxes to the Fairbanks North Star Borough general fund and $5.5 million in local property taxes. Employment was a large factor. Native organizations provided 2,725 direct jobs in the Interior, making them the fifth-largest employers in the region following the military, federal government, the University of Alaska and the Fairbanks North Star Borough School District. Of those jobs, 1,238 were in Fairbanks and 1,487 in Interior villages. An additional 848 indirect jobs resulted from Native organization spending. Together this accounted for more than 7 percent of civilian wages in the region. These jobs paid $101 million in wages and benefits to direct employees. Indirect payrolls added another $46 million. Statewide, these organizations employed 3,704 and paid $145 million in direct wages and benefits. Doyon President and CEO Aaron Schutt said about 40 percent of those surveyed returned data, which is enough to model the overall impact of the Interior. This includes 10 to 12 village corporations and perhaps up to 20 of the tribal governments. The participating Native organizations cover a broad range of businesses. Doyon is a for-profit Alaska Native regional corporation with an umbrella that covers government contracting, oil field services, tourism, natural resource management and construction. The Interior Regional Housing Authority works in low-income housing development with around 31 tribes. “It was certainly a good sample enough to do some modeling of the overall impacts,” he said. Schutt was pleased with the report. He said it shows Native organizations’ sizable impact and commitment to the Interior and state. He said it also indicates that these organizations are growing. He said the impact is especially strong in Fairbanks and that as the region has struggled with downsizing and high energy costs, the Native organizations are a source of good news and strength in the community. Irene Catalone, CEO for the Interior Regional Housing Authority, agrees. She said that Native organizations provide a strong backbone for the Interior. One part of the study that particularly stuck out to her was that the Native organizations’ current employment numbers for the Interior matched those from the entire state several years ago. She said this shows their strong employment role, especially because these companies hire all Alaskans and not just Natives. “I think that’s remarkable,” she said. The report indicated a few notable points to Schutt as well. One such factor is the $3.5 million in statewide charitable contributions from Native organizations. $2.5 million of that was in Fairbanks. He said this is a significant amount when considering that the majority of the organizations are nonprofit. In comparison, he said companies like BP and ConocoPhillips annually give between $5 million and $7 million. “That’s jut a glimpse of how we support education, social programs, other charitable giving, particularly here in the Interior,” he said. Schutt said something that wasn’t in the report is that multiplier effects from direct spending that turns into indirect spending for the total economic impact is quite a bit less than major municipalities around the country. Fairbanks has a smaller multiplier than Anchorage and rural communities have almost none. Schutt said this is a policy point where data on more dollars staying in the communities can be helpful. Schutt said this is the third such study to be done, however, comparing these results to the previous surveys’ is not exactly “apples to apples” because data from larger business presences like Arctic Slope Regional Corp., Chugach Alaska Corp. and Bristol Bay Native Corp. was gathered but not included in the report as in previous years. “We asked them for that data. And we got a lot of responses this time and that time. The difference is what we’re reporting,” he said. He said that although the data doesn’t offer a good basis for comparison, logic dictates that because Interior-based organizations are growing, their economic impact should be growing proportionately. The reason behind the study is to give the Native corporations an idea of what they are doing for the Interior and the state. Schutt said most only have data on their own specific companies but not about the others. The data is used to help local legislators and chambers of commerce make decisions, as well as internal and shareholder use. He said legislators have previously cited the data. “It’s a very useful tool for us,” he said He gave an example of how legislators used Native corporation information when going to bat for them on the Frontier basins oil and gas tax credits. “We want the general public to know the information. We certainly want influential policymakers to know the information,” he said.

AVTEC wind turbine powers energy training and Seward grid

SEWARD — Driving through a city as small as Seward, one can’t help but notice one of its tallest structures looming off of the sole highway near Resurrection Bay. This 121-foot wind turbine was built as a teaching tool for AVTEC, Alaska’s Institute of Technology, but has since become an extra power source for Seward. AVTEC has just attached the turbine to the city’s power grid. The structure powers the campus’ Applied Technology campus, which consists of three buildings, and any excess energy goes to the city. Dan Logan, an AVTEC department head and industrial electricity instructor in the energy and building technology department, said that the turbine can provide a lot of power and the campus doesn’t use all of it. The rest goes to Chugach Electric Association Inc. to feed into the city’s grid. Logan said that the campus use varies greatly throughout the year and even at different times of the day. He said many times the campus uses only 13 kilowatts but can go to more 100 kilowatts during times of high electrical needs. When the campus is using more power than the wind turbine can provide, AVTEC gets it from the city like all the other buildings. Logan said all of this power and more is quickly returned, especially at night when the campus is closed and the wind is blowing. According to the turbine’s manufacturer, Northern Power Systems, winds at 20 miles per hour would generate about 54 kilowatts. Logan said that the turbine gets a little more than that at standard density. He said winds of 33 miles per hour would be needed to get 100 kilowatts. While AVTEC hasn’t gotten that high yet, it’s come close with 30 miles per hour winds generating around 95 kilowatts. “It’s run steadily. We’re definitely getting more than what they said to expect,” Logan said. Seward Utility Manager John Foutz said this is a good deal for the city as well as the training institute. He said they worked closely together with all parties and the Alaska Energy Authority to verify the connection was acceptable. Like Logan, he said the amount of power exchanged is uncertain and could be anywhere from zero up, depending on what the facility is doing. Foutz said AVTEC currently has a temporary approval agreement for the power exchange with the utility. He said they are close to finalizing the documents for permanent interconnection. Logan said the turbine’s first role is as a training tool in renewable energy systems. The students’ role is using it to learn how to maintain wind turbines plus how to generate power with diesel and utility systems, both in operations and maintenance. They learn preventative maintenance, data management and test components. He said the deal with the city is an “added bonus.” Logan said the industrial electricity and power plant operation courses are probably among the most rigorous at AVTEC and have the highest math requirements. He said the program here is comparable to that of a major university. “We like to compare ourselves to MIT,” Logan said. “We’ve been there enough to make that comparison.” This wind turbine project has been long in the works. The turbine began its placement at AVTEC at the end of 2010. It was hooked into the campus the following spring. It just plugged into the city grid this May. Funding for the Northwind 100 turbine — 105 feet to the nacelle with 30-foot blades — came from the Denali Commission and the State of Alaska. The training program with the turbine also comes through an agreement between the Alaska Energy Authority and the Alaska Village Electrical Association. A dedication ceremony was held June 14 by Alaska Labor and Workforce Development Commissioner Diane Blumer and AVTEC Director Fred Esposito. “AVTEC’s wind turbine training reflects the state’s commitment to training Alaskans for jobs in energy efficiency and renewable energy,” Blumer said in a release. “Our focus continues to be training for industry needs.” Because the program is so new, it will be a while to gauge both student progress and how much it ultimately provides the city in excess power. “It will be nice seeing a whole year’s worth of data,” Logan said. What he said he knows for sure now is that it’s producing more than what was expected.

Begich urges vote on transportation bill

The Senate and House remain tied up in a conference committee to negotiate a version of a surface transportation reauthorization bill that could make or break the Alaska Railroad Corp. These negotiations are taking their toll on Alaskan legislators who want to see more progress. The Senate passed a bill in March that would strip $30 million from ARRC’s budget annually, yet it would bring in millions of dollars for Alaskan highways. Meanwhile, the House has extended the current law that leaves the funds intact. The law, called the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, or SAFETEA-LU, is set to expire June 30. It has been extended nine times since 2009. The decision on the ultimate language of a transportation overhaul now rests with the conference committee. Sen. Mark Begich, D-Alaska, spoke on the Senate floor June 13, urging the committee to conclude and send the bill forward for a vote. He said that a handful of the committee’s House members “led by the Republican majority” are preventing the bill from going to the floor for a vote. “Let’s move it forward. Let’s quit the politics,” he said. ARRC officials have stated that the Senate bill could virtually cripple some of the railroad’s operations, including passenger service. The railroad has already cut several capital projects this summer. Around a third of the corporation’s employees could also be laid off. Since the passing of the Senate bill, ARRC also faces defaulting on almost $137 million in revenue bonds. The company has already notified its creditors of a possible technical default because the original conditions of the bonds would change under the Senate bill. The Alaska Railroad has enough funds to cover scheduled bond payments in August and next January, but the loss of annual funding under the Senate bill would force it to find other means to make payments in the future. Moody’s lowered the railroad’s credit rating in April. In an email to the Journal, Begich said he feels strongly that the surface transportation reauthorization bill should not change the ARRC’s eligibility for Federal Transit Administration formula funding. He would like to see the railroad maintain this eligibility as part of the conference committee’s reported bill and is working with the delegation and conference committee on including this in the final report. Alaska’s Republican Rep. Don Young is on the conference committee. He does not support the putting the Senate bill on the floor immediately. “Whether it’s slashing crucially important Alaska Railroad funding or cutting funds for our tribes, the Senate-passed highway bill is bad news for Alaska,” he said. Young has expressed support for ARRC through SAFETEA-LU and its extensions. Young said he’s disappointed in Senate Democrats’ reluctance to address key House priorities – such as streamlining the regulatory process. He said he remains committed to working on making this a long-term, bipartisan bill that will serve the state best. Begich told the Journal he would like to see the bill reported in a timely fashion before the current extension expires so that Alaska’s communities and the construction industry have the certainty to plan and invest in infrastructure projects. Begich feels that the bill would pass with bipartisan support if it goes to the floor but a subset of Republicans are preventing the majority leader from moving it. He said the transportation overhaul is one of several bills the House is holding up. Begich said that stalling the bill jeopardizes construction projects, causes uncertainty and costs taxpayers money. He said 3 million jobs are on the line with this bill. Young said that as the chances of this conference committee passing a long-term bill dwindle, it might come down to working on passing another SAFETEA-LU extension. He said this would help maintain current funding levels for the railroad, the Alaska Marine Highway System and tribal transportation systems.

CUNA: Economic outlook OK but not what it should be

SEWARD — The recession is over, but that doesn’t mean everything is back to normal yet. Economists with the Credit Union National Association say the national outlook is a slow recovery, and this is something credit unions need to be aware of when lending. Mike Schenk, CUNA vice president of economics and statistics, addressed the Alaska Credit Union League about the slow recovery during the league’s annual meeting in May. “I can tell you that we’re now growing at fairly healthy rates but certainly not rates that are reflective of a normal economic recovery,” he said. Economic growth is rising and unemployment is falling. However, the rates are not what they should be at this time after a recession, Schenk said. Even with good news, albeit slow, economic concerns can still impact how credit unions lend money. He said there are positive economic turns that credit unions can take advantage of, like improving labor markets and consumer confidence. Inflation is currently in check for the moist part, too. Schenk said the main goals are to maximize economic growth, maximize employment and minimize inflation. While these goals seem basic, there could be more complications in reality. “The problem is if you look at it very closely, you quickly come to the realization that these goals compete against one another,” Schenk said. He gave an example of how boosting employment “by definition” almost always translates to increases in inflation. Last year had an optimistic start for gross domestic product but dropped quickly in the first quarter to 0.4 percent. It steadily rose to 3 percent by the fourth quarter. The first quarter of 2012 was also disappointing at 2.2 percent, and has since been revised down to 1.9 percent. Schenk said most economists hoped it would be closer to 2.5 percent. A bright spot in that quarter, however, is that government decreased spending by 3 percent. “So that result, 2.2 percent growth actually occurred in the face of a pullback on the part of the government,” he said. One concern is that investment spending declined by 9 percent. However, consumer spending went up 3 percent. Consumer spending is vital because if accounts for the majority of economic activity through CUNA estimates. Exports were up 5 percent while imports went up 4 percent. Growing domestic manufacturing is key to reducing the trade deficit. “The bottom line is that we achieved this growth with very little price increase,” he said. He said the slight price increase was still well in the comfort zone of the Federal Reserve. However, the rates could still be growing faster and are not what should be seen in a normal economic recovery, he said. He pointed out that the labor market still has a long way to go in improvement even as unemployment is on its way down. The current 8.2 percent unemployment rate, though, is not reflective of the actual amount of those not working. Adjusting for those who are underemployed or have left the job market out of discouragement brings the rate closer to 14.5 percent. Schenk said the goal nationally is to have a 5 percent to 6 percent unemployment rate. The rate was in this range in December 2007. In October 2009 that rate rose to 10.1 percent nationally. It has dropped to 8.2 percent by May, but the U.S. economy added just 69,000 jobs last month. Schenk said there has been 25 consecutive months of private sector job gains with 2.5 million new jobs since the beginning of last year. He said this combined with normal unemployment insurance claims indicate that further market improvements could be on the horizon. He said 150,000 new jobs added per month are needed for a healthy recovery and to bring that unemployment rate down. Recent data indicates the 115,000 new jobs currently being added each month doesn’t cover it. “The payoff for that of course is that when the employment situation is improving, when labor markets are improving, people’s incomes tend to go up and they tend to feel a whole lot better about the future,” he said. Consumer confidence started high in 2011. It had a fairly sharp falloff at the end of the summer but went back on the rise around November before dropping again in May. Schenk cited high oil prices, the Japan tsunami, and the Standard & Poor’s downgrade of the U.S. credit rating last August all contributed to loss of consumer confidence. Some more factors that have the CUNA economists concerned is the uncertainty surrounding Europe’s effect on exports, Congress’s handling of the budget and several tax cuts that could disappear. These include payroll tax cuts and extended unemployment benefits. Schenk said it’s uncertain but could mean a substantial hit to economic growth. In addition to these concerns, the household sector has its own set of concerns in that the debt burden is falling but is still very high, and the housing market is bouncing along the bottom and coming up out of that looks like it will be long and slow. “There doesn’t really seem to be a prospect anytime soon of what we would normally see in terms of a recovery housing that looks anything like a normal recovery housing coming out of a recession,” Schenk said. One possible way to achieve better economics is through monetary policy and controlling the money supply through Federal Reserve activities by selling securities to try to target interest rates. “If the economy’s growing slowly, we essentially try to lower those interest rate targets and make it more affordable for people to borrow money,” he said. Overall, the recovery looks to be a gradual one. Schenk said that while this is currently a soft patch, growth will continue into next year as unemployment also declines very slowly. Inflation is expected to remain flat. This could mean slow loan growth for the credit unions. This will present many challenges, especially for the smaller credit unions. Member business loans have been among the highest loans in terms of growth. Other positive loan growth was from first mortgages, credit cards and used automobiles. New automobiles, on the other hand, declined. So did home equity loans and second mortgages. Alaska’s credit unions have still done better than most. Schenk said Alaskan credit unions have grown slightly over the last three years while those in the rest of the country remained relatively even.

CUs look to Congress for larger loan limits

SEWARD — There is a fight between the banks and the credit unions, and the credit unions are turning to Washington, D.C., to change the game. Bill Cheney, president and CEO of the Credit Union National Association, addressed current legislation at the Alaska Credit Union League’s annual meeting in May. Cheney said credit unions rely on legislative and regulatory support to be successful. While examiners do play an important role in establishing and maintaining rules, he said there can be conflict between the examiners’ judgments and those of the managers. “It’s your job as a credit union. Not the examiners’,” he said. He said legal aid can help address the conflict between supervisory oversight and micromanaging while giving credit unions competitive options against the banks. “The banks would like us not to have a vote. We want to have a vote but more importantly, we want to win a vote on this legislation,” he said. One of the biggest bills out now is Senate Bill 509, sponsored by Sen. Mark Udall, D-Colo. It was introduced last year to amend the Federal Credit Union Act to more than double the capacity to make small business loans by raising the member business lending cap from 12.25 percent to 27.5 percent for qualifying credit unions. The bill, called the Small Business Lending Enforcement Act of 2011, is currently pending Senate floor action. Udall’s spokeswoman, Alex McCarthy, said Senate Majority Leader Harry Reid, D-Nev., promised it would make it to the floor. Cheney said the bill could go through at any time. The House has its own version in H.R. 1418. This is the Small Business Lending Enhancement Act of 2011 and would give certain credit unions the authority to make additional member loans. It has been referred to committee. Alaska’s delegation has supported these actions. Sen. Mark Begich is a co-sponsor of S.B. 509 and Congressman Don Young co-sponsors H.R. 1418. “As a small business owner, I understand how credit unions have stepped up for Alaska’s small businesses. Many small businesses look for $50,000 to $200,000 bridge loans from credit unions, after larger more traditional banks have said no, and I am proud to help them continue to assist small businesses,” Begich wrote in his newsletter. Cheney believes there are between 58 and 64 senators that support this action. He believes more are needed for the ultimate goal of winning the vote. He said at least 24 more are undecided and therefore must be convinced. He said this includes Sen. Lisa Murkowski. However, he acknowledges her difficulty in this issue because of her father, former Gov. Frank Murkowski, had a history in banking. Cheney said the banks are turning more of their attention to the House version and that’s a mistake on their part. He said if the Senate version passes, the credit unions would get more leverage and a louder voice than the House bill. A study by the National Association of Federal Credit Unions states that around 10 percent of credit unions had to deny loans because of cap restrictions during the last 12 months. Around 13 percent had to enter into loan participation arrangements to stay within the cap. Credit unions have reported that 44 percent of their portfolios are made up of loans less than $100,000, while these sized loans amounts make up less than 8 percent for banks. Business loans greater than $1 million make up 16 percent of the credit unions’ portfolios and 68 percent of bank portfolios. Cheney said allowing more freedom to the credit unions is an economic boost, too. He said it’s discouraging to see so many people leaving the labor pool because the jobs aren’t there. The idea is that more lending freedom would help more businesses to grow and create those jobs. “We have legislation saying it will allow credit unions to provide and addition $13 billion to small businesses in the first year, creating 140,000 jobs conservatively at no cost to the taxpayer,” Cheney said. “Who can argue with that?” The banking industry argues against the bills. The Independent Community Bankers of America states the current MBL cap doesn’t prevent nonmember business loans. The current cap also already allows exceptions for loans less than $50,000, Small Business Administration loans up to $5 million and loans secured by the borrower’s primary residence. Other arguments are that the House bill doesn’t expand small business credit and that both bills would only apply to a small number of the largest credit unions. Banking associations also point to the tax-exempt status of credit unions, and the ICBA states that the displacement of bank loans will affect the tax revenue and increase the deficit because banks pay taxes. Cheney said the battle between the banks and credit unions has gotten more and more heated, and that it would make things easier to pair relief for the credit unions with, “things that the banks should reasonably support.” “Banks aren’t lending and they don’t want us to lend either,” Cheney said. He said the CUNA is not asking for unlimited lending capacity, but that the low cap keeps some credit unions out of the market and more credit unions are lending today so a possible cap would hurt small business owners who are doing business today. He addressed the argument against credit unions already receiving what is perceived to be an unfair advantage in federal income tax exemption. He said the banks are still ahead and the credit unions’ 5 percent of the market share proves this. Cheney also talked about legislation geared toward providing supplemental capital option. House Bill 3993, introduced by Reps. Brad Sherman, D-Calif., and Peter King, R-N.Y., would allow credit unions to pursue outside sources of capital as long as it doesn’t change the member and ownership standards. Cheney said that while it was important to get it introduced, this legislation will most likely not move in this Congress. A House bill called the Eliminate Privacy Notice Confusion Act was just introduced to prevent credit unions from having to send out annual privacy notices if they do not change their policies. CUNA strongly supports this bill. A final legislative topic he addressed was the federal tax exemption law. He said that while there is no pending legislation that suggests this would go away, he said maintaining the tax exemption is always a top priority.

New program brings Fairbanks students and unions together

Fairbanks students have a new way to get into the workforce. The school district has teamed up with the University of Alaska Fairbanks Community and Technical College to bring secondary students Partnerships to Pathways, a state-funded program that ensures collaboration and training for these students to further education in postsecondary classes or get started in work or apprenticeships immediately after high school. These partnerships with the district expand to various workforce entities and labor unions to get students involved in work early. Karen Gaborik, assistant superintendant for secondary schools, said this has been a good opportunity for the community and has brought the district into looking at postsecondary options for students while getting counselors and principals involved. “Everyone has the broader picture,” she said. She said the best partnership has been with UAF CTC and the school district. A big part of this effort is developing mutual advisory committees between the technical college and district to give a “K-16 perspective.” Another focus is to develop process technology and health occupation pathways that start in high school. The Alaska Department of Labor and Workforce Development put in $43,400 to fund the program. The idea is to develop partnerships between the state, schools and labor organizations to get students ready for work. The program also helps ensure that high school guidance counselors understand the program and can better advise students about the Career Technical Education program, or CTE. Peggy Carlson, executive director for the curriculum and instruction for the school district, said the program has been a great success so far. She said the community understands the importance of getting students into a working environment and many have helped out. The CTE program began after workforce development studies indicated the state cannot meet its workforce demands, particularly in trades areas. The state determined that better methods of preparing students for work were needed. This led to recognition for cooperative needs between the Labor and Education departments. This led to Alaska Career and Technical Education Plan, or CTE, of which Pathways to Partnerships is a part. CTE also builds from the “Alaska Gasline Inducement Act Training Strategic Plan” by the Alaska Workforce Development Board in 2008 and the “Alaska Education Plan” adopted by the Board of Education and Early Development in 2009. The CTE plan addresses the individual students’ needs for career preparedness with certain goals in mind. Carlson said four labor organizations have joined the program, those of electrical, plumbers, operating engineers and carpenters. Each union has a goal of two students per year and one of those categories is way ahead. Students Michael Reynolds of Ben Eielson High School and Ryan Graham Taylor of Lathrop High School have even been accepted into apprenticeships for the Alaska Joint Electrical Apprenticeship and Training Trust. “This is an amazing program. It gives students like myself an opportunity that would otherwise never be available. I’m excited and thankful to be accepted into this program,” Reynolds said in a release. “I didn’t know this is what I wanted to do until this year,” said Graham Taylor. “I met a guy at my mom’s work and he had been in the IBEW for over 40 years and talked about his excellent retirement and career, and this got me looking at unions. I’m thankful for the opportunity. I don’t have to look for a job now! I don’t know what to say, I’m happy, very happy! Basketball was the only reason I was going to go to college, and I’m happy about this.” Gaborik said students must fulfill a list of requirement for apprenticeship eligibility, such as a high grade point average, teacher references and completing certain courses like algebra. She said the result is a big advantage t the students because it gives them a leg up in these competitive apprenticeships that adults are also seeking. The second CTE goal of strengthening the curriculum is moving along the public comments for the drafts are being reviewed with an adoption expected this month. The drafts include new courses and study programs for health science. CTE also seeks to disseminate programs and options to staff and students. Administrators recently met and counselors were given instruction in the plan to aid this effort. The biggest barrier to the project during the last quarter was determined to be the short time frame in which the school district had to get approval for supplies and material purchases. The district is continuing to work with the Alaska Workforce Investment Board for approvals. All grant funds are expected to be expended if approval is given. A letter from UAF CTC Interim Dean Michele Stalder dated April 9 states that $5,277 has been used for two faculty members for participating on the program advisory committee and assisting with development and site visits. Another $24,128 went to CTC career advisors and a financial aid coordinator. The year-to-date match/cost-share is $32,202. Gaborik said there’s room for advancements as the programs continue. The district would like to expand apprenticeships as well as outreaches to students and parents. She said they would also like to strengthen partnerships with the Fairbanks Pipeline Training Center and Alaska Works Partnership.

Air Force releases EIS for Joint Pacific Alaska Range Complex

Alaska-based armed forces need more places to train, and options for expanding uses of the Joint Pacific Alaska Range Complex have been released for public comment with the draft environmental impact statement. JPARC consists of all the land, air and water used for Department of Defense training, be it Army, Air Force, Navy or Marine Corps. It covers approximately 65,000 square miles of available airspace, 2,490 square miles of land within 1.5 million acres of maneuver land, and 42,000 square nautical miles of surface, subsurface and overlying airspace in the Gulf of Alaska. Each year, JPARC hosts several large-scale and joint training exercises, such as Red Flag, Northern Edge and Arctic Edge. It consists of lands ranging from the Yukon down to Anchorage and Valdez. However, most of the activities are concentrated in the middle around Donnelly Training Area, and spread outward coordinated by Alaskan Command, or ALCOM. The draft EIS outlines a series of enhancements and new operations to incorporate more realistic training exercise, new technologies, responses to recent battlefield experience and new weapons and equipment training. Twelve areas of interest are examined with different proposals, including no action alternatives. Some of these alternatives cover missile live fires, live ordinance deliveries in restricted areas, unmanned aerial vehicle corridors, a proposed joint precision airdrop system, enhanced ground space access and intermediate staging bases among other enhancements. Six of these proposals are definitive, meaning there is enough detail on them that they may be implemented as soon as a Record of Decision is signed. The other six are programmatic and need additional planning. Lt. Col. Howard Hunt, ALCOM training and exercises director, said the purpose of these options is to provide a better DOD training facility that will allow improved capability for existing and future weapon systems. In accordance with the National Environmental Policy Act, ALCOM is examining potential environmental consequences before submitting a final EIS. Part of this process includes gathering public input through June 7. The Air Force is conducting 10 public hearings throughout the regions with the most geographic ties to the plan. A Record of Decision is expected in 2013. Hunt and Lt. Col. Mike Cabal of ALCOM training and exercises stressed that the most important thing at this stage is public involvement. “We look forward to public involvement,” Hunt said. “We want there to be comments to make this a better document.” The first hearing was on May 11 in Anchorage, and it started slow. Hunt said that is expected since the affected areas are further out in the state. More hearings will be held in Palmer, Glennallen, Paxson, Delta Junction, Fairbanks, Healy, Talkeetna and Wasilla. To help ensure objectivity, an Air Force judge advocate Col. William Orr came in from Washington, D.C., to preside over the hearing. Orr said federal requirements mandate that a judge outside the Alaska Air Command must do so at each of the environmental hearings. Only three Anchorage community members testified publicly. Gregory Razo, vice president of Cook Inlet Region Inc., spoke favorably of the plan, saying it allows positive impacts for workforce development. He said there is high unemployment in JPARC areas, especially for Natives. Razo said he believes this plan allows “unprecedented” training opportunities and development. He said CIRI has found little environmental impacts to subsistence users. The next commenter was Terry Cartee, who represented himself as a private citizen, and he had some concerns. He said a proposed boundary movement for a Fox 3 Military Operations Area expansion northeast of the Mat-Su valley could represent a safety hazard, particularly with lower flying altitudes. The other public comment came from an energy activist, Paul D. Kendall, who urged the Air Force to consider cold fusion technology into its plan. Cabal said the small crowd was understandable given Anchorage’s distance from the activities, and that this was comparable to the crowd size during last year’s scoping and he expects more will participate in other areas.

University construction under way

The University of Alaska’s three main locations are getting their work crews ready as the spring season allows building to begin. A few big buildings are in store around the state but most of this year’s work remains in standard maintenance. One of those bigger projects belongs to Anchorage’s campus. Clearing out is under way for the new 5,000-seat sports arena. Site clearing for the $109 million, 190,000 square foot project has begun, as the university has gotten the final funding. The design is by McCool Carlson Green of Anchorage with Cornerstone General Contractors doing the building, which is expected to be completed in 2014. “You’ll see a building coming out of the ground in the fall,” said Chris Turletes, associate vice chancellor for facilities and campus services. The new arena will replace the currently used Wells Fargo Sports Complex, which Turletes said is “woefully undersized.” The complex seats around 1,000 and is used for a variety of games like basketball, volleyball and intramural sports. Turletes said it will continue to be used for student recreation and activities like hockey practice. The University of Alaska Anchorage has a few other big projects going on like a $5 million renovation at the wellness center at Prince William Sound Community College, which should be completed next summer. Work should also start soon for classroom additions at the Matanuska-Susitna campus to build more space for nursing and paramedic programs. Design work is being done for the new Mat-Su Valley Center for Arts and Learning theater and the new engineering building, but construction will not begin this year. A significant project under way is a $15.3 million career and technical center at Kenai Peninsula College. Another $17.8 million is going into new student housing, which Turletes said is a first for the campus. Like the other UA sites, several millions of dollars will go into infrastructure projects like roofing and deep maintenance, including plumbing, boilers and air handling equipment. Turletes is optimistic about project funding, saying this is the third year the governor has provided allowance for fund renewal. Other buildings and designs have been completed over the last several years, such as last year’s opening of a $45 million, 65,000 square foot health sciences building that opened last year art a cost of around $45 million. “We’ve been vey lucky with new construction,” Turletes said. The University of Alaska Fairbanks will be working on more maintenance issues than new buildings. Still, these projects are pretty large undertakings. UAF design and construction director Gary Johnston said among the biggest are a utilidor installation as part of a project to expand steam capacity to West Ridge, as well as a sewer line replacement from Lola Tilly Commons to Wood Center. Most of the building work is going into renovations. Johnston gave several examples, like the Community and Technical College getting a new roof plus fourth floor revitalizations that will aid in its health care programs. Other buildings renovations will be at Arctic Health Research Laboratory electrical revitalizations, lobby and office upgrades at the Student Recreation Center and new retaining walls at Cutler Apartments and the Patty Center. As far as new buildings, work is continuing on a new life sciences building that broke ground last year. It’s expected to be completed in 2013. Big work is also happening at the Atkinson Power Plant, as multi-year modifications will renew the deaerator, feeder heater and valves. Renewals will also raise the electrical distribution voltage. Things are also happening in three locations of the University of Alaska Southeast. Director of Facilities Keith Gerken said most of the projects are smaller renewal things like roofing, paving, boilers and system modernization. “They aren’t glamorous but keep the building stock working as efficiently as we want them to be,” he said. Still, there are a few larger projects in the works. The second phase of the work on a pedestrian greenway at the Auke Lake campus in Juneau is going on. Gerken said this is a $4 million project phased over four years. Design is being done on a new $8 million student housing project that is expected to break ground next spring. It will add 60 beds to the Juneau campus. Remodeling is going on to add space at the Sitka campus. This will provide new areas for vocational education, lecture areas and construction technology space. This is part of continuous work to help turn the former PBY aircraft hangar into a modern learning facility. The Ketchikan campus is getting a new principle parking lot plus a boat davit to be used as a lifeboat training facility, something Gerken said is a $750,000 device. The Institute of Social Economic Research states in its 2012 construction forecast that education spending is up 15 percent fro last year due to a large state education general obligation bond package that passed in 2010.

Safety, seafood industry driving airport improvements

Small towns from the tip of the Alaska Peninsula to the far-flung Aleutian Islands are some of the trickiest areas to get to and by aircraft is often the only means to do so. Improving access, safety and economic benefits are driving renovations moving forward in several such places this year. Akutan represents the biggest example. The tiny city has no paved airport. Passengers currently get in or out by way of the amphibious aircraft the Grumman Goose. Construction is under way for a 4,500-foot paved runway, which Project Manager Sean Holland said will open up the tiny town to more advantages. Holland said the $56 million is easily the biggest transportation infrastructure project Akutan has had. It’s expected to be completed by Sept. 1. The contractor is Kiewit Infrastructure West Co. of Anchorage. The Grumman Goose’s disadvantage comes in its size. The craft only carries seven passengers plus freight. It is also more than 65 years old, which Holland said is cause for a replacement. The new paved airport will be serviced by a Navajo aircraft operated by PenAir, which also operates the Grumman Goose. This is a slightly bigger plane with nine-passenger capacity. Holland said the real advantage, however, is long-term possibilities for flights to Anchorage instead of Unalaska. The new airport could be used to service PenAir’s bigger Saab 340 aircraft to Anchorage. Holland said this aircraft will be much more reliable and efficient. RMA Consulting is handling the project. Senior Program Manager Ray Mann said this airport has been a long time in the making and that a big advantage is in the economic benefits, especially with future Anchorage connections. Akutan is home to the largest seafood processing plant in the North America, owned by Trident Seafoods, and large influxes of fishermen, processing workers and other crews will be able to rotate more frequently and transport product more efficiently. “We believe this will be a significant pickup for economic activity for the next five to 10 years,” he said. “It’s reasonable transportation and economic development coming together.” Plans are also moving forward with a master airport plan in Cold Bay to address several renovations needs, including runway length, pavement issues, safety zones, visibility zones and airport land. Cost estimates for the short-term plan are around $37 million. This project is still in early development, as the public comment period has just ended. Administrators are pushing for the renovations as a way to boost economic activity beyond airport revenues. Ernie Weiss, the natural resources director of Aleutians East Borough, said there has been a big push for an apron to the new Aleutians East Borough terminal building. A major part of this effort is to develop a direct route from Cold Bay to Chinese markets. He said the ability to fly direct would enable more live crab and seafood transports with less dead loss. Flights currently go through Anchorage, which means an extra 1,400 miles in the air plus downtime at the airport. “We don’t want to be in direct competition in Anchorage but make a brand new market,” Weiss said. Crab harvesters and other fisheries have supported this effort. The Legislature just passed $2 million for the Cold Bay airport apron and taxiway construction in the capital budget. The budget still awaits the governor’s signature. Weiss said there is enough infrastructure present to get started as soon as funding and regulatory issues come through. “In general, we’d like to get moving on this project right away,” he said. Weiss said there will be a thorough presentation of the effort at the Alaska Seafood Marketing Institute forum in June. Unalaska, home to the nation’s perennial leader in seafood landings, is gearing up for its own airport renovations. Bids will go out this year for runway renovations, airfield lighting, safety area work, taxiway and apron resurfacing, drainage improvements and relocating a segment of Ballyhoo Road. Engineering estimates put the project between $30 million and $40 million. Most of the substantial work is expected to be done by October 2013.

ISER: Private spending unchanged in 2012

With the snow gone, dormant building projects are getting back under way. There are several good-sized projects, but according to the Institute of Social and Economic Research, there aren’t any new large-scale efforts starting this year. Much of the construction work this summer involves completing projects started in prior seasons. For this reason, ISER’s 2012 construction forecast states that private commercial spending will be around $120 million, the same as last year. Spending on residential building will also remain the same at $400 million. Anyone driving around Anchorage will notice an abundance of structures being worked on, even if many are left over from last season. For example, an 85,000-square foot office center adjoining the Alaska Native Tribal Health Consortium is moving along again. The $25 million building is expected to be completed this year. Other bids for Anchorage projects valued greater than $1 million include those for the Roosevelt, Fire Station 6, Residences at Northwood, Aspen Hotel, the Harry J. McDonald Center, Providence Commons and Verizon among others. The University of Alaska Anchorage has its own set of projects it’s working on, such as an $82 million sports arena, a new engineering building and an arts and learning center in the Matanuska-Susitna Valley. These projects will not be completed for several years. Anchorage permit manager supervisor Gretchen Stuller said two new retail structures of note are in store. These are a Sam’s Club in Tikahtnu and a new Wal-Mart in Muldoon that were just permitted. A new $37 million Blood Bank of Alaska will also begin with an anticipated 2014 completion time. One area that will not see any construction this year is the Port of Anchorage. Officials state there is need to examine the construction and cost difficulties that have surrounded the long-delayed project. Fairbanks has a number of projects in the works as well. City building department official Clem Clooten said this building season looks to be an average one and that construction has been pretty steady over the last several years. Projects include Raven Landing, a senior citizen housing complex that has been ongoing. A recent $3.5 million state grant has helped work on a new 20-unit addition. Clooten said other projects include a roof replacement at the Noel Wien Public Library, additional rooms for Barnette Elementary School and remodeling at Lathrop High School. John MacKinnon, executive director of Associated General Contractors of Alaska, said a number of commercial construction project are actually supported through federal and state dollars instead of strictly private investments. “For the last several years, construction in Alaska has been buoyed up by public funds, not private investment,” he said. MacKinnon provided a representative list of building projects, both commercial and transportation-related. He said every one of the 59 items has at least some public money behind it. Several of these projects related to small rural areas, such as $30.6 million for school renovations in Kipnuk and $23 million for school repairs in Kwigillingok. There will also be a $9.2 million Wainwright seawall reconstruction.

Safety issues more than just statistics for trucking industry

When truckers don’t live up to safety measures, everyone loses. Just ask Renata Smith. Her cousin’s family was in a car accident in Georgia late last year. An 18-wheeler was going too fast and trying to pass another vehicle when it hit the family’s car head-on. While her cousin made it to the hospital, her husband and two-year-old daughter were not so lucky. Smith works as a planner for the Alaska Department of Transportation and Public Facilities. She describes her job working “toward trying to make the world safer dealing with commercial vehicles.” While she started the job earlier in 2011, it took on a whole new meeting after the accident later that year. “It made it real to me. You weren’t just dealing with number or statistics. That’s when it became real,” she said. “I started realizing you’re dealing with people’s lives.” She said the connection made when working accidents such as the one her family experienced makes it a genuine issue to resolve. She said it’s not just the victims and families that are affected, but the drivers who must live with it the rest of their lives. Smith told her tale to the Journal, but her first stop was to share it with Anne Ferro, administrator for the Federal Motor Carrier Safety Division. Ferro was in Anchorage to give an update on her agency at the Alaska Trucking Association’s annual meeting. The federal agency’s safety agenda nationwide is to raise the bar the industry safety, ensuring operators maintain high standards and removing unsafe drivers and companies from the roads. Among her topics was the agency’s Compliance, Safety, Accountability program, or CSA. This initiative, implemented in 2010, is a nationwide system to improve safety and reduce accidents that involve trucks and buses. CSA data is company-specific, using inspections for around 525,000 companies engaged in interstate commerce. Regular audits issue scores to companies and drivers within seven BASICs (Behavior Analysis and Safety Improvement Categories). These BASICs include measuring driver fitness, driver fatigue, unsafe driving, controlled substances and alcohol, vehicle maintenance, cash indicators and improper loading and cargo separately. CSA is undergoing changes with updates planned after a preview period and public comments this year. Such changes includes updating the Safety Measurement System methodology to better identify carrier that are riskier or more safety sensitive while addressing industry biases. There could also be changes to the safety fitness determination rule to be proposed next year. Among these changes would be applying CMS data to established thresholds to determine safety ratings, replacing on-site compliance reviews. As for the crash BASIC information, data was broken out to help distinguish between crashes that had injuries from those that were fatal. The agency is currently analyzing crash indicators using this separation. However, scores from the crash BASIC are not public information. Ferro said there has been some misinformation out there that this would change but the analysis must be completed first to ensure fairness within the program. Ferro said trucking conditions here are different than many areas down south, which has to be taken into consideration. There were 5,700 roadside inspections here last year Ferro said there has been a 90 percent drop in overall violations and 12 percent drop in driver violations from these inspections nationwide. She said Alaska has an outstanding safety record, with only 6 people killed and less than 50 injured in collisions involving trucks in 2010. “Alaska is below the overall nationwide rate with regard to fatalities and injuries,” she said. Ferro suspects this is due to the knowledge of Alaska’s high-risk conditions and the practices they build into their procedures due to that knowledge. She said there is also less interaction with cars and trucks than in other parts of the country. Dan England, chair of the American Trucking Associations, agrees that accidents have gone down. He said the number of truck-related fatalities is down 27 percent since 2000, adding the number of injuries has dropped at about the same rate. However, England said the regulatory issues concerning agencies like CSA can be challenging to the trucking industry, especially with over-reaching policies, which can be especially tricky with CSA since it’s a new and still-developing program. “So we’re asking why do they want to change the rules when were doing so well,” he said. England said having seven categories instead of a single overall audit means audits and scores on individual categories rather than everything, affecting efficiency. He said CSA is a good system as long as the separate BASICs accurately reflect how drivers and companies are doing, but issues can arise about the methodology for coming up with these scores being accurate reflections. He said ATA is working with FMCSA to develop the best ways to work it out problems with the system. “This is a process that’s going to take us some time to make sure that these basics accurately measure us,” he said. England said an industry concern is that over-regulation from the federal government can affect productivity and costs. Ferro agrees that the business side is important and FMCSA is there to help maintain success while imposing better driving, saying safety and profitability go hand-in-hand. “Clearly for the trucking industry and the supply chain, it’s all about efficiency but over the years so many recognize safety must be built into that supply chain just as efficiency and sustainability,” she said. She gave an example of how a detained shipping dock operation could contribute to drivers hurrying, which could cause an accident like the one Smith’s cousin experienced. “At DOT, safety is our highest priority and we certainly recognize the impact of our safety programs and requirements on the ability of companies to operate effective,” Ferro said. Smith said she would like to see driver safety improve and even head for the ultimate goal of zero fatalities someday. “While some people may say it’s unrealistic, you’ve just got to strive for that because no one wants to find out that they lost a loved one,” she said.

Capital budget helps Fairbanks make headway on LNG

The two largest energy companies in Fairbanks are moving forward in their efforts to expand the borough’s liquefied natural gas customer base. Golden Valley Electric Association and Flint Hills Resources have been working on a joint venture for LNG and the design phase for storage plants in North Pole and the North Slope are now under way with some state help from the capital budget passed April 15. Golden Valley Electric Association was given $3.75 million for engineering and design for a liquefied natural gas storage facility on the North Slope. A separate appropriation gives the Fairbanks North Star Borough $3 million toward a natural gas distribution system. Both appropriations must still be signed off by the governor, and neither are anywhere near what the projects will cost. However, GVEA President and CEO Brian Newton said this draws them closer to getting the two plants operational. He said Senate Bill 23, which has passed but must also be signed, would get the company around $30 million in grant money to offset the storage costs. The plan is for two storage units: one in North Pole and another in Prudhoe Bay. The Prudhoe Bay facility would require the gas to be trucked across the Dalton Highway to Fairbanks. Newton said the two plants would constitute 9 billion cubic feet annually with each company taking around 3.5 bcf and an additional bcf to be made available for sale. To explore the justification for a new LNG distribution system, the borough commissioned the Fairbanks Economic Development Corp. to manage a distribution study. While the final report is due this month, the preliminary summary states that the residential, commercial and industrial sectors consisting of 26,35 units that would have an estimated combined demand of 20.9 bcf per year. Almost 25,000 of this estimate are residential units needing 5.7 bcf. The preliminary report states pipeline costs could be anywhere between $309 million and $662 million. The personal cost to consumers can vary just as much, according to the report. It states that residential homes can spend as little as $1,000 to replace a burner gun to $20,000 to replace a boiler with a natural gas system. FEDC President and CEO Jim Dodson said two things are paramount for LNG distribution: to lower Fairbanks’ cost of energy and finding a cleaner energy source while being proactive in cleaning the air quality to keep up with federal standards. “If those are the two overarching issue, then you have to address the issue of distribution beyond the 1,100 customers so that’s what we’re studying,” Dodson said. GVEA and Flint Hills both currently use oil for energy at extreme costs. Dodson described energy costs as an “economic disaster of this community” Although an exact figure isn’t yet known, Newton said the project could mean an estimated for $25 million to $30 million per year in savings for the company, which would be passed on to the consumers. Current natural gas prices are $23.35 per million cubic feet. Fairbanks’ winter conditions force use of oil-burning stoves that exacerbate air quality problems, which more LNG stoves could remedy. The report states that other developments can encounter permitting difficulties in the area if they will exceed air quality standards. “What we simply need to do is convert burning diesel heating oil to burning natural gas and that would dramatically lower the emissions, the (air quality) problem that we have,” Dodson said. The exact costs of the project aren’t yet known either, but Newton estimates it could be between $200 million to $250 million project, which would be split between GVEA and Flint Hills. He said the engineering portion should be completed close to the end of the year, at which point the Board will consider it. “If it were to move forward, it would have first gas to Fairbanks in the first part of 2015,” he said. Dodson feels the plan may need more work and that the estimated amount may not allow system growth within the community. The current distribution system reaches about 1,100 customers in the area, which Dodson said consume about 1 bcf. Of those customers, about 600 of those are commercial buildings with the rest being residential. These customers currently get their LNG from the smaller outfit, Fairbanks Natural Gas LLC. President and CEO Dan Britton said the company has been working on a separate project to explore expanding the customer base. He said they have been limited by the Cook Inlet supply in the last number of years and so are also exploring LNG opportunities on the North Slope. Britton said many consumers want LNG and so solving this supply problem could fill a larger customer base rather quickly. He said this has been in development for four years and that permits are in place but establishing this larger customer base is necessary to justify project costs. FNG had originally explored possibilities with GVEA and Flint Hills but they ultimately went into separate projects. Britton said residential customers save an average of 23 percent on their heating bills with LNG. Dodson said the current distribution system only reaches about 5 percent of the 28,000 buildings in the borough community. Newton said a possible option for the estimated additional gas could be used by FNG to double its customer base. Britton said there is no deal in the works as of now. “The overarching mission is to supply affordable energy to as much of the borough buildings as possible in the shortest time possible and also deal with the air quality issue,” Dodson said.  


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