Naomi Klouda

FCC funding shortage imperils telecoms, health providers

The hospital in Cordova has received a shut-off notice from Alaska Communications for its broadband services unless a balance of nearly $1 million is paid by June 30. Now Federal Communication Commission Chairman Ajit V. Pai has stepped into the dispute and warned the Anchorage-based telecom provider that it’s against the Communications Act to shut down services. “Alaska Communications is prohibited from engaging in unjust and unreasonable practices or from discontinuing service to a community without prior Commission approval,” Pai wrote to CEO Anand Vadapalli on May 8. The exchange is “at least is shedding a light on a lack of funding problem,” said Cordova Community Medical Center Administrator Scot Mitchell. Alaska Communications Vice President of Finance Laurie Butcher wrote to Mitchell on May 2 stating that a 10-month outstanding bill of $964,370 needs to be paid or service will be shut off on July 1. Alaska Communications hasn’t received funding for going on 11 months through a federal program that bridges the high cost of bringing broadband service to rural Alaska, called Rural Health Care, or RHC. The Cordova hospital is just one of about 40 rural health care facilities that Alaska Communications supplies broadband services. In Cordova’s case, the total hospital Internet bill is $80,100 per month. After the RHC subsidy is paid to the telecom, “what we pay is $1,060 per month,” said Mitchell. The remaining $79,040 per month would fall under the category of the RHC funding portion, he said. “In the past, the Rural Health Care division of USAC made funding decisions in a short enough time that we could provide your service and only charge you the urban rate,” Butcher wrote to Mitchell. “This was not the case the past two years. We are now 10 months into the current funding year and your funding request is still being put through an ‘enhanced review’ by USAC.” USAC is the Universal Services Administration Company, which disperses the RHC funds. “USAC has not yet acted on the vast majority of our rural healthcare customers’ funding requests,” Alaska Communications stated in its first quarter report. In December, Alaska Communications laid off 30 workers, instituted wage cuts and put employees on furlough just to stay afloat under the loss of RHC revenue, said Leonard Steinberg, the company’s vice president of legal, regulatory and government affairs. The layoffs represented 5 percent of its workforce. As of Dec. 31, 2017, according to its first quarter earnings report, Alaska Communications was owed $8.6 million in RHC funds, a total that has now grown to $11.8 million as of March 31. “We’re almost all the way through the current funding year without receiving anything since last July,” Steinberg said. “Every month we’ve taken money out of our pockets. This company and its employees have put their lives on the line to subsidize health care services. We’ve been willing to do it for a while to resolve funding issues, but we can only go so long,” he said. In its first quarter report released May 10, GCI Liberty also reported a huge shortfall in RHC funding of $5.5 million. “We may need to further reduce the RHC Program support receivable as we pursue avenues for payment of the shortfall,” according to the GCI Liberty filing. “USAC’s assessment of the program funding shortfall caused a program-wide delay of support payments, which has continued during the review of rates charged by Alaska carriers.” In a statement, GCI Liberty spokeswoman Heather Handyside called the situation “troubling” and said that the company, “has been working with rural providers, the FCC, and the Alaska congressional delegation to develop a solution to maintain this critical source of support for rural Alaska health care. “Because this year’s funding reduction is much greater than last year, it is causing deep concern for our rural health care customers,” Handyside wrote in an email. “GCI has not proposed reducing or terminating service to any of our customers. We are continuing to work with them and other concerned parties to secure a responsible, long-term solution. We agree with the bipartisan group of 31 U.S. senators who are proposing an overhaul of the Rural Health Care program to meet the growing demands of connectivity for rural providers.” USAC funding help All of Alaska’s telecoms get funding support for rural services through the USAC, which allocates from four budgets. One is the E-Rate funding for schools and libraries to make internet more affordable; another provides the Lifeline telephone-internet funding. A separate category is the RHC funding. For the past 20 years, rural communities in Alaska and the Lower 48 split an annual pot of about $400 million for the RHC funds alone. Alaska’s portion of that was $122 million in 2016, according to FCC spokesman Mark Wigfield. But the funding help hasn’t been enough over the past two years after Rural Health Care funds ran out. The new filing window for telecoms to receive funding goes from Feb. 1 to June 29, 2018. USAC put a notice on its website alerting telecoms that the “net demand of all funding requests received by the close of the FY2017 filing window period exceeded available RHC Program funding.” The 2017 funding year runs from July 1, 2017 to this June 30. But there will be a prorating “percentage of funding” for the next funding year, the notice stated. In other words, telecoms can expect to get about 84.6 cents on the dollar, rather than the full amount of RHC funds after an invoice is submitted. One of the problems is that technology, needs and services have broadened the reach of broadband in the past 20 years, while the RHC funding never stretched with it, Steinberg said. “For first time, the demand for RHC funds exceeded the budget,” Steinberg said of funding year 2017. “That woke the FCC up. They wanted to look at how to reduce the demand to stay within our budget. They’ve been applying what they call ‘enhanced scrutiny’ to filings.” Steinberg said he’s had direct communication with FCC Commissioner Pai over the current crisis, hoping to bring the Alaska telecoms’ funding crisis to light. Pai’s letter wasn’t without sympathy. He recalled his own childhood “as the son of two doctors in rural Kansas. I understand how connectivity can play a transformative role in the provision of medical care,” he wrote to Vadapalli. “I recall my father driving many miles at times to see patients in remote areas.” But the Communications Act makes clear that “Alaska Communications must continue to provide services to the rural healthcare providers it serves upon a bona fide request for service.” To put it another way, he wrote, “Alaska Communications many not deny or cut off service to any of its existing rural health care provider customers.” If it does so, the FCC could cite it for violating the federal Communications Act. Cordova’s medical needs Mitchell said he’s surprised Pai has gotten involved. But he hopes this means solutions are on the way. “For us, if this does happen (a broadband cutoff) we will probably have to close our hospital,” Mitchell said. “Our electronic health records are on the cloud. We rely on it for X-ray and CAT scans, our entire telemedicine system. Our payroll system uses the internet. We won’t even be able to pay our staff.” Cordova’s famous Copper River salmon season starts May 17. That means the year-round population of 2,200 will swell to 5,000 as the fishing season and canneries crank up. The Cordova Community Medical Center is the only 24-hour emergency care in the active commercial fishing hub region, 300 air miles from Valdez and 200 air miles from Anchorage. Mitchell said he doesn’t have harsh feelings against Alaska Communications. “My understanding is that ACS is for us, and the other facilities,” he said. “They are paying out of their pocket the money the FCC has been withholding.” Cordova isn’t the only facility that received a letter calling bills due, said Becky Hultberg, the president and CEO of Alaska State Hospital and Nursing Home Association. “The fallout from the FCC’s decision to impose funding cuts to the USAC Rural Health Care fund is significant,” she said, and added that Alaska congressional delegation is working on resolving the shortage of RHC funds. And there may be a legal argument Alaska telecoms can make, she said. “It is ACS’ opinion that the FCC neglected to mention in their letter that the law also states that telecommunication carriers are entitled to the difference between urban and rural rates,” Hultberg wrote in an email. “We do not know who would prevail in court, but we do know that health care in Alaska will suffer greatly if internet services are disconnected.” Naomi Klouda can be reached at [email protected]

Alaska shoe startup ready to step into production

Alaska startup Pandere Shoes has reached a milestone: the business met its goal to pre-sell $30,000 worth of online orders to fund production of the first run of shoes for direct retail. The three women who invented the patented shoe designs — Laura Oden, Celia Crossett and Ayla Rogers — are believed to have created the first closed shoe designed to expand three-dimensionally up to 1½ shoe sizes. Their market research shows 23 million to 45 million people suffer from some kind of foot ailment caused by cancer treatment, birth defects, edema, poor lymphatic systems or any number of causes. “These shoes expand where feet swell,” Crossett said. “When your feet swell, they get bigger from the top. But shoes aren’t designed to expand in that direction; they are only designed for length and width.” Think of the classic Italian and Portuguese footwear expertise that’s dominated style since the Middle Ages. “Pointy-toed shoes just don’t cut it,” Oden said. “This business was borne out of my own frustration at not being able to find shoes.” For the past 40 years, Oden has suffered from lymphedema that meant no one pair of shoes would fit both feet. Looking for a shoe that fits well set Oden off on her quest within the nurturing community of Anchorage startups. Two women, Rogers and Cossett, joined her at a January 2016 Startup Weekend, one of the events meant to brainstorm and fine-tune new entrepreneurial endeavors. Rogers, raised in Houston, Alaska, is a One Million Cups facilitator, a realtor and a “serial entrepreneur” who’s helped launch other businesses. Both Oden and Crossett are business planners at the Southcentral Foundation. Cossett earned two master’s degrees and did social justice work in Kazakhstan before returning home to Alaska where she earned yet another degree, a master’s in business at Alaska Pacific University. “When we were doing the research, we found we have a real strong business case when we started hearing all the stories. The first day after we created our Facebook page, we already had 100 followers,” Rogers said. “It was a gold mine of information: we heard from people saying ‘I have an aunt, I have a friend that needs those shoes.’” From that first startup weekend, they’ve attracted a following of 1,200 people on Facebook who continue to share stories of woeful footwear options. The current market offers only orthopedic shoes, which leaves out those who need to dress for a corporate setting and multiple other functions. The Pandere partners found people wearing slippers or painful footwear or two size shoes that pinched or left them with other health problems. After the Startup Weekend, the three women stuck together, meeting at least once a week. They did this while working their full-time jobs. The trio refined their business plan and shoe designs over the next two years. Along the way, Pandere won awards at six entrepreneurial competitions, including Startup Weekend and the Alaska Business Plan Competition. The money provided enough funding to help them through designing the shoes and finding a Portuguese manufacturer to work up a prototype of each shoe design. At the end, the cost per shoe was $2,000 because they are hand stitched and adhere to an expanded design specific for the heel, arch and toe areas. After several prototype tries, they settled on two designs. Pairs of shoes range from $99 to $200 but currently most sizes are sold for around $120. There are only two styles for women so far, “but we’re working on more and on making them for men,” Oden said. “We were told we wouldn’t be able to mass produce these shoes because there are more parts than to traditional shoes,” Cossett said. “They expand in three different areas, the toebox, the midfoot and the heel or ankle.” And mistakes were made along the way. A drawing that showed an opening at the so-called toe box came back as a shoe with a small window-like opening that missed the point of expanding in that area. They went through four shoe designers. They encountered language barriers. “It was a big learning curve on both sides,” Oden said. “You fail a lot at first.” Plus, they couldn’t post photos of their inventions until they had received the patent. But they were armed with market validation and stories of people out there wearing sandals in cold climates — the only thing that fit — as well as suffering painful feet, lifelong embarrassment and immobility. The stories didn’t just come from Alaska. They came from around the U.S. and the world, men and women. “Our mission plan is to always keep our customers’ mobility, dignity and comfort in our thoughts,” Rogers said. On April 18, Oden, Crossett and Rogers launched a 30-day Kickstarter campaign with a funding goal of $30,000 as a way to introduce the innovative shoe line to the world and raise funds for production of the first round of shoes for retail sale. They met the goal, and now will launch their first manufacturing run using a shoemaker in Portugal. Pandere works out of The Boardroom in downtown Anchorage, a “co-working” space for a community of people who share ideas in financing and resources. Katherine Jernstrom, founder of The Boardroom and fund manager at Alyeska Venture Management, said the launch of Pandere Shoes is a great representation of an Alaskan innovation ecosystem that has made a lot of gains in the past five years. “They found a global customer-base looking for a unique solution to their problem and with grit and determination, and a little luck, Pandere will create new jobs and will create new wealth for its employees, owners, investors, vendors, and contractors,” she said. Naomi Klouda can be reached at [email protected]

Draft complaint prompts mediation in Rogoff bankruptcy

The long-running bankruptcy case filed by former Alaska Dispatch News owner Alice Rogoff might be near an end after the public trustee found grounds for an official complaint of wrongdoing against her and all parties agreed to go into a mediation set for June 4 in Anchorage. The purpose of the settlement conference is to find a resolution of the case without further litigation “by providing a forum for private and informal discussions,” according to a filing May 10 issued out of the U.S. Bankruptcy Court for the Eastern District of Washington. It’s a process that promises Rogoff little public exposure in a look at her financials or how much income she received that was not parceled in with the newspaper’s holdings. “Prior to the settlement conference, each party is to e-mail their confidential statement of position,” wrote Judge Frederick Corbit, of U.S. Bankruptcy Court for the Eastern District of Washington. Afterwards, all the documents will be destroyed, he wrote. The case remains in the U.S. Bankruptcy Court, Alaska Division, explained Christine Tobin-Presser, an attorney in the Seattle law firm of Bush Kornfeld LLP, who represents the public trustee. The mediator who agreed to oversee the process just happens to be out of Spokane, the Eastern Washington District of the U.S. Bankruptcy Court, she said. These moves indicate a settlement may be near. Rogoff originally filed for Chapter 11 bankruptcy reorganization on Aug. 12 before selling the Alaska Dispatch News to the Binkley Co. for $1 million on Sept. 11, 2017, after she purchased it in 2014 for $34 million from McClatchy Co. Under Binkley ownership, the historic daily newspaper was then changed back to the Anchorage Daily News. (The Binkley Co. has since acquired the Alaska Journal of Commerce in a deal that closed Feb. 23). The bankruptcy was converted to Chapter 7 liquidation later in September to pursue assets that could be used to pay those still owed money. As of the deadline on March 19, a total of 29 companies or individuals submitted claims for bills they say are owed them, a collective total of just less than $9 million. Rogoff listed herself as a creditor for up to $23 million owed. Nacole Jipping, a court-appointed public trustee, examined Rogoff’s finances to see how her financial decisions may have contributed to the bankruptcy. Jipping’s role is to recover any monies possible to repay the debts left behind, and if she found fault with Rogoff’s handling of finances that contribute to bankruptcy, her role calls for her to file that finding with the court. Just prior to the mediation agreement, in late April, Jipping provided Rogoff with a draft complaint “setting forth a variety of asserted causes of action against the Rogoff entities and Northrim Bank.” Whatever Jipping found as error on Rogoff’s part in her financial dealings isn’t publicly available because it was filed confidentially in court documents, Tobin-Presser wrote in an email response to a Journal question. Further, the complaint is still in draft form. “We have not filed the complaint. It is not public at this time,” Tobin-Presser wrote in an email. As for the upcoming June 4 settlement conference, all communications there also are confidential, Corbit wrote in his order. Even paperwork submitted for the settlement conference will “be maintained in Judge Corbit’s chambers and will be destroyed after the conference.” Confidentially claims on Rogoff’s part have played a big part in the plodding progress thus far in the case. Rogoff has maintained that her private finances are off-limits to this court examination in the manner that legally protects owners of limited liability corporations. How much she received through a 2005 separation and later, a 2017 divorce settlement with her former billionaire husband David Rubenstein is not “the court’s business,” her attorney James Lister has argued. In March, U.S. Bankruptcy Court Alaska Division Judge Gary Spraker ruled that Rogoff’s financial documents at Northrim Bank were not off limits. The bottom line of Spraker’s March 21 decision is that Rogoff’s finances are not confidential as it relates to the $13 million loan from Northrim Bank used to purchase the Anchorage Daily News from McClatchy Co. In mid-April, Lister submitted an appeal to the Ninth Circuit Court of Appeals bankruptcy section asking the court to decide on whether Spraker erred in his ruling. The 9th Circuit hasn’t yet agreed whether to hear the appeal, Lister said. “All I can say is that all the parties agreed to mediation but there is no certainty that what would happen would result in settlement,” Lister said in a phone call with the Journal. “In the stipulation agreement, we asked to be issued a mediator to see if he can mediate the dispute. In the request for mediation, she (Jipping) has claims against Rogoff.” The appeals question remains separate and could become moot, depending on the outcome of mediation, Tobin-Presser said. If the complaint against Rogoff is finalized, it would be available for public view, the attorneys said. Naomi Klouda can be reached at [email protected]

Marine named Entrepreneur of the Year by Anchorage Chamber

An Afghanistan veteran whose entrepreneurship stretches from forming Quick Cup and Quick Bites to helping coffee shops develop safety measures was named the Alaska Entrepreneur of the Year by the Anchorage Chamber of Commerce during its Annual Young Professionals Summit. U.S. Marine Sgt. Keith McCormick developed a free app called Quick Cup and worked through the startup concept while serving as a medic and bunking in a connex trailer on his last tour of duty at the U.S. Embassy in Kabul. In fact, last April, he was a finalist in the 2017 Alaska Business Plan Competition. He did his pitch before a live audience at the Bear Tooth Theatre via video while still stationed in the war zone. “A lot has happened in a single year,” McCormick said. “Thanks to my wife and business partners — that’s what I call the coffee shops that signed on — this has really been an unbelievable year.” Quick Cup is focused on a single mission: to get coffee-cravers to their favorite cup of java in the shortest time possible. It leverages a patent pending algorithm for estimated wait time-quickest options, believed to be the first in the nation. Quick Bites produces private mobile apps for restaurants, using similar patent-pending technology, to save time and steps at meal times. The chamber honored McCormick as a motivated individual “who identifies a need and seeks to fill it.” The citation lauded McCormick as “Alaska’s next generation of legacy builders. They are innovative, passionate, ambitious, and visionaries. Most importantly, recipients have demonstrated a growing impact with their business in their industry and/or community.” McCormick was raised in Alaska, graduating from South Anchorage High School in 2009, the same year he joined the Marines. He married Sarah Russell in February 2010 during one of his training leaves, and spent a total of five years away from Alaska between several tours. “I figured out of the five years since he was born, I’ve spent six months total with my son,” he said. “I was tired of being away, and wanted to create a business. There’s no real jobs for infantrymen when they get out, other than police forces or security.” McCormick trained as a medic to qualify as a contractor just as the war efforts were ratcheting down. He was building on the University of Alaska physician’s assistant program he wasn’t able to finish during his tours of duty. But creating a business that lets him stay closer to his family matches his goals for now. He also works with other veterans in a partnership called Northern Shield Defense, which provides bodyguards for celebrities visiting Alaska and safety training to coffee shops to help prevent robberies. He analyzes baristas as they open and close their daily operations, evaluates camera placements, then generates a report and advises on how to close security gaps. And he works for the City of Whittier training other emergency medical technicians or EMTs. “I work out of the house, and when I do EMT training for Whittier, the family comes with me. We stay in a trailer by the water,” he said. Some Anchorage coffee shops and huts have been fast to sign on with Quick Cup. They pay no upfront costs to have their menu loaded on McCormick’s Quick Cup app. The fee comes as 5 percent take on each coffee or beverage sold. So far, he has 15 active shops signed on and another 75 customer leads to follow up on after attending the Specialty Coffee Expo in Seattle in mid-April. Based on national interest generated at the expo, he will be able to upload menus from chains like Starbucks. McCormick does all the technical work himself, with help from Keoke Long, a U.S. Marine and business partner who invested in Quick Cup. Because it’s an app, the customer base can be anywhere in the U.S. , or the world. The algorithm will be able to calculate wait times based on the individual location. “It works anywhere in the world with tweaking for language and the formatting of the language,” he said. Some coffee shops have turned down Quick Cup. One local coffee shop, for example, doesn’t want the kind of customers that are in a hurry, he said. “On the other hand, when you have people sitting in line at a coffee hut, I’m sure that’s not something they want to be doing,” he said. “Just trying to give people back time is our most important asset.” Naomi Klouda can be reached at [email protected]

Brewer honored by SBA for launching coffee boom in Alaska

Ever wonder how an Alaska coffee shop or hut gets set up from scratch, moving through the business plan to finding locations, purchasing machines and training staff? Chances are, Caffe D’arte owners Lori and Bob Brewer lent a helping hand in preparing literally hundreds of new business owners throughout the state during the past 25 years they’ve been in business. The company is a unique A to Z wholesale and training provider that responds quickly to market changes. Lori Brewer — yes, she gets a lot of comments on her name — was recognized by the Small Business Administration Alaska Division as the 2018 Alaska Small Business Person of the Year Award. She and her husband, Bob Brewer, have operated their business since 1993. The full operation, called Caffe D’arte Alaska, Alaska Coffee and Restaurant Equipment, is composed of six coffee shops in Anchorage. Another 400 accounts across Alaska supply wholesale coffee-to-coffee houses and coffee carts. How the Brewers built a business that became so diversified that it even markets its own coffee labels in Keurig cups probably rests on the constantly-moving dynamism of its founder. “She always has her feelers out for the latest thing,” said Lynn Vaughn, her operations director. “She looks at the ideas she wants, grabs ahold and runs with them. I think that’s something she does well.” Brewer studied marketing in college, then went to work for Seattle television station KTVZ in the late 1980s. But marketing didn’t hold her attention like the first drive-thru coffee stand she opened in 1992 by revamping an old gas station on a busy Bellevue corner. At the time, she became news for opening what was considered one of the first coffee drive-thrus in the country and was written up in the Seattle newspapers. In 1993, Brewer moved to Alaska and met her husband, Bob. The first year in Alaska, they launched Caffe D’arte. The coffee business changed over time, she said, and her life did as well. She developed cancer in 2008 and underwent months of treatment. Then, recovering, she went right back to work. “Being around people is healing,” she said. “Especially in the coffee business, there’s a lot of joy in helping people leave your store feeling good.” When the hours get too long, the Brewers try to stick to a schedule of three-day weekends. “The secret is really in the hard work, focus and passion,” Brewer said. “I tell our partners, you take what you love and focus on growing that. Trust the people you work with and help them grow. As I help them, they multiply my ability. We become a better team.” Caffe D’arte employs 54 people, about two-thirds of them are baristas. The rest are marketing, accounts people and maintenance-repair people. The company began in 1993 on Homer Drive and 64th Avenue in south Anchorage as a wholesale company to provide coffee beans, training and equipment to retailers. The spacious quarters include an upfront shop where people can stop in for their morning coffee or to buy wholesale supplies from stocked shelves. A training-conference room off to the side provides the equipment — espresso machines, cold coffee brewer and other machines — for hands-on barista training. A separate part of the business focuses on maintenance of espresso machines, special brands ordered out of Chicago, and sold to businesses. “In the coffee business, you have to stay constantly changing and flexible. You have to remember the core is coffee, but you also pay attention to the industry and how your company can change,” Brewer said. In January 2019, the changes evolving for Brewer’s operation will extend several thousand miles south to the Sea-Tac Airport. A new 1,300-square foot Caffe D’arte is going in the new N Concourse, beating out bids from Starbucks and Stumptown Coffee, Brewer said. The business also caters to several Alaska hotels, supplying each room with both single-cup espresso machines and the Keurig cups of D’arte’s signature blend from a Seattle roasting company it’s used for many years now. But fads are ever changing in the coffee business, and staying on top of trends is vital, she says. Brewer moved the company into the cold brew business, marketing its own label to coffee carts and businesses along with the other supplies. Her roaster worked on the right blend until he found the sweet spot. Brewer also spotted the Tie-Dye Smoothie fix drawing in fans, and moved in on that market. The Caffe D’arte brand is also on grocery shelves at Safeway and sold in 150 rural Alaska locations. Due to the training center contact, Brewer is often the first real networking new shop owners get to do, she said. “A lot of these are young women opening their first business and we mentor them,” she said. “We teach them everything they need to know from their business plan to the inventory list of supplies they will need, right down to the doggy bones.” Brewer returned May 1 from Washington, D.C., after receiving her Alaska SBA award directly from the Administrator Linda McMahan. On May 3, she will be honored locally by the Alaska SBA in a morning breakfast. Naomi Klouda can be reached at [email protected]

Small Alaska school district remains alone for performance bonuses

Test results showing Alaska students perform poorly in comparison to their national counterparts naturally leads to questions about how to hold the system accountable when students fail. One Alaska school district that offers extra teacher pay when teachers and students perform well now has a two decade-long track record, and its system is often studied for what it does right. The Chugach School District encompasses the small schools in the Prince William Sound communities of Whittier, Chenega Bay, Tatitlek, and a dorm and residential school in Anchorage. There are just more than 400 students in the district, according to Superintendent Michael Hanley’s most recent numbers. They have a staff of 21 spread across four schools, with nearly 300 of the students home-schooled. The Chugach example was highlighted in the “Teacher Salary & Benefits Schedule and Teacher Tenure Study in 2015,” conducted by the University of Alaska Anchorage Institute for Social and Economic Research. In the district, teachers are evaluated three times per year, at the beginning, at the end and in November. Because the performance bonuses are based on the collective average scores of the teacher, the study found, “It incentivizes teachers who score well in their evaluations to reach out to and mentor those not scoring well, while incentivizing those who are scoring lower to ask for assistance. The superintendent has seen peer evaluation become a lot more important in the district than before.” Hanley, who formerly served as the Commissioner of Education, said the system is a competency-based model and student-performance based. That means both the teachers and the students are being evaluated for success in the classroom. Teachers can increase their annual paycheck by $2,000 per value achieved. There are seven values that are measured in benchmarks achieved by the students and teachers, so it’s possible to earn $14,000 of extra merit pay per year, Hanley said. Not only teachers, but principals and superintendents also share in the bonuses when the seven values are achieved. On performance pay, Hanley said, “We averaged $12,000-$13,000 payouts over the past 20 years, some years lower and some higher. The Chugach School District was one of only a few in the country to have a merit-based system like this. When we first did this 20 years ago, the district was recognized as the first in the nation.” A recurring question about Alaska education policy is whether schools should be held accountable for student achievements, and if they are, will test scores go up? Alaska students rank near the bottom in national testing results, including the Performance Evaluation for Alaska Schools, or PEAKS. Results from spring 2017 testing throughout Alaska school districts showed more than half of all students from grades three to 10 aren’t up to proficient levels in math, English and science. Another test, the 2017 National Assessment of Educational Progress, or NAEP, showed only 28 percent of Alaska’s fourth grade students performed at or above the proficient level in reading on NAEP testing. For eighth graders, only 26 percent showed proficiency in reading. In math, fourth graders scored at the 32 percentile and eighth graders at 29 percent. They were tested only in these two subjects. The Chugach School District saw positive testing results in a carefully orchestrated system that involved the community, teachers and students, Hanley said. It might not work in a large school district, he said. “The school district was in the lowest quartile of the state compared to all the other school districts when we started this. Our communities drove the communication about wanting more. They wanted the students to do better,” Hanley said. “(This system) removed the organizational barriers that harken back to a factory organization where students were grouped by age.” Teachers started to transition from the “factory” model, he said. “That’s where at the end of the school year, you picked up books and went to next grade. Some were ready to do that three months earlier and some still aren’t ready to do that, and a third are just right. We erased all those and put student learning first,” he said. Teachers teach in teams and track with students from grade to grade. Each student works with teachers to set out his or her own goals in an individual learning plan, or ILP. “In small schools like ours, we can be nimble,” Hanley said. “The community, teachers and administration all work together. We see good longevity, not much turnover. Teachers have a lot of ownership and students see flexibility in how they learn.” All of the Chugach schools use the performance-based model. After it was adopted, the “district moved to the top quartile and now we’re more in the middle of the pack,” Hanley said. The ISER study concluded that the collective evaluation of teachers encouraged working together for improvement. “Having other teachers play either formal or informal roles as mentor empowers them,” according to the study. “(The superintendent) sees mentor teachers’ performance increase just because they are teaching others. It becomes a self-perpetuating cycle of continuous improvement.” Like much of the state’s students, the Chugach kids scored below average in math but higher than others in English on the PEAKS exam in 2017. “That was the first time the PEAKS test was used. I’m not putting a lot of weight on it but I’m not dismissing it either,” Hanley said. In the seven values scoring, students are tracked in a different way — not in grades — to record when they pass the required eight levels of English and 10 levels of math. Through education grants, they developed the Aligned Information Management System, or AIMS, to track levels of proficiency rather than through simple grading. This provides more specific information, Hanley said. Hanley is currently in conversations with a school in Michigan that wants to build a similar school performance based model, but he doesn’t hear much from Alaska schools, he said. For the most part, grading teachers on how their students perform had dismal results in Alaska, said National Education Association Alaska Chapter President Tim Parker. The performance-based system most recently was tried in Alaska through the No Child Left Behind. “That was 100 percent unsuccessful,” he said. In order to achieve good results, “it encouraged people to cheat or teachers taught to the test and threw out PE, music, art” in order to emphasize the test subjects, Parker said. “It put super high pressure for tests that were not good measures of how students were learning. You have to look at it from the student’s point of view. “They’re feeling the pressure. We had kids throwing up before the tests.” Due to the dismal results, the notion of performance-based pay for teachers has been largely discarded as a venue for public policy on education in Alaska and elsewhere, Parker said. “There are a few people left who advocate for that, but most people see it’s not the right way to go,” he said. Other ways to increase quality teaching — and therefore student performance — do offer teachers merit pay under the current system. If teachers seek out and earn National Board Certification, a voluntary advanced teaching credential that goes beyond state licensure from the National Board for Professional Teaching Standards, they can earn another $2,000 per a year. Higher pay is also offered for teachers with master’s degrees, he noted. “That does impact learning, we’ve found,” he said. But in order for the discussion to lead somewhere fruitful, the ISER study concluded, “it has to consider the thoughts of teachers in helping to shape the system.” Hanley cautions that there isn’t a magic recipe for how a district should do this, noting that it might look different in different districts. The district ownership of the system by teachers, “much more than salary, (has resulted in) a key reason staff turnover in Chugach School District has declined,” the ISER report concluded. The superintendent credited the district’s decision to allow teachers to help build the system, creating the feeling that “this is our system, we built it; it works the way we want it to, and if we want to change it someone will listen to us in making those changes.’” Naomi Klouda can be reached at [email protected]

Already among largest education spenders, advocates argue for more

The Alaska Legislature has agreed on school funding levels for the next two years, with strings attached, but the debate about how much the state spends is far from over amid the scrutiny on Alaska’s teacher pay and national teacher strikes. Under House Bill 287, now passed by both the House and the Senate, districts stand to gain $117 more per student per year in the base student allocation, or BSA, starting in the 2019-20 school year. If the legislation moves, another nearly $30 million will be added to the state’s $1.2 billion education budget starting 2020 fiscal year, though at this date the passage of the bill is contingent on passing the funding source. If enacted, it would raise the BSA from $5,930 to $6,047 per student. Senate Bill 26, the contingent funding source passed by the Senate and agreed to by the House in its concurrence with HB 287, would use a portion of the Permanent Fund earnings each year to help fill the state budget deficit. Educating each Alaskan student costs more than $20,000 per pupil, the fourth highest of all 50 states and the District of Columbia, according to the National Education Association. As a percent of total income, no state spends more on education than Alaska, also according to NEA data. How that translates into keeping teachers and recruiting more to fill a current backlog of vacancies creates the apparent contradiction of Alaska already spending huge sums yet not spending enough, according to the dozens of educators and advocates who descended on Juneau in April during budget talks. Alaska’s educators may have it better than perceived, however, in light of the pension disasters currently unfolding in the Lower 48 that are a factor in the recent teacher strikes in multiple states. Where does Alaska teacher pay rank? Teachers in Alaska rank seventh in the nation for pay, according to the latest data put out by the NEA in a comparison of all 50 states and the District of Columbia. According the NEA, the state of New York had the highest paid-teachers at an average of $77,628 for the 2015-2016 school year. Alaska’s average teacher pay in 2016 was $67,433, which is about $9,000 more than the national teacher average. According to the Bureau of Labor Statistics, the average income for all occupations in Alaska is $57,750. Tim Parker, the president of the National Education Association Alaska Chapter, believes pay for Alaska teachers has slipped downward, and coupled with less attractive benefits, contributes to the current teacher shortage. Parker has taught English and journalism in Fairbanks high schools for the past 20 years, but is currently on leave from that role as he’s midway through a four-year term as the NEA president, a post he says serves well in his role to highlight real workaday issues impacting the state of Alaska’s education. As president, he has visited 30 of the 54 school districts. “I spend about 50 percent of my time out traveling school to school,” he said. Parker sees a crisis in the making that involves not having enough teachers for each classroom in the near future. For a variety of reasons, the state isn’t attracting enough new teachers either through the University of Alaska programs or through outside recruitment, he said. The teacher protests in West Virginia, Colorado, Arizona and Oklahoma are spurred by complaints of poor pay, but Parker says the teacher pension system in certain states are better than Alaska’s. Despite Alaska’s No. 7 rank in teacher salary, Parker said it’s a “falsehood” that they are among the highest-paid in the nation. “We don’t have as low a number on salary as West Virginia, Colorado, Arizona; they are down in a lower zone,” Parker said. “I would put us at the 50 percentile, not quite as low as they are, but meaning half the states now pay better in reality. They are getting paid more in a real sense, meaning they take home more pay. But when you look at their retirement, they actually have better retirement than we do. The fact that we have lower retirement is pulling us down in to that zone.” The cost of living expenses also push Alaska down in attracting new teachers, he said. A $50,000 annual salary here — common pay for newer teachers in the state — spends like $40,000 given higher rent, mortgages, fuel, groceries and even car payments. At job fairs, one of the main ways officials entice new teachers to the state, Alaskan recruiters are finding themselves beat out by recruiters in California, Oregon and Washington, Parker said. Only California ranks higher than Alaska in teacher pay, at No. 4. Washington ranks No. 25 and Oregon is No. 14, but both have lower costs of living. Yet any cost-of-living comparisons should also note that Alaska has no state income, sales or property taxes. The Lower 48 economy is also booming right now with record-low unemployment while Alaska remains mired in a slow-motion recession. “Superintendents, principals and human resource people trying to hire teachers right now know how uncompetitive Alaska has come,” Parker said. “It has been coming about for about five years as money has been drastically cut out of budgets due to flat funding and inflation. We are very close to a crisis. “On day one at the beginning of school year 2017-2018, the state lacked 250 teachers. We still don’t have some of those positions filled. That was the first time that’s ever happened.” He blames the problem in part on the way pink slips have driven out teachers. “There’s a small window to get yourself hired when you’re a teacher,” he said. “They can’t wait until after July 3 to sign a contract.” The Alaska Legislature finally passed a budget last year on June 23 letting districts know the dollars that would be coming to their districts. “We lost a lot of teachers that say ‘I either have to sign or contract, or I could be waiting tables next year,’” he said. Pensions versus 401k Education advocates claim that Alaska’s retirement system works against it in recruiting, but national organizations that have graded all 50 states rate it among the best for new teachers. Alaska shifted from a defined benefit pension system to a defined contribution system for all teachers hired after Jan. 1, 2006. A defined benefit system meant teachers would know a dollar amount they would receive annually, say, a set $49,000 per year. Under the change in 2006, 401ks became the established retirement system. The teacher contributes 8 percent of his or her salary and the state matches another 8 percent, a much more generous match than can be found in most private sector 401k plans. The problem is that teachers won’t be able to plan on a known dollar amount per year for their retirement, Parker said. However, across the country school systems have accumulated $500 billion in pension debt obligations, with wages eroding to fund the debts and future retirees having their benefits cut. Two organizations that have studied the issue recommend moves like Alaska’s toward defined contribution, portable, 401k-style plans. Bellweather Education Partners, a national nonpartisan group dedicated to helping education organizations achieve better results, made Alaska one of only 9 states that didn’t get an “F” for their pension systems. Instead, a “D” grade came in a June 2017 report called “Retirement Reality Check,” that analyzed the nation’s troubled pension systems state-by-state. Alaska was given at least a passing grade thanks to the fact that 100 percent of an employees’ contributions toward retirement are their own and don’t go toward paying off pension debts. It was given a low grade, however, because Alaska still has a more than $3 billion in debt for its teacher pension fund. The report recommends states put teachers back into the Social Security system and that new teachers be placed into defined contribution, portable retirement plans such as a 401k as the default option. And it charts the portions of teachers’ pensions that go to pay down pension debt, noting in Alaska teachers hired after 2006 in 401k programs keep 100 percent of their retirement contributions compared to the national average of 28 percent, with the rest of the contributions paid for pensions going toward the states’ debts. In Colorado, one of the state’s Bellweather graded “F,” the bulk of the money school districts spend on the Public Employees’ Retirement Association is paying off $32 billion in benefits previously promised to public-sector retirees but never properly funded. Striking teachers in Denver protest that just $3 of every $20 spent per teacher goes to their retirement, according to an analysis the state retirement system. The National Council on Teacher Quality, or NCTQ, gave Alaska the only “A” grade in its “Doing the Math on Teacher Pensions” report in January 2015. Urban Policy Institute, in “The State of Retirement: Grading America’s Public Pension Plans” report, gave Alaska a “B” grade overall for the system for new teachers. Both Bellweather and NCTQ recommend defined contribution and portable plans for new teachers, instead of defined benefits with lengthy periods to vest. They make the recommendation as a way out of the defined benefits mess that placed school districts deeply in debt with new teachers paying pensions for its retired teachers, and having their future benefits cut at the same time wages are being frozen. The Alaska Policy Forum, a public watchdog on state spending and policy, has applauded the state’s switch to 401k pensions. President David Boyle said “it got Alaska out of the nightmare currently experienced by many governments in the Lower 48.” But in Alaska among education employees, the 401k plan is thought to be inferior to the previous known benefits teachers could count on, Parker said. He said he’s “skeptical about the high grade awarded Alaska’s pensions by these organizations. That’s not what we see on the ground. They are not backed by facts in Alaska. People are leaving the state because they can’t retire.” Teachers in the current 401k plan dubbed it the “Death Tier,” Parker said. That’s primarily because, with Social Security off the table, teachers are forced to count on an unknown dollar amount. “They call it that because you have to work until you die and you can’t afford to retire,” Parker said. Younger teachers will have an easier path than those closing in on retirement, Parker has told legislators in testimony. At the end of five years, they are 100 percent vested, meaning they are eligible to withdraw the funds and reinvest. “The state is no longer making a long term investment in their retirement; and after five years you can take all of your money and all the state’s money and go someplace else,” Parker said. “Right now if you are in Tier 1 or 2 you don’t get to do that. It’s almost like we are encouraging people to leave. At year five you can have 100 percent of your money and go to the Lower 48 to another state where they have a defined benefit retirement and use the money earned in Alaska to put a down payment on a house.” This contributes to the state’s teacher drain. “It’s almost like we’re giving an incentive for teachers to leave,” especially if they work in districts where pink slips hang over teachers’ heads during difficult budget years, Parker said. However, as Bellweather, NCTQ and Urban Policy Institute have noted in their reports, and evidenced by the benefit and wage cuts in the Lower 48 tied to recent teacher unrest, defined pension benefits are not likely to survive in their current form. Health benefits cut into classroom In Anchorage, the district shouldered 100 percent of the $19,740 per year benefit package, setting it apart from other large districts in Fairbanks, Juneau and the Kenai Peninsula, and the district’s health care costs rose alarmingly in 2016-17, ASD Chief Financial Officer Jim Anderson testified in Juneau. These costs bit into dollars meant for classrooms, Anderson said. The cost of deductibles and portions of health care has risen, and necessitated some contract changes that mean some bargaining units pay a portion of their health care, Parker said. Still, that is new for this contract year and doesn’t impact all of the ASD employees who are separated into bargaining units via job designations. Still, given the entire picture, Alaska teachers are paid well when considering an overall package of pay, says Boyle. “Does a look at the salary include a look at the benefits as well?” Boyle asks. “In Anchorage, teachers get $19,740 paid per individual for health insurance. Multiply that by several thousand people and you get a huge number that is getting paid out.” When there was no employee match in the Anchorage School District for health care coverage, that was a sweet deal, he said, that few other school districts were allowing. Around the state, who paid what of their health insurance showed differing pictures. Of the 54 school districts in Alaska, only 14 of the districts were paying 100 percent of the health insurance premium in 2016. The other 40, even far-flung village districts, pitched in at least a 10 percent match. “Alaska teachers aren’t the highest paid in the nation,” Boyle said. “But a benefits package can add another $40,000 onto the salary, and that needs to be counted.” The demise of the teacher pension system is an area noted as bringing down the value of a benefits package, said Scott MacManus, the superintendent of the Alaska Gateway School District that is headquartered in Tok. MacManus does outreach at job fairs in the Lower 48 in order to hire his new teachers. “It’s true that Alaska isn’t competitive for pay,” he said. “Teachers here and in the Lower 48 take a beating from the public, and we’re not getting that many drawn to the profession to begin with. Then you add in Alaska’s high cost of living and lower-than other states’ pay, and we can’t draw them here.” Alaska’s 401k plan, when discussed in recruitment, is “not seen favorably” MacManus said. But in the overall picture of how much gets spent by the state on education, Alaska Policy Forum’s Boyle sees progress in its Tier 3, or 401k, retirement system. “The present 401k the state has for government employees and the school districts have saved the state tons of money in the future,” he said. “These unfunded liabilities are enormous and there needed to be changes.” Naomi Klouda can be reached at [email protected]

Business Plan winner to manufacture sportswear in Alaska

After long spells on Alaska trails, finding a shirt that didn’t stink of body odor following a few days’ wear came to be high on Jennifer Loofbourrow’s priority list. The entrepreneur founded Alpine Fit LLC, and put together the financing for her start-up to begin manufacturing outdoor clothing this July. The high tech wicking fabric contains silver, a natural combatant of odor-causing bacteria. Alpine Fit makes apparel for avid outdoor fitness lovers and wilderness adventurers, offering size options with fits for body types for both women and men. Loofbourrow beat out five other finalists to win the 2018 Alaska Business Plan Competition held April 25 at the 49th State Brewing Co. She won $2,000 in cash and was welcomed into a network of entrepreneurial support. She also took another $2,000 prize for the student award, related to Loofbourrow’s enrollment in the University of Alaska Fairbanks master’s of business administration program. The annual business plan contest brought out 33 entrants this year from around the state, said organizer Gretchen Fauske, the associate director of the Center for Economic Development at the University of Alaska Business Enterprise Institute. The finalists were Loofbourrow, and start-ups FutrSelf, Northern Hydro Farm, Tandem Labs, Litter Defender and Wheelhouse. Since 1999, the competition has been a joint project of the University of Alaska Business Enterprise Institute, Alaska Pacific University and the University of Alaska Fairbanks to encourage new business startups to add their ideas to diversify Alaska’s economy. Loofbourrow caught the judges’ attention on a couple of fronts, said Christi Bell, associate vice provost and executive director of the UAA Business Enterprise Institute. Loofbourrow’s passion for starting a manufacturing company in Alaska to make her own label of sportswear goes back a few years. She and her husband, Hale, choose to spend their vacation time on outdoor trips and she’s a daily runner or trail hiker on days that allow around a busy schedule as the mother of four- and six-year-olds. She said she wouldn’t pack clothing for an extended trip if it didn’t have some anti-odor properties. One shirt made of the special material is now 10 years old and still goes in the backpack for her trips. “I won’t pack clothing of certain fabrics if it won’t smell great after a couple of days of wearing it,” she said. “I had been thinking about this for several years and I started focusing on it during 2017, working on the business alongside my MBA courses.” For her own operation, Loofbourrow found a Pennsylvania materials supplier that creates the fibers. She will work with a fabric mill in California that then makes the fabric from the fibers to her specifications. ‘They will send me the sample yardage to mock out prototypes and test it out,” she said. The actual manufacturing of the sportswear will be done in Alaska. “Spring, summer, fall products: this is the fiber that works and it should definitely be the foundation of any packing list,” Loofbourrow said. But the outdoor wear isn’t “out there yet” where it would be more accessible to Alaskans. “What’s available in the marketplace? A couple of items, not hiking or camping-specific,” she said. “What I can tell you is that silver is known and studied as an inherently antimicrobial substance. It does not support the growth of bacteria,” Loofbourrow said. “A normal base layer that doesn’t have silver fiber is a breeding ground for bacteria for body odor.” Silver is used in the medical industry for that reason, she said. Antimicrobial means the ability to resist not just bacteria, but also molds, fungi and other germ-producing organisms. It’s a safe material when dealing with infections, which is why the medical industry puts it to use. Alpine Fitness is planned as a self-funded start-up. Loofbourrow is investing her own funds from the 2014 sale of a business she owned, Change Galway, a women’s lingerie store in Gallway, Ireland. While her husband, Hale, was completing medical school at the National University of Ireland, she ran the shop. As a Canadian citizen from Ontario, she first had to write a business plan to the Irish government for permission to open the store in Galway. “I had to write a business plan and write to the Irish government for permission to go there. It was a good foundation to write a good plan,” Loofbourrow said. “Ireland was in a recession; I needed to create my own job and continue my own job and contribute to the Irish economy during the time my husband was a student there. That was my first run through starting a business from scratch and growing it to something sustainable.” Hale Loofbourrow, a Juneau native, is now a physician at Primary Care Associates. His wife is essentially doing the same thing she did in Ireland: starting a business to employ herself and others, “and contribute to the local economy,” she said. To launch in Alaska, she would begin with a staff of two in addition to herself. Her plan is to test the market and “make sure we grow in response to the market demand” rather spreading out too thin by taking on too much expense upfront. Loofbourrow is on track to complete her MBA in 2019. The other finalists of the business plan competition were: Second place, Wheelhouse: Jake Carpenter developed Wheelhouse, an app that provides career and technical education for the marine and ocean industries. Third place, Futr Self: Emily Niebuhr, Ben Matheson, and Katvita Jattansingh devised a simple way for companies to improve their own business outcomes by increasing their employees’ financial wellness through a hassle-free, reasonably priced solution that helps weather times when they are short on cash. Northern Hydro Farm: Ryan Mortenson wrote a business plan for an indoor hydroponic vertical farm consisting of salad greens and cherry tomatoes for sale in Bethel. Litter Defender: Karen Remick came up with a dog-proof cat litter box. Tandem Labs: Conroy Whitney came up with Tandem Labs, a “Startup Studio”: a startup to build startups that provides money and mentorship as well as an experienced team of designers, developers, project managers, marketers and salespeople.

JBER, Downtown Fairbanks among opportunity zone selections

Geographic tracts identified as 25 federal Opportunity Zones were announced April 19 by the state’s Economic Development office in a move to spur private projects in distressed areas of the state. To be eligible, each tract’s population had to meet the criteria according to the U.S. Census data, said Britteny Cioni-Haywood, the director of the Alaska Division of Economic Development. “The criteria was a poverty rate of at least 20 percent or a median family income in the tract that was 80 percent or lower than the statewide median income,” Cioni-Haywood said. The median family income in Alaska is currently at $69,825. An individual median salary is $34,187 in Alaska. The federal poverty level is defined as an income of $12,060 to $16,643 per individual or $24,600 to $33,948 per family. The program was created by the 2017 Tax Cuts and Jobs Act, which established Opportunity Zones or OZs. U.S. Treasury Secretary Steven T. Mnuchin has said the “resulting benefits will be jobs and economic growth to move these communities forward and provide a brighter future.” The Treasury Department identified 60 low-income tracts in Alaska out of 167 tracts overall. The state Division of Economic Development then was asked to whittle the list down to 25 that are now qualified as federal Opportunity Zones. Letters of application came from community leaders and investors. The criteria for selection are based on economic hardships, geographic representation, project feasibility, alignment with existing initiatives and community support. In the next 10-year life of the federal OZ designation, investors can defer taxes on any prior gains, so long as the gain is reinvested in an investment vehicle called the Qualified Opportunity Fund. The IRS is currently working on guidance for businesses on how to take advantage of the tax credit, according to the Department of Revenue, which issued a news announcement April 9 after the first round of newly enrolled OZs were announced. Certain Alaska tracks may come as a surprise: the Joint Base Elmendorf-Richardson is one. Fort Wainwright and downtown Fairbanks where a performing arts center construction is planned are other designated tracts. Disadvantaged areas ripe for investment to create jobs and better family incomes were identified from the North Slope to Bering Strait to the Upper Kuskokwim and down to Hoonah, Wrangall and Prince of Wales Island. The tracts selected don’t include cities such as Nome, Kotzebue, Utqiagvik, Craig or Klawock in the south where income opportunities are higher than other areas. Seven are in Anchorage, including Spenard, Fairview, two areas of Muldoon, Midtown, and Ship Creek. On JBER, a proposal by J&L Properties is to build new housing units for military personnel. State Reps. Gabrielle LeDoux, R-Anchorage, and Ivy Spohnholz, D-Anchorage, and Sen. Bill Wielechowski, D-Anchorage, all advocated for J&L Properties as “a leading Alaska real estate and development firm” that has “expressed a tremendous interest in this designation for possible development projects,” their letter stated. They represent districts that include an area of East Anchorage where J&L also has proposed more housing. Anchorage’s census tracts 10, 14, 19, 20 and 21, known as Fairview, Midtown and Spenard neighborhoods, were identified in “numerous community plans,” wrote Emma Kelly, the business and economic development director for the Anchorage Economic Development Corp., in the application. “The City of Anchorage, in partnership with AEDC’s Live.Work.Play. initiative as well as Anchorage’s near-complete Comprehensive Economic Development Strategy… all identify benefits that would result from increased private sector investment in areas including housing, education, transportation, crime and safety,” Kelly wrote. Fairbanks tracts are in the area where housing will be needed for some of the anticipated 1,635 new personnel arriving at Eielson Air Force Base with the stationing of 54 new F-35 fighter planes, said Jim Dodson, president and CEO of the Fairbanks Economic Development Corp., or FEDC. The two new F-35 fighter jet squadrons are expected to arrive in 2019 and 2020. After analyzing the vacancies available in the Fairbanks, North Pole and Salcha areas, the FEDC concluded each of these borough communities need more housing to accommodate the squadrons, Dodson said. In Fairbanks-North Pole area, 200 to 500 housing units need to be built, Dodson said. “Analysis shows there will be a need for 900 housing units to house the crews and we have some of that in vacancies,” Dodson said. “But we’ve needed some community assistance to encourage building housing.” The FEDC has been conducting outreach to entice investors so far slow to move into Fairbanks to build the necessary housing, he said. “Maybe the tax cuts will help,” he said. Fairbanks North Star Borough Mayor Karl Kassel wrote of the hardship the area has endured, as cited in the April issue of Alaska Economic Trends. Some of the largest employer cuts were from the University of Alaska Fairbanks where 500 people have lost their positions and numerous retail jobs were lost when Sam’s Club and Sports Authority closed. Kodiak also made a strong pull to become enrolled as a federal OZ, but Kodiak wasn’t selected. No tracts on Kodiak Island were selected in the final cut of 60 communities to 25 OZs. City Mayor Pat Branson, in her letter nominating Kodiak, listed the need for “redevelopment” projects for seafood and tourism, expanded wind capacity on Pillar Mountain and a new seafood processing plant. Areas of the Kenai Peninsula also were not selected, though several qualified. “There were only 25 tracts that could be nominated,” Cioni-Haywood said. “Many factors were taken into account to select the 25. We would have loved to nominate all of the eligible tracts. There were many worthy projects but the federal restriction of only 25 tracts made it impossible to nominate all of them.” In Southeast Alaska, Hoonah, Angoon, Haines Borough, Wrangell and Metlakatla all occupy tracts that were selected as federal OZs. Alasks Power & Telephone was one of the businesses advocating for selection; plans in Southeast include increasing broadband capacity for Skagway, Haines, Prince of Wales Island and Metlakatla, wrote AP&T President Michael Garrett. Prince of Wales Island-Hyder Census Area in Southeast Alaska has nearly 17 percent living in poverty and annual unemployment for the past eight years has between 11 and 13.4 percent. Two investment projects pushed in its nomination are Dotson Ridge rare earth mining project that would recover rare earth elements essential for components needed in high tech domestic and military applications, wrote Craig City Administrator Jon Bolling. Another is an Angoon hydro project. Many projects named in the OZ applications are shovel-ready, Cioni Haywood said, and had been sought by communities for several years prior to the creation of OZs. OZs were first envisioned by the Economic Innovation Group, or EIG, a Washington D.C.-based bipartisan public policy organization founded in 2013 that describes itself as an entity that “brings together leading entrepreneurs, investors, economists and policy makers” to address “America’s economic challenges.” EIG lobbied Congress to set up OZs based on similar programs in the past: the “empowerment zones” of President Clinton’s era and the “enterprise zones” of the President Reagan era. A recent analysis by the Brookings Institute raises questions, and warnings, about how OZ investments might not work as intended. The tax incentives could become a sweet deal for projects that already promise return on investment, but not so much in “deeply impoverished areas where rents and property values are stagnant,” wrote author Adam Looney. He warned against turning a low-income neighborhood into a more upscale one via housing projects if it displaces low-income people and creates fewer places instead of more where they can afford to live. Naomi Klouda can be reached at [email protected] Correction: The original version of the story stated that AT&T was pursuing a project in Southeast. It is actually AP&T, Alaska Power & Telephone.

Third-generation Alaska business honored by SBA

People need suits, dresses and professional clothing dry cleaned as much today as they ever did, and that’s an opportunity that hasn’t escaped the owners of an Anchorage business in a time when many traditional careers have become obsolete. Fireweed Cleaners will be honored for its three generations of continuity in Anchorage on May 3 as the 2018 Family Business of the Year by the Small Business Administration Alaska Division. Dating back to 1967 and the efforts of Helen and Gerald Earp, the business was passed to their son Randy Earp and his wife Julie in 1993. In 2010, it was passed down again to their daughter, Katie and her husband J.T. Hampton. The Hamptons took over the business after graduating from Colorado State University in Fort Collins in 2010. Katie had earned a degree in social work; J.T. was one of the first classes to graduate with a business degree specializing in entrepreneurship. Katie grew up at the cleaners. She recalled at age eight helping customers and her dad, but it wasn’t on her list of goals to work in the business. “I didn’t want anything to do with it,” she recalled, and neither did her twin brother, Ryan. At college she met J.T. who was enthusiastically inventing a new business to walk through pitches for his degree. It was a company that made personal assistants available to an older generation for understanding their iPhones, iPads or whatever else they used. “He told me he wanted to own a business, to be his own boss. I said ‘well hey, my parents have a business they are trying to retire from,’” Katie said. “And I recalled watching my parents and realizing they had the benefit of being their own bosses.” The first generation at Fireweed Cleaners is the story of the Earp family. Katie’s grandparents, Gerald and Helen, said goodbye to their farm in Monmouth, Ill., in 1959. “Dad got tired of farming in Illinois,” son Randy Earp recalls. “He wanted to do something different. Two places he wanted to check out were here or Australia, of all places. That was the year they had discovered gas in Cook Inlet. He could see that things were just about ready to explode and go big time.” The Earps drove up the Alaska-Canada Highway in 1959 in their Pontiac sedan pulling a trailer. Randy was three years old. His dad worked for Alaska Oil Sales at a time when they delivered fuel to Anchorage homes, many fed by underground oil tanks. Later he worked for the Alaska Aggregate Co. laying cement. Then in 1967, Gerald Earp saw a future in dry cleaning. “He was busy with other things. He worked at Alaska Aggregate until 1973, then he bought a plumbing and heating wholesale supply house," Randy Earp said. “Anchorage had only one, maybe two, cleaners. He did it more as a business interest.” The cleaners started with three employees, including Helen Earp. Then Randy came into the business and he and his wife took over in 1993 when Gerald retired completely. The business grew to a second location, and more than 25 employees through the years. The technology has changed a lot in terms of machines and chemicals used in the dry cleaning process. “Dry” cleaning is a misnomer, since the clothes are washed in water. A key chemical, perchloroethylene, or perc for short, was the main one used in the past, added to the water, Randy Earp said. “It was a man-made chemical, a degreaser more than anything, that was used for a lot of things,” he said. “However, the handling of it was very expensive. It had to be handled as a hazardous chemical and it was expensive to dispose it.” Used perc was shipped out of the state in barrels. “We were responsible for it from what’s called the ‘cradle to grave,’ where it is incinerated at the other end,” Julie Earp said. “It was one of our major expenses at the end of the year, about $10,000 to get rid of it.” Now dry cleaners use System K-4, an environmentally-friendly perc substitute that gives better “mileage” Randy Earp said, by giving more pounds of cleaning per gallon. Another big change came about after Randy had a motorcycle accident a month after his daughter married J.T. Hampton. “They took over, maybe before they were ready for it,” Randy said. Just now getting ready to celebrate their 30th birthdays (J.T.’s is in May; Katie’s is in June) the two were truly “fresh out of college” when they took over eight years ago. One of the first changes J.T. wanted to make related to the new bar code technology that he realized the computer system at Fireweed Cleaners could adapt to. “They used to use tags that went onto each piece of clothing,” J.T. said. “With a bar code, all you have to do is scan an article of clothing and it will give you all the information on the brand, the color, the type of garment and you can track it throughout the store.” The Hamptons also expanded into more hotels for picking up laundry and they run both Fireweed Cleaners locations: one at 500 Fireweed Lane, and the other at Abbott Road. Now Julie and Randy Earp live most of the time in Anchorage and part of the time in Scottsdale, Ariz. “Randy helps with maintenance issues. We pop in if they need us but for the most part we’re retired,” Julie Earp said. And yes, if the family last name sounds familiar, it is the same as the Old West legend Wyatt Earp, who came to Alaska during the Klondike Gold Rush in 1897 and eventually made it to Nome where he and a business partner built the Dexter Saloon, the first two-story building in the town. Wyatt Earp was Randy’s great-great grandfather’s brother. They all came from the same Illinois town, Monmouth, where both Wyatt and Randy were born. “We don’t mind a bit when people ask,” Randy said. Now Katie and J.T. have two children of their own, Finley, three, and Jamison, five. Bookkeeping allows Katie to stay home with them for now. “Who knows, they might be interested one day,” J.T. said. Naomi Klouda can be reached at [email protected]

Entrepreneurs brainstorm new plan for Seeds of Change

The Seeds of Change hydroponic farm that was at risk of shutting down two months ago is operating under a new business plan and has stopped losing about $30,000 per month. The shift came after Anchorage’s entrepreneurial community brainstormed with Seeds of Change management in February. As a result, the non-profit whose purpose is to provide youth employment and pursue a high-volume growing operation is turning around. “We’re in a much better place than we were before,” said Ryan Witten, Seeds’ community development manager. “We were told we have funding through the end of March, by the (Anchorage Community Mental Health Services) board. Unless we have a plan for the future, they would be forced to shut down. That is absolutely not what the board wants to do.” That led to calling on Nigel Sharp, the University of Alaska Anchorage Global Entrepreneur in Residence, or GEIR. Sharp, the university’s first GEIR and one of only a handful around the nation, has held startup weekends, technology sprints and other events to guide savvy startups since arriving in Alaska last June. But this was the first chance to put together a think tank of expertise moving from theory to a hands-on rescue of a distressed business. He put together a weekend event that brought 32 pros together for a 10-hour brainstorming catalyzer Feb. 17. They came up with four areas for expansion that would bring in more revenue streams. “We took ideas from the group and turned them into a plan to change our program,” said Jim Myers, the chief executive officer at Anchorage Community Mental Health Services Inc., which owns Seeds of Change. “Now we are going to switch our focus in youth employment development. We had thought selling our produce would provide the revenue, but that wasn’t what happened. Now we see produce as just one of our funding streams.” New job horizons Two entities that fund job training programs for young people — Myers doesn’t want to say their names because no contract is yet signed — are finalizing plans to pay Seeds to do a six- or 12-week employment training program for young people. Up to 16 young people can be accommodated at a time for training at the hydroponic farm. The biggest difference is that Seeds of Change will be paid for each person it trains; that’s a lot different from footing that bill on their own and supplying each employee-in-training a paycheck. Some are at-risk teens who were formerly homeless or displaced, or are emerging from mental health programs. Any young person ages 16 to 24 can apply to work at Seeds of Change, said Siena Belle, the program manager. Applications are on their website. “This is a program for youth in transition, which is what we call all young people transitioning to adulthood,” Belle said. “They are young people who face all kinds of challenges and barriers. A little more than a job is their need. Maybe they are struggling to get to work on time or a huge skill set is missing and we can provide a sense of community and support while training them in how to communicate, how to take criticism, any number of skills they may need to learn.” Each person received in-depth training on how to raise vegetables and other plants in a high tech, controlled environment. Commercial greenhouses operating in Anchorage are hiring Seeds of Change trainees. Other partnerships Another partnership that emerged after the catalyst involves new tenants that will pay rent. One is Far North Fungi, which is set to move in in the fall. In the meantime, mushroom spores are suspended in bags amongst the towers of lettuce and herbs. “We’re testing now how much C02 it gives off,” Myers said. Another promising arrangement is in the works with Arctic Harvest Deliveries. The community supported agriculture, or CSA, program is currently a customer, purchasing greens and vegetables from Seeds of Change to add to their CSA boxes and for restaurant delivery. “I currently have a spot in Palmer, but I need a space in Anchorage,” said Arctic Harvest owner Kyla Byers. “At the very least I’d like to have coolers at their location to hold products. Eventually we may have their kids help out with smaller tasks such as weighing out and bagging vegetables that go in the boxes.” She delivers to restaurants year round and starts back collecting produce for the CSA boxes in July. Catalyst members also encouraged Seeds of Change managers to think about the opportunities in philanthropy. Given Anchorage’s high crime rate and a drug epidemic, this isn’t a particularly easy city to transition into adulthood for many. But the power of the job employment skills imparted to more than a dozen teens in the first year is something others in the community also want to support, entrepreneurship pros told Witten and Myers at the catalyst meeting. “They suggested we develop a plan for approving donations and how to market events for fundraising – some that can be held here,” Myers said, referring to the attractively laid out greenhouse where veggies grow in towers. Fire Island Bakery held a 5K run April 7 that brought out 200 participants and raised $2,000 in donations that went to the operation. “Then we also sold $600 in produce to people at the event,” Myers said. Another piece of the plan is “agricultural tourism.” Currently a potential partner is putting together a plan for tours. The greenhouse recycles water and uses energy efficient lighting. Its system for planting and vertical growth is monitored for pH levels. It takes expertise to grow year-round in a subarctic environment, which is a topic eco-tourists would likely find interesting, Myers said. Manager Witten said teen employees are good fit for the operation. “They have a different way of seeing a problem and a solution,” Witten said. “A lot of young people are marginalized but the problem is really that a lot of adults don’t know the right questions to ask them.” One day Witten said he was struggling to think through a leaking problem on one of the towers when one of the teens arrived after school. “There was a whole other way to look at the problem – I was just amazed,” he said. “We can give them baseline skills and then, with their own talents, they can really shine.” Watch for Seeds of Change produce at the Sears Mall and at Fire Island Bakery in Airport Heights from 3-7 p.m. on Wednesdays and at the South Anchorage Farmers Market starting in late May. ^ Naomi Klouda can be reached at [email protected]

TERRA network completion a milestone for GCI’s Markley

Behind Alaska’s giant engineering feats such as GCI’s TERRA network are stories of the people who made it happen.  One name for the history books is Rebecca Markley, GCI’s project manager for Terrestrial for Every Rural Region in Alaska from the first foot to the last leg.  Markley choreographed the logistics for all 3,300 miles of it: leasing land, permitting and setting up transportation for crews. She tracked each cell tower site from construction to final set up.  People she worked with say Markley’s got one of the best TERRA maps kept in her personal mental archives.  “Visually, it really helped to physically go to all the sites. That way I can memorize all the sites,” Markley said. “I’m asked ‘How do you remember all that stuff?’ and I say I’m a mother, I have to.”  When Markley joined GCI’s customer service department, she had no clue her work for GCI would have such far-reaching impact. Laying the groundwork to connect remote Alaska to the rest of the world via high-speed internet became critical for saving lives, opening economic opportunities and improving education.  For starters, picture TERRA’s communication system as a ring starting in Homer and extending west to Bethel and Dillingham, north to Unalakleet then Nome and Kotzebue and back down to Nenana, Anchorage and the Kenai Peninsula.  It includes buried fiber optic cable, laid in the early phases of the project across Cook Inlet, plus an extensive network of 120 microwave antennas mounted atop 30 towers as high as 305 feet tall.  “It’s probably one of the biggest, if not the biggest, long-haul, contiguous microwave systems in the world,” said GCI project engineer Patrick Goodyear.  The entire TERRA project includes 95 towers and 108 sites, 24 of which are on mountaintops. The average shot — the distance that the microwaves need to travel between antennas — is 35 miles, with the longest at 83 miles.  Now completed, the system supplies communications for 84 villages.  The launch of a career  In February 2002, Markley landed in frosty Anchorage with her husband and three children ages five to 12. Clarence Markley is in computer operations and maintenance in the U.S. Air Force.  Their tour of duty sent them to Germany and Japan before the Alaska assignment where Clarence wanted to retire. After years of being a stay-at-home mom, Markley sought full time employment.  “I had a bachelor of science degree in information technology with a minor in computer science, and there were two openings at GCI I was interested in,” Markley recalled. “One was in HR (human resources), but it was only part time. The other was in customer service, full time.”  Markley took the customer service position.  After a couple of years as a supervisor over field technicians, a project management position opened in 2006.  “At that time, it meant working mostly on rural projects; no one else wanted to do it,” she said.  Prior to TERRA’s construction, GCI supplied managed broadband to bush schools and health corporations. In 2006, Markley worked on projects focused on customer, schools and health corporation upgrades.  “In that position I soon learned where every village was in rural Alaska,” Markley said.  As a project manager, she set up logistics, housing and transportation for technicians who came out to work on the ground-based broadband.  “I personally would deal a lot with the cities, villages and local people who could get us lodging, four-wheelers, transportation from the airport. I interacted with locals to schedule upgrades with schools and health corporations. It was a good background for what was ahead,” she said.  In the meantime, GCI was conceiving a better network to supply rural Alaska: a new, 3-gigabyte microwave and fiber network that would form TERRA was in the design stages.  By the time stimulus funding became available through the American Recovery and Reinvestment Act in 2009 under the Obama administration, “we had a shovel ready project to the deliver the services,” says Heather Handyside, GCI’s senior director of communications.  To fund the $300 million project, GCI gained $50 million in federal funding and brought in $250 million of its own capital to build out the system. It would be completed in four phases, starting in southwestern Alaska in the Illiamna Lake area, two more phases in the northwestern Alaska and a fourth Yukon phase.  By the time GCI posted the open position for TERRA’s project manager in 2010, Markley had completed a master of business administration in telecommunications at Alaska Pacific University. She took classes at night after working days at GCI.  “On weekends I cooked large meals my family could eat during the week,” she said.  The MBA may have helped in selecting her to lead the project.  But her work in rural Alaska meant she knew details about phone exchanges, local carriers, “what services we delivered to everyone out there. It was in the back of my head.”  In 2010, the project began, with the first build completed in 2012 that connected 65 villages in southwest Alaska.  “When a vice president retired, they felt like I should jump in the saddle and run with it. I didn’t know a lot about environmental permitting and leasing or hiring contractors to build shelters, or about the civil engineering on several installations. It was quite a bit to handle,” Markley recalled.  She learned quickly. At a few points, the project was delayed during the short window of summer construction.  One was the Yukon River caribou herd during environmental permitting. GCI needed to do mitigation to make sure their construction wouldn’t negatively impact the herd.  To do that, GCI paid for flights for the Alaska Department of Fish and Game to study the caribou herd during calving season, Markley said.  In another setback, a contract crew for GCI, Kikiktagruk Inupiat Corp, stumbled on an archeological find that stopped their TERRA track and called for a two-year halt. But 4,000 objects estimated at 800 years old came of the discoveries and GCI volunteered to pay for curating the collection.  Markley said a typical day for the most part included orchestrating remote fueling operations, observing strict permitting guidelines, arranging helicopter lifts, supplying mountain-top camps, shipping heavy equipment and tons of steel.  “(TERRA) added a whole layer,” she said. “On top of knowing who to go to in a village, I needed to go into topography and mountaintops. What is the closest village to that mountain top? How to get transportation to the mountain tops?”  One of the biggest questions for big segments was “How do you get there?”  “How would we get there in the winter time? One gentleman (contractor) had an R-44 helicopter. Another had Jet Rangers that he did flights to the lodges. A lot of them did not work in the wintertime,” Markley said. “It was a matter of making sure crews had the right tools on site. Everything you take on must come off. Human waste. Garbage. A lot of these were federal lands. You’re not allowed to burn anything.”  The smaller helicopters got personnel on and off sites. It took a heavy-lift Erickson Sky Crane helicopter to haul up to 20,000 pounds per flight to build the tower sites.  As the director of rural initiatives, her most recent title at GCI, Markley “anchored” the telecom company’s TERRA project group. This meant she supervised other managers for oversight over the entire project.  Mark Carlson, a TERRA project manager who worked under Markley, said what stood out was how “hard she worked.”  “You’d see early morning emails, late at night emails. She put in a lot of hours on it,” Carlson said. “No job was beneath her. You’d see her sorting materials, getting into the details on invoices, the mundane details in mountains of paperwork.”  She also traveled with the crews to whatever rough location the work took them.  Complete, but never finished  Although TERRA’s four phases are completed, that doesn’t mean there’s not a lot more to do.  “Finishing TERRA is a milestone, and the ‘parade’ celebration was all about closing the ring, but we’re not done yet. Alaska is a huge place. There are always more villages to connect, more bandwidth to add,” Markley said.  Since the “ring” was closed in the final TERRA phase this past December, the system has redundancy and if there are breakdowns at any point, backups kick in to keep internet power continuous.  The buildout will focus now extending from the “spurs,” or backbone villages where new connections can be built out to the closest settlements. A “donut hole” left in the middle of the state west of Kotzebue and east of Fort Yukon present challenges.  “We’re able to get the villages closest to the backbone. Any other villages after that can require a lot more repeaters. They will be more difficult for us to reach,” Markley said.  Meanwhile, the TERRA map shows an untouched Aleutian Chain.  “In the Aleutians we’re looking at fiber instead of microwave. It’s a little easier. Microwaves reflecting off water doesn’t do so well,” she said.  Now it’s Markley’s job to help figure out what’s next: what’s possible and how to get there.  Her eyes rest on the TERRA map, this one on her laptop in front of her, at the end of the interview.  “It does feel good to have this accomplished,” she said.  Naomi Klouda can be reached at [email protected] 

Alaska Railroad painting contract helps launch local business

The Alaska Railroad used to ship some of its 45 passenger cars on barges to Seattle every year, then put them back on tracks for a long chug to the Midwest for repairs and paint jobs.  The costs piled up, according to Tim Sullivan, the Alaska Railroad Corp. director of external affairs. Not only did it cost money for the shipping and the work. There was a price for flights and hotels for officials to inspect the work as well.  Kevin Stalder was a co-owner of Driven Auto Body, where he knew there was a major unmet need that extended beyond the bright yellow and blue train cars to body work on Kenworth trucks and Peterbilt tractors, and Holland America coaches and tour buses.  That’s when Stalder got the idea to start his company.  “I sold half of my interest in the auto body business to start Alaska Industrial Paint. I knew the market was there for fixing buses and big vehicles,” he said. “And I spent a year planning my business model. There wasn’t anyone doing it here. Even Holland America was shipping out its (train) coaches.”  Stalder’s motto, printed on his business cards, is “Yeah, we can paint that.”  When he went looking for a giant-sized shop, not just any commercial building would do the job.  Rail track connections were necessary to get the cars in and out. Proximity to the Alaska Railroad was a must. Clearance for 19- to 23-foot high trains meant high ceilings. He needed outdoor yard space on rails for sand blasting and indoor space for winter painting and coating. He’d need a building long enough to maneuver 88-foot long train cars.  “I found this building and it was perfect,” he said, referring to the multi-leveled gray historic structure at 229 E. Whitney Road across from Ship Creek. “If I had to build a place to do this work, it would have cost $8-$10 million.  “It used to be Chugach’s old coal-fired power plant. They needed the tracks to get the coal in for supplying electricity to Anchorage and it had the spur for turning around the rail cars.”  Called the Knik Arm Plant, built in 1950 to serve the swelling post-World War II Anchorage population, it was initially jointly owned by the Alaska Railroad and Chugach Electric Association. The coal burners were converted to natural gas in 1967. Then the plant was retired from service in 1985, and the building was sold into private hands.  Once an old eyesore, it formerly housed multiple boilers that were fed a steady diet of coal shipped on train hoppers from Usibelli Coal Co. With the 75-year old rails still there, it proved the perfect place for Stalder’s plans.  Stalder worked with the Small Business Administration on his pro-forma plan and obtained an SBA loan. He moved in 2014 under a lease with the building’s owners, Central Environmental Inc. (CEI is an abatement company that scraps old buildings, sends the steel Outside to be recycled, then does environmental remediation.)  Starting with two employees, Stalder soon grew his crew to the present 20, and anticipates needing another 10 people by fall. They work on six to eight train cars per winter, as well as on other large vehicles.  It can take two months to sandblast, paint and coat each train car. If it was dinged in a collision with a moose or another mishap, they fix dents. The job covers every inch of the train car, including the underbelly in black paint and protective coating, and the wheels painted silver.  “I wanted an all-Alaska workforce, trained and able to work year-round,” Stalder said. “I didn’t want to be bringing workers up. These are Alaskans. They raise their families here, buy houses, pay mortgages or rent, buy groceries and it adds jobs to the local economy.”  Stalder has direct experience in the ebb and flow of a seasonal economy. He arrived in Alaska in 1985 to earn summer money for tuition at the University of Idaho. But he met a girl and stayed and she became his wife. For work, he took a job with VECO on the North Slope. He transferred to the University of Alaska Anchorage to earn a degree in psychology.  “And upon graduation, I immediately went to work for Allstate,” he said. “But I do use psychology in my work every day.”  His job involved analyzing insurance claims, investigating fraud claims and going through the process of estimating for auto body repairs. He did this work for nearly 20 years, 15 with Allstate and five years as claims manager at Leader Infinity. That work led him to opening the auto body shop in 2008. And it all lent expertise for founding Alaska Industrial Paint.  Stalder’s operation was one of a handful of companies recently highlighted in a report called “Alaska: State of Entrepreneurship,” by the University of Alaska Center for Economic Development.  Businesses such as his account for essentially all new private sector jobs in Alaska, on net, each year. Without them, there would be no net job growth, according to the report. Between 2005 and 2014, employer firms less than one year old added an average of 5,200 jobs per year, according to the report.  Because winter prep work for tourism companies dries up in summer, Stalder’s business model called for doing painting and protective body coating work from May to September in rural Alaska.  The customers for that work are Crowley Marine and Shoreside Petroleum Inc. on their fuel tanks in Adak, Cold Bay, Cordova, and any place that receives winter fuel offloaded in amounts to last entire winters. Alaska Industrial Paint crews sandblast, paint and coat fuel tanks as well as other work associated with maintaining them.  In winters, Stalder’s crew paints trains: Holland America’s passenger coaches and domed cars, Alaska Railroad passenger coaches, and tourist buses for various companies.  He also recently purchased another four acres and a 42,000 square-foot set of warehouses at Whitney and Post roads, a grouping of high-ceilinged buildings dating back to the 1950s, to expand his coach, school bus and semi-truck repairs and painting work. That business will be called Alaska Collision Specialists, set for a September opening.  But growing too big too fast is a fate Stalder’s been trying to avoid.  “I have all the work we can handle right now, and if I take on more than I can do, I risk not being able to take care of the customers I have,” Stalder said.  Serving the customers he has meant he needed more space.  His goal was always to do complete fleet work. Major trucking companies have standard cars and trucks that also get into wrecks or need paint and logo upkeep.  “I want to serve the customer, in their needs for their entire fleet of vehicles,” he said.  That’s why the new space will be useful; he can stretch out and let his crews do multiple jobs in the new space while reserving the Whitney Road location for industrial size vehicles and trains.  But after a few years in business, Stalder said he still hasn’t let his company website “go live” yet. He doesn’t need the publicity.  “I don’t ask for more work than I can do reliably and safely,” he said.  The Alaska Railroad is happier with this arrangement, said Sullivan.  “We’re saving money,” he said. “The timing is better. It’s a higher quality of work and we’re involved in the whole process.”  Naomi Klouda can be reached at [email protected]   

Enstar to cut rates with $5M benefit from 2017 tax reform

Enstar Natural Gas Co. anticipates $5 million in additional revenue coming in 2018 thanks to the U.S. corporate tax rate changing from 35 percent to 21 percent and plans to cut rates for its 144,000 customers.  Enstar’s move is among the latest by companies on how they intend to use the benefits from the recently enacted Tax Cuts and Jobs Act of 2017.  Enstar hasn’t determined yet the amount its customers’ rate will go down, said spokeswoman Lindsay Hobson.  “We’re filing soon with the Regulatory Commission of Alaska to let them know the tax change will impact rates,” Hobson said. “The request will include the amount to reduce rates. Anytime we can save customers money, we like to do that.”  Once the RCA approves the new rate, customers should see an immediate difference in their Enstar bills, Hobson said.  The RCA sent out a letter March 23 to all for-profit utilities in the state requesting information on the effects of the new tax act. Among those sent the letter were TDX North Slope Generating Inc., Doyon Utilities, College Utilities Inc., Golden Heart Utilities Inc. in Fairbanks and Cook Inlet Natural Gas.  Another of those was Juneau’s power company, Alaska Electric Light and Power Company, or AELP, which also anticipates “reducing its annual revenue requirement by approximately $1.5 million to $2 million,” wrote AELP President and General Manager Connie Hulbert, in a response to the RCA.  “While the utility hasn’t yet determined a specific course of action, it plans to ensure that the benefits of the tax cut will be reflected in customers’ rates,” Hulbert wrote.  For-profit utilities also may be in line for other tax breaks, as AELP indicated.  “The Tax Act also has an impact on accumulated deferred income taxes (ADIT),” Hulbert wrote.  The actual amount of the excess ADIT taxes paid won’t be known until the 2017 income tax return is prepared this fall, Hulbert wrote in the letter.  The impact of the lower corporate tax rate on deferred taxes is what has allowed many corporations to see immediate reductions to their tax liability, despite the fact the new tax act just took effect in January. BP recently reported results for Alaska that were improved by $500 million because of reduced liabilities on deferred taxes.  Non-profit utilities or cooperatives such as Chugach Electric Association, Homer Electric Association, Matanuska Electric Associations and Golden Valley Electric in Fairbanks do not pay federal taxes. The RCA didn’t send them a letter requesting the information, said Grace Salazar, the Consumer Protection Section chief at the RCA.  Electric cooperatives are not impacted by the corporate tax cuts, Salazar said.  Another significant Alaska economic benefit likely will come from the state’s lone individual market health insurance provider.  Premera Blue Cross Blue Shield announced last month that it will invest $50 million in Alaska infrastructure over four years, starting in 2019, thanks to the tax changes. That tax benefit came when the new tax act repealed the corporate alternative minimum tax, or AMT.  Premera Alaska President Jim Grazko said the $50 million will focus on infrastructure projects in three key areas: improving health care access in rural Alaska, investing in behavioral health and shoring up the individual insurance market that was set up under the Affordable Care Act.  The tax savings are expected to trigger premium rebates for individual and small group customers under the medical loss ratio provision of the ACA, Grazko said. Premera also expects to return about $1.5 million to those covered in large groups or employee-sponsored insurance policies.  Teresa Newins, a partner in KPMG’s tax practice in Anchorage, explained that many medium-size companies in Alaska also should see big refunds.  “They won’t be anywhere near as large as Premera’s,” Newins said.  Refunds for these companies will be in the $1 million range, either more or slightly less. KPMG, a national accounting and consulting firm, has many Alaska customers but does not name its clients. Newins spoke in general, predicting that about $10 million will drift into the Alaska economy from corporate AMT’s repeal.  This is a narrow category that “relate to the refund of alternative minimum tax credits for corporations,” Newins explained. “These credits are generated in years where the AMT tax is greater than the regular tax. The new 2017 Act repeals AMT for corporations and, as such, allows the credits to either offset future regular tax or be refunded over tax years beginning in 2018 through 2021.”  Prior to tax reform, corporations with three-year average annual gross receipts of greater than $7.5 million could be subject to the AMT. As such, there are various Alaskan corporations that have AMT credit carry-forwards that may qualify for the new refund or offset to federal tax, Newins said.  The tax cuts also promise to provide bonuses for employees of some of Alaska’s biggest corporations.  The Alaska Chamber sent out a survey to Alaska members to find out how the new tax structures may impact them.  Chamber President Curtis Thayer said they received a good response back that allows a snapshot insight into how the tax changes could impact the Alaska economy, because they have members in every corner of the state.  “We asked what was their take on the new tax bill. A lot of people were still trying to figure it out,” Thayer said.  Based on survey responses, Thayer said Alaska Airlines was able to give employees a bonus, as did Wells Fargo and Home Depot. AT&T, the largest telecommunications company in Alaska by wireless customers, was the first company to announce $1,000 bonuses after tax reform passed.  Northrim Bank responded that it did some restructuring on their employees’ 401Ks to increase the bank’s match.  Smaller to medium companies reported a different kind of impact, Thayer said.  For the past several years, small businesses were hit by huge health care costs for their employees under the ACA. At the same time, they are contending with a shaky economy that’s been in a multi-year recession.  “Several of the companies had indicated that the potential tax savings allowed them to keep employees. They didn’t think they would lay anyone off this year,” Thayer said.  Taking corporate taxes down from 35 percent to 21 percent will impact small family companies differently than its large corporate counterparts, but “there’s also an economics of scale within the company and how they were surviving the past few years,” Thayer said. “For some, that tax break means keeping employees and avoiding another round of layoffs.”  Still, more impacts won’t be known until next year, when companies do their 2018 taxes, Thayer predicts.  “The Lower 48 is booming,” he said. “We’ll see a delayed reaction until 2018 taxes are paid.”  Either way, the tax cuts should help Alaska in its economic slump that started when oil prices spiraled downward in late 2014.  “From the sum total, clearly I think it is helping soften the recession to some degree. Just Premera putting $50 million back into health care buffers a lot,” Thayer said. “It avoids more layoffs across companies. It’s softening but we’re not out of it. This isn’t going to solve our economic problems; only state fiscal policy will.”  Naomi Klouda can be reached at [email protected]   

‘Displaced’ teachers a lesser known story of budget decisions

The process of laying off teachers in what’s known as “pink slip season” — May 15 to the last day of school — attracts most of the attention when education loyalists argue for funding. But there’s another category known as “displaced” or involuntarily transferred teachers that also stems from budget cuts. It involves keeping a teacher in the district but putting him or her up for bid to a different school. Teachers selected to be laid off or displaced are identified by school principals and generally are the latest hired, said Tim Parker, president of the National Education Association–Alaska Chapter. If programs are reduced or eliminated, the teachers, even tenured ones, will also get laid off or displaced. “Tenured teachers are usually the last ones to be identified for layoffs,” Parker said. Critics of this system argue that a perfectly great teacher could get lost in the “last hired-first fired” criteria, he acknowledged. While Alaska’s educators and legislators have debated the matter through the years, Parker said, no system for deciding which teachers deserve higher merit status over other teachers was ever developed. Many of the state’s teachers belong to the National Education Association bargaining unit, which helped devise the current system. Emma Brooks, an English teacher at Dimond High School, was notified of her displacement last month. Brooks was raised in Homer and graduated early in an advanced placement program at Homer High School in 2005. She earned her bachelor’s degree in English and writing from Southern Oregon University in Ashland and a master’s degree in teaching from the University of Alaska Anchorage. Teaching literature to high school students used to be her goal. “At the end of the school year, displaced teachers will be shuffled around randomly to other schools,” she said. “It’s a process that shows how little value is placed on teachers, for your strengths or letting you pick where you go or adequate time to plan for the school year ahead.” At a giant meeting of district principals sometime in mid-summer, the teachers’ names and certifications are posted on a board in the Anchorage School District building. A principal then takes a name down and casts a bid on a teacher by exhibiting the name on a paddle to claim a displaced teacher the school is interested in hiring, Brooks said. Last year, when displaced from her English teaching position at West High, Brooks’ name was exhibited on the paddle of a Clark Junior High School principal. “He emailed me a photograph of him holding up the paddle with my name on it,” Brooks said. There was no interview. He simply offered her a job teaching junior high English. This method for acquiring teachers occurs in tight budget years, after dozens of pink slips were sent out and student needs shift: more English teachers may be needed, another math certification or a social studies specialist. Teachers will be hired back after being laid-off but in many cases, the teacher has moved on to get a new position in another state. Brooks turned down Clark’s position and applied to Dimond High School, where she teaches freshman English sections to 75 students and a literacy support course for 13 high-needs students. Now she is displaced again. “Even the legislators in Juneau didn’t understand displacement is different from being laid off,” Brooks said. “My own husband confused the difference until I explained it.” Parker, the president of the National Education Association-Alaska Chapter, said the bid process for acquiring a teacher might pit one principal against another principal who both want the same teacher, so using the term “bid” to describe the process isn’t inaccurate. What kind of bargaining they do to get the credentialed teacher they want, however, isn’t known. “Two competing principals debate it a little bit,” he said. “I’ve never been allowed in to witness one of these events but I have been one of the displaced before. It would be better to consult the employees about job strengths. We would like if they would go through the process of letting them apply.” If schools could place an opening soon enough in the school year, “you would get a more natural movement,” Parker said. “In shrinking times we get an artificial, strange process that happens in mid-summer. It’s not in the interest of kids to do this every year.” In the 1990s and 2000s, school districts didn’t go through this, Parker said, because budgets kept pace with inflation. In times of adequate budgets, districts don’t cycle through layoffs, hiring them back and losing many teachers in the process, he said. Brooks’ displacement comes as Dimond High officials project enrollment for the 2018-19 school year ahead. The student body of 1,654 this year declined by 50 from 1,704 last year. Nine teachers will be displaced or laid off from the school — well ahead of the statutory-mandated teacher notification of May 15 for non-tenured teachers and the last day of school for tenured teacher layoffs. When her impending displacement was announced again this year, Brooks handed in her resignation. For the first time since taking a teaching job in Alaska four years ago, she felt it would be okay to testify to legislators in Juneau about teachers getting randomly moved to other schools. She volunteered on one of the Alaska Education Association’s Juneau trips. “I wanted to say something about this. There is a lack of respect for teachers. There’s a sense that teachers feel entitled, but that’s not true. I know what is happening from having been there and I think a lot of legislators didn’t even know this is going on,” she said. “I wanted to communicate how inefficient this whole system is. Even just as an Alaskan, I wanted them to know the system because they (legislators) are so distant from it.” Brooks likes to write and has published professionally. Mostly, in teaching, she wanted to impart writing and reading skills to teens. Now she isn’t so sure she wants to be a teacher again. “This isn’t part of the culture I want to be part of; they aren’t professional in how they treat teachers,” she said. An Institute for Social and Economic Research report concluded it costs $20,000 for each new-teacher hire due to costs of recruiting out of state, mentoring or training, and other factors. Yet, in the “lack of value” placed on teachers they already hired, Brooks said, the district manufactures some of its own chaos. “It completely wastes funding,” she said. As an Alaska-grown teacher, she prioritized getting a job in the state. But she feels the system drives out young new energetic teachers. “It’s sad beyond just me,” Brooks said. “Our school district activity drives out teachers in this crazy cycle of being laid off or displaced. You can’t develop relationships. You can’t do planning ahead when you don’t know where you will be or what you will teach. It’s harming students.” Parker agrees. Alaska has a hard time recruiting new teachers due to relatively lower pay, higher costs of living and poor benefits. He would like to see stability in the number of Alaska teachers, rather than the present shortage. “The retirement system is not adequate. It’s atrocious. It’s a defined contribution system, as opposed to a defined benefit system, that is not good financial planning,” Parker said. Social Security won’t be available to Alaska’s retired teachers due to opting out of the system. Scott MacManus, the superintendent of the Alaska Gateway School District headquartered in Tok, testified recently that he attended a teacher job fair in Anchorage. “There were fewer than 200 applicants, because we’re not competitive anymore,” MacManus said. “Then I attended a job fair in Oregon, and they had 1,600 applicants.” MacManus could only offer $50,000 a year to any new teacher hires. But in Oregon, teacher salaries are closer to $59,000, he said. “I can’t compete with that.” Brooks isn’t sure what goals she will pursue now. But she wants to remain part of the dialogue on the state level. “I am hoping the Legislature will find a way to forward-fund education,” she said. “This is impacting 37 percent of the students in Alaska. That’s how many are in the Anchorage School District. Teachers deserve a lot more lead time than they get.” Naomi Klouda can be reached at [email protected]

Former ADN owner appeals order to turn over loan documents

Former Alaska Dispatch News owner Alice Rogoff appealed to the 9th Circuit Court of Appeals April 4 to challenge a judge’s order that Northrim Bank turn over all documents related to her 2014 loan used to purchase the company. U.S. District of Alaska Bankruptcy Court Judge Gary Spraker’s decision allowed the court-appointed public trustee to examine Rogoff’s bank loan documents as part of a continuing examination of her finances aimed at repaying some of the debts she left behind after selling the paper last fall. Rogoff attorney James Lister argued that Spraker’s March 21 decision “sets an erroneous standard for determining if confidential treatment of non-debtor’s personal information is warranted.” Rogoff asserts she has complicated business interests that should be off limits from the limited liability corporation she created to operate the Alaska Dispatch News. She also has a confidential marital separation agreement with her former husband, billionaire and Carlyle Group founder David Rubenstein. He got involved in the bankruptcy with a filing to demand the divorce terms remain confidential. But the bottom line of Spraker’s recent decision is that Rogoff’s finances are not confidential as it relates to the $13 million loan from Northrim Bank used to purchase the Anchorage Daily News from McClatchy Co. Spraker ordered Northrim to turn over all documents to the public trustee Nacole Jipping in an unredacted form, including memos relating to Rogoff’s personal finances. Northrim issued a loan to Rogoff to purchase 100 percent ownership interest in the Anchorage Daily News in May 2014, and quickly changed the newspaper’s name to the Alaska Dispatch News. In early 2017, she pledged the newspaper’s assets on the Northrim loan, but had used operating revenue from the ADN to make payments on the Northrim loan, according to Trustee Nacole Jipping and her attorney’s analysis. Jipping filed a Rule 2004 motion relating to the documents “to explore possible causes of action against Ms. Rogoff and Northrim Bank,” Lister wrote in his appeal. Rule 2004 allows a look into the “acts, conduct, or property or to the liabilities and financial condition of the debtor, or to any matter which may affect the administration of the debtor’s estate.” Rogoff’s Northrim loan file includes personal financial statements and tax returns that Rogoff submitted to support her loan application. But she has objected in numerous motions to turning over her personal financial information to the trustee, even after Jipping agreed to keep the information confidential in closed filings the public will not be allowed to view. Now Rogoff is asking the 9th Circuit to “define the class of documents eligible for confidential treatment solely by terms of whether the document is ‘relevant’, and not by terms of whether the document qualifies for protection from public disclosure” under bankruptcy law, according to the appeal. Lister argues the information provided to Northrim by Rogoff “do(es) not relate to the acts, conduct, or property or to the liabilities and financial condition of the” of the Alaska Dispatch “or to a matter which may affect the administration of the debtor’s estate.” Due to the “peril in which this ruling places Ms. Rogoff’s interests in a highly confidential personal financial statements, tax returns and documents quoting them, she moves for leave to pursue an interlocutory appeal.” That’s an appeal made during the interim stages of a case to prevent certain actions, in this case, revealing Rogoff’s financial details to the trustee. The 9th Circuit will review the case and decide whether or not to hear the appeal, Lister said. Naomi Klouda can be reached at [email protected]

House considers BSA bump as more poor test results released

After three years of flat funding, school districts around the state are attempting creative ideas in their budgets as well as additional layoffs. Fairbanks schools face a projected $8 million shortfall and are on the verge of shutting down hockey, cheerleading and cutting 50 teachers, but nothing’s final until the Alaska Legislature passes the education budget. The Lake and Peninsula Borough School District wants to shave 20 days off its school year, resetting it at Sept. 5-May 1. They can do it with Department of Education approval. It would save the 13 schools between $400,000 and $500,000. Anchorage School District teachers are set for a 1 percent to 1.5 percent raise amid a 30 percent hike in utility bills and health care costs. ASD sent early notices to 68 teachers and 18 janitors. Education officials are in Juneau this week lobbying on a last ditch hope: Anchorage Democrat Rep. Les Gara’s House Bill 339 that would boost the Base Student Allocation by $100 per student. If passed, it would move up the BSA to $6,130 per student and would add $25 million to the budget for the 2019 fiscal year that starts July 1. Dozens of officials flew to Juneau for what’s traditionally the last week of the legislative session. The fiscal year 2019 budget proposed by the governor and passed by the House designates flat funding for education, but how to fund it remains under debate in the face of a roughly $2.7 billion revenue shortage to fund Alaska’s $4.5 billion operating budget. Where will the money come from? That question was left up in the air when the Alaska House sent a standalone education budget over to the Senate on Feb. 7 that didn’t designate a funding source for the full $1.3 billion education bill. Like the rest of the operating budget, it could come from tapping earnings from the Permanent Fund or from the Constitutional Budget Reserve. Even with so much undone, school officials try to be optimistic. “I haven’t given up hope of a raise in the BSA,” said ASD’s Chief Financial Officer Jim Anderson, speaking from Juneau. “Some legislators expressed support for it and some are very concerned they need to find the funding before they can legitimately discuss whether it can be increased.” David Boyle, representing the Alaska Policy Forum, submitted testimony against the BSA increase. The forum acts as a public watchdog on government spending and policies. “We could support this bill to increase the BSA if, and only if, it had some accountability metrics on student achievement required from the districts/schools,” Boyle wrote. The Alaska goal is to improve student achievement and increase the opportunity for life success for all students, Boyle said. “This bill does not do that,” he said. “As a matter of fact, this bill which throws more money at the education problem actually incentivizes poor performance by schools/districts.” That’s because if schools perform poorly, they get more funding to improve, he said. But school officials see increasing the BSA as an equitable way to get schools across the state equitable funding increases. Since fiscal year 2017 began in July 2016, the BSA has remained flat at $5,930. Over the past decade, the BSA was increased three times, starting in 2009 fiscal year at $5,480. Today, the BSA is $450 more than it was a decade ago. Advocates for increasing the BSA said it will simply keep up with inflation. The Bureau of Labor Statistics’ inflation calculator suggests the BSA should be $6,200 per student to keep up with inflation since 2009. Poor performance ASD Superintendent Deena Bishop called into the Finance Committee hearing April 10 to urge the BSA increase. She lamented the 2017 National Assessment of Educational Progress or NAEP results (released the same day) that placed Alaska’s fourth graders “dead last in the nation” in reading, she said. Only 28 percent of Alaska’s fourth grade students performed at or above the proficient level on NAEP testing. For eighth graders, only 26 percent showed proficiency in reading. The 2017 NAEP reading and mathematics assessments were given to a representative sample of fourth and eighth grade students in public schools in all 50 states, the District of Columbia, and U.S. Department of Defense schools at the beginning of 2017. On the other side of the spectrum, “Alaska is one of the top 10 states in the nation” for education spending, Bishop added. “We invest more than other states already. It’s no secret that everything costs more in Alaska and that’s not only true for education,” Bishop said. “Roads, health care, eating out and drilling for oil” all cost more in Alaska, she said. “But we must invest more,” Bishop added, describing students as Alaska’s future. Critics of raising the BSA and giving schools more money cite concerns that the state doesn’t get enough for its money when students perform poorly. The NAEP results track with scores from the Performance Evaluation for Alaska’s Schools or PEAKS last school year. It showed more than half of all students from grades three to 10 aren’t up to proficient levels in math, English and science. Tim Parker, president of the National Education Association-Alaska Chapter, said NAEP and PEAK tests are “quick dip sticks that don’t measure a lot of the standards that we’re trying to push students to know: analysis and critical thinking.” Rising costs, declining enrollment Anderson, ASD’s chief financial officer, attributes the Anchorage district’s $13.1 million deficit to several causes that are exacerbated by rising costs and flat budgets. “We still have inflationary costs. One is utilities. Our power rate increased over 30 percent when ML&P (Municipal Light and Power) increased rates to pay for the new generation plant they installed a few years ago,” Anderson said. Health care costs have increased for the nearly 6,000 ASD employees. ASD also has schools that are declining in enrollment, which subtracts funding in the BSA as well as the Education Foundation Formula from school allocations. Over the past five years, the Juneau School District absorbed cuts representing $10 million. They face another $3 million cut this year that takes out 33 administrative positions and reduces the teaching staffs by 10 percent, Juneau School District Board President Josh Keaton testified. In Fairbanks, where hockey and cheerleading program cuts were under debate, the Fairbanks North Star Borough School District is projecting a decrease of 57 students for a total projected enrollment of 13,643 for the 2018-19 academic year. That enrollment drop equates to an $859,463 less projected funding from the state. Alaska’s population has lost about 2,629 people in 2017 due to employment layoffs and the current recession. But the Mat-Su Valley grew by 1,612 people and the Mat-Su School District is one of the few that continues to grow. Total enrollment in the state’s schools K-12 counted at 129,790 in 2017-18. The previous school year, 129,969 students were enrolled. Since 2014-15, student enrollment increased from 128,804, or 886 more students overall today than four years ago. Naomi Klouda can be reached at [email protected]

Rogoff claims lion’s share of $33M in debts for former paper

The total claims against the former Alaska Dispatch News now total $33.5 million, but two-thirds of that is by former owner Alice Rogoff herself. Rogoff is claiming debts owed to her of up to $23.6 million in the ongoing bankruptcy case after the March 19 deadline passed for all unsecured claims to be filed with the U.S. Bankruptcy Court Alaska Division Twenty-nine companies or individuals submitted claims. Rogoff filed for bankruptcy protection Aug. 12, 2017, just more than three years after purchasing the Anchorage Daily News from McClatchy Co. and renaming it the Alaska Dispatch News. Rogoff originally filed for Chapter 11 bankruptcy reorganization before selling the company to the Binkley Co. for $1 million on Sept. 11, 2017. (The Binkley Co. has since acquired the Alaska Journal of Commerce in a deal that closed Feb. 23). Several debts associated with the newspaper’s operations were paid by the Binkley Co. using the $1 million in funds to keep the paper going before the sale closed. After that the bankruptcy was converted to a Chapter 7 liquidation to pursue assets that could be used to pay those still owed money. Nacole Jipping, a court-appointed public trustee, is now examining Rogoff’s finances to see what funds might be used to pay her bills and the court recently ordered Northrim Bank to turn over loan documents related to the purchase of the company in 2014. Rogoff is now appealing that order to the 9th Circuit Court of Appeals. Rogoff has previously claimed $16.6 million in debts owed to her by the company she used to own for funds she injected into it to cover its operations, repayable at 6 percent interest. Now, she’s added up to another $7 million as a claim owed her personally. Rogoff attorney James Lister said he filed a claim within the range of $900,000 at the lowest and $7 million at the highest on Rogoff’s behalf. “It’s a ‘range claim.’ It estimates the amount for reimbursement where she has incurred lawsuits from the bankruptcy,” Lister told the Journal. “It represents money she has paid or will pay in lawsuits.” Rogoff initially estimated she owed $2.7 million to individuals and vendors other than GCI and Northrim Bank. GCI filed a claim for $3.4 million in back rent and $174,768 for utility bills. GCI filed in court to evict the Alaska Dispatch on Aug. 11, 2017 for overdue back rent and unpaid electrical bills. The next day, Aug. 12, Rogoff filed for bankruptcy. Rogoff sold the Anchorage Daily News’ former headquarters at 1001 Northway Dr. to GCI for $15 million to help pay for the $34 million price to former owner McClatchy Co. Rogoff was supposed to vacate the building eventually but never did, leading to more debts and the eventual eviction notice from GCI. Arctic Properties, another company that leased Rogoff space, put in a claim for $2.5 million. Rogoff had rented warehouse space at 5900 Arctic Blvd. to install a new press she purchased to replace use of the Northway Drive press. M&M Wiring Services Inc., a company owned by Mark Miller who told the court he was stiffed in payment after wiring the new press at the Arctic Boulevard warehouse, put in a claim for $1.5 million. J. Birkett Inc., a company from Lebanon, Tenn. that came to install the press at the Arctic warehouse, put in for $265,376. Tony Hopfinger, Rogoff’s former partner in ownership of the Alaska Dispatch News, put in a claim for $95,000. He and his former wife, Amanda Coyne, founded the Dispatch in 2008 as an online news service that Rogoff bought into. Hopfinger retained a 5 percent interest in the company when Rogoff purchased the ADN. Hopfinger alleges Rogoff lent her signature and wrote down a $1 million price to be paid over 10 years on a bar napkin to seal the sale of the Dispatch News to Rogoff. The Hopfinger-Rogoff payment dispute lingers in court, with postponed trial dates. The latest is now scheduled for November in Alaska Superior Court. Northrim Bank put in a claim for $731,100 in expenses related to the bankruptcy case. Birch Horton Bittner &Cherot attorney James Lister (representing Alaska Dispatch parent company AK Publishing and Rogoff), claims $54,718. Cabot Christianson, Rogoff’s bankruptcy attorney, billed for $83,385. Yet another leasing company, 3150 C. LLC owned by Robert H. Hume Jr., filed a claim for breach of lease stating $715,490 is owed. Individuals or companies owed money after providing services or goods to the now defunct Alaska Dispatch News should have been on the list. “Anyone that has knowledge of a bankruptcy and asserts a claim against the debtor is required to file a proof of claim in order to share in any ultimate distribution,” said Christine Tobin-Presser, an attorney with Bush Kornfeld LLC of Seattle who represents the public trustee Nacole Jipping. The likelihood of paying these debts hasn’t been seen as much of a possibility, according to Rogoff’s attorney Cabot Christianson. He argued the estate is at “0 point 0” during the liquidation phase last fall.

Board tables onsite consumption vote until June

A vote on draft regulations allowing onsite consumption of marijuana at retail businesses was postponed yet again Friday, when the Marijuana Control Board unanimously tabled the issue until the June meeting in Anchorage. Board member Brandon Emmett — the author or co-author of several draft proposals regulating onsite consumption — reluctantly brought up the motion for postponement. Emmett, who has one of two industry seats on the board, and Loren Jones, the public health representative on the board, drafted the latest proposal for the meeting held in Nome April 4-6. “As many of you know, this has been my baby for a while now. I’ve been working on this for three years,” Emmett told fellow board members. He referenced tourism as one of the major drivers of the effort to provide spaces for visitors to consume. “I don’t think that the onsite consumption regs, even if we put them out for public comment today, I don’t think the process is going to be complete soon enough before the last cruise ship leaves,” he said. “Because it has been such a contentious issue and we have worked so hard on it, it deserves a full vote of the board.” Although four members is a quorum, the board is missing its public safety seat member. The Governor’s Office of Boards and Commissions put out a 14-day notice on March 11 for applicants to fill the seat and presently is still working on sending the governor recommendations from a tiny pool of applicants. The seat is vacant after being temporarily filled by North Slope Borough Police Chief Travis Welch, who resigned from the board after he was fired by the new borough Mayor Harry Brower in March. Soldotna Police Chief Peter Mlynarik’s Jan. 6 resignation, which came after U.S. Attorney General Jeff Sessions rescinded the Obama administration guidance on nonenforcement of federal marijuana laws, created the vacancy. Welch was one of only two who applied for the board seat. Jones agreed to postponement for some of the same reasons, he said. “We came at it from different angles,” Jones said, referring to his work with Emmett as they drafted the latest proposal. “I also expected healthy debate among the four of us. I think we can also have a healthy debate in June with five members.” At the June meeting, the board could debate the regulations, make amendments and send it out for a 60-day public comment period. The board would also have time to schedule public testimony on this latest draft, said Alaska Marijuana Control Office Director Erika McConnell. The board meets June 13-15 in Anchorage. “The soonest we could vote on this would be October,” Chair Mark Springer said, referring to the 60-day comment period required after the June meeting. “Even if we adopted it today, nobody would be in the consumption business until Christmas.” If the newest draft regulation for onsite consumption is adopted, it will allow marijuana products to be sold to patrons much as a bar functions to legally dispense beverages. Once licensed, the premises would need to confine activities to a designated area. It would be separated from the remainder of the premises by a secure door and a separate ventilation system or located outside. The debate for and against allowing onsite consumption has been before the board since its inception in July 2015. Each time a measure was put forth to allow it, the board either postponed the matter or voted it down. Naomi Klouda can be reached at [email protected]

Marijuana board to take up onsite consumption Friday

The Marijuana Control Board will take up onsite consumption and make recommendations to change how the industry is taxed at its April 4-6 meeting in Nome. A hefty agenda is ahead over the next three days. The board is set to review 46 applications for new businesses and renewals. And it will tackle whether a moratorium on the number of new marijuana businesses might be warranted. There are currently just more than 189 cannabis cultivation, retail and manufacturing operations in Alaska. (The number was updated from 150 operations to 189 on April 4 at the MCB Nome meeting.) If the newest draft regulation for onsite consumption is adopted, it will allow marijuana products to be sold to patrons much as a bar functions to legally dispense beverages. Once licensed, the premises would need to confine activities to a designated area. It would be separated from the remainder of the premises by a secure door and a separate ventilation system or located outside. The debate for and against allowing onsite consumption has been before the board since its inception in July 2015. Each time a measure was put forth to allow it, the board either postponed the matter or voted it down. But this time board member Brandon Emmett hopes the contentious points are worked out to everyone’s satisfaction. Emmett is one of two industry representatives on the board. “We were all unanimous on the committee that this is the draft we will bring forward. We want to alleviate concerns and we want the industry to have a responsible rollout,” Emmett said. Emmett and board member Loren Jones of Juneau worked on the draft with input from staff and the board.  Jones, a Juneau resident who represents public health on the board, had a lot to say about potential hazards that need to be addressed, such as second-hand smoke that can be intoxicating for those who work in establishments. Clean air ordinances are already in place in many municipalities, he frequently reminded the board during discussions. “A lot of the changes are ones that staff and Mr. Jones had brought to my attention,” Emmett said. “Still, you never know what is going to happen with onsite consumption. The board was in disagreement on whether Alaska was ready for it.” Jones said he feels public health concerns were covered well. “We addressed ventilation and smoking, and the staff raised clarity and definitions. We worked well together,” Jones said. “I think the product — probably we’ll take it up on Friday — is a good one. It’s greatly improved. We’ll see if other members are willing to accept that, or if we make changes.” What entertainment is allowed — television, music, dart games or pool, etc. — wasn’t taken up in the new regulations. In past debates, some board members expressed disapproval of entertainment to prevent lingering and vagrancy. “That may end up being a non-issue,” Jones said. “If someone wants to make an amendment (on allowable entertainment) before it goes out or if it comes up through suggestions, it could come up at any time.” The proposed restrictions limit amounts to be sold at what’s been dubbed “bud bars.” Edible marijuana products can’t exceed 10 milligrams of THC per person per day or marijuana bud or flower in quantities more than one gram per person per day. The regulation prohibits employees from consuming marijuana products during a work shift and it doesn’t allow patrons to bring in their own marijuana. It has to be purchased from that retail store.   “These are not marijuana clubs,” Emmett said. “You can’t bring your own.” People being subjected to harmful smoke particulates proved key to the mitigation challenge, Jones said. To address those concerns, the regulation calls for a smoke-free area where employees can monitor the establishment. A venting system must direct air from the consumption area to outside of the building “through a filtration system sufficient to remove visible smoke… and adequate to eliminate odor at the property line.” But the outdoor area also has to be compatible with its neighborhood environment, including uses of surrounding buildings and the location of their intake vents. They’ll also need a wall or fence at least 6 feet high that cuts off any view of marijuana smoking from the public. And the licensee will need to consider objections from other property owners and residents within a 250-foot area, or whatever distance is required under local zoning codes. As in other licensing requirements, any applicant for onsite-consumption approval will need detailed diagrams plus depictions showing serving areas versus retail, employee monitoring areas, ventilation exhaust points and floor plans. Taxes A draft resolution asking the legislature to change how marijuana taxes are calculated is now before the board for a vote at the meeting. Board members at the last meeting agreed they want to request the Alaska Legislature to change the tax structure. The proposal shifts to a 12 percent retail sales tax structure to replace the “current inflexible cultivation tax structure that does not move with the market’s ebbs and flows,” the resolution states. More details are spelled out as spreading the 12 percent among nearly all products sold wholesale and across the counter: marijuana trim, marijuana flowers, immature plants, edibles, concentrates, extracts — even cannabinoid products meant for use on hair and skin. Under current law, only marijuana flower at $50 per an ounce and trim at $10 an ounce are taxed. Under the requested changes to state tax code, each marijuana retail facility would be sending monthly tax statements to AMCO as well as reports of quantities sold. The Alaska Department of Revenue has collected about $7.4 million in marijuana taxes since collections began in October 2016. The last month tabulated, January, proved a record surpassing the $1 million in taxes raised for single month. According to revenue’s numbers, 46 cultivators were active in Alaska, which currently pay the tax. Short a member The five-member board will be operating with just four until the vacant public safety seat is filled. Four is enough for a voting quorum in the meantime, said Chairman Mark Springer. The Governor’s Office of Boards and Commissions sent out a public notice March 13 inviting applicants for the public safety seat vacated when North Slope Borough Police Chief Travis Welch resigned. Welch gave his resignation to the Marijuana Control Board in early March after he was removed as police chief by Borough Mayor Harry Brower. As a political appointment, Welch said he was given notice only that the mayor wanted to “make changes.” An active role in public safety is a statutory requirement for this position on the board. The other four seats are designated for industry (two seats), public health (one seat) and rural Alaska (one seat). Welch briefly replaced Soldotna Police Chief Peter Mlynarik who resigned Jan. 6 after serving as chair of the board for more than a year and on the board since its July 2015 inception. Welch participated in the last board meeting in Juneau in February. Mlynarik resigned after Attorney General Jeff Sessions rescinded the so-called “Cole memo” written in 2015 that established a Justice Department policy of nonenforcement of federal marijuana laws in states that had legalized it for medicinal or recreational use. Lindy Irwin, deputy of Boards and Commissions, said they are actively interviewing to fill the vacancy. “For the past two days we have been interviewing candidates. We’re getting close to the edge of the Legislative session, so we’re hoping to get it done soon,” Irwin said. “It may be a difficult seat to fill because of the Cole Memo. There’s been some interest but it’s limited. “We’ve only had a couple of people apply,” Irwin said. Naomi Klouda can be reached at [email protected]


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