Naomi Klouda

Alaska’s ‘Chief Encouragement Officer’

Allan Johnston has a theory about the cyclical attempts at new business ideas. Institutional knowledge tends to turn over every eight years. Then the knowledge disappears — maybe in the form of a discouraged entrepreneur moving on to a new idea or to the Lower 48. Alaska attracts talented people possessing good ideas who seek to set a plan in place, but few have the longevity to know what’s already been tried. “An idea will come up and someone will say ‘it’s never been done before. No one is aware of it,’” Johnston said. “In reality, it has been done. But nobody who’s working there was part of it or is aware of it.” Whether rescuing orphaned business plans or finding new connections, nearly every recent Alaska investment program to help entrepreneurs has seen the stamp of Johnston in one way or another, his champions say. As far as encouragement and institutional memory, Johnston supplies both. Since retiring in 2012 from a 36-year career as regional manager for Wedbush Securities, he’s become a CEO, but not of any particular company. Instead, he’s the Chief Encouragement Officer for a whole lot of people and projects involved in a modern-day ecosystem for startups. The ecosystem isn’t restricted to an Alaska pond, either. Global entrepreneurship helps Alaskans look outward — or in that Alaska lexicon “Outside” — where their true markets may be located, he says. “If all we do is look inside Alaska, there may not be much of a market and the idea won’t realize its potential,” Johnston says, in what sounds like a walking TED talk to journalists, investors, business strategists, technologists, planners and public officials. “If we can identify the ‘been there, done that’ people and pair them with a new entrepreneur that has the same idea, there’s an opportunity,” he says. Shake down the former plan that didn’t work, take it apart and figure out why. Usually, the infrastructure and logistics weren’t complete. But to say it’s never been done here before or it’s been tried and failed is another way of discouraging hopeful ideas. “We have to get these ideas into a positive environment,” Johnston said. “In a negative environment you feel like nothing works or it will never work or you can’t do anything right.” Alaska has critical reasons for trying. Third World countries are usually extraction economies and most decisions impacting them are made outside of that country with their wealth based on a single resource. “Alaska is like a Third World extraction economy since we receive 80 percent of our revenue from oil. That is a real danger,” Johnston said. “You would never invest in just one type of stock.” He believes oil was a godsend, but the future of Alaska will be built on the dreams of innovators and entrepreneurs. Making his own history A college-age Johnston spent the summer of 1968 in Alaska, by then not even a decade into statehood. The Trans-Alaska Pipeline System hadn’t been built. He and a friend drove part of the Alcan Highway in a Volkswagen Bug thinking they would commercial fish in Ketchikan. But they arrived too soon for the season, and decided to take the ferry to Haines. On the drive toward Delta Junction, a huge forest fire broke out. “We were conscripted to fight fires,” he said, “and never did get out on a fishing boat.” At the University of Vermont, Johnston was studying finance, destined toward what he thought involved corporation finances. That summer in Alaska “lived up to my expectations as a good place to raise a family, and it had everything to make for a good quality of life here,” he said. In St. Johnsbury, Vt., Johnston’s dad was an internist/cardiologist whose practice was about 30 feet from the house. He didn’t see the East Coast as offering the same types of wide-open opportunities. The town of his birth was established in 1760, a “shire” town or county seat for Caledonia County. St. Johnsbury is famed for Thaddeus Fairbanks’ 1830 invention of the platform scale and as the center of manufacturing candlepins, better known as bowling pins. Maple syrup is a primary industry. “You’re always living someone else’s history,” he said. “In Alaska you’re creating history every day. There, people ask: ‘Where did you go to school? Who were your parents?’ Without saying anything about yourself, you’re pigeon-holed.” In that part of the country, if the “dad’s a U.S. senator and the son is a jerk, he’s still considered someone special,” he said. “If your dad’s a senator here and the son is a jerk — he’s still a jerk.” Several things interrupted Johnston’s return to Alaska. He was drafted during the Vietnam War in February1970. First at Fort Monmouth in New Jersey, then in Germany, Johnston worked Army communications for two years. His education had also been interrupted, so upon discharge he returned to his finance studies at UV. “I found that I got really restless and wanted to come back to Alaska. I never finished my degree,” he said. In the summer and winter of 1974-75 in Fairbanks, Johnston worked for Bechtel as a payroll timekeeper a few months, then took a construction job out of the Labor’s Union in Happy Valley. By the time he married his wife Jennifer on Jan. 2, 1976, the couple was ready to move permanently to Alaska. The newlyweds drove a Dodge pickup truck-camper from Vermont cross-country and up the Alcan Highway, carrying not much more than a few duffle bags of clothes, wedding gifts and a “bit of maple syrup,” as his wife puts it. They settled in Fairbanks where Johnston was the regional manager for Wedbush Securities, a position that brought them to Anchorage in 1988. He retired in October 2012 after a 36-year career. After they raised three children, Jennifer Johnston was voted to the Anchorage Assembly where she served three terms. Now she represents District 28 in the Alaska House of Representatives. The impetus for his retirement, Johnston said, was to assist the Municipality of Anchorage in creating the $13 million State Small Business Credit Initiative or the SSBCI, awarded to Anchorage in 2012. It is now known as the Municipality of Anchorage 49th State Angel Fund and has attracted more than 20 investors who help set startups on their way to success. Angels and accelerators The major programs Johnston is credited with launching include the Alaska Business Plan Competition in 1999, the 49th State Angel Fund in 2012, the Global Entrepreneurship In Residence Program in 2016, Startup Weekend in 2012, The Alaska Energy Prize contest (now set to take place in 2018) and the Alaska Innovation and Entrepreneurship Support network. He also helped develop Launch Alaska. The Alaska Business Plan Competition was one of the first projects of The Entrepreneurs and Mentors Network, or TEAM, which Johnston formed with like-minded innovators and investors such as Mike Haines and Eric McCallum. “Not a single one of these would have been started without Allan Johnston,” wrote Forrest Nabors, a UAA Political Science professor, in an email. “He has been helping to shape Alaska’s innovation and entrepreneurial culture for over 15 years. A lot of the opportunities and networks have in some way been seeded by his efforts.” Nabors is a co-founder of Alyeska Venture Management and the Alaska Accelerator Fund, a firm that now has four partners and 19 investors. “Allan was instrumental in helping us start our fund. Without him, AVM and AAF would not exist. I have also worked with him on the Alaska Business Plan Competition. He has been a tireless advocate for new business startups in our state,” Nabors wrote. Nabors credits him not only as Alaska’s Chief Encouragement Officer but also as “godfather of Alaska entrepreneurship.” One of Johnston’s visions was to set up a funding pot for well-vetted business startups. Lucinda Mahoney was the chief fiscal officer for the Municipality of Anchorage under former Mayor Dan Sullivan when she sought the $14 million in funding from the federal government for establishing the 49th State Angel Fund. “Allan and I worked long hours together to create an application for Anchorage. He guided me through the entire process,” Mahoney said. “We received the money and finally Anchorage had some funds to create a culture of angel investing in startups. This would not have happened if not for Allan.” The programs may sound Alaska-centric, but Johnston is active nationally in a network of entrepreneurial mentors. He taps international mentors to help Alaskans and is a financial supporter of the new Global Entrepreneur In Residence at UAA, Nigel Sharp. “As you know diversification of our economy is critical and startups play a critical role. I attribute this new community’s existence to Allan. It was his vision, his tenacity and he made it happen,” Mahoney said. Isaac Vanderburg, the executive director of Launch Alaska, said he met Johnston about a decade ago. “I’m sure he reached out to me because he’s a connector. I don’t remember the exact moment, but it was back when I was running the UAA Small Business Development Center,” Vanderburg said. “He’s always working behind the scenes to put together the right people.” Johnston’s vision for how the community should look in the future “is pretty compelling,” he said. “He thinks at a pretty high level.” Somehow, entrepreneurship ties everything together. “He is like a classic community builder: Extremely selfless as he gives his time and his money and his expertise to a lot of people. He’s also got a pulse on events and people coming together – it’s almost uncanny,” Vanderburg says. At Launch Alaska, Johnston was able to see a business accelerator program put to work after he invested some of his own money toward the $25,000 grants that go to each company chosen to participate. This is how Launch Alaska works for those accepted into the program: “We give them $25,000, they sign a note, and the investors have a right to convert the note into stock or equity in the company if they chose for a possible return on the investment,” explained Lance Ahern, a business advisor for the Alaska Small Business Development Center. In the “accelerator,” the company commits to four months of intensive training and contact with mentors. At the other end of the training, they emerge as investment-ready companies that are looking to scale quickly, Vanderburg said. The first graduating class of the Launch Alaska program are Aquilo, which provides drone services for large companies; Kwema, a team marketing “Smart” jewelry; and Heather’s Choice, which developed a line of dehydrated organic foods for outdoor adventures. Back before there were these programs though, Johnston’s original work setting up the Business Plan Competition in 1999 provided a place to start a good business plan. To get it launched, Johnston went to university business professors at the Schools of Business at UAA, University of Alaska Fairbanks and Alaska Pacific University. In the contest, entrepreneurs from across the state vie to attract investors, validate their business ideas and win prizes. Teams pitch their startups to a panel of judges and attendees for a chance to be named creator of the year’s Best Business Plan. It’s supported by a network of businesses, such as Northrim Bank, First National Bank Alaska, Wells Fargo Foundation, Team Network Inc., Alaska First Community Bank and Trust, Anchorage Economic Development Corp., UAA College of Business and Public Policy, APU Hickel Leadership and Entrepreneurship Fund, and the Anchorage International Rotary Club. “It started out as being for business students, an act of learning, or experiential learning,” Johnston said. Gradually, the competition became a welcome mat for the winning business plan — and for the runners-up — into that community ecosystem that would nurture a new entrepreneur. Most of these programs also have connections to the University of Alaska Schools of Business, both at UAA and UAF, as well as the Business Enterprise Institute, said Director Christi Bell. Universities have long played a role as economic engines, Bell said. Johnston has seen the value of connecting university expertise with community business leaders to expand the network: the Global Entrepreneur in Residence Program just welcomed its first faculty member June 19. “Universities have their research arms and they partner with industry so it’s commercialized that way,” Bell said. Industry can benefit the university as a funding mechanism as well. Johnston and Bell point out that all these programs are paid for from private funding – not through the beleaguered state budget allocation to the UA system. A great example of a university generating its own funding comes out of the University of Florida. Gatorade was created in 1965 by a team of scientists at UF, College of Medicine, Bell noted. “They’ve received $12 million a year in recent years from royalties.” The money goes back into the school through a foundation. A holy grail for universities, ever since Florida’s success, is to find their own “Gatorade” by nurturing the intellectual talents of faculty and students. “If enough seeds are planted in nourishing soil,” Johnston said, one day we may see a successful venture that will allow the university to self-fund to some extent. For Johnston, seeing these developments come to fruition has made his job as a CEO rich and rewarding. “It’s fun getting up in the morning if you think you can make a difference,” he said. ^ Naomi Klouda can be reached at [email protected]

UAA lands first global entrepreneur-in-residence

The University of Alaska Anchorage welcomed its first occupant of the Global Entrepreneur in Residence program who’s racked up a string of accomplishments, including inventing a mouse cleaner and founding an international technology start-up. Nigel Sharp’s position at UAA will involve mentoring entrepreneurs and connecting them to expanded networks. Community members, students and faculty will be able to consult with Sharp. His first day in the 18-month position was June 19. UAA will be in distinguished company with GEIR programs already established at Colorado, Massachusetts and New York universities. The position is funded by private contributions, not public money. For UAA it’s a newly carved position. But it’s not a new one for Sharp. He comes from the University of Boulder Colorado where he was seated in the same position for a two-year residency. There he focused on helping people commercialize their ideas, assisted with “thought leadership” and research that has an entrepreneurial component as well as networking people into the global startup community. “There are a lot of the same components to the position here, the difference being location and attitudes. Here in Alaska we have an emerging ecosystem that isn’t well developed, while in Boulder, it was more of a comparative perspective to” what the business community had already developed, he said. Sharp is a British-Armenian entrepreneur and technologist, born in England and raised in Scotland and Ireland. He co-founded an international technology start-up Lionsharp, which produces Voiceboard, the world’s first gesture and voice-controlled presentation tool. The company operates in Armenia, Bulgaria and the USA. Sharp led the fundraising efforts and took the company through three rounds of funding through the Eleven Accelerator in Bulgaria. He found both venture capital and Angel Investors from the USA. Sharp gave a TEDx presentation on the company in 2013 that can be viewed on YuTube. at Something of a child prodigy, Sharp invented and marketed a computer mouse cleaner while a young teen. He had won as a national finalist in the Irish Young Entrepreneur competition with his mouse cleaner. Profits from the cleaner helped fund his education. At the age of 16, Sharp had been building websites for customers, and found himself invited to review proposals submitted to the Irish Government Board of Education to help them select a professional company. “The thing about technology is that it’s the least ageist industry, I believe. It requires new and relevant knowledge,” he said, referring to the experience of advising his elders. Enthusiasm for each new project has provided the story thread of his life, he said. He attended King’s College London where he earned a degree in mechanical engineering and a master’s in both digital technology and engineering. From his studies he chose to volunteer and then live and work in Armenia after being promoted to IT Project and Technical Systems Manager at the $70 million Tumo Center for Creative Technologies. The staff grew from 10 to 189. One of the champions of establishing a UAA GEIR position, Allan Johnston, said Nigel’s perspective will be invaluable to start-ups. “Nigel sees the world differently – he’s the ‘outside looking in’ that we need here,” he said. Sharp moved to Anchorage with his wife and daughter. He says he’s looking forward to meeting the Alaska entrepreneurial community and helping to connect them to the global entrepreneurial community. Naomi Klouda can be reached at [email protected]

Flags up for Uber, Lyft drivers after gov signs bill

Uber and Lyft drivers took to the roads in Anchorage, Fairbanks and Juneau this week, newly authorized to offer rides after a bill approving the transportation network companies was signed into law. Gov. Bill Walker signed House Bill 132 on June 15. The bill had an immediate effective date, allowing the companies to start operating as soon as it was signed. Both had dozens of pre-approved drivers ready to start. Interest in driving for Uber drew more than 100 people in a single day to start the application process at Anchorage Chamber of Commerce headquarters on Fourth Avenue. “The line went out the door and down the street,” said new Uber driver David O’Malley, one of the first to be approved. He started giving rides on Friday after 3 p.m., the official launch time for Uber in Anchorage. Fairbanks followed with a 3 p.m. June 19 launch, and Juneau on June 21. Lyft passengers will be able to use the code LYFTLOVE17 to receive $5 off their first ride, which can be entered under promo code. Scott Coriell, communications director for Lyft, said the service provides new opportunities for those looking to make extra income and it’s good for the economy in cities where they operate. He emphasized that each driver is an independent contractor, not a Lyft employee. Alaska, the last state to authorize transportation network companies, or TNCs, has a bit more detail planning to work the new transportation option into tourism season traffic spots. In Juneau, that process started weeks ago, even though the governor hadn’t yet signed the bill. The concern about extra vehicles at the cramped Juneau docks was hammered out early on with Uber officials. Juneau has an unusual situation: four or five cruise ships at a time and 17,000 visitors a day disembarking for capital city excursions takes careful orchestration on the part of dock officials and transportation companies. Add to that a tiny two-way Franklin Street as the only in-and-out of two public docks where four ships berth, and you can have chaos in no time, said Carl Uchytil, port director at Juneau Docks &Harbors. To stay ahead of potential chaos, stakeholders met at City Manager Rorie Watt’s office for a call-in meeting with Uber officials. “In the call-in, we talked about concerns with the downtown port area and the potential for congestion,” Uchytil said. “They were accommodating, saying they would work with us as far as set locations for pickup and dropoffs. At the time, Uber didn’t know the lay-down of Juneau and how we have such a surge of traffic when cruise ships come in.” Travel Juneau, the city’s non-profit convention and visitor’s bureau, has welcomed the transportation companies. “We are supportive of any service that provides efficient, practical transportation for our visitors,” said Liz Perry, Travel Juneau president and executive director. “I think for Juneau in general there are times when getting taxis can be problematic. That said, I’m glad our city leadership are working with Uber and Lyft on appropriate dropoffs and pickups.” Like protests of the new TNC companies at work in Anchorage, Juneau also had its groups who didn’t want them. Objections came from the taxi operators who see themselves under a more onerous regulation system. They also came from the Alaska Municipal League because municipalities cannot regulate TNCs with local ordinances other than the ability to levy a sales tax on rides. Now the hope is that all transporters will pull together and serve the community and visitor needs ahead, Perry said. “We didn’t take a position on either side of the issue,” Perry said. At Visit Anchorage, Julie Saupe, president and chief executive of Visit Anchorage, sees a definite role to be filled by the new TNCs. “As the city’s destination marketing arm, we welcome the transportation network companies,” Saupe said. “It’s an amenity that visitors, whether here for business or pleasure, have come to expect.” A smartphone app is used to hail a ride through Uber or Lyft. If it’s downloaded on your phone along with your payment information, a deduction can be made when the ride is finished. The rider lets the app know a location, and the app shows drivers are in the area who can respond. No waiting on street corners; no making phone calls; no cash exchange except tips, although Uber has now added the option to tip through its app. Saupe said meeting planners ask if companies like Uber and Lyft operate in Anchorage because they have delegates who are accustomed to these services and have corporate accounts set up in advance. Independent visitors have also come to expect ridesharing as a convenient, and known, option. “We have let both Uber and Lyft know about our resources — from visitor guides to event calendars and phone numbers for our visitor information centers. In the end, I believe we have similar goals in mind — creating positive experiences and valuing repeat customers,” she said. As incentive for Anchorage passengers, Uber was giving away four $5 rides between June 16-19. On June 20, Uber hosted a celebration launch at 49th State Brewing Co. in Anchorage where they awarded a year of free trips for Sam Moore of Anchorage, who is legally blind. He paid his way to Juneau several times to lobby for the approval of the TNC legislation. David O’Malley started as an Uber driver in 2014 when just a handful of drivers were operating in Anchorage. Uber had offered free rides to get Anchorage consumers familiar with its brand. This will be Lyft’s first experience working in Alaska. Uber was active for about six months in 2014-15 in Anchorage before a Department of Labor and Workforce citation shut down Uber in the state for not carrying workers’ compensation insurance on its drivers and resulted in a fine of $77,925. As part of the settlement the company agreed not to come back to Alaska unless state law authorized the use of independent contractors for TNCs. The company offered rides for free in Anchorage during its initial launch because under city taxi laws it wasn’t allowed to charge customers. During that time, several Uber drivers gained experience. David O’Malley was one of the drivers. “It was free for everyone for the whole six months as we were trying to build up a business. It got crazy,” O’Malley recalled. “We were going down to the shelters. People there calling us for rides. Going back and forth to the Valley. Some were keeping us outside as they shopped. One driver went all the way to Fairbanks to take a ride there.” Consumers weren’t just getting familiar; they were taking advantage of a free thing, he said. “We got paid for it by Uber,” he said. When the bill allowing TNCs to operate in Alaska passed, O’Malley said he was eager to get back into providing the service. He had liked the company and how it operates, as well as the job freedom to work when he wanted and stay home when he didn’t. He owns two cars, one a luxury Toyota model and the other a smaller energy efficient Ford Fusion. “I’ll need the nicer one for certain kinds of trips,” he said. The timing is great, just as the peak tourist season begins. “Hopefully, it will be steady,” he said. Naomi Klouda can be reached at [email protected]

More rural broadband options coming through fiber, satellites

Competition and collaboration between telecom companies promises to bring the costs down for Alaska in the coming two years as Quintillion, Alaska Communications and AT&T launch projects building out wireless and fiber optic networks. Alaska Communications developed a non-exclusive memorandum of understanding to become the first reseller of OneWeb enabled broadband access in Alaska starting in 2019. That puts rural Alaska a step closer to more affordable broadband access, said CEO Anand Vadapalli. By “closer,” that’s exactly what’s about to happen as 900 low Earth orbit, or LEO, satellites connect in greater proximity to Alaska. The LEOs will be deployed by OneWeb in late 2018 or early 2019, Vadapalli said in a June 9 interview. Alaska historically had poor coverage from the satellite industry because of its high latitude, he noted. This is just the latest improvement in broadband access for rural Alaska. GCI recently completed its six-year TERRA project that involved multiple phases, starting in 2011 when 400 miles of fiber optic cable and 13 new microwave towers began providing network connection for 65 communities in southwest Alaska. The TERRA Southwest and Northwest phases currently serve 72 communities totaling nearly 40,000 residents, and another 12 communities will be connected by the end of 2017, according to GCI. OneWeb’s low latency service enables seamless connectivity and the same user experience and lag-free web browsing. The streaming capabilities, video conferencing, voice communications, and enterprise applications access will put Alaska on equal par with the Lower 48, according to Greg Wyler, the founder and executive chairman. “Uniquely, because of the polar orbit, OneWeb’s terminals can view the satellites almost directly overhead at any time, providing clear line of sight access,” Wyler said in a news release. In April, a different collaboration, this one between Alaska Communications and Quintillion, went live from Deadhorse at Prudhoe Bay to Fairbanks. Construction is nearly complete on the first segment of the multi-phase Quintillion Subsea Cable System. Phase 1-Alaska is a 1,200-mile subsea fiber optic cable main trunk line between Nome and Prudhoe Bay. Additional branches are installed into the Alaskan communities of Kotzebue, Point Hope, Wainwright and Utqiagvik (Barrow). The Quintillion Cable System, a new terrestrial fiber between Fairbanks and Prudhoe Bay, was installed along the Dalton Highway and is now in service. At Fairbanks, the new fiber connects to existing networks reaching Anchorage, Portland, Ore., and Seattle. This is a first: providing fiber link between the continental United States and the North American Arctic, said Quintillion Vice President of External Relations Kristina Woolston. Quintillion will maintain the Alaska portion and the system build-out scheduled to reach London in the east and Tokyo west via fiber optic buried under the Arctic sea. The famed Northwest Passage that was promised to 18th and 19th century Europeans as a more economic trade route wasn’t discovered in time to help them out. But in this century, the Northwest Passage is the shortcut that will serve East and West in a safer and less costly internet connection, Woolston said. Currently, Japan’s Internet is routed through the Middle East. A shorter route and safer connection is wanted for a variety of reasons, Woolston said. It provides more diversity for all inter-continental routes. “Shorter is faster and in a lot of these connections, seconds or milliseconds can make a lot of difference, which is why there is demand for this system,” she said. In Alaska, Quintillion handles the fiber optic infrastructure that Alaska Communications will tap into while OneWeb supplies the satellite link. OneWeb sells Alaska Communications the new LEO satellite technology access, leading to greater bandwidth and low time lag along with a better price structure for rural Alaska. “In the older technology, the higher the satellite meant slower speed. That’s just the law of physics. It takes more time to return to earth the higher it has to go,” Vadapalli said. “A closer-earth satellite brings higher speed and with it, latency will improve.” Along with current satellite, fiber optic is a good complement for ensuring connectivity in Alaska. Frequent inclement weather and multiple hops to get access at times cause satellite interference. That won’t impact fiber optics, Woolston and Vadapalli each noted. The environmental difficulties and maintenance issues are overcome with the newer fiber optics that have a 25-year design life, Woolston said. It can be more expensive on the front end, but in the long run it requires much less maintenance and that lowers costs. In their work, Quintillion — an Alaska company founded by telecom veteran Elizabeth Pierce — documented village needs. Lag time meant it took a day and a half for a Wainwright resident to download a new version of Microsoft Word. The much-touted virtual classroom as a solution for sharing teachers in the face of dire Alaska budget cuts doesn’t have much chance for success if class time shuts down while a teacher tries to access an online connection, teachers told Quintillion in the company’s series of interviews. Worse, medical facilities rack up devastating human costs when telemedicine isn’t available and instead an airlift hundreds and sometimes thousands of miles away is required to reach a physician, Quintillion found. The new high-speed, low latency broadband service will be available to every Alaska home, school, business, and community center in about two years, Vadapalli said. He declined to specify pricing since, he said, many variables are factored into an up-and-running system that is not yet in place. “Fiber is really expensive and there are many geographic obstacles. New technology is going to be very significant for our state,” Vadapalli said. “That said, given the vast geography of the state, fiber optics is also a necessary component.” Last season, Quintillion focused on bringing the fiber optic cable ashore to the five communities from Nome to Barrow, as well as Prudhoe Bay. The cable is buried on the continental shelf in various depths to protect against damage from ice scouring the ocean floor. Alcatel Submarine Networks, based in France, fabricated and is laying the fiber. From the five communities now connected by Quintillion’s fiber optics, OneWeb will pick up communities that aren’t served by Quintillion, Alaska Communications spokesperson Heather Cavanaugh explained. The system is in test mode and won’t be “live” until Dec. 1. This summer, Woolston said there isn’t a lot left to be done to meet the December “live” schedule. The main portion is a segment between Prudhoe and the trunk line about 40 miles out to sea. The French ship, C/V Ile de Batz, is due in Dutch Harbor from Calais in late June to prepare for its trip north. In July it will “trench” and then bury, the last section of cable on the sea floor. In the coming year, Phase 2-Asia is the part of project to build out the backbone cable from Nome west to Asia. Phase 3-Canada-United Kingdom is intended to extend the subsea system east of Prudhoe to Northern Canadian communities and will provide a secure low latency route from Europe to Asia. First responder network AT&T also is speeding its wireless build-out plans. The telecom invested $150 million in Alaska wireless and wired networks from 2014-16. Part of those investments added 450 miles of new fiber from Fairbanks to Prudhoe Bay in partnership with Quintillion. Shawn Uschmann, AT&T’s Director of External Affairs for Alaska, said the company is focusing both on its customer access and a new effort to provide nationwide public safety broadband network. AT&T was chosen by the First Responder Network Authority, known as FirstNet, to build a nationwide public safety broadband network. It will be dedicated to police, firefighters and EMS personnel. So far, it’s unknown whether the State of Alaska or individual boroughs or cities will decide to opt-in to FirstNet. If so, “we will build on our current and planned investments,” he said, “with a dedicated focus on the state’s first responders.” What this means, in specific terms of the coverage for responders, is that they will have a network all their own, Uschmann said. “The public safety community’s communications challenges have impeded response efforts for far too long. The FirstNet network is a much-needed investment in America’s communications infrastructure,” he said. It will allow first responders to communicate with other responders in different agencies or jurisdictions across the country — which they currently have difficulty doing — so they can better coordinate when jointly responding to situations like man-made and natural disasters. The connection will be a highly secure, reliable and fast broadband built to meet the communications needs of first responders, Uschmann said. A big problem the new designated line will solve is security. Currently, first responders use the same networks that consumers and businesses use. “When a significant public safety crisis occurs, these networks can get congested, making it difficult for first responders to communicate, coordinate and do their jobs,” Uschmann said. With FirstNet network as the public safety’s network, their needs will come before non-public safety users. Other devices connect to the network — such as “wearables” like an Apple watch, drones and vehicles — will relay near real-time information to improve situational awareness and ultimately, to help save lives both for first responders on the front lines and the communities they protect, Uschmann added. He estimates about 90 percent of the Alaska population is now covered by AT&T. Naomi Klouda can be reached at [email protected]

Hotels spring up as visitor numbers keep climbing

Alaska has some of the highest hotel occupancy rates in the country on average in the short four-month period from May to September, enough to warrant yet four more hotels on the Anchorage landscape in addition to three that went up last summer. The Hyatt House on C Street opened in May and the company is breaking ground for two more hotels on land cleared at nearby 46th Avenue. Last summer saw My Place on Old Seward across from the University Center open. A new Aptel Hotel opened near the Northway Mall. And Home2 Suite opened in 2016 near Motel 6, also on C Street. “Hotel Row,” as C Street is dubbed, isn’t finished becoming one long string of hotels in its stretch from International Airport Road to Northern Lights. Senior City Planner Francis McLaughlin said the city didn’t plan it that way, but a thematic draw in the area makes sense in its proximity to the airport and its zoning allowance for hotels. The Alaska visitor industry has sustained hotel growth, said Alicia Maltby, executive director of the Alaska Lodging and Hotel Industry Association. The 24,000 hotel rooms in the state are soon to be boosted by another couple hundred rooms at least, she estimates, in the new structures. More than half of the statewide number is in Anchorage. “If the occupancy rate isn’t 62 to 67 percent or better, the hotel investors are not going to gamble by building,” Maltby said. Anchorage has a consistent record for hotel occupancy over the past three years, especially since new tourism records were achieved at nearly 2 million visitors in 2016. But the summer months saw increasing demand for hotel rooms, and some hotels unable to keep up with that demand, she added. Records for the Anchorage Municipality’s 12 percent bed tax collected city wide shows more than 8,000 rooms were rented per quarter, or 65 percent occupancy and higher. As of May 22, $3.7 million was collected in the first quarter 2017 on 8,178 rooms. In the breakdown, $1.6 million in taxes came from “upper class” rooms and $1.7 million came from mid-market rentals. Another $196,748 came from economy class. Compare that with peak season in the third and fourth quarter. Anchorage took in $7 million and $10 million respectively after rentals of 17,400 rooms collectively. In 2015 first quarter, 7,985 rooms were rented at Anchorage’s hotels and a collection of $3.8 million is shown in city tax records. That year, 2015, also saw, peak-season, tax collection of $7 and $10 million in second and third quarters on 16,860 rooms. “Hotel occupancy in Anchorage has been pretty consistent largely due to the good marketing efforts. Anchorage is a convention destination,” Maltby said. “The bed tax fund was used to build the Dena’ina Center. Iditarod brings a good crowd. The AFN (Alaska Federation of Natives) comes to Anchorage and Fairbanks, alternating years. We have ‘Staycations’ now and business travel as well as corporate events. Sales teams do a good job to keep occupancy up.” Another hotel is going up on a 3.5-acre site near Office Depot and Lowe’s off C Street, this one a Hyatt Place Hotel where 148 rooms are planned, McLaughlin said. The Ted Stevens Anchorage International Airport also is getting into the hotel business. Currently it is in a 60-day period accepting requests for proposals, said Tom Hubble, the airport leasing and concessions business manager. “The idea is to walk from the airport into the hotel without going outside,” Hubble said of the concept. Possible locations have been proposed between the airport’s South Terminal and North Terminal or by the train depot at the airport. Hubble expects the estimated $40 million to $60 million project to go up for bid later this year, with hope for construction to begin in 2018. Kenai Peninsula The Kenai Peninsula, which received more than 1 million visitors in both 2015 and 2016, looks like it could support more hotels to the casual visitor, said Shanon Davis, director of the Soldotna Chamber and former director of the Kenai Peninsula Tourism Marketing Council. “The whole Peninsula could support the development and we do have new properties opening up, new B&Bs, a new lodge in Seward and an extended one at the Fox Island Wilderness Lodge and the Alaska Wild Land Adventures at Cooper landing,” she said. But no new hotels proposed for the region could mean a couple of factors, Davis said. One is that it takes time for investors to feel confident that “now is the right time to buy and to expand.” That’s not to say there aren’t big investments, such as in the transfer of the Kenai Landing, formerly owned by Jon Faulkner, who owns Land’s End in Homer. It was sold to Ron Hyde, founder and chief executive officer of PRL Logistics. The historic cannery went through a year of intensive design and preservation work and was renamed “Cannery Lodge.” “We have a tremendously diverse amount of lodging on the peninsula,” Davis said. “Cabins along the Kenai River, B&Bs. Definitely, that is what is saving the area as far as having enough rooms. Except for three weeks in July when the kings and reds are good at the same time, we seem to have enough rooms for everyone.” The outlook is for continued good visitor numbers to the Peninsula this summer, she said. One continued complaint expressed by several Peninsula communities is that cruise ship passengers by-pass their towns en route to Denali National Park or elsewhere by bus or train. “A new hotel built by Holland America or Princess is one thing I think a lot of us would like to see,” Davis said. Southeast No new hotels are going up in Juneau, at least, none were publically announced, said Juneau Chamber of Commerce Executive Director Craig Dahl. But big investments are going into hotels in the land-locked seaside capital of the state. A multi-million dollar renovation at the Goldbelt Hotel rebranded it to the Four Points by Sheraton Hotel and put millions of dollars in the local economy. It was purchased by the owner group, YC Rivergold Hotel LLC, in July 2015 with the intent to rebrand it as Four Points, said General Manager Aimon Indoung. “The hotel was built in 1976 and there is no room to add space since we are downtown,” Indoung said. The 106-room hotel saw bathroom overhauls and major design changes, she said. Sitka will see a 71-suite Aspen Hotel open on July 15, adding a fifth hotel to the popular southeast Alaska town that sees seven to eight cruise ships per week. Sikta Chamber of Commerce’s Eileen Chanquet said rooms sell out at the Westmark, Totem Square, Super 8 and Sitka Hotel during the summer. “We’re excited to get another hotel up and running,” she said. My Place Hotel in Ketchikan opened this spring, adding 64 rooms to availability, said Chamber Director Bill Swift. This is the chain’s second Alaska hotel; the other one is located on Anchorage’s Seward Highway. Naomi Klouda can be reached at [email protected]

Fishermen watch, wait, work, while Legislature in limbo

An Alaska government shutdown is a fisheries shutdown. Commercial, sport, gillnet, dipnetters and subsistence fishing would all be impacted in devastating ways if a fiscal year 2018 budget isn’t approved by the Alaska Legislature by July 1. United Fishermen of Alaska, which represents 33 Alaska commercial fishing organizations, is taking the stance that people should “work on the season,” said President Jerry McCune. “As it gets closer to the deadline, we’ll get more worried and put the pressure on the Legislature to fund Fish and Game at least, if they’re not coming up with a budget,” he said. The Alaska Department of Fish and Game’s 2018 fiscal year budget of $200.16 million was agreed upon by both the House and the Senate in April. Of that, commercial fisheries were allotted $70.77 million. “The Fish and Game budget is already done. There was no difference between the House and the Senate, so that isn’t in contention,” McCune pointed out. “We’re monitoring the situation and as we get closer, if there’s no budget, we’ll have to mobilize fishermen to put pressure on the Legislature to pass a limited budget.” A public announcement from the Alaska Department of Fish and Game June 10 “left us very much up in the air,” said Mark Vinsel, the executive administrator at UFA. “Right now there are a whole bunch of question marks.” As processers gear up for seasonal work, a lot of those questions are coming from Bristol Bay. That fishery provides around 40 percent of the world’s sockeye, said Rebecca Martello, executive director of Bristol Bay Regional Seafood Development Association. Negative impacts on funding the management of the resource, or the shutdown of the fishery, “would literally be felt ‘round the world,” she said. The ADFG announcement June 10, as did similar releases from the rest of the state agencies, summarized what would be impacted should a shutdown occur. “Alaska’s multi-billion dollar salmon industry is primarily based on fisheries that occur between the months of June and September,” the release stated. “These fisheries provide the sole means of subsistence and livelihood for many Alaskans. A government shutdown would coincide with the peak of the Bristol Bay sockeye season, which regularly occurs around July 4th. “Not only would current season fisheries be potentially impacted, the department’s ability to forecast future escapement goal analyses and data collection could also be significantly compromised.” Insufficient sampling could hinder assessment of the state’s performance for Pacific Salmon Treaty obligations, the department’s ability to manage allocations set by the North Pacific Fishery Management Council, and impact the International Pacific Halibut Commission’s stock assessment program, the release said. The ability to issue subsistence and drawing permits also could be delayed, “interrupted or even not issued.” The release doesn’t mention fish processors and other service providers that would be shut down. ADFG hasn’t made a determination on when to pull staff in from far-flung posts on salmon weirs where harvest counts determine catch limits. “We’re still hopeful the legislature will pass a budget before July 1 and we can continue as normal,” said Forrest Bowers, deputy commissioner for Division of Commercial Fisheries. “We’re not pulling anyone out until then.” Bowers doesn’t consider the fears expressed in the industry as an exercise in waiting and worrying only to find out the season will proceed as normal. “It’s a serious matter. We’re all watching, carefully watching, the legislative actions this week,” he said. Martello said any prospect of a temporary shutdown spells potential disaster at the beginning of salmon season, coinciding with the beginning of fiscal year 2018. “From the perspective of our fishermen, and certainly other stakeholders, there is a lot at stake. There are more than 1,800 drift permits in the Bay and each boat represents a small business, employing crews of 2-3 deckhands per vessel,” Martello wrote in an email to the Journal. “Processors employ hundreds of workers for their plants, not to mention the impact to related trades and businesses and the impacts to communities around Bristol Bay who rely on the industry for economic support as a tax base in their cities and boroughs. We’re talking about an average of almost 10,000 jobs per month.” The loss would be to state’s revenue coffers as well: A $1.5 billion dollar annual industry whose shutdown would mean the loss of associated fisheries taxes that are paid to the state and split with the communities where the fish are landed, Martello said. Friday, June 16, marks the end of the current 30-day special session, after a previous 30-day extension of the regular 90-day session. All this, with no budget road map for the year ahead, said Senate Majority Leader Peter Micciche, R-Soldotna. Friday marks the 151st day – and it’s hard to excuse not having a budget or the plan to pay for it in place by then, he added. “But the bottom line is — no matter what (legislation) is left this week, we have to pass and fund a budget,” Micciche said. “We simply can’t risk an economic and cultural hostage situation with 740,000 Alaskans because of the Legislature’s lack of ability to determine accurate remuneration. “We wanted deeper cuts, but we are willing to give up 50 cuts in order to get a budget.” Micciche represents most of the Kenai Peninsula, which fishermen of all stripes call home. “I’m worried about all user groups right now,” he said June 12. “Salmon is Alaska’s brand. I’m also thinking of the tourism season getting underway – nearly 2 million visitors are expected and a lot of the reason relates to fishing.” He expects that by Friday, there will be a balanced budget to hand off to the governor. Sen. Gary Stevens, R-Kodiak, called the concern “a legitimate fear.” He spent the weekend in Cordova where he heard concerns loud and clear. “I saw it in Kodiak and I saw it in Cordova for three days,” he said. “This is close. It’s of great concern and it should be. But it simply is not going to happen. Think of what is happening in gearing up in Seward, Kodiak, Cordova and Bristol Bay; it would be a big disaster. I’m surprised anyone is thinking it is a possibility.” Naomi Klouda can be reached at [email protected]

Housing both affordable and trendy snapped up in Anchorage

Key Anchorage building projects underway this summer add more than 100 units to residential availability and inject a nouveau mix of retail space for town segments in sore need of beautification. A glimpse at high market demand shows itself in the proposed Downtown Edge project sited above Ship Creek’s warehouse district and just below Second Avenue and Christensen Drive. Before a shovel of dirt or a layer of brick, there is only one “unreserved” unit left at the Downtown Edge development. That’s out of the first phase’s 21 townhouse style condos, according to Trevor Edmondson, vice president and general manager for The Petersen Group, the contractor and a partner in Ship Creek Development LLC. “We’ve used the reservation system for other projects, but it hasn’t been successful to this extent,” Edmondson said. Location is the primary driver: the views of Sleeping Lady, Cook Inlet and access to the buffet of a downtown lifestyle. A second phase of seven more units won’t be built until later in the 18- to 24-month first phase, Edmondson said. Units will be two or three stories each and come at a price tag that starts at $400,000. The same market demand occurred in a new affordable housing project at 36th Avenue and Spenard where the Petersen Group also acted as contractor. The 33 affordable housing units opened May 31 for applicants. Move-in is set for sometime in September. Forty-seven people came through to apply in the first days available to apply after May 31, said Cook Inlet Housing Authority spokesperson Sezy Gerow-Hanson.Many will be eligible for a rent subsidy. CIHA owns part of the block adjoining the derelict PJs Strip Club. Like much of old Spenard, PJs had defined a long-gone era of pipeline-building wild lifestyles. CIHA acquired the land in auction five years ago after U.S. Marshalls seized it as the site of a large drug operation. Doors are opened for Anchorage to see more housing in new construction, said Christopher Schutte, the director of the Anchorage Office of Economic and Community Development. He cites a unique partnership between the Municipality and the Rasmuson Foundation for the impetus that should place more such housing projects on the market. Partly in response to criticism that Anchorage hasn’t been friendly to new construction, leveled by, among others, Rasmuson Executive Director Diane Kaplan, the city recently created a chief housing officer position to facilitate increased construction of residential housing units. The position is funded for an initial two years by Rasmuson and will serve as a primary liaison between the municipality and private sector housing developers. Robin Ward, current director of Real Estate Services, was appointed in March by Mayor Ethan Berkowitz to fill the position. Her tasks include identifying barriers to housing production in the Anchorage Bowl and then creating achievable solutions, incentives, initiatives, and implementation strategies. A second move by the Anchorage Assembly created a new tool for developers or homebuilders to deliver more affordable housing. Unit Lot Subdivision now allows a property owner to divide an existing residential lot into smaller unit lots for fee simple ownership, but does not allow any increase in density under the current zoning of the parent lot or any changes to the development standards of the parent lot, Schutte said. “It’s a great tool that other cities have used to allow smaller, more affordable housing development in a way that is easier to finance than building townhomes or condos,” Schutte said. The new owners get deed to the land as well as their own building, unlike traditional townhouses or condos where residents do not own the land. Here are other developments for summer 2017: The Rail The Alaska Railroad Corp. and its partners will break ground soon on a mixed-use development called The Rail, intended to be the first phase of a larger redevelopment effort. The project is on 11 acres of railroad-owned land near Ship Creek that will eventually bring retail, restaurants, other housing and event space there as well. 3600 Spenard This $10-million project is nearly completed on what used to be an asphalt parking lot and the old PJs strip club at the corner of 36th Avenue and Spenard Road. Cook Inlet Housing Authority, an Anchorage-based nonprofit that promotes affordable housing, is constructing three-story building that will mix residences and retail. There’s 900 square feet of commercial space still open for one retailer on the ground floor; the other two units will be used as Cook Inlet Housing Lease Office. The 33 one-bedroom apartments will be spread out through the three floors, priced at both subsidized ($785 or $880 per month) and market rates ($1,250.) The apartment amenities include washers/dryers, shared second floor “roof top” deck, private balconies and close proximity to public transportation. The building will also feature photo voltaic and geothermal alternative energy systems to supplement traditional gas and electric. Elizabeth Place Housing Development The municipality issued a Request for Proposal for development proposals for three lots the city owns in downtown Anchorage at 7th Avenue between I and K Streets. The RFP asked for creative proposals to redevelop the land in a manner that is consistent with the goals of the “Anchorage 2020” Anchorage Bowl Comprehensive Plan and the Anchorage Downtown Comprehensive Plan and that provides the highest and best use of the site. “We received three proposals on the land and selected Cook Inlet Housing Authority through the competitive RFP process with its proposal for a trendy apartment building with street-level stores and a rooftop patio,” Schutte said. At five stories, the mixed-use development will include 40 one-bedroom apartment units, priced at both market and subsidized rates, and ground floor retail space. “This project is exciting because it is the first new residential development in Downtown Anchorage since 2006,” he said. Unit Lot Subdivisions “While not a ‘project’ per se, this is an exciting community development initiative that we recently passed at the Anchorage Assembly that created a new tool for developers or homebuilders to deliver more affordable housing,” Schutte said. “Unit Lot Subdivision” allows a property owner to divide an existing residential lot into smaller unit lots for fee simple ownership, but does not allow any increase in density under the current zoning of the parent lot or any changes to the development standards of the parent lot,” Schutte said. This means that someone in South Addition who owns a 7,000 square foot lot that is currently zoned R-2A could subdivide that lot into smaller units and build townhouses that could be purchased fee simple. Naomi Klouda can be reached at [email protected]

Anchorage library project $2M over budget, behind schedule

Further delays in the Loussac Library renovation are frustrating the Anchorage Assembly as yet another “reopening” has been postponed from June until September or October. An additional $2 million in overruns above what was allocated is currently being used from a “contingency fund” to cover unexpected costs, according to city officials. At this point, the project is over-budget and behind in completion estimates. The project to rebuild sections of the 30-year-old Loussac began in May 2015 when then-Mayor Dan Sullivan announced the $16.5 million project start in a ribbon cutting. A $13.5 million bid was accepted from Pinnacle Construction to reconfigure space in nearly the entire 140,000-square foot library. Another $2 million went for design to RIM Architects. The date for completion originally set for October 2016 passed with significant portions of the work unfinished. A new date announced by the library for reopening some closed sections of each floor was set for “spring.” That too passed with numerous delays. Now, a June reopening date is stalled at least in part due to materials that have not yet arrived from New Jersey and Italy, according to Alan Czajkowski, director of maintenance and operations for the municipality. “Materials from the East Coast didn’t make it,” Czajkowski said June 1. “We have some temporary substitutes for the tiles that were to go on the outside of the facility.” Czajkowski said he received a letter from the tile product manufacturer that they are 10 weeks behind in production due to a labor strike. He declined to give the name of the tile manufacturer but said they were promised the tile was due to arrive in August. For the interior, resin panels also didn’t make it on time. Those are made in Italy, an eco-friendly paneling made of a composite epoxy with stone chip materials that Czajkowski said are now made in that country. “There was a production problem that meant the shipment hasn’t arrived. They’re supposed to be nice, but not super high-end panels,” he said. Each day he walks the site, Czajkowski said the library sections on floors one through four facing the old entrance are more complete, though he acknowledges it may not look that way to casual observers. “We’re working through issues with the contractor, moving pretty fast. If you were there every day, you would see a lot buttoned up,” he said. On the fourth floor, carpet was laid by June 5. Work moves from the top floor down at this point, he said. In July, the circulation desk moves to the first floor by the Anchorage Assembly Chambers and the public will be able to use the new entrance along with a new courtyard. “This project is huge. There were a lot of unforeseen problems. We found earthquake damage, major cracks in columns that had to be repaired or replaced, and building safety stopped us. That was out of our control,” he said. “Some things were improperly installed. We ran into other code issues such as we had to have extra sprinkler systems.” Assembly Chair Dick Traini is analyzing the cost overruns and delays to see if the reasons are justified. He said he may call a work session, but wanted to look at cost figures first after this latest delay. Former Anchorage Mayor Sullivan and city officials marked the new project in May 2015, estimating costs at $16.5 million. In the last year when the Alaska Legislature approved a big state capital budget, appropriations supplied the bulk of the money. The Legislature approved a $10 million grant in 2014 for the 2015 fiscal year. It was to go with more than $4 million in previously allocated state funds, according to Alaska budget records. In addition to the visible changes, much of the building’s heating and cooling, or HVAC, equipment needed upgrades. It also was in sore need of removing the poorly thought-out glass roof that let out too much heat, said Loussac Administrator Mary Jo Torgeson at the time. It cost $300,000 per year to heat and cool Loussac under its old construction design. That the $16.5 million price tag on the renovation has risen to $18.5 million isn’t that unusual, Czajkowski said. At 10 percent over, that’s about par for public buildings, he said. But $2 million is more than 10 percent over. The money came from a contingency fund the municipality had set aside for just such a potential problem. Any time a project of this magnitude is started, a 10 percent fund needs to be set aside for overruns. Now, with drywall and paint left, there’s less chance of further cost overruns, Czajkowski said. “Most of the significant work is done,” he said. The Loussac Library was one of the Project ‘80s buildings constructed in a flood of oil royalties from the newly constructed Trans-Alaska Pipeline System, along with the Sullivan Arena, the Egan Center and the Performing Arts Center. The Loussac, like others that proved structurally substandard, didn’t model architectural needs of a northern climate, Czajkowski noted. “That glass roof — it’s gone,” he said. “During the pipeline days, a lot of the people weren’t from Anchorage. The designers were from California and different places.” Codes and inspections weren’t in place then for factors such as earthquakes and electrical standards. “Parts of the original electrical system weren’t mono-coded for fire protection. We’ve had to spend money and time on work order changes to do those things and about 100 different things,” he said. A 30-year-old building wouldn’t normally be considered so aged that it needs as much work as the Loussac. But the administration had underestimated the many needs, said Traini. “A lot hadn’t been done for the building in a long time. When the contractor finally got in they noticed other things,” Traini said. “I’m frustrated, the public is frustrated, but a lot was unexpected.” Assemblyman Felix Rivera, the newly elected representative for Midtown, said he’s hoping “they’ll be able to get it done and stay on budget by September or by the end of the year.” “Then we can go back to being able to fully experience the library again. It’s a tough environment for people to work in, too,” Rivera said, referring to the hammering and drilling noises that have accompanied each work day for two years now. “In the end we’ll have a library that is up to par and that hopefully the community can enjoy.” Pinnacle Construction, the general contractor in charge of the renovation, has overseen work on the Girdwood Library and Community Center, a gas station shoppette on Fort Richardson and the Aleutian Housing Authority Headquarters building in Anchorage. They are going off designs from RIM Architects, whose cold-weather portfolio includes renovating the 1960 Alyeska Round House, designing the Eielson Visitor Center at Denali National Park and the Consortium Library at the University of Alaska Anchorage. Unfortunately, the kind of work that is now known as substandard to a subarctic climate wasn’t all that uncommon, the city has found in expensive lessons on everything from the Sullivan Arena to the Egan Center and the now the Loussac. “Anyone who built an outside stairway with an outside plaza is not from Alaska,” Czajkowski said, speaking of the old Loussac entrance. In a fit of nostalgia, library patrons were invited on one last walk down the outside stairs on Jan. 25, 2016. The day was around 18 degrees, and few turned out, according to news reports at the time. The new design places the public entrance on street level, with immediate elevator access to all four floors rather than the walk-around the old design required from entry level to the second floor and then another set of elevators for accessing the third and fourth floors. The entire building is reconfigured. A bigger lobby on the first floor makes a more functional entrance along with the Anchorage Assembly Chamber. The second floor library collection is now on the first floor, along with the café. A new automated book sorter is meant to make conditions safer for library staff who formerly navigated the parking lot four times a day in inclement conditions to bring in huge metal carts loaded with books and media materials. The new system sorts items at the drop off point using a radio frequency identification technology. Assemblyman John Weddleton said the Assembly took a tour last fall when they tackled the 2017 budget. “There were questions then and we were told that a lot had to be done that were not in the plans,” Weddleton said. One of his frustrations is that the public is deprived gathering space since there hasn’t been a lobby area for discussions outside the Assembly Chamber doors during breaks, Weddleton noted. “If there’s an issue, they gathered and met in the entryway to the library. Now it’s closed off to construction and there’s no space to meet,” he said. “No one is happy about it,” he said. “But you can’t say ‘stop.’ We’ve got to move it forward. To the extent that the assembly gets into the details, it’s a combination of unforeseen problems and it will be finished.” In a few more months, Sept. 14 marks the Loussac’s 31st birthday. Naomi Klouda can be reached at [email protected]

Construction season ramps up with nearly $1 billion in projects

Summer 2017 brings $976 million in construction contracts for 128 projects in 45 communities across the state as the season for both tourism and construction gets underway. The dollars — 90 percent federal with a 10 percent state match — will pay for Alaska Department of Transportation and Public Facilities highway and airport improvements. Federal monies so far have remained at consistent levels in recent years, said department communications director Meadow Bailey. The good news for the Alaska Department of Transportation is that many projects are coming in lower than bid estimates. DOT’s Jill Reese, public information officer for special projects, said competition for projects is intense. “It’s due to the shift in vertical construction to horizontal,” she said, referring to the decrease in capital spending construction due to the recession currently underway in Alaska. “Firms that normally work on tall buildings are bidding on road projects that they hadn’t in the past,” Reese said. This allows federal dollars to stretch further. Summer travelers out of Anchorage heading south get a big break this summer from road construction projects, while the majority of road projects are focused north. Some of the most involved projects that started June 2 include: • Dalton Highway MP 362-379 Reconstruction: This is the third in a series of projects to reconstruct 52 miles of the highway south of Deadhorse. This project includes widening, spot repair and resurfacing the highway from Miles 362-379. The construction contract is $32 million, the contractor is Cruz Construction Inc., and the project will be completed in September 2018. • Haines Highway MP 3.5-25.3 Reconstruction: This is the first in a series of projects to reconstruct the highway from Mile 3.5-12. The construction estimate is $40 million to $50 million, the project will go out to bid this summer, and the project is scheduled for completion at the end of 2018. • Seward Highway: Dimond to Dowling Reconstruction: This project involves reconstructing the New Seward Highway from four to six lanes between Dimond Boulevard and Dowling Road, improving frontage roads, and Sandlewood Place, including adding pedestrian facilities and bike lanes. During construction, two new bridges will be built across the highway connecting 76th Avenue to Lore Road. The construction contract is $55.9 million, contractor is QAP, and the project will be substantially complete in fall 2018. • Sterling Highway, MP 58-79 Rehabilitation: This project will rehabilitate the Sterling Highway from Mile 58-79. Improvements include resurfacing, widening shoulders, adding passing lanes and wildlife viewing structures. During construction, staff will replace the culvert at the East Fork Moose River with a bridge, and install a pedestrian undercrossing for the Skyline Trail. The construction contract is $54 million, the contractor is Granite Construction, and the project will be complete in October 2018. North of Anchorage: On the Glenn Highway, expect repaving from Highland Road to Eklutna in the evening hours from 7 p.m. to 5 a.m. Be alert to lane restrictions and reduced speeds. Work on 14 miles of road is expected to be finished by August. Parks Highway from Church Road to Pittman Road undergoes construction beginning June 6 from 8 p.m. to 6 a.m. Between MP 44.5 and 48.8 a two-lane will be expanded into a four-lane divided highway with a new bridge at MP 46.5. This is set to be finished by August. Parks Highway MP 91.2 to 92; MP 100 to 100.8: DOT is improving the railroad crossings at these points with new overpasses going up over the rail crossings. This is set to be finished by October. Parks Highway MP 239 to 252: The highway segment leading to Denali National Park includes repaving, and installing new signage and guardrails. Expect delays and watch for the pilot car. This is the third season after mitigating rock fall hazards by removing loose rocks south of Glitter Gulch. The department is hoping to be finished by July because this is a high traffic area. Expect minor day delays and most work at night. Elliott Highway MP 107.7 to 120.5: Highway reconstruction between Fox (about 10 miles north of Fairbanks) and Manley Hot Springs involves a realignment to improve sight distances and drainage improvements to reduce icing and overflow. Richardson Highway MP 24 to 35: Resurfacing has begun on this 11-mile stretch that involves culvert replacements and asphalt grinding. Upon completion, new asphalt will surface this gravel road. Tok Cutoff MP 75.6: DOT is putting in a replacement bridge over the Slana River. Expected to be complete in October, drivers should be alert to a detour during summer months. MP 64-67 Taylor Highway: Reconstructed road surfacing by DOT on the three-mile stretch to the Chicken Bridge takes place Monday through Sunday 7 a.m. to 7 p.m. Expect delays of up to 20 minutes and be alert to the pilot cars. DOT is working on a new bridge over Chicken Creek. South of Anchorage: Travelers get a break from construction this summer on the segment from Anchorage to Girdwood. The next project in the planning stages involve the segment from MP 105-107 at Windy Corner. The goal is to take out a dramatic corner for safety issues, Reese said. This has been controversial, according to public testimony. “Some people think it will be unsightly to take out the rock. But we see it as a safety issue,” Reese said. “This project won’t begin until 2018 at the earliest.” The Alyeska road that leads from the Seward Highway to Arlberg Road is a minimal project but due to heavy summer traffic, is listed as one to keep in mind. Road structural improvements and guardrail replacements could cause delays. Also in design is the segment from MP 90-75, Girdwood to Turnagain Pass, which is getting safety improvements in the form of eventually replacing eight bridges. Watch for 15 miles of construction to make more passing areas and straighten dangerous curves. Sterling Highway MP 114-135: Ending at Ninilchik, this stretch will cause some single-lane traffic and delays throughout June in what DOT hopes is a one-month project to upgrade storm drains, guardrails, signage and repave. Traffic interruption will be minimal. Kalifornsky Beach Road from MP 16-22 will be seeing more road improvements. On this section is the ear that was damaged in a 2015 earthquake. The plan is to resurface from MP16 (just west of Bridge Access Road) to Milepost 22.2 (just west of Sterling Highway). In addition, improvements will be made to the existing traffic signals at Bridge Access Road and Poppy Lane and new signals will be installed at Ciechanski Road and at Gas Well Road. MP 79-58 in the Skilak Lake area involves a shoulder-widening project with added passing lanes. DOT also will replace a culvert with a bridge for fish passage purposes. Naomi Klouda can be reached at [email protected]

Work begins tearing down 1920s-era Eklutna River dam

Deconstructing the old dam wedged in an Eklutna River ravine begins this month, a megaproject to eventually help native salmon return to home waters. The $7.5 million project is funded by the Conservation Fund in a partnership with Eklutna Inc., which is providing the labor, Eklutna CEO Curtis McQueen said June 5 at the Anchorage Chamber of Commerce Make it Monday Forum. Eklutna Inc. became the default owners of the derelict dam because it was built there in 1929 on the traditionally Dena’ina Athabaskan land. It was abandoned after World War II when the new Eklutna dam began to supply more power to the burgeoning wartime Anchorage population. Now the task is to take the dam out, McQueen said. “More than 300,000 cubic squares of sediment has built up, along with junk cars, television sets and all kinds of trash thrown there,” he said. Much of that was taken out last year. This summer’s work involves installing a system to secure the job site and make it safe so that large concrete slabs can be chiseled into smaller chunks. It takes the largest crane known to exist in Alaska to handle the job, McQueen said. Getting the crane to the work area took 40 tractor-trailer trucks. At 400 feet tall, the crane is charged with the task of lowering bulldozers and other equipment about 200 feet into the canyon. The crane was installed in last season’s work. For the workers, there aren’t a lot of places to stand. Rock falls down the cliff face. Descending the canyon couldn’t be done without the 700-foot staircase built to secure the work site last year. Now the site is staged for the work to begin breaking into the dam’s concrete edifice but a few more permits are needed, McQueen said. McQueen believes Eklutna is the first Tribe in the nation to get involved in such a massive project, he told the Chamber. “We haven’t heard of another story where the actual Native people are playing a part in the removal of a dam,” he said. Brad Meiklejohn, Alaska State Director of the Conservation Fund, said the project has historic ramifications not only for dismantling the dam. It signifies the first step in the long process of restoring the Eklutna River’s historic salmon populations — and it rights an historical wrong. “The village is there because there used to be a lot of salmon. The dam got built without consulting them and the fish population really dropped off,” Meiklejohn said. “This is something that happened to them. They’re the ones who are fixing it, taking care of someone else’s mess. They are fixing a mistaken artifact of history. (The project) restores the fish and makes amends for some of the things we did wrong.” So far, $6.5 million has been raised by the Fund, Meiklejohn said, with another $1 million needed. Further funding sources include foundations that hopefully will include the Rasmuson Foundation, he said. Almost daily, Meiklejohn visits the work site, now as an impressed observer. He watches from the top of the canyon and tries to stay out of the way. “This operation is one of the more dramatic work sites that I know of. You’re on the (top) end of one the largest staircases. It’s like St. John’s Cathedral,” he said. The giant crane’s role is to lower the equipment into the canyon. That includes huge bulldozers and excavators suspended off spooled crane cables until they touch down. Large pneumatic chisels will bite into the concrete, which bulldozers will then maneuver to the side. “A big part of the project is managing all the sand and gravel that has built up since it was abandoned, 300,000 cubic yards of sand and gravel. They use the equipment to move the sediment so they can get to the dam,” he described. Water is diverted by pipe around the worksite to make it as dry as possible, he said. The wild canyon tucked away from sight near Thunderbird Falls isn’t wide. But it’s been a dumping ground for anything wanted to be disposed over the cliff: televisions, scrap metal, tires and even old cars, said Noel Aspiras, an Eklutna Inc., real estate and land development specialist. Eklutna used a drone, which was much less expensive than hiring a helicopter, to take reconnaissance of the area for video and photos that then helped in planning. A helicopter pad is built onsite in case of emergency, Aspiras said, once work begins. The derelict dam in question — also called an “orphan dam” because no one in present day claims ownership — was built between 1927-29 by the Anchorage Light and Power Co. Frank Reed, a pioneering Anchorage businessman and filmmaker, spotted the natural landslide dam while walking in the Eklutna valley in the 1920s, according to Anchorage 1910-1940 Legends &Legacies. He spotted it for a hydro project to supply some of the first electricity to the Anchorage area. Construction of the 70-foot tall concrete arch dam was a major feat, but proved a success when it provided electricity for the young city of Anchorage until it was shuttered in 1952. After the land came under Eklutna title following passage of the 1971 Alaska Native Land Claims Settlement Act, the idea of tearing it down to bring salmon back became a dream that seemed impossible without strategy or funds to get it done. McQueen told the Anchorage Chamber that of the many Eklutna projects his corporation is in charge of around the state, he’s proud of this one as a bipartisan effort and grateful for the help of the Conservation Fund. “One thing we in Alaska all agree on is that kings are impacted in north Cook Inlet. “This is a positive project to restore watershed and get salmon up the river again,” McQueen said. “Everyone is for it.” Naomi Klouda can be reached at [email protected]

Anchorage Assembly cuts fee in move to boost farmers’ markets

The Anchorage Assembly passed an ordinance May 23 that waives the $260 permit fee for cottage food vendors and refunds those permit fees already paid for 2017. That’s good news for jam purveyors, people who hawk chutney at farmers’ markets and others involved in food preparation that doesn’t involve a higher level imposed by city code. It’s also good news for consumers. Loma Little and her daughter Joy Beals enjoyed a brisk business at the Spenard Farmers’ Market on May 27. Their bright orange carrot pickles and varieties of green dills drew a steady stream of customers. The give-and-take with customers is all about ingredients, a key draw for farmers’ market patrons, they said. “I really like being able to ask how these products were made from the person who made them,” said patron Dorothy Arima, whose shopping bag included fresh rhubarb, shrimp from Prince William Sound and now three jars of pickles. Along the way, it seems Arima also hears how it came to be that the mother sticks to canning pickles while the daughter keeps track of the books. Cottage foods are defined as “food other than meat, poultry or a food product containing meat or poultry that is designated as a non-potentially hazardous food under” city code 18 AAC 31.985. The ordinance isn’t just for vendors at farmers’ markets. It’s also in play for food trucks at neighborhood lunchtime gatherings in parking lots since the code addresses the product, not the venue. The variance holds for vendors in 2017. But in order for this regulation to go beyond 2017, the Anchorage Food Code would need to be updated to include cottage foods and an appropriate permit fee, said Shannon Kuhn, the Health and Human Services information officer. To that end, they will be gathering public comment on this throughout the summer with the goal of updating the Food Code this year. Small businesses such as these who bring in $25,000 a year or less are the ones the city targeted for a break. The measure means this class of vendors will pay the one-time $50 variance-application review fee, according to Ordinance 2017-85. Previously, the fee was $310 per year. Farmers’ markets sprang up in a popular ground-swelling driven by consumer demand, said DeeAnn Fetko, the deputy director of Anchorage Health and Human Services. “The need to address cottage food vendors came to our attention through farmers’ markets,” Fetko said “The number has grown significantly and with those came the opportunity for a wonderful showcase for people to sell what we call artisan products.” On any given day in summer, farmers’ markets are found Downtown on 4th Avenue, in Spenard by Chilkoot Charlie’s, South Anchorage at Old Seward and O’Malley, in Muldoon at the Begich Middle School, 15th and Cordova Farmers’ Market, Sears Mall and in Mountain View opposite the Clark Middle School. Soon to come are farmers’ markets planned at Government Hill and Sand Lake, Fetko said. “We heard from those involved that our fee didn’t fit with what they were doing,” Fetko said. “We hoped to put this in place to provide a stopgap until we would be able to amend the city food code to clearly include cottage foods and take into account the appropriate fees.” Anchorage Mayor Ethan Berkowitz supported the idea and advocated for the Anchorage Assembly to take up the matter. Assemblyman Forrest Dunbar agreed to sponsor the ordinance. “A number of people who could be described as cottage food folks told us the regulatory burden was making it difficult to do their business,” Dunbar said. This fits into a couple of themes, Berkowitz said. “It encourages small businesses to do things to develop food security and we also want to do things that build a stronger sense of community through activities,” he said. The Food Policy Council looked for a suite of initiatives. Working on assisting cottage food vendors was one of the proposals, the mayor said. “Another one was community gardens and making sure we can grow our own food and create our own jobs,” Berkowitz said. As the “food telegraph” circulates the news that permitting for cottage food vendors is $50 instead of the $310 in 2017, Berkowitz is hoping more people will be encouraged to join in food production, and in the discussion. The balance of city government is in protecting public safety and yet encouraging more local foods, he said. Recognizing that cottage foods pose a less significant food safety risk than other food products, but under the legal requirements to enforce a code that contains no special provision for cottage foods, the HHS developed something of a workaround, Kuhn said. It requires cottage food vendors to apply for and receive the food establishment permit required for facilities that present the lowest risk. Products can be made in a home kitchen but must have the formulation or recipe listed on the product container. Naomi Klouda can be reached at [email protected]

Premera, state await waiver decision from federal government

Hoping to clamp a ceiling on Alaska’s already high insurance rates, state officials are keeping an eye on Washington, D.C., for two developments. One is an application for a federal waiver that would replace the state’s one-year funding of $55 million in 2017 as a reinsurance program to halt a series of steep premium increases in the individual market. The Alaska Division of Insurance applied to the U.S. Department of Health and Human Services for the 1332 waiver in January, but has not yet heard back from the federal agency. The other developments are changes under debate now in the U.S. Senate that Premera Blue Cross/Blue Shield of Alaska hopes won’t upset the few advantages Alaska has even as it’s one of the states with the highest premiums in the country. Rates for 2018 are due in July. In prior years rates have been submitted by May, but the federal Department of Health and Human Services has given companies until July this year. “We are not prepared to make any announcements about our 2018 rates,” Premera spokesperson Melanie Coon said May 30. “During the first two years of the ACA, our Alaska customers saw premium increases of 37 percent in 2014, and 38 percent in 2015. Last year, the rate increase was under 10 percent, or about 35 percent less than what they would have paid without the reinsurance program. We believe continued support of a state reinsurance program is critical.” The federal funding of $55 million would redirect supplemental funding that currently comes to the state through another mechanism, Director Lori Wing-Heier said in April. About 90 percent of Premera’s customers on the federal insurance exchange qualify for premium subsidies; therefore if the rates can be held down the federal subsidies can be smaller. In 2016, Alaska’s Legislature created the Alaska Comprehensive Health Insurance Fund that sunsets in June 2018, and authorized the Division of Insurance to apply for a 1332 waiver. The fund is designed to reinsure Premera, the one remaining insurer in the individual market, for costs to treat people with life-threatening, chronic or high-cost conditions. As a result the health insurer scaled back 2017 premium increases to 7 percent. Alaska funded the program by using $55 million of the $64 million generated in 2015 from a 2.7 percent tax on health insurance premiums. The new law expanded the premium tax base to all insurance premiums – not just health insurance, according to Alaska’s Division of Insurance. All eyes are on Alaska to see if this 1332 waiver request is approved, but as of May 31, the federal agency in charge of granting it had not yet issued a decision. Senate’s health care bill rewrite Alaska’s only health insurance carrier also is hopeful that any new health care act to emerge from Congress at the end of the U.S. Senate’s work on the American Health Care Act that passed the House will keep subsidies and retain an Alaska poverty-line adjustment. Jim Gazko, president of Premera Blue Cross Blue Shield of Alaska, predicts subsidies will not go away. But they most likely will be changed. “There will be minor to almost no changes in 2018-2019, then we’ll most likely be transitioning from income-based to age-based subsidies,” Grazko said. Presently Alaskans qualify for subsidies based on 133 percent of the federal poverty line. If this adjustment goes away, the concern is that insurance rates will become unaffordable to Alaskans, he said. In an age-based subsidy system, premiums would be assessed on age rather than the current system of income. People under the age of 30 would get a lower subsidy than a person over 50 years old, Grazko said. It would take two years to make the switch, to the year 2020. “A 27-year-old, under a new age-adjusted flat tax rate, would get something that looks about two-thirds of what someone 45 years old would get,” Gazko said in an interview with the Journal on May 25. But all of this talk is theoretical until an actual bill emerges from the U.S. Senate. Grazko, like so many others in the industry, is keeping a close eye on what comes out of revisions to the House bill, which the Senate has vowed to rewrite. The Congressional Budget Office report on May 24 estimated the House-passed health care bill would cause millions to lose insurance. It would potentially have the biggest impact on the least healthy. On the same day, in the U.S. Senate, chairman of the Health Education and Labor Committee Sen. Lamar Alexander, said the Senate is writing its own bill. That in turn will get its own score from the CBO before the Senate votes, Alexander said in a statement. Unlike other states and other insurance carriers, Premera is the lone company left standing to take care of Alaska on the open-market exchange. Events last year coincided with two insurers pulling out of the Alaska health individual insurance market, Moda Health and Aetna, leaving Premera Blue Cross/Blue Shield as the sole company remaining selling individual policies. The deciding cause for the pullout related to high costs far exceeding the carriers’ ability to balance their bottom lines. Even Premera was at risk until the Legislature stepped in with the $55 million reinsurance subsidy from the state’s general fund. That allowed a proposed 42 percent hike in 2017 premiums to be reduced to a 7 percent increase across individuals. For 2018, Alaska is still looking to the 1332 waiver for a bridge over that $55 million gap. New provisions may fix ACA The new health care law debates in Congress raise worrisome challenges, Grazko said. Given the disagreements about provisions in the new health care bill presently under revision or new construction, key provisions are at risk. “One of things we are most concerned about, especially in Alaska with premiums the highest in the country, is if the flat tax credit isn’t adjusted for Alaskans,” Grasko said. “A lot of other things are. The federal government uses the federal poverty line as an adjustment for the Alaska version of several programs in the Lower 48. It’s been the same with Medicaid. It’s our hope they can come up with a method that keeps the affordability here.” Grazko is also concerned about the elimination of Medicaid expansion — a key House provision that Alaska’s two U.S. Senators opposed. Rep. Don Young, however, voted in favor of eliminating the expansion of Medicaid when he voted “yes” on the House bill. For Sen. Lisa Murkowski, one of her strongest reactions was against eliminating the Medicaid expansion, which she said would place 27,000 low-income Alaskans at risk. Both she and Sen. Dan Sullivan support repealing the individual and employer mandates and want to keep the provision protecting those with pre-existing conditions. The tax penalty for those who didn’t buy into the insurance market or go on Medicaid, if they were eligible, was no longer enforced as soon as President Donald Trump hit office. Maybe it wasn’t a popular provision, but “anything you can do to encourage them to buy promotes market stability,” Grazko said. Premera is in favor of continuing with the individual mandate as opposed to consumers opting in only as they get sick. Alaska’s small insurance pool is the biggest reason rates are so much higher than the rest of the nation. A lot of discussion has centered on how to give a level playing field with other states. Why not form an insurance compact with Washington, for example? Alaska’s 18,000 insured would join with Washington’s 300,000 insured, and rates would go down because they would cast a wider net. That option wasn’t available for a variety of reasons. In a hypothetical scenario, Alaskans’ higher insurance rates and higher risk patients would likely increase Washington’s insurance rates, Grazko said. Alaskans are “higher risk” in insurance speak for higher rates of diseases and accidents. Currently, for two states as different as Washington and Alaska to agree on one uniform set of rules is very difficult. “I don’t think it’s been attempted,” Grazko said. The House bill gives the ability for states to opt out of certain “essential” health benefits mandated under the current Affordable Care Act, a solution that makes sense and Grazko hopes is adopted by the Senate. Just as car insurance regulations allows consumers to select which kinds of coverage they prefer — roadside assistance or extra collision, for example — the House’s version also allows for individuals to opt out of certain benefits. “This gives more latitude to develop plans. Now, the ACA is prescriptive. (But) if they could redesign a product that goes outside of those lines to what can best be excluded that can’t be excluded today, it can bring costs down,” for the consumer, Grazko said. Those are Grazko’s hopes for what comes out of Congress. His fears are the loss of subsidies and curtailment of Medicaid expansion. Loss of those would change the risk profile of exchange pools. “A different person buys Medicaid verses exchange coverage,” he said. “Right now when people are eligible for Medicaid, they don’t buy into exchange pools. If don’t get Medicaid they will buy into individual pools and that tends to be more expensive.” Because an estimated 5 percent of the people generate 50 percent of the costs, a small portion dictates costs for 95 percent of the pool, Grazko said. Without Medicaid to help defray costs, people who would normally qualify for it would be pushed into the exchange in order to have any coverage at all. “Our commitment to the market runs deep no matter what. We did stay,” Grazko said. Correction: The original version of this story stated rates were due in May. Premera clarified that a federal extension this year allows companies until early July to submit 2018 rates. The story and headline have been adjusted accordingly. Naomi Klouda can be reached at [email protected]

Ridesharing on the way but not without municipal complaints

An injection of employment opportunities for about 100 people as Uber or Lyft drivers and more options for riders should begin in time for the tourism season. House Bill 132 passed 35-5 in the House after a similar bill, Senate Bill 14, unanimously passed the Senate. Alaska will be the last state in the country to authorize transportation network companies, or TNCs. It was popular enough that supporting testimony came from towns as far north as Barrow and as far south as Ketchikan. Once Gov. Bill Walker signs the bill, it will allow TNCs to operate anywhere in Alaska. One main factor will drive which towns see the TNCs begin to operate: Wherever a person is licensed to become a driver will see a start-up in that town, said Uber spokesperson Brian Gebhardt. If a driver has a vehicle that meets the requirements, the only up-front cost is approximately $20 for a vehicle inspection from a certified, third-party mechanic, he added. From the state end, a business license will cost about $50 per year, obtained from the Alaska Department of Commerce and Economic Development. But the measure raises heartburn for the Alaska Municipal League because it sees the bill as trespassing on local control in licensing the drivers, said Executive Director Kathie Wasserman. Currently all towns and cities in the state regulate their own cab drivers. By extension — even if a TNC isn’t a cab — cities have historical reasons for wanting to regulate the business, Wasserman argues. Anchorage Assembly Chair Dick Traini has the same problem with House Bill 132. As of May 30, the governor had not signed the bill, nor had it been transmitted to the governor. “I’m hoping the governor doesn’t sign it,” Traini said. Wasserman was hoping to meet with Walker this week to discuss the bill. The bill’s sponsor, Rep. Adam Wool, D-Fairbanks, said he and Sen. Mia Costello, R-Anchorage, who sponsored the Senate legislation, worked hard to clarify or revise the bill to accommodate municipal concerns. “The bill doesn’t allow cities to micromanage the industry, but they could prohibit them from operating in individual towns if they put it to a vote,” Wool said. “We worked hard to address the AML’s concerns.” Wool said the governor likely will sign the bill in early June. He’s hoping the fanfare will include drivers already gearing up to start business as soon as the ink is dry on the governor’s signature. TNCs operate within state laws and across town boundaries. They would be regulated by state agencies and would need a state business license, because they are each independent business operators rather than employees of a company. Division of Motor Vehicle laws apply, as do permitting requirements and any municipal tax codes. “My objections are not about Uber or Lyft or any one organization. That’s great if they want to come in. It’s about local control,” Wasserman said “The Legislature, which is supposed to uphold the Constitution, should not be giving away local control.” But Wool argues there is the ability of local control through voters. An ordinance outlawing the TNC can occur through local ballots. Any provisions already in place would remain. Wool said it wasn’t necessary to create a state regulatory agency to handle TNCs given existing laws already in place. That in itself would be duplicative. HB 132 widens options for drivers-on-demand who operate much like taxi cab drivers. TNC drivers are exempt from the Alaska Workers’ Compensation Act and are classified as independent contractors. They maintain their own schedule, their own vehicle, and can even work for a competing company if they choose. Rideshare drivers typically work during times of peak demand, when there simply are not enough taxis, according to Wool’s sponsor statement. Given that it opens job opportunities for many under-employed Alaskans, part or fulltime, what’s to lose? “If you’ve ever been stuck in the bitter cold Alaskan weather without a cab in sight or needed one but no one was willing to drive to where you’re located, then you can appreciate why ridesharing technology will be a valuable asset to Alaska and its residents,” Wool said. Any sales tax will be collected on the municipal level from pre-existing laws and there is no provision for a state tax, he emphasized. Municipalities regulate cabs and tour buses, and tax them according to local levies. In Anchorage, taxies are tightly regulated. Some 116 new permits are to be auctioned off over five years after changes were made in 2016 by the Anchorage Assembly, for example. The bidding for permits started at $1,980 and no system of allowing Uber or Lyft to operate in Anchorage was made at the time. In Juneau, Wasserman said regulating tour buses and taxies is necessary to serve thousands of cruise ship passengers each day in the docks’ tight spaces. “This is not an individual thing, but a whole tourism program. Tour buses are lined up; taxis are lined up and now how are Uber drivers to be worked into the mix?” Wasserman asks. “We can’t tell them ‘you have to park here.’” Yet, arrangements already in place that direct commercial drivers at state facilities would remain in place, Wool counters. “I felt that we made a lot of concessions to the municipalities. If there’s a sales tax it will be charged to the passenger and the city will recover it,” Wool said. The U.S. or Alaska Department of Transportation already sets limits on traffic flow at state and federal facilities. Requirements for drivers Drivers must be 21 years old and possess a smartphone. A full list of driver requirements include background checks and incorporate state and local requirements. Those interested in driving for Lyft or Uber can sign up on their websites. Cars must be up to safety standards predetermined from an itemized list. Cars that fail the requirements won’t be allowed for use. “It’s important to note that drivers are not employed by Lyft,” said Scott Coriell, communications director for Lyft, a company founded in San Francisco in 2012. “They are independent contractors who make their own schedule and decide when, where, and how often they want to drive.” Driving is seen as a flexible way to make ends meet to fill a gap between a current job and income. Most drivers work fewer than 20 hours per week, Coriell said, and 93 percent of the drivers identify themselves as already being employed in other jobs, seeking full-time work or retired. “We will have Uber staff visiting Alaska between now and when we launch to help people who have signed up to drive,” Gebhardt wrote in an email. “Drivers at all stages of the onboarding process will receive direct communications with details about meeting times and locations.” Naomi Klouda can be reached at [email protected]

Record Copper River king prices celebrated at annual seafood event

Restaurants from Seattle to New York City paid about $50 per pound — a new record — for the Copper River king salmon sold direct from Cordova fishermen on May 19. A representative 45-pound Copper River king was the royal guest at a public seafood event celebrating spring’s famous run in Alaska on May 19. About 100 people turned out for a five-star restaurant sampling as part of the festivities featuring the king on square white paper plates. The salmon, held between U.S. Sen. Lisa Murkowski and Copper River Seafood CEO Scott Blake, was caught aboard Pete Blake’s FV Dakine on May 18 in the Copper River opener. It was flown to Anchorage May 19 in time for the 2:30 p.m. event. Chefs from Orso and 49th State Brewing Co. fired up the grill to treat folks to signature appetizers. Orso Executive Chef Rick Griffin created a strawberry-spring salad drizzled by a sweet balsamic dressing and topped by a king wedge. The 49th State Executive Chef Todd Podborny combined a couple of appetizers from the Denali 49th State Brewery and the Anchorage restaurant: micuit with orange zest tarragon and citrus cured salmon sided with tapenade arugula crème. Each year, Copper River Seafoods celebrates the first fat-laden kings taken from its famous home waters. At the Alaska Airline Cargo hanger, discussion about this year’s prices was part of the celebration. At $50 a pound market price per pound for the king, what would an entre at 49th State cost? About $33.99 for a plate of blueberry barbeque salmon, said Ellen Maloney, the restaurant’s marketing promoter. At Orso, an entre dinner featuring Copper king, grilled asparagus, roasted fingerling potatoes, pesto and grape tomatoes was going for $48.95 while sockeye salmon in similar presentation goes for $34.95. “Strong pricing for the fishermen and aggressive marketplace prices mean a real range,” said Marin Weiser, chief development officer at Copper River Seafoods. “At Pike Place Market (in Seattle) you’ll see it go for $65 pound and at Costco, they may see it as low as $12.99 pound.” Copper River Sockeye wholesales at $27 per pound to restaurants for now, but as the season progresses, the price on both species will drop as the supply becomes more abundant. The preliminary harvest estimate from the 12-hour opener on May 18 was 1,900 Chinook and 36,000 sockeye salmon said Cassandra Squibb, chief marketing officer for Copper River Seafoods. This compares to an anticipated harvest of 37,200 sockeye salmon for this period. Managers are closely watching the king salmon harvest because of a forecasted run of just 29,000 kings compared to a minimum escapement goal of 24,000. The Alaska Department of Fish and Game forecasted a commercial harvest of just 3,500 kings, but that had been exceeded in just two periods after another 1,700 were caught in a 12-hour period on May 22 for a total of 3,617. No additional fishing periods had been scheduled as of May 24. “All of the kings we processed were pre-sold,” Squibb said. “Demand for Copper River King Salmon is at an all time high; we have more demand than we have fish to supply.” Fishermen earned $11 a pound for Chinook and $8 a pound for sockeye from the Copper River, she said.

Marijuana board will revisit onsite consumption at July meeting

The Alaska Marijuana Control Board will discuss three options for onsite consumption proposed by board members at its next meeting July 11-14 in Fairbanks. • Scenario 1: You walk into an establishment where it’s okay to smoke marijuana. There are no pool tables, no dart games, no televisions. Just couches or chairs and coffee tables for a social ambiance. “This space is to try marijuana or a marijuana product and then to leave,” according to board member Loren Jones’ proposal. • Scenario 2: You walk into an establishment where it’s okay to eat cannabis products such as candy, cookies, brownies, etc. But it’s not okay to “inhale” or smoke marijuana on the premises under the proposal by Solodtna Police Chief and board Chair Peter Mlynarik. • Scenario 3: You walk into an establishment where it’s okay to smoke and eat cannabis products. Similar to rules governing bars, employees watch for people who over imbibe. Consuming marijuana not purchased at the location is prohibited. To mitigate second-hand smoke and odor the facility must invest in a good ventilation system under the proposal by member Brandon Emmett. Several businesses have filed applications for onsite consumption, indicating they are ready to go once licensing is in place, according to their applications: Pakalolo Supply Co., (Fairbanks) Alaska Fireweed (Anchorage), Remedy Shoppe (Skagway), Cannabis Corner (Ketchikan) and the Green Elephant (Juneau), Stoney Moose (Ketchikan) and the Rainforest Cannabis (Ketchikan). But an onsite endorsement by the board isn’t likely until 2018, said Emmett, an industry representative from Fairbanks. That’s because the matter won’t come up for vote until the August hearing at the earliest, following a 30-day public comment period. “The language must be put out for public comment,” MCB Executive Director Erika McConnell wrote in an email. “The board then sees the language and the comments. If the board makes substantive amendments to the proposal, it must go out for public comment again.” At the time when they make no substantive amendments, the board may adopt the regulation. Then it goes to the Department of Law for review. “Assuming it is all ok with DOL, it goes to the Lt. Governor’s Office for signature. The regulation change becomes effective 30 days after being signed by the Lt. Governor,” McConnell wrote. Emmett brought on-site consumption back to the drawing table in March, after it was tabled by a 3-2 vote at the February meeting. The March “aye” votes came from members Emmett, Mark Springer and Nick Miller. Back in February, when dropping the onsite regulation was approved, the “ayes” were members Mlynarik, Jones and Mark Springer. Jones, who suggested a two-year moratorium for onsite consumption in his proposal, cited what he called overwhelming public testimony opposed to such establishments. Springer spoke about “going slow” and staying out of the spotlight while seeing what happens on the federal level. “We have a new administration in Washington and a new attorney general who has made it quite clear that is more friendly with the KKK than he is with marijuana,” Springer said, according to the meeting minutes, referring to a joke by Jeff Sessions in the 1980s when he said he thought the KKK was OK until he found out they smoked pot. Members expressed concern that allowing onsite consumption would wave a red flag at federal officials who may be inclined to crack down on states that have legalized recreational use. “We don’t want a million people getting off of cruise ships in Juneau saying it’s great that they went to half of the stores and were able to smoke marijuana,” Springer said. Taking it off the table related to a technical error in the public notice process. After it was put back on, McConnell requested the board work from a single proposal after receiving three. “When people voted yes on Ballot Measure 2, they voted to regulate it similarly to alcohol, and consumption venues are part of that,” Emmett argues. In its newest incarnation, three board members proposed drafts for onsite consumption regulations. Jones, who holds a seat reserved for a member of the public on the board, wants clear delineation between retail and consumption. He also would disallow any TV, pool tables, darts, or the like in the consumption area. Mlynarik’s draft allowed on-site consumption but applied certain restrictions, including prohibition against smoking. He said he wanted to address concerns from the public about both second-hand smoke protections for employees and the public municipal laws that outlaw smoking in public places. Emmett’s proposed draft would allow on-site consumption separated from retail and carry myriad rules similar to bars. Local consent from authorities and annual renewal would be other conditions for monitoring the establishment. “We’re trying as a board to create a new regulation after the first project went by the wayside,” Emmett said. “There was a lot of comment by the people that wanted a smoke-free work environment. We’re trying to look at how we can craft legislation for those concerns and others that were expressed. Our goal is to come up with something — or nothing. “ The current “project” is essentially starting over. The public will not be able to comment on agenda items at the Fairbanks meeting in July. But they will be able to send in public comment between now and then, addressed to [email protected] Lengthy agendas According to the most recent tally, Alaska issued 198 marijuana licenses statewide between Oct. 5, 2016 and May 15. McConnell said there isn’t a backlog in new businesses needing licenses to operate. But the board runs out of time to deal with regulations such as putting onsite consumption to a vote because there are many licenses to approve at each meeting. To accommodate all the activity, the July meeting will be the longest since the board’s creation covering three days at the Fairbanks North Star Borough Assembly Chambers at 901 Airport Way. “The board opened almost a dozen new regulations projects at their May 15 meeting, and consideration of existing open regulations projects had to be postponed twice (April and May),” McConnell wrote in an email. The board’s addition of a third day to their July meeting is to make sure they are keeping up with both the applications and the regulations projects, McConnell said. Other matters considered by the board at the May 15 meeting: Handler permits and transportation regulations: Mlynarik sponsored a regulation meant to clarify cases where a handler permit cannot be issued: if a person had a felony conviction less than five years previous or if the person is on probation or parole for a felony. A permit would also be denied in cases where the applicant had a misdemeanor conviction of distributing marijuana, or is currently under indictment, or fails to disclose previous relevant criminal history. In the same regulation section, Mlynarik also seeks to simplify transportation transactions. Under current law, a licensee of one type cannot transport cannabis products to a licensee of another type. “We are trying to clean them up to allow more versatility for transporting product. Right now it’s pretty restricted,” Mlynarik said. “Right now (regulations) allow a cultivator to take marijuana to a retailer, but a retailer can’t take it back to the cultivator. The changes will allow more free flow between license types.” If it passes, all license types would be able to transfer to one another. Lowered tax on “shake” products: The board approved a measure asking the Alaska Department of Revenue to lower the tax currently applied to the shake, or flower of the cannabis plant. That measure is now awaiting approval by the Department of Revenue. If approved, a levied $15 tax per pound will drive down prices on concentrates, which also are often used for medical conditions and food items. Emmett, an industry representative on the board who has a manufacturing license, proposed the reduction. Currently, under the $50 per pound tax, the shake portion of the plant is often worked into stems and leaves mixtures because it’s not advantageous to sell. Ten pounds of flower make one pound of concentrate. At $50 tax per ounce, it adds up to a hefty sum, he said. “If you are already paying $8,000 for 10 pounds before you get any revenue, then it comes to a point that concentrate manufactures will destroy it (the flower) if its not up to the standard of the competing products on the market,” Emmett said. “A drop in the bucket is better than a dropout. If it’s not sold at all, it brings in no tax revenue.” Between now and the July public members can write to the Marijuana Mailbox to make comments on any proposed regulation or other matter related to cannabis operations. Naomi Klouda can be reached at [email protected]

Despite gov’s signature on Real ID bill, JBER issues July 10 deadline

Alaskans traveling to domestic destinations by air will not be required to carry Real ID until October 2020, if a waiver is granted as expected from the Department of Homeland Security following Gov. Bill Walker’s May 19 signature on a bill to bring the state into compliance with federal law. On the same day, however, Master Sgt. Jerimiah Brock, non-commissioned officer in charge of base access for Joint Base Elmendorf-Richardson in Anchorage, announced that as of July 10 an approved government identification such as a passport or Department of Defense clearance ID or a Real ID from a compliant state or will be required to get on base. Brock met with the media to explain the policy and urged the 14,000 contractors and other casual visitors to JBER to start the process of obtaining one of the approved forms of identification not yet available from the Alaska Division of Motor Vehicles. The effective date for Eielson Air Force Base in Fairbanks is currently June 6, in keeping with the deadline set by DHS for the state’s limited waiver expiration, said Eielson spokesman 2nd Lt. Kitsana R. Dounglomchan. All bases in Alaska will be following these guidelines, including Fort Wainwright and Fort Greeley, military spokesmen for both JBER and Eielson said, though neither Wainwright nor Greeley bases responded to the question of when by press time. As for the July 10 date for requiring Real ID from base entrants, Brock said JBER was following DHS guidelines, and giving the public a few weeks to get ready for the requirement. Alaskans will not be able to obtain the $40 driver’s license or $35 Real ID cards until January 2019. That’s because the DMV won’t begin “implementing infrastructure changes and equipment purchases (until) January 2018,” according to Walker spokesman Jonathon Taylor. It will take another year to be able to issue the ID cards, Taylor said. That means obtaining a passport or passport card is the next best option to get on base, at $110 per adult or $80 for youth under age 16, plus the $25 fee if purchased from a U.S. Post Office. A passport card, which is valid for land and sea access between the U.S., Canada and Mexico, costs $55. Both passports forms take 6 weeks to 8 weeks to process, or 2 to 3 if expedited for an additional $60 fee. After July 10, access to the base will be denied to visitors without approved ID according to Brock. Because visitors include service providers, day laborers, pizza delivery drivers and a myriad of others, Brock emphasized the need to start now obtaining a compliant ID. The military did create an exception; if a visitor is with a sponsor carrying Real ID compliant identification, they could access the base. But a random system meant to check visitors could still find the person to be out of compliance and that person would be ejected from the base, Brock said. “It’s been a real challenge for us every since Real ID came out,” Brock said. “People tend to wait for the last minute and we want to encourage them not to do that.” Taylor said his understanding is that once the waiver is granted from DHS, Alaskans should be able to enter all federal facilities with a state-issued ID. “We were assured there won’t be a gap in access to federal facilities once the state has its DHS waiver in hand,” Taylor said. “We’ll see if something changes after the next 10 days when we have the waiver.” But on May 22, Brock said JBER would continue to go by its July 10 deadline for the Real ID requirement on base. “We’re strictly following the guidance provided from the Department Homeland Security,” said Tech Sgt. Joshua Jasper, a non-commissioned officer in charge of media engagement, speaking for Brock. Walker signed House Bill 16 on May 19, an act that allows the Department of Administration, which houses DMV, to purchase equipment needed to process and produce Real ID cards. “Alaskans no longer have to wonder if their travel plans or ability to work will be in jeopardy,” Gov. Walker said when he signed HB 16. “This legislation balances compliance with federal law with the privacy concerns that some have noted by giving Alaskans the choice of having a Real ID-compliant license. The Department of Administration will move quickly to ensure that there are no disruptions in the everyday lives of our citizens.” Prior to that signing, the DMV and the Department of Administration was “barred from purchasing” equipment necessary to implement the stepped-up identification, Taylor said. It’s been a bit of a scramble blamed in part on the lack of legislative action on passing the bill so late in the session, Taylor said. Complying with the Real ID Act raised numerous privacy concerns from legislators but ultimately the federal pressure won out. “It was one of the first bills we introduced (in January) and they sat on it, maybe thinking that DHS (Department of Homeland Security) would let it slide or to flout the federal government,” he said. As a consequence, bill passed on May 17, the last day of the 121-day regular session and the very last day possible to comply with the federal deadline. If DHS grants the waiver to the State of Alaska, granting time to implement the ID changes at the DMV, then federal enforcement won’t begin until October 2020, Taylor said. “We should be hearing in the next 10 days on the waiver, and fully expect that it will be granted,” Taylor said on May 22. Congress passed the Real ID Act in 2005. But the federal government gave states until October 2020 to bring their citizens up to compliance with the law. Alaska was one of eight states that had been approved for waivers until this year, and needed to have legislation enacted in order to implement the ID system in time for the 2020 deadline. That waiver, once granted, will continue through October 2020 for all Alaskans who travel domestically. It means an ordinary Alaska driver’s license or ID will be accepted at airport security gates. International travel stays the same in requiring the U.S. passport. Where to get a passport Three U.S. Post Offices in Anchorage process passport applications during limited hours from 10 a.m. to 3 p.m.: the Sand Lake PO, East Chester PO and the Airport PO. Dawn Peppinger, manager of Alaska Post Office marketing, said several Passport Fairs will be offered at post offices around the state to help travelers get started. Fairs allow people to set an appointment to complete their application process and get photos taken. For first-time passport applicants, a form can be printed from online at prior to a visit to the post office where the signature portion is required. Renewing a passport can be done by mail or in person. Cost for a DMV Real ID will be considerably lower than a passport. DMV Spokesperson Minta Montalbo said the fee set for a compliant identification or driver’s license is an additional $20, so a compliant ID will cost $35 and a compliant DL will cost $40. The state-compliant Real IDs will be good for eight years as compared to the current five for non-compliant. Alaskans who do not wish to have a Real ID can choose a non-compliant driver’s license. “If people need to renew their identification or driver’s license prior to January 2019, they will receive the current ‘non-compliant’ version,” Montalbo said. In most outlying areas of Alaska, post offices will be the place to go for a passport. But in hub cities such as Bethel and Dillingham, city hall and the local campuses or school libraries also serve as official “passport receiving offices.” Nearby, Palmer’s Colony High School Library is one such place listed at In Dillingham, it’s the Bristol Bay Campus of the University of Alaska. In Bethel, it’s the city clerk’s office. The Seward Library is a passport acceptance office, as is Valdez’ Prince William Sound Community College. Naomi Klouda can be reached at [email protected]

Schools watch, wait as state misses budget deadline

Alaska’s school districts are in a quandary: all districts must by law give layoff notices to teachers before the Legislature lets them know whether or not the proposed $69 million in education cuts hold for fiscal year 2018 that starts July 1. One of the key problems highlights deadlines that must be met by state statute. Teachers are to be notified of layoffs by May 15 if they are non-tenured. For tenured teachers, notice must be given by the last day of school. Given the combined layoff numbers of Anchorage, Mat-Su, Juneau, Kenai and Fairbanks school districts alone, more than 700 teachers and staff faced a loss of their job this month. “If these notices aren’t made in time, we owe them a job the next school year,” said Todd Hess, director of human resources for the Anchorage School District. Meanwhile, in Juneau, the state’s operating budget for fiscal year 2018 is still under debate. The only real deadline state legislators face is the tick toward the end of the fiscal year on June 30. If the governor doesn’t receive the budget by then, state agencies shut down in their own operating budget unknowns. This hasn’t happened. But records of budgets past show it wasn’t always like this. The cart-before-the-horse sort of budgetary decision-making that stymies school districts now didn’t happen when the Alaska Legislature did its work within the 90 days session allotment. A glance back over the past 10 years shows the legislature voted and passed the operating budget by April 15 from 2007-10 and in 2013. One year, 2011, saw the operating budget drag out until June 5. And for the past two years, the Legislature has gone into extended sessions that stretched the daily budget drama for school districts and state employees alike past June. Another deadline experienced by schools comes in March when each of them submits their proposed budgets to local governments. Boroughs and municipalities then analyze the budget and incorporate them into their own budgets. Those budgets are also approved before the boroughs or districts hear from the Legislature. Budget mystery gets expensive ASD’s Hess is outspoken about what he calls the expensive, “fiscally irresponsible” bind. About 200 teachers were mailed their pink slips by Hess’s office this month — all without knowing whether the Legislature will agree to cut education by 5 percent in the Base Student Allocation as proposed by the Senate, which amounts to $69 million from the state budget. “It would be nice if the state appropriated this in a relatively sequential manner,” Hess said. “We’ve spent hundreds of thousands of dollars the last few years recruiting qualified, dedicated employees. And now we are laying them off.” This leaves the districts guest-estimating their 2018 budgets in the hole by the millions: • Anchorage School District estimates a loss of $26.9 million and the lay off of 200 teachers on top of the 99 layoffs this year, Superintendent Denna Bishop has said. • Fairbanks North Star Borough School District estimates a loss of $15.7 million and the layoff of 192 non-tenured teachers, Clare Morton of human resources said. • The Kenai Peninsula Borough School District estimates losses at $6.5 million and the layoff of 30 positions, said Dave Jones, school district superintendent. • Juneau School District has not laid off any teachers at this time, said JSD Chief of Staff Kirstin Bartlett. The budget assumes status quo with last year, “but we know that can change quickly,” she said, depending on how lawmakers decide to handle the proposed BSA cuts. Pink slips go out The Mat-Su Borough School District, the fastest growing school population in Alaska, sent out 18 pink slips to teachers and 130 to special education assistants or moved them to 75 percent time, according to Superintendent Monica Goyetta. Another 30 custodians were reduced in hours or eliminated; 14 school aides were cut and 14 records specialists went from full-time to part-time. Classroom sizes are already the largest in the state in the Mat-Su at 35 to 40 students per class in the secondary level, Goyette said. The Mat-Su Borough Assembly voted to come to the district’s rescue with an additional $1.59 million, but Borough Mayor Vern Halter vetoed it May 16, “citing the fiscal uncertainty of our times.” The veto returned the local funding amount for education to the same level as this year, $55.8 million. “The borough champions our schools,” he wrote. “But funding the increase this way isn’t prudent.” Now, budget staff will be back to amending an as-yet unknown budget. The Mat-Su policy is to try to hang onto the 900 teachers it takes to run its 47 schools. “Layoff notices went to 18 non-tenured teachers and staff reductions were part of the preliminary budget. But if the 5 percent cut holds, then there will be additional cuts,” Goyette said prior to the mayor’s veto. “Right now we are being cautiously optimistic.” A status quo budget level with last year creates a $10 million deficit, so the district had asked the borough Assembly for a 6 percent increase. They didn’t get that, but were approved for a 2.8 percent hike over last year until the mayor’s veto. An additional 5 percent reduction from the state’s BSA, as proposed in the Senate’s operating budget, would push Mat-Su to a $21 million deficit. With this much of a gap, district officials say they will be making more adjustments. Juneau’s policy this year is to refrain from handing out pink slips all together, said Chief of Staff Bartlett. “At this time, based on the information available, the Juneau School District has not issued layoff notices to staff,” she said. “We have a different approach, based on all the very many variables that exist at that moment. In a community like Juneau where we are fairly isolated, we don’t have any nearby districts where teaching jobs might be available. If we hand out notices (to teachers) they move out. And it’s not easy to recruit new teachers.” Instead, the district is proceeding with its annual process of submitting its $87 million budget, issuing contracts and hiring staff for the next school year. Significant changes to funding from the State of Alaska will require the Juneau Board of Education to revise its budget once the total funding levels are known, Bartlett said. In Anchorage, the logistics of the one of the largest school district in the nation requires a different process once state budget cuts are proposed, said Hess, the chief human resources officer. The letter from HR carefully explains the district is required to send out the notice, but that no layoff may be the result. By now, Anchorage teachers know the drill. “They watch this very closely,” Hess said. Nonetheless, “there’s a great deal of angst and some teachers start looking elsewhere,” he said. Forward-funding for two years would help solve the problem, Hess said. But that has not happened in a number of years. In Fairbanks, the numbers are almost as large as Anchorage’s layoff roster. FNSBSD slated 192 non-tenured teachers, six tenured and 76 support staff either for layoff or removal to other schools. “We have a process for recalling and for noticing,” said spokesperson Walker. “For us, we have a slight decrease in enrollment; that is part of our budget scenario as well.” HR Manager of Staffing and Operations Clare Morton said she issued 192 “blanket” pink slips. That’s more than a quarter of its 940 teachers. They did it through principals of each school to soften the anxiety. Each teacher is called into the office and handed the notice, with a chance to ask questions and receive information about where the district is at in terms of knowing its budget. “We’ve met all of our statutory obligations (to give teachers notice),” Morton said. “At this point, we’re issuing recalls or placing teachers in position.” FNSBSD has its “worse case scenario budget.” If the 5 percent cuts are approved in the operating budget by the Legislature, Fairbanks schools face a $15.7 million shortfall. “Everything gets hit, teachers, staff, supplies. We’re covered for our worse case budget scenario. At this point it’s a waiting game with both our borough and the state. If the cuts are restored, then we will start to reinstate, if we can,” Morton said. When teachers don’t know if they have a job next year, it’s “terrible for morale; it’s terrible for recruiting and retentions,” she said. “Who wants to go work for a school district that may tell you in a year you don’t have a job?” Morton, like all the districts, would like to see the budget settled earlier. “I don’t know if forward funding is going to happen again. That would be the gold mine,” she said. “Anything would be better than we are experiencing now.” Naomi Klouda can be reached at [email protected]

Like ‘80s recession, net migration turns negative

More than 20,000 people left Alaska than moved in over the past four years in what state economists are noting as a consistent negative trend in migration that likely will continue into the next year. Alaska typically gains 40,000 to 50,000 people per year from “in-migration,” said demographer Eddie Hunsinger. The state also loses about that many in most years. “The numbers cancel one another, and growth comes with natural increases (births),” Hunsinger said. From 2012-16, some 43,338 babies were born and added to population statistics. Another 16,556 people died. And, those moving to Alaska totaled to 172,758. With numbers like those — where births and migration to Alaska added more than 200,000 to the state’s population in four years — the Last Frontier gives the appearance of an assured statistical climb. “You look at the out-migration for those years, though,” Huntsinger said. “Every year we lost more people than we gained.” In 2012, 52,478 people moved out. The following year, 48,622. In 2014, out-migration was 46,125 and the next year was 45,725. A net loss in population gets economists’ attention, said state Labor and Workforce Development economist Neal Fried. As they cast for reasons, the usual culprits of a slow economy and layoffs show up. “Lots of businesses have experienced a slow down. That’s why we see the job losses we have,” Fried said. “One way (businesses) react is to be less active. They don’t replace those who leave through attrition, or they lay off workers.” Most people know sinking oil prices result in petroleum employment losses, which in turn tends to make people move out of Alaska, Fried added. But net migration losses marked the past several years also are ruled by another indicator: how well is the economy in the Lower 48 doing? Net migration losses for the past several years — even before oil prices started dropping in 2014 — show an exodus, Fried noted. The national economy has been growing at a fast clip, and could be causing more out-migrations as people seek improving opportunities Outside. The converse is true as well. When the economy tanks there, people migrate north to Alaska. For example, a U.S. recession officially began in December 2007 and ended in June 2009, Fried wrote in a report, “Alaska Migration and U.S. Recession Trends,” published in the October 2015 Alaska Economic Trends. The national unemployment rate was 9 percent or higher for two years and didn’t drop below 8 percent until 2013, Fried wrote. “Jobs deteriorated in three of the four states that regularly provide Alaska with its largest numbers of migrants.” Unemployment reached double digits in California, Oregon and Washington. Alaska gains the most in population from residents that move here from Texas, California, Oregon and Washington state. Between 2,000 to 3,000 people from those states came to Alaska each year for the past decade. Fried documented Alaska’s net migration gain was 3,009 in 2009, or the largest since 1992. In 2010, that jumped to 8,347, the largest since 1985. (Alaska also attracts 1,000 or more annually from Florida, Colorado, North Carolina, Georgia and Alabama.) The largest of all migration years to Alaska occurred in the 1970s and early 1980s. But, during the building of the Trans-Alaska Pipeline System, the unemployment rate in Alaska and the Lower 48 were roughly equal, Fried noted. Today, Alaska’s unemployment rate is higher than the rest of the nation, which hovers at about 4 percent. According to the federal Bureau of Labor Statistics announced in March, Alaska hit 6.4 percent unemployment, (which was lower than 6.7 percent in December 2016) This meant Alaska had the highest unemployment rate in the nation. Given Fried’s model for immigration and migration, it holds that Alaska should be in the midst of large out-migration years. And it is. As of March 2017, Alaska had calculated 25,169 unemployed people. “But you have to remember, those who just graduated from high school and are now looking for a job are part of that number. We can’t say how many are tied to the oil industry,” Fried said. “I think we can’t ignore what’s happening elsewhere in the country’s labor market.” Then, too, another turn in trends is upon us: Migration rates have fallen overall. “Americans are simply moving less than they did in the past. National mobility rates hit a historic low in 2011 and have risen only slightly since,” Fried wrote. Military spending is also a causal factor, demographer Hunsinger noted. The Adak Air Force Base closure in 1990 resulted in population loss, as did general military reductions following the end of the Cold War. Meanwhile, Alaska is about to gain another boom in the military population with the expansion at Eielson Air Force Base in Fairbanks. A total of 54 new aircraft and an estimated 2,765 personnel will be part of the upcoming deployment of two F-35 squadrons, with construction now underway and more than $500 million appropriated for Interior projects in the current federal fiscal year 2017. In the years 1989-93, while a recession rocked the Lower 48, Alaska came out of its oil-price induced recession through the unfortunate help of the massive spending related to the 1989 Exxon Valdez cleanup effort. Over four years from 1986-89, the state had negative net migration of more than 44,000. Back now to the net loss of 20,000 people in the past four years. The national economy is in recovery and with it and other trends, Alaska’s net migration turned negative in 2013 and 2014. The net loss for 2014 was 7,488 – the largest in the last 21 years. Last year, the net loss number was lower at 4,290. “It’s more likely that the 2014 drop was due to pent-up demand to leave Alaska that may have built up during the long recession but wasn’t feasible because the job market was so poor in the Lower 48 for so long,” Fried said. As for how the future bodes, Fried offers the economists’ tools: Look at the national economy’s employment health. Note Alaska’s layoffs and unemployment rate. Incorporate what military growth or downsize is discussed. Look at other industries. Then, of course, take a glance at the price of an oil barrel. For now, if you’ve predicted a continued negative net migration, you’d be about where he is, Fried said. Naomi Klouda can be reached at [email protected]

Arctic Council members tout cooperation as US hands off chair

U.S. Secretary of State Rex Tillerson assured Arctic leaders from around the globe gathered in Fairbanks May 11 that the United States is committed to advancing the work of the Arctic Council into the future but as yet, President Donald Trump hasn’t established a policy on how to deal with climate change. “We are appreciative that each of you has an important point of view, and you should know that we are taking the time to understand your concerns,” Tillerson said. “We’re not going to rush to make a decision. We’re going to work to make the right decision for the United States. The Arctic Council will continue to be an important platform as we deliberate on these (climate change) issues.” Tillerson made his remarks at the beginning of the 10th Arctic Council Ministerial Meeting at the Carlson Center in Fairbanks. Meanwhile, a group hosted by the Alaska World Affairs Council and Institute of the North gathered at the Anchorage Museum to watch a live stream of the meeting of the Fairbanks event. Tillerson, representing the U.S. chairmanship of the Arctic Council, opened the meeting, speaking to the foreign ministers of Russia, Canada, Finland, Sweden, Norway, Canada, Denmark and Iceland. The U.S. held the Arctic Council chairmanship for two years, a role to which Tillerson, former CEO of ExxonMobil, was appointed in the Trump Administration. At the conclusion of Thursday’s morning meeting, that chairmanship was handed over to Finland’s Foreign Minister Timo Soini for the next two years. During his two-day participation at talks in Fairbanks, Tillerson was successfully lobbied by Alaskans and others, including Chief Bill Erasmus of the Arctic Athabaskan Council, to sign the Agreement on Enhancing International Arctic Scientific Cooperation. Skeptics had expressed doubt he would do so, since the Trump administration has declined to take a stand on global warming. “It’s easy to dismiss Tillerson as a climate change denier because of his Exxon history,” said David Ramseur, author of the soon-to-be released Melting the Ice Curtain, which looks at Arctic climate change history. “But unlike his predecessors there, he has acknowledged global warning and the role carbon emissions play in contributing to it. The real challenge will be overcoming his boss’ denial of climate change and his administration’s regressive environmental policies.” The agreement is a multi-plank platform outlining ways the Arctic countries agree to cooperate efforts to solve mutual problems. It can be read here: “The United States had been privileged to lead the Arctic Council at a time when the Arctic region has been facing unprecedented change and challenges,” Tillerson said in opening. “I am grateful for the level of cooperation that the nations and the peoples of the Arctic have demonstrated as they continue to address these challenges.” “I want to affirm that the United States will continue to be an active member in this council,” he said. Pressing Arctic concerns, Tillerson said, include “advancing the welfare and living conditions of those who call the Arctic home; recognizing that each country has a strategic interest in being part of the Arctic’s future; and making sure that we continue to be vigilant in protecting the fragile environment.” Hearing from foreign ministers Foreign ministers, addressing Tillerson and the watching global community, emphasized Arctic issues in a slightly different vein. Both Norway foreign ministers and Sweden’s talked about the Arctic as a place where the focus needs to be on avoiding international political conflicts. Most all of the Arctic ministers also spoke on the need to balance resource development and economic needs with environmental protection. Norway’s Borge Brende emphasized that in a politically turbulent world, the “Arctic today is an area based on peace and stability. Our No. 1 priority is to make sure it stays this way.” The fear is that in the need for resources from the Arctic, global conflict between Russia and the U.S., North Korea or in the Middle East could spill over, he later elaborated on High North News, a Norwegian publication. The challenge is to “careful use of the resources and (to) protect the fragile environment. Rapid changes make new opportunities, yet it means needing even stronger cooperation. We need to make sure (the Arctic doesn’t) become sources of tension and conflict, but there is no guarantee for the future.” A strong Arctic Council should push back on such pressures, Brende said. Sweden joined Norway’s plea. Andres Jato said Sweden promotes economically, socially and environmentally sustainable development throughout the Arctic region. Sweden also works to ensure that the Arctic remains a secure region where political tensions are low. “For these objectives, we see a need of a strengthened Arctic Council,” Jato said. Norway’s Anniken Ramberg Krutnes spoke passionately about a “world marred with violence and conflict” where the Arctic is characterized by “low tension and cooperation based on respect for international law.” Krutnes noted Norway has dropped carbon emissions by 23 percent at the same time its GNP has grown by 58 percent. “Like no generation before us, we have the knowledge, technology, and capacity to save our planet,” Krutnes said. Her speech posed the question of what “mother earth” would say if she had a seat at the Fairbanks table. It might be “I’ve been your best fiend through the industrial revolution. I’ve done everything I can … and I have sent you no invoices, but it is about to change.” For one thing, it’s going to cost $90 trillion at the end of this century to bolster against the damage of a warming climate for businesses, communities and whole cities, she said. Russia’s Foreign Minister Sergei Lavrov spoke in more vague generalities on Arctic cooperation between indigenous peoples and industry. “(We) have been doing a lot with no conflict in the region,” he said. He talked about the Arctic as one of the “least explored areas on earth,” and the need for more scientific research and better telecommunication. The Canadian FM, Chrystia Freeland, had expressed hopes for a sit-down with Lavrov during the Arctic Council meeting, in Canadian press accounts, prior to traveling to Fairbanks. Not only are tensions high between Canada and Russia over investigations that seem to reveal Russian hacking of political individuals, Freeland is personally banned from visiting Russia due to the sanctions Canada leveled against Russia for its actions in the Crimea. During her time at the mic, Freeland spoke not about international tensions but about supporting strong Arctic communities, including advancing the rights of indigenous peoples and addressing mental wellness, education, and resilience to climate change. She also advocated for strong economic assistance to the region to ensure long-lasting jobs and better cooperation between indigenous science and traditional knowledge in decisions. Indigenous Saami, Inuit and a representative of the Russian Association of Indigenous Peoples of the North pled for reducing carbon outputs that are hitting the Arctic faster than any other areas of the earth. They found support for these causes in the newly named Arctic Council Chairman, Soini. At the close of the meeting, Tillerson turned the gavel over to Soini, minister of foreign affairs for Finland, which will take over chairmanship until 2019. Soini echoed other foreign ministers’ concerns about how new Arctic resources and transportation routes may attract interest that will not always be beneficial. “We should make sure that all human activity is sustainable, increasing opportunities to benefit the people who already live in the Arctic region, and certainly also the indigenous communities,” he said. Reaction to the Council’s work ahead Sens. Lisa Murkowski and Dan Sullivan took the Arctic Council’s meeting on Alaska soil as a significant step in gaining better awareness from the Trump administration for the climate change havoc in the state. Murkowski said she intended to discuss broadband, economic development, science and research, and community resilience with Tillerson. “This is a significant opportunity for Alaskans and people of the Arctic to showcase our ways of life, priorities, and perspectives to people from all over the world,” Murkowski said. Sullivan noted the big opportunity for “all eyes (to) be on Fairbanks this week as it hosts dignitaries from not only the eight Arctic nations, but from around the world for the 10th Arctic Council Ministerial.” Ramseur, who served under former Gov. Tony Knowles, Sen. Mark Begich and for Begich as Anchorage mayor, focused on American-Russian relations in the Arctic meeting of minds. “As U.S.-Russia relations deteriorate to some of their worst since the Cold War, managing a changing Arctic seems the best area of potential cooperation between us,” he told the Journal. “Alaska benefits from hosting the Arctic Council this week. But as Secretary Tillerson noted, it’s too early to tell what the Trump administration’s Arctic policies are and what they’ll mean for Alaskans.” Russia is opening dozens of mothballed military bases in the far north and increasing air incursions near Alaska, Ramseur noted. “A chief focus of the Arctic Council should be on militarization of the Arctic. The Council should expand its jurisdiction into that area to ensure safe and peaceful transportation and to avoid conflict,” he said. The smartest step the Trump administration could take to protect American interests in the Arctic and elsewhere is encourage the US Senate to ratify the international Law of the Sea treaty to put us on equal footing with 170 other countries, he said. Naomi Klouda can be reached at [email protected]

Consumer revenue keeps dropping as GCI reports 1Q results

General Communication Inc. took in $228 million in its first quarter of 2017, but a decline of nearly $7 million in consumer revenue and a $46.5 million accounting writedown for income taxes led it to post a $55.2 million net loss for the period. In the first quarter of 2017, GCI’s revenue from consumers fell to $107 million from $113.7 million in the same period for 2016. But those losses were somewhat offset by nearly $4 million in additional business revenue for the same time period. Following national trends, a growth in data streaming — movies and television from Netflix, Hulu and other entertainment sources — are outpacing consumer demand for cable television. GCI saw a further loss of 4,500 cable subscribers between first quarter 2016 and the same period in 2017. “Alaskans, just like our counterparts in the Lower 48, are getting more and more of their TV and film entertainment over the Internet instead of traditional pay-TV subscriptions,” said Kate Slyker, GCI chief marketing officer. This shows up in the gain of $8 million in Internet data revenue that helped offset a $3 million loss in consumer wireless revenue and a $4 million loss in cable revenue. The loss of nearly $7 million between 2017 and 2016 in the consumer category was partially offset by a gain of $3.6 million in business revenue. GCI has 4,000 fewer wireless lines in service after the first quarter of 2017 compared to a year ago and 6,500 fewer basic video subscribers. The number of HD/DVR boxes in service declined by 5,600. Postpaid business and consumer wireless lines declined by 7,100 lines (5,500 consumer and 1,600 business), which was offset somewhat by a gain of 3,900 prepaid wireless lines. An investment conference May 4 and a first-quarter 2017 financial report spell out other expenses that impacted GCI’s bottom line. GCI President and CEO Ron Duncan said additional expenses in 2017’s first quarter came in part because the sales, general and administrative expense line items have increased. The financial report shows a $3 million increase in labor and health insurance costs and a $2.4 million rise in professional and contract services. There was also a $4.2 million jump in transaction costs related to GCI’s purchase by Colorado-based Liberty Interactive Corp. In a deal announced April 4, GCI sold a controlling interest to Liberty Interactive Corp. for $1.12 billion. Currently, GCI is incurring expenses for advisory and legal fees as it completes transactions and filings with the Regulatory Commission of Alaska and the Department of Justice. “A majority of these costs have already been incurred or will be incurred regardless of whether the transactions are completed. It’s difficult to estimate those costs accurately ahead of time,” the financial report states. Liberty and GCI are unaffiliated companies that are currently operated independently of each other. Management at both GCI and Liberty may be required to “divert a disproportional amount of attention away from their respective day-to-day activities and operations. Yet the reorganization agreement imposes certain restrictive interim covenants on us,” according to the report. The restrictions may prevent GCI from changing employee benefits, making certain acquisitions or pursing certain business opportunities or making certain changes to CGI capital stock. Yet, during this transitional time, officials say GCI is committed to continuing service to Alaska customers and investing in Alaska infrastructure. The corporation’s vision is to become the leading technology and cloud services provider for “businesses and enterprise organizations throughout Alaska, the Pacific Northwest and beyond,” according to Leah Boltz, director of business marketing. Like other telecoms nationally, GCI sees the upswing in business and consumer needs for data storage. Most recently, the company acquired Northpoint Consulting, which provides network engineering and professional technology services to Fortune 500 companies throughout the Pacific Northwest. GCI also foresees some growth in the rural Alaska customer base. By the end of 2017, GCI will deliver broadband internet service to 10 additional communities in the Norton Sound and Kotzebue region, bringing the total number of communities served on the TERRA network to 84. Alaska’s ailing economy also has impacted GCI’s bottom line. Last year, GCI spent $1.1 million in the first quarter advocating for a fiscal solution as part of the Alaska’s Future coalition co-founded by Duncan. The ultimately unsuccessful campaign, at least for 2016, encouraged legislators to approve a fiscal plan and for the public to support such a plan. GCI reduced its capital expenditures for 2017 by 20 percent due to lack of a fiscal plan either through restructuring earnings from the Alaska Permanent Fund or income taxes. GCI recognized a $46 million tax bill in first quarter 2017, when the previous year’s taxes were just more than $1 million. But “the taxes in the financial statements for the first quarter are an accounting anomaly and are not related to the taxes that we actually pay. They also do not impact our free cash flow or Pro Forma EBITDA (earnings before interest, taxes, depreciation and amortization), which is how we measure the performance of the business,” said Kyle Jones, senior manager of GCI Finance. “Because of extensive investment, GCI has taken losses in the past that are resulting in a tax benefit this year.” The $46.5 million income tax expense combined with an $8.6 million loss from its operations led to the posting of a loss of more than $55 million. Alaska’s fiscal crisis is seriously impacting businesses, Duncan contended again on May 4 during his conference with investors. Job losses in the economy haven’t yet shown up in a collapse of the real estate market, Duncan noted. Nor is it known yet how many job losses resulted in an outward migration from Alaska. “But one thing is certain,” he said, “they are not taking their cable modems with them.” According to the Alaska Department of Labor statistics, Alaska has seen outward migration of more than 20,000 people from 2012-16. Now businesses are in hold mode, sitting on “a bit of a pause while we see what’s going on. We’ll see if they (the Legislature) come up with some solution that plugs the deficit hole. If they go home and do nothing again this year, the likelihood is that losses will accelerate,” Duncan told investors. Because Alaska is dependent on the oil industry along with state government spending, prolonged periods of low oil prices will adversely impact the economy. Duncan told investors at the May 4 meeting that despite losses, GCI is back in growth mode. Losses last year had to do with transitions. GCI was also “late with the launch of unlimited and was hit with a second round of national price reductions.” ^ Naomi Klouda can be reached at [email protected]


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