USDA loans reach $1.5B to rural Alaska over last five years

Alaska U.S. Department of Agriculture Rural Development staff convened in Anchorage Sept. 5 to hear from other government groups and local organizations about how layered economic development efforts can work together to benefit the outlying areas of the state.

USDA Rural Development Alaska Director Jim Nordlund said his staff of regional managers and program directors is tasked with work unparalleled Outside.

“Rural Alaska is probably the most challenging place in the country to create jobs and move the population forward in terms of their wellbeing,” Nordlund said.

He attributed much of the challenge to the simple fact that the programs — state, federal and otherwise — available to rural Alaskans often go untapped.

Despite communications, infrastructure and technology barriers, the USDA has loaned nearly $1.5 billion over the last five years to Alaska rural development projects. Nordlund said the department has a $200 billion loan portfolio nationwide, “That makes us one of the largest banks in the country.”

Alaska Department of Commerce, Community and Economic Development Deputy Commissioner Jon Bittner said the Division of Economic Development, which he oversees, is a central location for businesses looking to grow, or for business owners who just have questions, whether they are inquiring about assistance programs or state marketing campaigns.

“We’ll put you together with the people and tools you need to succeed,” Bittner told the Rural Development staff.

Gretchen Fauske, a business development officer with the Commerce Department said the Division of Economic Development uses the 10 Alaska Regional Development Organizations, or ARDORs, to connect particularly with rural areas.

“The ARDOR program is a huge boom for us in terms of understanding what’s going on in the state and being able to offer assistance when we can,” she said.

The state’s commercial fishing loan programs are a specific example of a wide range of loan programs the state offers to small businesses that might not qualify for other forms of financing, Bittner said.

The Division of Economic Development advertises 10 loan programs ranging from those looking to improve alternative energy conservation in commercial buildings or for the purchase of new, capital-intensive communications equipment for aircraft, among other things.

The fishing loans offer term options specified for each of a dozen industry-specific needs. To date, the state has provided more than $700 million to three generations of fishers through the loans, Bittner said.

“This is a bridge loan that works to get them from financially risky to financially secure,” he said.

When the Rural Development staff is searching for information of any kind about a specific village, Bittner referred them to the state Division of Community and Regional Affairs. DCRA offers unique cultural and day-to-day life insight that is impossible to find elsewhere, he said.

“They’re my one-stop shop for everything I need to know about a community from statistics and facts and things you can find through in-depth research, but also for on the ground information,” Bittner said.

Bittner and other panelists including Anchorage Economic Development Corp. President and CEO Bill Popp agreed that economic development and community development are separate, but intertwined entities, both needing the other to succeed.

For a community large or small to have a healthy economy it must also be safe, have working infrastructure, and generally a “good social fabric,” among other things, Popp said.

The USDA Rural Development group understands the relationship between community and economy and works to strengthen both through its work, Nordlund said.

U.S. Economic Development Administration representative Shirley Kelly, who sat on a panel of state and federal representatives with Bittner and Fauske, emphasized a focus on private sector benefit in the projects the agency approves.

The panel discussions were part of a three-day training agenda aimed at opening communication between USDA Rural Development staff and potential federal, state and local collaborators.

Kelly said the Economic Development Administration, or EDA, has a beneficial relationship with the State of Alaska agencies to spur business growth.

Through matching grants, the EDA has funneled more about $30 million into Alaska projects over the last five years. However, the yearly total has generally declined from $22 million in 2004 alone.

The EDA offers public infrastructure investment and one-time regional planning and technical assistance grants to public entities and select nonprofits. Applicants must develop a Comprehensive Economic Development Strategy document that highlights at least one of the agency’s six investment priorities. The six are: collaborative regional innovation, public-private partnerships, national strategic priorities, global competitiveness, environmentally sustainable development and economically distressed and underserved communities.

Kelly said most grants require a 50 percent match from the recipient, but the EDA will front up to 80 percent of project cost in areas of extreme economic distress, either locally or regionally.

“We look at both community-specific and the region to see which will give (applicants) the best grant rate,” she said.

EDA staff often uses, a database website with the specific economic qualifiers to used to determine exact match requirements, according to Kelly.

Grant recipients are then required to report the progress of their projects three, six and nine years after the award.

“It is a tracking of the jobs they are creating and the private investment that’s being invested in the communing or region because of the project,” Kelly said.

On a subsequent panel of local economic development leaders, Juneau Economic Development Council Executive Director Brian Holst encouraged the Rural Development staff to look for projects that play to a community’s strengths. He said 95 percent of job growth comes from existing industries.

“We put most of our focus on key industries in our region,” Holst said.

Popp echoed Holst’s sentiment, adding that good business ideas continuously leave Alaska because of the state’s unavoidable logistical and cost barriers. Harnessing a region’s economic strengths is vital for a project to be successful, he said.

09/11/2014 - 9:01am