Construction

State scraps revisions to workforce training regulations

State Labor Department officials have for now scrapped a plan to overhaul training requirements for aspiring plumbers, electricians and linemen following strong pushback from legislators and numerous construction trade groups. Department of Labor and Workforce Development Commissioner Tamika Ledbetter announced Feb. 7 that the department had suspended the pending regulations package to allow for additional stakeholder engagement on ways to strengthen career and technical training. The 30-page packet of regulatory revisions also addressed numerous other technical code changes, but the lion’s share of the more than 400 pages of public comments submitted to the state about the proposed changes were focused on the prospect of removing apprenticeship requirements for the highly technical trades. “My goal is to ensure that Alaskans are trained and prepared to participate in this economy,” Ledbetter said in a formal statement. “Many good ideas have already emerged from this process. I am confident that through respectful dialogue we will get the best possible outcome for the Alaskans that we serve.” This past Dec. 4, the department issued proposed regulations that would allow individuals seeking to become a journeyman plumber, electrician or lineman to qualify for the certificate of fitness exam for a given trade through 12,000 of general work experience in the field instead of the currently mandated 8,000 hours of work in a registered apprenticeship. Numerous other proposed changes dealt with building code issues and didn’t elicit the same response. Lawmakers in a Feb. 5 House Labor and Commerce Committee meeting said the plan would amount to a workaround that requires little documentation for contractors that want to offer journeyman opportunities while paying lower wages to inexperienced workers. Workers’ Compensation Division Director Grey Mitchell said the on-the-job training proposal would still require trainees to take the requisite certificate of fitness exam after accruing the 12,000 work hours to reach journeyman status. “Our goal was simple, to increase training opportunities and employment opportunities for individual Alaskans and give employers more options to train their future workforce,” Mitchell said. Rep. Zack Fields, D-Anchorage, a director for Laborers’ Local 341, said the proposal inadvertently undermines contractors that invested in apprenticeship programs because employers that offer the work experience route would not be subject to the same wage scales as companies that utilize a certified apprenticeship. It would encourage employers to hire out-of-state workers who would accept lower wages, according to Fields. “You’re setting up a puppy mill type of operation. This is not good public policy,” he said. Fields also said reaching the 12,000-hour threshold would be unrealistic for many trainees in the often seasonal fields. Lawmakers were also critical of the department’s decision to issue the changes without actively consulting industry stakeholders. According to Mitchell, 37 states don’t require apprenticeship experience to take a journeyman exam. That puts Alaskans at a competitive disadvantage, he said. “A lot of these adjustments are things that staff have basically heard from the public over a number of years,” said Mitchell, who spent much of his career in the department’s Labor Standards and Safety Division. An initial iteration of the regulations also allowed employers to supervise journeyman trainees at a 10-1 ratio, but that provision was stripped out before implementation of the whole package was suspended. Fields was one of 17 Republicans and Democrats the House and Senate and independent Rep. Dan Ortiz who signed a Jan. 13 letter to Ledbetter express their “strong opposition” to the proposed training regulations. Lawmakers argued the regulations would allow trainees to repeatedly perform basic tasks without adequate skill growth while still accruing training work hours. “We want good jobs with decent pay and excellent training for high-standard, quality work and safety,” the Jan. 13 letter states. “We urge you to withdraw these proposed regulations and stand with Alaska businesses and workers for whom the apprenticeship system is the foundation of workforce development.” Associated Builders and Contractors of Alaska President Amy Nibert said during the Feb. 5 hearing that the department should withdraw the regulations and engage stakeholders to resolve the issues that have been raised. Elwood Brehmer can be reached at [email protected]

Quake-free 2019 means dip in construction spending in ‘20

The amount of money flowing into Alaska’s construction industry is expected to dip to roughly $6.7 billion in 2020 but large resource projects on the horizon continue to fuel hope for industry leaders in the state. Associated General Contractors of Alaska Executive Director Alicia Siira said a forecasted decline of $500 million, or about 6.9 percent, in construction spending this year is largely due to the dwindling number of repair projects stemming from the 7.1 magnitude earthquake that struck Southcentral Alaska in November 2018. While the Anchorage and Matanuska-Susitna school districts are still working on long-term rehabilitations to several schools severely damaged by the earthquake, the vast majority of repairs to roads and private buildings have wrapped up. AGC of Alaska released its annual construction spending forecast Jan. 30 in Anchorage. The report was compiled by the Alaska research firm McDowell Group. Last year’s forecast for $7.2 billion of construction spending attributed approximately $200 million in government spending to earthquake-induced projects, with additional spending related to private-sector repairs. “We saw a spike last year due to unexpected earthquake repairs,” Siira said, adding that other sectors of the industry are expected to see mostly flat spending year-over-year. “Although the outlook is relatively flat, there are certainly some bright spots for construction. Overall, petroleum, oil and gas spending is still a bright spot; we’re seeing lots of activity up there. Mining is still going to be a big one, as well,” she said. Oil industry spending will lead the way with $2.9 billion in capital investments, which is a nearly $200 million year-over-year increase. The growth in oil activity — driven by large prospects being developed by ConocoPhillips and Oil Search, a new entrant to Alaska — will offset spending declines in the mining and utility sectors. Mining companies are expected to spend about $170 million on capital projects this year, which would be about $100 million less than 2019 as several expansion projects at producing mines are completed. New work this year includes a new tunnel at the underground, multi-metal Greens Creek mine near Juneau and an expansion of the processing facilities at the Pogo gold mine in the Interior, according to the report. The Department of Defense is also starting to wrap up years of work on projects at Interior Alaska installations and that is also contributing to the smaller, $6.7 billion spending forecast, according to Siira. Statewide national defense spending is pegged at about $500 million this year in the report, which is about $200 million less than 2019. Specifically, the lion’s share of $325 million allocated to a new radar system at Clear Air Force Station through 2021 was spent from 2017-19. Also, preparations for two new squadrons of F-35 fighters to Eielson Air Force Base, which included new hangars, flight simulators, and other facilities, are mostly complete as the first fighters are set to arrive later this year. Overall, public construction spending is expected to be nearly $2.3 billion this year, which is roughly a $300 million decrease from 2019. Activity in most of the subsets of public spending is generally anticipated to be flat, with the exception of Defense and earthquake projects declines. State and federal spending on transportation projects should be flat in the $1 billion range, according to the report. However, substantial work is set to begin again at Anchorage’s Port of Alaska after city officials approved a $42 million contract last summer for Seattle-based Pacific Pile and Marine to construct the first phase of a new petroleum and cement terminal at the port, which is the primary hub for inbound goods statewide. The new fuel and cement dock is the first of a series of large dock construction projects at the port in the coming years. While a final cost for the entirety of the port modernization work is not yet available, it will clearly be many hundreds of millions of dollars. Private sector construction spending will be mostly flat this year at about $4.4 billion, according to the report. Utility spending will also be down roughly $300 million to $150 million following the completion of GCI’s $140 million 5G upgrade, the report states. Construction industry impact While the winter release of the construction forecast is an annual tradition of sorts for industry leaders, this year’s report also highlights the significant influence the construction trades have on Alaska’s economy as a whole. According to McDowell Group, the industry provided $3.3 billion of direct and induced income across Alaska in 2018, representing more than 10 percent of the state’s total labor income for the year. On the employment side, state Labor Department figures have long pegged the construction industry as accounting for less than 5 percent of the state’s total workforce with an average of 15,000 to 17,000 jobs. Alaska’s three-year recession has put the reported construction workforce towards the bottom of that range of late. However, the Labor Department estimates do not include self-employed contractors, as they are much more difficult to quantify for state researchers because they are not required to file the same financial and insurance records with the state as larger companies are. Based on federal statistics, the McDowell Group report concluded that there were more than 7,300 self-employed construction workers in Alaska, bringing the total industry workforce to 23,600. That direct employment also supports another 17,700 jobs in the state, according to the report, meaning the industry helps provide more than 41,000 jobs in Alaska; about 9 percent of all employment in Alaska in 2018. Siira said the report gives her and other industry leaders more new, solid data that they can use to help advocate for their industry. “We are really excited to release this economic impact report. A study on the construction industry in Alaska has never been done to this level of detail, and the results exceeded our expectations. The construction industry is a major contributor to Alaska’s economy, and now we have the numbers to back it,” she said. Combined, the closely tied oil and gas and construction industries support approximately 82,000 jobs in the state providing more than $6.4 billion of income, according to McDowell Group reports. Oil and gas impacts The Alaska Oil and Gas Association released a similar economic impact report for its industry Jan. 29 that was also compiled by the firm. It’s worth noting that some of the labor data for the construction and oil and gas industries undoubtedly overlaps given oil companies provide a significant portion of the work done by construction companies in the state. The construction report also concluded that the state’s construction workforce has become a bit more Alaskan in recent years. Alaska residents comprised 82 percent of the state’s construction workforce in 2017; that’s up from 79 percent in 2013, which is also the statewide resident hire average across industries. “That’s a number we can really be proud of as an industry,” Siira said in reference to the increasing resident-hire rate. ^ Elwood Brehmer can be reached at [email protected]

Understanding the military’s role in Alaska’s economy

On May 13, 2005, Fairbanks residents awoke to a startling possibility: the loss of as much as a third of the borough’s population. The reason? The Department of Defense Base Realignment and Closure Commission, also known as BRAC, proposed to withdraw 2,821 troops from Eielson Air Force Base and transfer the aircraft of the 354th Fighter Wing to Nevada, Georgia, and Louisiana. This would mean an exodus of families, civilian employees, contractors, and the closure of untold numbers of businesses. BRACs are used by DoD to reorganize its bases for increased operational readiness and efficiency; Eielson made the list because of high operating costs. But Alaskans had long been told that our bases play an essential role in the nation’s defense strategy for the Pacific Region due to the ability to rapidly deploy to hotspots and were surprised that the military was changing course. The idea that Eielson AFB, which at the time of the proposed closure had been part of the Fairbanks area for 60 years, could be reduced to a skeleton military crew with what felt like a swiftly-made and ill-reasoned decision, was shocking. It spurred the community to action. Fairbanks Economic Development Corp. President and CEO Jim Dodson helped lead the effort. Back then, he was a local businessman who had been raised with an appreciation of the military, attending “in the home” military appreciation dinners as a young man and eventually hosting his own. He also served in the Special Forces during the Vietnam War, giving him perspective about how the military functions as an organization. Recognizing that his hometown’s economy would be devastated by the BRAC, Dodson and then-Mayor Jim Whittaker created a team to fight the closure, and enlisted Sen. Ted Stevens, Gen. Mark Hamilton (retired from the military, Hamilton was the president of the University of Alaska at the time), and other Alaska leaders in the fight. “I knew that if the BRAC went through, you’d see this community dry up and go away — 30 percent of the population, 38 percent of our payroll — that’s just too much of our community to lose,” Dodson said. “You would see businesses close, homes being foreclosed on. I didn't want that to happen to Fairbanks.” As part of the BRAC process, the commision in charge held a series of public meetings in communities with military bases on the realignment and closure list. The first meeting was in Fairbanks, where the commissioners were greeted by a crowd of more than 3,000 people, all wearing red T-shirts emblazoned with “America Needs Eielson.” The Pentagon, under intense pressure from the community and the congressional delegation, announced that fall that Eielson AFB would remain open. “We changed their minds,” Dodson said. Today, it’s a victory to look back on —  a story told to show how a small community fought for their future —  and won. Dodson says that the borough changed for the better after 2005. “Before, Senator Stevens was really the one making sure the military was in Alaska,” Dodson said. “But after the ‘Save Eielson’ campaign, we all recognized that Eielson AFB, Fort Wainwright, and Clear Air Force Base are a huge part of our economy. Since then, we have been very proactive in supporting the military’s presence in Fairbanks.” Although many Alaskans have been slow to recognize the importance of the military to Alaska, the economic impacts stretch back before statehood. During World War II and the early-Cold War, Americans migrating to the territory of Alaska reshaped the pre-statehood economy. By the mid-1950’s, as much as 40 to 45 percent of Alaska’s population was tied to defense operations as active duty, civilian support, contractors, and dependent family members. The military built roads, airfields, and ports still in civilian commercial use today, and invested heavily in scientific research at the University of Alaska. Prior to North Slope oil production, the military’s economic role dwarfed all other private industries, including mainstays like mining and fisheries. “The military drove the economy of Alaska in the ‘50s and ‘60s to an even greater degree than oil and gas does today,” says Nolan Klouda, Executive Director for the University of Alaska Center for Economic Development. “The economy completely centered around military in those days. People who came for mining and fishing lived the sourdough lifestyle — off the grid, single men for the most part. The military brought families to the state, and with them, mainstream America came to Alaska. They wanted housing, neighborhoods, schools, places to shop, and entertainment.” Today, Alaska’s economy and population are more diverse, but the military still plays a major role. The roughly 29,000 active duty, National Guard, reserve, and defense civilian personnel is the equivalent of about nine percent of the state’s workforce, though official employment figures do not generally count service members. In the 2017 Fiscal Year, the DoD spent more than $4,000 in Alaska for every resident — more than double the amount of the 2019 Permanent Fund Dividend. And yet, there’s still opportunity to grow the relationship for the benefit of all involved. Klouda is leading a study funded by the DoD Office of Economic Adjustment to better understand the role of the military in Alaska’s economy, and the opportunities on which Alaskans have yet to capitalize. The Alaska Defense Industry Resilience Initiative will identify barriers and vulnerabilities to defense sector firms; help decision-makers and community leaders better understand community sensitivities to changes in defense activity; identify types of assistance needed by defense firms; and identify assets, resources, and stakeholders to support resilience of defense firms. “"The military is a huge investor and employer in the state, and we need to remember that when we think about economic development strategies." says Klouda. Dodson agrees. “It’s one thing to get a military mission, but then you have to figure out how to make the most of it economically,” Dodson said. Although past military impacts were often seen in funding large-scale infrastructure improvements — rebuilding the railroad after WWII and building the Parks Highway to connect Anchorage and Fairbanks — today, technology offers additional economic opportunity. Nationally, the military has been a patron of technology development; the first computers and the internet are just two critical examples. More recently, military technology focused on unmanned aircraft systems, or UAS, has spurred business and educational opportunities in Alaska, along with the creation of the Alaska Center for UAS Integration at University of Alaska Fairbanks. Similarly, military research can spur innovation. Dodson points to the new Long Range Discrimination Radar, or LRDR, at Clear Air Force Station as an example. An LRDR is capable of detecting ballistic missiles en route to targets in the US or allied nations. It will also be gathering non-missile information, 99 percent of which will not be classified, according to Dodson. “There’s an opportunity for UAF or others to use that information to help Alaska understand weather patterns in the Arctic, migration of waterfowl, and more,” says Dodson. “It could have tremendous impacts to aviation. What if someone in a remote part of Alaska knew what the weather was going to be before they took off? It could really increase safety.” The DoD also provides funding to incentivize new technology, like the Small Business Innovation Research, or SBIR, grants for research and development, a boon for tech entrepreneurs. Alaska company Triverus has been part of the Navy R&D process for more than 15 years, beginning with a SBIR grant award in the early 2000s to develop a Mobile Cleaning, Recovery and Recycling System, or MCRRS. With support from the Navy, multiple iterations of the product were designed and tested before the final design was approved. Today, the Palmer-based company employs 22 people and was awarded a contract from the Navy to deliver 43 MCRRS units, each valued at $850,000. In addition to the military, the company also serves the aviation, oil and gas, and construction industries. “The military has to stay at the cutting edge, and constantly look for new solutions. That's a great thing if you're a tech-focused entrepreneur in Alaska,” says Klouda. Dodson also sees opportunity in increasing the number of Alaska companies supplying the military with goods and services, especially with two squadrons of F-35s (46 aircraft) coming to Eielson AFB. The first F-35 is scheduled to arrive April 2020, with the rest following over the course of two years. He estimates an increase of around 5,000 people once families and civilian contracts are factored in. Almost 15 years after the fight to save Eielson AFB succeeded, the future is bright. Instead of a dwindling population and crippled economy, the borough is buzzing with activity. “Eielson is going to be 50 percent larger than it was,” says Dodson. “That’s good economic impact, but you have to manage it right,” Dodson says. “It’s pretty huge.”

State settles Alaska hire suit for $50,000

The State of Alaska has paid $50,000 to settle a lawsuit challenging the validity of its resident hire law following a legal opinion from Attorney General Kevin Clarkson agreeing with the company that brought the suit earlier this year. The lawsuit was filed by the Southeast Alaska general contractor firm SECON in July in state Superior Court alleging that the “Alaska hire” law requiring contractors working on state and locally funded projects to utilize at least 90 percent resident labor under certain economic conditions violates the Privileges and Immunities and Commerce clauses of the U.S. Constitution and the Equal Protection Clause of the Alaska Constitution. Juneau-based SECON is a subsidiary of Colaska Inc., which is part of the larger Colas USA group of construction companies. The company routinely works on Southeast Alaska road projects. Ricky Kirby, a seasonal SECON paving equipment operator from Yakima, Wash., was also named as a plaintiff in the suit. On Oct. 3 Clarkson issued a formal opinion at the behest of Gov. Michael J. Dunleavy indicating he also believes that laws intended to economically benefit Alaska residents at the expense of nonresidents violates the Privileges and Immunities Clause of the U.S. Constitution. Similarly, provisions in the current law could at times put Alaskans from one region of the state ahead of others when being considered for certain work, meaning it violates the Alaska Constitution’s Equal Rights, Opportunities, and Protection Clause, according to Clarkson. The $50,000 settlement, dated Nov. 8, ends the lawsuit in which SECON was seeking to have $158,670 of fines issued by the state Labor Department covering 18 Alaska hire violations since 2017 vacated or repaid. According to SECON’s complaint, the union contractor is managed by Alaskans and has an 85 percent resident workforce but is periodically forced to hire Outside laborers such as Kirby to work on its projects in the state. As it stands, state law requires that staffing for state or locally funded public works projects be conducted with a 90 percent Alaska resident hire requirement by trade when a given project is in a region of the state deemed to be a Zone of Underemployment by the Labor Department commissioner. A region of the state can be considered a Zone of Underemployment if the unemployment rate for the area averaged 10 percent more than the national unemployment rate over the prior 12-month period. The entirety of Alaska can also be deemed a Zone of Underemployment if the criteria are met statewide. Labor Commissioner Tamika Ledbetter found all of Alaska to be a Zone of Underemployment in the most recent employment preference determination issued by the department June 13. The determination was effective through June 2021 for 21 trades until Clarkson’s opinion, which recommended the state stop enforcing the law. Nonresident workers accounted for 17.9 percent of the state’s construction labor force in 2017, according the state Labor Department. A common lack of economic opportunities and the subsistence lifestyle prevalent in rural Alaska, and the state’s highly seasonal industries such as fishing and tourism have historically combined to give the state a significantly higher unemployment rate than the rest of the country. While settling the case means the true constitutionality of the Alaska hire law remains unsettled, some state lawmakers are unhappy with the Dunleavy administration’s decision to stop enforcing a law that otherwise remains remains on the books. Republican Senate President Cathy Giessel sent a letter to Clarkson Oct. 22 insisting it is his duty as the Alaska’s top lawyer to defend the state’s laws until they have been thrown out in court. Clarkson responded Oct. 29 writing that the administration wants Alaskans to work on projects in the state, but also stressing that he took an oath to defend the state and federal constitutions first. Senate Labor and Commerce Committee chair Lora Reinbold, R-Eagle River, said in a brief interview that she had not yet discussed with members of her committee whether they should look into the Alaska hire situation. Reinbold, who is a supporter of many of the administration’s conservative policies, withheld an opinion on Clarkson’s position, saying she needed to research it further leading up to the legislative session that starts Jan. 21. The House Labor and Commerce Committee is currently without a leader because of changes in committee assignments, but Labor and Commerce member Rep. Zack Fields, D-Anchorage, was blunt in his assessment of the situation, saying the issue is one he hopes the Legislature examines closely. “When you have a law that’s been passed that hadn’t even previously been challenged, it’s pretty outrageous for an administration to unilaterally not enforce it,” Fields said. “It fundamentally challenges the balance of powers between the executive, legislative and the judiciary.” The development director for Laborers International Union of North America Local 341, Fields said the decision to not enforce a statute that is still on the books leaves impacted businesses in an untenable situation because the next governor could, and likely would, revert the state’s policy back to enforcing Alaska hire requirements. “The downsides for the State of Alaska and workers are obvious, but I think it is a very fair point that there are a lot of downsides for businesses, too, who are just trying to make reasonable investment decisions, recognizing that they have a graying workforce and that’s particularly true for the construction and oil and gas industries,” he said. For his part, Dunleavy said in an interview that his administration is working on alternative ways to encourage companies to hire more Alaskans on projects in the state. “We’re having discussions about how we can incentivize Alaska hire, how we can make that work without running afoul of the Commerce Clause issue,” Dunleavy said. “We really believe in Alaska hire. We’re doing everything we can with our economic development team to bring jobs up here, industries up here that have jobs.” The governor said he needed to talk further with Clarkson about whether the administration should submit legislation to repeal the current Alaska hire statutes. Elwood Brehmer can be reached at [email protected]

Alaska hire preference in limbo after AG drops defense

Editor's note: This story has been updated with a statement from Associated General Contractors of Alaska Executive Director Alicia Siira. Alaska’s local hire requirements are a touchy subject these days. On one hand, they are a means to ensure the residents of a state with historically high unemployment aren’t passed over when often large, nationwide construction firms are looking for help. At the same time, though, several iterations of Alaska hire laws have been struck down as unconstitutional, which appears to have led Attorney General Kevin Clarkson to conclude the current in-state hire mandates for many public projects are illegal, too. Clarkson issued a formal legal opinion Oct. 3 contending the state’s Alaska hire statute violates portions of both the U.S. and Alaska constitutions. In the 11-page opinion written for Gov. Michael J. Dunleavy, Clarkson wrote that laws intended to economically benefit Alaska residents at the expense of nonresidents violates the Privileges and Immunities Clause of the U.S. Constitution. Similarly, provisions in the current law could at times put Alaskans from one region of the state ahead of others when being considered for certain work, meaning it violates the Alaska Constitution’s Equal Rights, Opportunities, and Protection Clause, according to Clarkson. Clarkson’s interpretation of the Alaska hire law was published as the state Department of Labor and Workforce Development was being sued by SECON, a Juneau-based general contractor firm that works extensively on government-funded Southeast road projects as well as Ricky Kirby, a seasonal SECON paving equipment operator from Yakima, Wash. The Labor Department implements the Alaska hire law. SECON is a subsidiary of Colaska Inc., which is part of the larger Colas USA group of construction companies. While the law was being challenged, the case had not been adjudicated and state Superior Court Judge Peter Ramgren had not indicated how he might rule on the complaint, according to court records. Filed in July, the lawsuit alleges the state’s residential hiring preference violates the Privileges and Immunities and Commerce clauses of the U.S. Constitution and the Equal Protection Clause of the Alaska Constitution. SECON was fined by the Labor Department and paid $3,678 in July 2017 for violating the Alaska hire law while working on a public water system project; the company was additionally fined 17 separate times from Feb. 15 to May 20 for not meeting resident hire thresholds on a host of projects it worked on earlier this year, according to the complaint. The 2019 fines totaled $158,670. The complaint asserts that SECON is a union contractor managed by Alaskans and has an 85 percent resident workforce but is periodically forced to hire Outside laborers such as Kirby to work on its projects in the state. As it stands, state law requires that staffing for state or locally funded public works projects be conducted with a 90 percent Alaska resident hire requirement by trade when a given project is in a region of the state deemed to be a Zone of Underemployment by the Labor Department commissioner. A region of the state can be considered a Zone of Underemployment if the unemployment rate for the area averaged 10 percent more than the national unemployment rate over the prior 12-month period. The entirety of Alaska can also be deemed a Zone of Underemployment if the criteria are met statewide. Labor Commissioner Tamika Ledbetter found all of Alaska to be a Zone of Underemployment in the most recent employment preference determination issued by the department June 13. The determination was effective through June 30, 2021, for 21 trades — boilermakers to culinary workers to carpenters and tugboat workers — until Clarkson’s opinion. The subsistence lifestyle and lack of economic opportunities prevalent in rural Alaska and the state’s highly seasonal industries have historically combined to give the state a significantly higher unemployment rate than the rest of the country. The resident hire preference was suspended in 2013 under former Gov. Sean Parnell when the Lower 48 was continuing to recover from the Great Recession that largely missed Alaska. It was reinstated statewide in June 2015 by Gov. Bill Walker’s administration after the national unemployment rate had fallen below Alaska’s, which at the time was mostly holding steady. According to the most recent data available from the Labor Department, nonresidents made up 20.9 percent of the Alaska workforce in 2017. Kirby’s and SECON’s attorney Michael Geraghty wrote in the complaint that the state cannot justify upholding the Alaska hire law because there is no good reason for treating nonresidents differently than Alaskans. Discriminating against nonresidents won’t improve the employment situation of residents because workers from Outside “are not the ‘peculiar source of the evil at which the statute is aimed,’” Geraghty wrote, citing a 1978 U.S. Supreme Court ruling that struck down a prior Alaska hire law focused at oil industry employment based on the Privileges and Immunities Clause. “The residency law, thus, unlawfully discriminates against out-of-state individuals like Kirby who have the requisite skill, knowledge, and experience to work on publicly funded projects in Alaska, but for the residency law,” the complaint further contends. Geraghty was attorney general for Alaska from 2012-14 under former Gov. Sean Parnell. Kirby, according to the complaint, can make more money working on Alaska projects for roughly half the year than he can working in his home state of Washington for the same amount of time. Kirby is a member of the International Union of Operating Engineers, Local 302, which covers Alaska, Washington and Idaho. Local 302 Juneau district representative Corey Baxter said in an interview that union contractors such as SECON call him when they need workers for projects in the area. Baxter subsequently calls Local 302 union halls in Anchorage and Fairbanks if there are not enough Southeast workers to fill projects. However, he said it can be a challenge to get workers to temporarily relocate, particularly in summer when work is plentiful. “We can’t force somebody to come down to help,” Baxter said. He added that union officials always try to hire in state when they can, but sometimes they have to go Outside to meet the labor demand. SECON’s complaint lays out a similar scenario. The state does have a detailed process by which companies can have the local hire requirement waived on a case-by-case basis; it includes advertising the positions that need to be filled statewide for at least three days, according to an informational paper published by the Labor Department. The Associated General Contractors of Alaska, a trade group that represents numerous contractors subject to Alaska hire requirements, issued the following statement from Executive Director Alicia Siira. "In the construction industry, few people believe in local and Alaska hire more than we do," she said. "This determination will not open the floodgates to Outside contractors coming to Alaska. It costs more for a contractor to import labor from the Lower 48 than it does to hire local. The public projects that the Alaska hire law applies to have a prevailing wage requirement — workers are paid at published rates. These requirements also include paying $100 per day to workers whose domicile is more than a specific number of miles away from the job. There are not margins on construction projects to allow contractors to hire Outside labor unless it's absolutely necessary because workers are not available. And why would they? The excellent training Alaskans recieve in the construction trades results in some of the best trained workers in the country, and our industry wants to make sure they stay in Alaska." Clarkson wrote in his opinion that just because the Alaska hire law is based on good intentions, that doesn’t mean it passes legal muster. “Despite its popularity among some Alaskans, Alaska hire has not fared well in the courts,” also referencing the 1978 Supreme Court ruling and other rulings by the Alaska Supreme Court against broader Alaska hire laws that have since been repealed. “The U.S. Supreme Court has long held that the Privileges and Immunities Clause ‘plainly and unmistakably secures and protects the right of a citizen of one state to pass into any other state of the union for the purpose of engaging in lawful commerce, trade, or business without molestation,’” Clarkson wrote, citing the same U.S. Supreme Court precedent as Geraghty. Department of Law spokeswoman Cori Mills wrote via email Oct. 29 that the state was close to finalizing a settlement with SECON. But some legislators are not keen on the attorney general not defending the laws they’ve passed. House State Affairs Committee co-chair Rep. Zack Fields, D-Anchorage, called Clarkson’s opinion “politically charged” in a statement issued shortly after it was published. He acknowledged that courts have struck down local hire mandates for privately funded projects, but noted that, except for Dunleavy, both Democrat and Republican gubernatorial administrations since 1986 have implemented Alaska hire laws. Senate President Cathy Giessel, R-Anchorage, sent a letter to Clarkson Oct. 22 in which she wrote that his opinion “caused consternation” to her and many of her constituents. The State of Alaska has long tried to find a balance between being unjustifiably parochial and supporting employment for Alaskans, according to Giessel. She wrote that Alaska hire laws have been “tested and refined through the judicial process” but the current version has not been thrown out in court. Giessel stressed that as attorney general, Clarkson has a constitutional duty to enforce and defend the laws of the state, including Alaska hire. “Your ad hoc determination that the laws of our land, which remain untested in the courts, are unconstitutional is a diversion into the lawmaking field that is rightfully the purview of this branch of government (the Legislature). I respectfully urge you to cease a law creation process that appears to be done by executive fiat,” she wrote. “I also respectfully urge you to modify or revoke your Oct. 3 opinion in recognition of the constitutional obligation of the executive branch to faithfully execute the laws of this state enacted by the Legislature.” Clarkson responded to the Senate President Oct. 29, writing in a four-page letter that he and Dunleavy share her desire to see Alaskans working on projects in the state, but stressed that he took an oath of office to defend the state and federal constitutions. "Nowhere in law is the attorney general charged with a duty to defend every statute, however plainly unconstutitional it may be," Clarkson wrote, contending Alaska Supreme Court precedent gives the attorney general the discretion to handle the state's legal matters as he or she deems appropriate. At this point it’s unclear if Dunleavy, who has long stressed a need for state officials to follow the laws of the state — most often regarding the Permanent Fund dividend — will seek to repeal Alaska hire in the upcoming session. A spokesman for Dunleavy did not respond to questions in time for this story. Elwood Brehmer can be reached at [email protected]

Sullivan seeks answers on missile defense plans

Sen. Dan Sullivan wants Alaskan contractors to know that the more than $200 million expansion project at Fort Greely is moving ahead “full bore,” despite mixed messages coming out of the Pentagon. The Associated Press reported in late August that Department of Defense officials decided to cancel a contract with Boeing to develop a new “kill vehicle” for intercontinental ballistic missile, or ICBM, interceptors housed at Fort Greely because of problems with the aerospace giant’s current design and related cost issues. The contract was officially canceled Aug. 22. Fort Greely is at the center of the country’s ground-based missile defense system with 40 of the 44 active ICBM interceptors housed in underground silos at the Interior Alaska Army installation. Sullivan said in an Aug. 29 meeting with the Journal that he wanted to quell concerns he heard after the news of the kill vehicle contract broke from those working on a project to expand the number of interceptors at Fort Greely from 40 to 60, as Congress directed in the 2018 National Defense Authorization Act. After making calls to Secretary of Defense Mark T. Esper, Missile Defense Agency Director Vice Adm. Jon Hill and other senior Pentagon officials, Sullivan said he was assured the expansion work at Fort Greely wouldn’t be stopped along with the kill vehicle contract. “We continue and will continue into the future to be the cornerstone of America’s missile defense — no ifs, ands or buts,” Sullivan said of Alaska and Fort Greely. “They got silos, the need to put in what they call sleeves; the need to wire them… That’s continuing. That’s a $200 million project, just that expansion. It’s not done yet but it’s getting close.” In addition to the work at Fort Greely, the Missile Defense Agency is in the midst of spending another $325 million over six years at Clear Air Force Station just south of Fairbanks. Clear is a radar base near Nenana along the Parks Highway. The money there is going towards installing a new power plant and missile detection radar system. Clear Air Force Station is on the electrical grid; however, the upgraded power plant is a backup facility that will be protected against electromagnetic pulse weapons that could be used to render electrical systems useless, according to former MDA Director Vice Admiral James Syring. When the long range discrimination radar being installed at Clear —expected to be done in the early 2020s — is done it will be “the most sophisticated ground-based radar system on planet Earth,” according to Sullivan, and is focused on detecting ballistic missile threats. As for the kill vehicles on the interceptors, he said Pentagon officials want updated kill vehicles to match the ever-evolving threats from adversarial nations and a request for proposals should be let soon to the aerospace companies capable of performing the work. Sullivan added that he was assured the new kill vehicles and associated rocket booster are compatible with the infrastructure at Fort Greely. He planned to get detailed, classified briefings on the status of the ICBM interceptor program when he returned to Washington, D.C., in September after spending most of the August recess in Alaska followed by a week of training at Camp LeJeune in North Carolina as part of his duties as a colonel in the Marine Corps Reserve. Sullivan serves on the Senate Armed Services Committee and chairs the Readiness Subcommittee. To him, the worries over whether or not the work at Fort Greely was going to continue came down to a poorly executed communications strategy on the part of Pentagon officials. The incomplete information that came out initially resulted in the ballistic missile interceptors at Fort Greely and California’s Vandenberg Air Force Base being conflated with work to oppose the newer, hypersonic missiles China and Russia are believed to be developing. The hypersonic weapons fly at a faster speed and on a much lower trajectory than ICBMs and therefore are beyond what the current interceptors can respond to, according to Sullivan. He said the interceptors at Fort Greely are meant to counter threats from “rogue nations” such as North Korea. “I was very mad about the rollout. I was not given a heads up about it but I knew they were looking at it,” he said about the interceptor redesign. He highlighted the significance of a successful test in March when two ICBM interceptors were launched from Vandenberg and destroyed the faux warhead exactly as prescribed. The first defense missile struck the dummy threat, while the second honed in on the largest piece of leftover debris and destroyed it. Sullivan described it as “a bullet hitting a bullet in space, essentially.” There are also plans to increase the frequency of missile tests at the Pacific Spaceport Complex in Kodiak. In July, the Israel Missile Defense Organization and the MDA conducted a successful test of the Israeli Arrow-3 Weapon System at Kodiak, according to a statement from the MDA. “Maybe at the end of the day this was the smart thing to do,” he said of the interceptor changes, “but what I’ve been able to tell people here is that on the construction that’s ongoing, which is kind of all over, and the continued use of Kodiak as a really important place, we’re full bore.” Milcon funding to border wall Secretary of Defense Esper issued a memo to Defense agency leaders Sept. 3 that included a long list of military construction projects that will be deferred as money is pulled from them to fulfill President Donald Trump’s emergency declaration to build a $3.6 billion wall along the southern border with Mexico. Trump issued the declaration in February and projects at Fort Greely Eielson Air Force Base near Fairbanks will have $102 million pulled from them to support wall construction. At Eielson, $74 million to repair two of the base’s central heat and power plan boilers and $19 million to upgrade the combat arms training and maintenance, or CATM, range will be redirected. At Fort Greely, $8 million to support expansion of the installation’s Missile Field No. 1 will also be sent south. However, the contracts for that work was not scheduled to be awarded until early 2020 and early 2021, according to Esper’s memo. Sullivan has been critical of congressional Democrats for blocking attempts to fund additional border security through the normal appropriations process. His spokesman, Mike Anderson, wrote via email that the 2020 National Defense Authorization Act, which passed the Senate in June 27 on an 86-8 vote, authorizes $3.6 billion to restore the repurposed funds. “Going forward, Sen. Sullivan will work with his colleagues on the Appropriations committees to fund this initiative,” Anderson wrote. Elwood Brehmer can be reached at [email protected]

Interior housing on track to meet demand from F-35 arrivals

Interior Alaska leaders believe early concerns have been quelled over the ability of communities around the Eielson Air Force Base to comfortably absorb the pending influx of thousands of personnel to the region linked to the arrival of two F-35 fighter squadrons. Fairbanks North Star Borough Mayor Bryce Ward said in an interview that an analysis of the housing market around the Fairbanks-area base combined with the building activity he’s observed give him confidence that finding homes for the roughly 3,300 people about to move to the area won’t be a problem. Ward was formerly the mayor of North Pole, the closest city to Eielson, and also has his own general contracting business there. He noted that the Eielson Air Force Base Regional Growth Plan commissioned by the borough and published last fall concluded there would be a need for 532 new housing units around North Pole by 2022 to meet normal growth as well as the F-35 driven demand. The federal government’s study of the impacts of locating two squadrons of F-35s — 54 in total — at Eielson found there would be a need for 974 units to house F-35-related personnel and their families. The first F-35 is scheduled to arrive at Eielson in April 2020 with the rest following over about two years, according to a spokesman for the base. Eielson Public Affairs Officer 1st Lt. Kitsana Dounglomchan wrote via email that a small number of personnel dedicated to the F-35s have already started arriving and the number of new personnel and their families will keep ramping up in preparation for the first aircraft in less than a year. While the Air Force is spending approximately $550 million to prepare the base for the hi-tech, fifth-generation fighters, new base housing is not being built. Dounglomchan said the Air Force is relying on the homes currently on the base as well as the local communities to support the new personnel. “To build the numbers that they were talking about would’ve been a huge undertaking,” Ward said. However, the Air Force’s study presented raw figures and did not account for the specific conditions of the borough’s housing market. State budget cuts and the related three-year statewide recession have led some folks to leave the borough, which has led to more available housing, Ward said. The area also went through about 10 years of a depressed housing market — the combination of the Great Recession and multiple rounds of discussions about shrinking Eielson drastically or outright closing the base. The new stability in the market has encouraged builders, he said. There were more than 100 housing units built in the borough last year beyond what is normally built during a summer construction season, according to Ward, who added there has been increased activity by developers from outside the area, mostly in the multi-family realm. “We exceeded the number of units that we needed to build last year in order to meet our objective and I think we’re on target again for this year to be a very productive year for housing,” he said. Fairbanks Economic Development Corp. CEO Jim Dodson thinks the community will be able to absorb the new residents without a problem, “but it might not be in the North Pole area,” Dodson said. Upwards of 80 percent of current Eielson personnel that live off base reside in the North Pole area and its presumed the new arrivals will similarly want to live close to work. Dodson and Ward both said most new home construction, particularly around North Pole, has been small developments. “Guys that normally build one house (per year) are maybe building two or three a year. We’ve got lots of mom-and-pop type outfits,” Ward said. Because there is now little worry of a housing shortage, borough officials are focused on making sure the new homes are built to a standard that people want to live in, Ward said, adding that it’s a perpetual issue across much of Alaska. “A lot of our efforts have been driven to address the issues of quality and efficiency and to really make sure that the market is able to address those concerns,” he said. The quality of the construction is of particular importance because many of the new active-duty personnel will be coming from warm-weather bases that already have F-35s such as Luke Air Force Base in Arizona, and they likely won’t be prepared to deal with an Interior Alaska winter in a poorly constructed home, Ward emphasized. He stressed further that he’s actually more worried about too much building once all the new members of the community are settled given the early talk about needing nearly 1,000 new housing units to meet the demand. “A couple hundred homes is a big number for us but for some of these larger contractors they could throw up 100 houses in a summer pretty easy; that could be detrimental to the overall economy and the housing market if you overbuild,” Ward said. Elwood Brehmer can be reached at [email protected]

Span Alaska to construct new freight terminal

One of Alaska’s largest shipping companies is investing in the state. Span Alaska Transportation Inc. announced Feb. 15 that it is constructing a new, 54,000 square-foot freight terminal in West Anchorage that will serve as the company’s primary service center. Span bills itself as the largest freight forwarder and less-than-container load shipper in the state. The company, which was purchased by integrated shipper Matson Logistics in 2016, handles roughly 180,000 shipments annually totaling more than 400 million pounds, according to President Tom Souply. “Anything that has a need to get from the Lower 48 up in to Alaska — on the average we’re running 160 to 200 containers per week to the Alaska market,” Souply said of the freight Span handles. The new facility will allow Span to consolidate its operations and provide greater efficiencies. Span currently works out of two South Anchorage warehouses. Souply said the new building, located off Electron Drive near Chugach Electric Association’s Southcentral Power Project, exemplifies Span’s commitment to the state. “We’re in it for the long run here, we really are. We’ve been in Alaska since ’78; 40 years we’ve been doing this. We know there’s going go to be highs and lows and we’ve all come together as a community here over the last three years dealing with the recession,” Souply said. “We’re really bullish on what we’re doing here. Our commitment here is a major commitment to Alaska, to our customers and to our employees.” Foundation work has begun and vertical construction is expected to start in the coming weeks. All 80 current Span employees will move into the new building once it is complete; and that is scheduled for the fourth quarter of 2019, according to Souply. “As the economy continues to recover we will have the capacity to grow our business which will allow us to add additional employment,” he added. The company declined to disclose a price on the project, which is being led by Anchorage-based Watterson Construction. Municipal records list the roughly 16-acre parcel as currently being appraised at nearly $6.4 million. Municipal officials have told the company “it’s the largest non-government related project for 2019” in Anchorage, according to Souply. In addition to bringing all of its work under one roof, which will help avoid duplication, he said the new facility will have an 8,100 square-foot covered area to protect flatbed freight loads, a larger loading dock and improved security. “We’re going to have everything we need to be as efficient and effective as possible, including creating a four-bay vehicle maintenance shop that will allow us to be very nimble when it comes to maintenance and repairs. We’ll be able to do that on-site; that’s a big piece for us,” he said. Elwood Brehmer can be reached at [email protected]

Construction spending forecasted to rise 10%

The coming year should be better than last for Alaska’s construction industry and the state economy as a whole. Construction spending across the state is expected to increase about 10 percent this year over last to a grand total of more than $7.2 billion, according to the Associated General Contractors of Alaska’s annual industry forecast. AGC of Alaska Executive Director Alicia Siira said the trade group is “cautiously optimistic” about 2019 after some very tough times. “Our industry has really taken a beating over the past few years with this recession and we could really use some good news,” Siira said. “We’re hopeful this trend continues and we start to see some dollars moving through the state to help support the economy.” Alaska’s construction workforce averaged a little more than 15,000 workers the past two years and employment levels that low hadn’t been seen since 2001-02, according to state Labor Department data. The industry was doubly hit by Alaska’s three-year oil price-induced recession. Not only did oil companies sharply curtail capital spending, but the state also cut its capital budget allocations from more than $2 billion to less than $200 million in recent years. Restoring some of that state capital spending is a top priority for AGC. State economists expect Alaska to officially climb out of the recession towards the end of the year. The construction industry is correspondingly expected to add roughly 900 jobs in 2019. Most of the spending growth is expected to come via the oil and gas industry and Department of Defense projects at Interior military installations. Both sectors are pegged for 13 percent growth; however, in oil and gas that means an increase to $2.7 billion and roughly $700 million overall for Alaska Defense spending in 2019. On the oil side, many companies have managed to reduce their operating costs to where they can afford to resume investing in larger projects at current prices in the $60-70 range — a price band that is being predicted for several years. The discovery of the now-prolific Nanushuk oil formation on the North Slope has also spurred some oil prospects with development costs pegged at upwards of $5 billion. As a result, oil industry spending is projected to increase for several years, according to the forecast. Military construction in the state continues to center on Eielson Air Force Base near Fairbanks, which is readying for two new squadrons of F-35 fighters that are planned to start arriving in 2020. “Some of the larger elements of the (F-35) ‘bed-down’ are a flight simulator, new maintenance buildings, aircraft weather shelters, new utilidor, as well as renovation of many existing structures,” the forecast states. Additional missile defense projects are ongoing at Fort Greeley near Delta Junction and Clear Air Force Station near Nenana. While not as significant in terms of overall dollars, the mining industry is projected to increase its capital spending by 18 percent this year to $265 million as three of Alaska’s six big large mines — Red Dog in the Northwest and Pogo and Fort Knox in the Interior — have major expansions planned. Siira said she is hopeful political forces will continue to support the resource industries. “For increased spending to continue we feel that we need some stability in our stat and timely review of resource development projects which support the economy and, of course, construction spending,” she said. Overall private industry spending is expected to be about $4.4 billion, a 9 percent year-over-year increase; Alaska public construction expenditures should grow about 7 percent, with about $200 million or more coming as a result of the Nov. 30 earthquake. “Our industry, both vertical and road construction, did see an increase in activity due to the earthquake and although it was unfortunate, it maybe highlighted some of the projects that have been overlooked over the years,” Siira noted. She added that private building damage from the earthquake is more difficult to quantify. State and local government officials have emphasized since the earthquake that additional damage will likely be revealed with the arrival of spring. Longer term, the state still has a $2 billion-plus deferred maintenance list that it must address and new cost estimates to rehabilitate the Anchorage port have shot up dramatically to nearly $2 billion as well.   Elwood Brehmer can be reached at [email protected]

Unions, companies, labor officials mull worker shortage with major projects on horizon

How quickly things can change. Alaska, still inching its way out of a three-year recession that cost the state more than 10,000 jobs, could soon be a facing a labor shortage in some of its trademark industries, according to state workforce development officials. “We’ve got this sort of perfect storm of challenges where we have a downturn in our economy; we have an aging workforce, including oil and gas workers; we have stagnant wages in Alaska and there’s a boom going on in the Lower 48 pulling a lot of our workers (away),” state Department of Labor and Workforce Development Commissioner Heidi Drygas said in an interview. Most of the estimated 10,100 jobs the state has lost since 2015 were in the tightly connected construction and oil and industries, which together lost about 6,900 workers, according to state figures. At the same time, workers in those industries are at a premium in the Lower 48, where the shale oil boom continues and has helped spur a generally robust economy. Most oil companies in Alaska contracted some during the three-year price downturn and some delayed projects. Others, however, focused on exploration on the belief the price would eventually rebound. Armstrong Energy and Repsol combined to make the large Nanushuk formation oil discovery on the central North Slope, which ConocoPhillips has parlayed into multiple other prospects. The four recent discoveries made by those companies — two smaller prospects and the Nanushuk and Willow projects with potential for more than 100,000 barrels per day each — along with a couple other developments that have been in the works for years are expected to be the drivers of North Slope labor demand Drygas and others are concerned the Alaska workforce might not be able to meet. ConocoPhillips expects to need up to 700 construction workers per winter for its $1.5 billion Greater Mooses Tooth-2 oil project in the National Petroleum Reserve-Alaska from late 2019 through early 2021. Initial work laying gravel will begin at GMT-2 this winter. Hilcorp Energy also received federal regulatory approval Oct. 24 for its long-anticipated Liberty manmade island oil project, which will offer another 200 or more construction jobs per winter during the coming years. But those two are just the start. ConocoPhillips submitted a master development plan for its major Willow prospect in the NPR-A to the Bureau of Land Management last summer. While the company is still in the early planning stages on Willow, ConocoPhillips Alaska officials estimate it will generate “thousands of construction jobs” and hundreds of long-term operations positions once it is online — likely in the mid-2020s based on the company’s current schedule. The Nanushuk project, now led by Australian-based Oil Search after its acquisition of an operator stake in the Armstrong-Repsol discovery last fall, is expected to need a construction force of nearly 1,500 workers. Oil Search Alaska President Keiran Wulff said the company expects to make a final investment decision sometime in 2020. Additionally, Donlin Gold is slowly compiling the remaining permits it needs to build the world-scale open-pit gold mine it has planned in the Kuskokwim drainage. That project, with a 315-mile natural gas pipeline, two port developments, and a road to go along with all the on-site infrastructure, is expected to generate upwards of 3,000 construction positions. Finally, the far more controversial Pebble mine could add another 2,000 construction jobs to the state in the coming years if it is ever approved. Drygas said she is already hearing from some union hall leaders that they are starting to run out of skilled laborers. Doyon Associated President Warren Christian said Oct. 26 during the Labor Department’s Rising to the Challenge: Preparing Alaska’s Workforce forum that his pipeline development company was pretty much at full capacity last winter and already has at least as much work lined up on the North Slope for the next several years. Donlin spokesman Kurt Parkan and others who spoke at the event emphasized that finding workers with soft skills, such as the ability to pass a drug test and show up on time, can be the biggest obstacle to filling open jobs. Drygas said the state wants to encourage young people to look at careers in the trades, saying the “college for all” mantra espoused by many today is a “pervasive” problem in recruiting them. “We’re about to ramp up on some pretty significant projects in Alaska. We have all this work going on on the North Slope; we have a boom in military construction in the Interior and other Interior build out projects. We have an expansion of mining at Fort Knox and Kensington; Donlin Gold looks like it’s going to come online and they’re all happening at the same time,” she said. “It’s going to be challenging but it’s a pretty incredible opportunity too.” State economist Karinne Wiebold said strictly by the numbers, those jobs will be filled, but that could require recruiting Outside workers, something Drygas is constantly trying to avoid. Wiebold noted that Alaska’s construction sector has historically been comprised of upwards of 20 percent nonresident workers and in the oil and gas sector the figure rises to nearly 30 percent Outsiders. How many Alaskans left those industries to find similar work in the Lower 48 is largely an unknown and would be a very difficult figure to calculate, according to Wiebold. “It’s definite that some folks have left and it’s definite that some folks are still in Alaska but working in different industries,” she said. That forecast doesn’t even include the $43 billion Alaska LNG Project and the nearly 12,000 construction jobs it could add to the state. It’s largely understood that AK LNG would necessitate bringing in significant Outside labor help. State budget cuts have also contributed to the worry of a future worker shortage. Drygas said the Labor Department budget, which was one of the hardest hit in the Legislature’s effort to reduce the state’s multibillion-dollar deficits, was reduced 38 percent in the first couple years of Gov. Bill Walker’s administration. And many of those cut funds were meant for training programs, according to Drygas. She said those training programs, such as the Alaska Construction Academies, can be expanded on relatively short notice, adding that the University of Alaska has already cut tuition on its career and technical education, or CTE, courses by 25 percent in hopes of attracting more students. Fairbanks Central Labor Council President Doug Tansy said his union hall, part of the AFL-CIO, put all of its available laborers to work this year by April, largely due to the roughly $500 million worth of military construction projects being done at Interior installations. Tansy added, however, that about 60 of the union’s Alaska workers are on jobs in Seattle and Portland because they can simply make more money Outside which Drygas and Christian reiterated. They said wages for trade jobs are currently about 20 percent more in the Lower 48 than they are in Alaska. “Pretty much anyone who works in the Lower 48 in the pipeline industry has a job,” Christian said, and it’s expected to stay that way for at least another five years. Tansy said the 2008 global recession, which mostly missed Alaska, led to less CTE training down south and has now “created a wildfire of opportunity” in a rejuvenated economy. He sees the same scenario playing out in Alaska, just a few years later. A state capital budget plan — in addition to addressing deferred maintenance and basic infrastructure needs — could also spur Alaskans to return to the construction trades, Drygas stressed. “If there was an infusion of money for projects right now we can ramp up fairly quickly but what it’s going to take is everyone singing from the same sheet of music and that is we have to invest in this; we’ve got to invest in Alaska’s infrastructure and we’ve got to invest in training programs and training opportunities,” she added. Drygas reiterated that her message to the next governor’s administration would be to “invest in Alaska’s future” through a somewhat larger capital budget and workforce training programs. “We have to invest in young Alaskans and in training — ensuring that we have Alaskans first in line to work in these jobs,” she said. Elwood Brehmer can be reached at [email protected]

Steep drop in state workers’ comp rates to save $35M

Come 2019, Alaska workers’ compensation insurance rates are expected to fall the most in 40 years, according to state managers. Gov. Bill Walker’s office announced Oct. 4 that workers’ compensation insurance premiums should decrease an average of 17.5 percent statewide starting in January and worker’s compensation voluntary loss costs similarly could drop 14.8 percent. The proposed rate decreases for 2019 follow a 5.4 percent average rate decrease this year from 2017 and workers’ compensation premiums are down roughly 25 percent since 2015, according to the governor’s office. Workers’ Compensation Director Marie Marx said the reductions should save employers an estimated $35 million or so statewide. State officials are attributing the favorable trend to fewer claims and medical cost reductions. “These proposed rate reductions are welcome news for Alaska businesses — lower workers’ compensation costs reduce the burden on the small businesses that strengthen our economy,” Walker said in a formal statement. “Thank you to the Alaska state Legislature and the Department of Labor and Workforce Development for their work on payment reform, contributing to significant rate reductions for 2019.” The rates are proposed by the National Council on Compensation Insurance and subsequently reviewed and approved by the state Division of Insurance. Marx said employers of oil and gas pipeline workers would see some of the most significant reductions at more than 26 percent versus current rates, while rates could drop for clerical workers — typically with fewer on-the-job dangers — in the 9 percent range if the proposals are approved. Automobile technicians should see rate reductions of about 13 percent, for example, she added. Following approval by the Legislature in 2014, the Alaska Workers’ Compensation Board approved new practices and fee structures for paying medical providers for procedures paid for through workers’ compensation insurance in October 2015. The fee structure changes put provider reimbursement rates more in-line with general group health insurance rates, according to Marx. It replaced a system of paying medical service providers at the 90th percentile of “usual and customary” fees in a given region. Alaska was the 33rd state to adopt the new payment system, Marx said at the time. At the time, Alaska also had the highest workers’ compensation rates in the nation, state officials said. “Alaska has some of the highest medical, if not the highest, medical costs in the country and workers’ compensation was right at the top and we’re bringing it down with the reform over a number of years,” Marx said in an interview. Alaska Chamber CEO Curtis Thayer noted that the reimbursement rate revisions were based on Medicaid guidelines. He said that it’s correct rates are going down — a very good thing — but stressed the credit should go to employers and their workers for not needing to file as many claims as in years past. “It’s just the fact that our employers are providing a safer working environment,” Thayer said. Reforming the state’s workers’ compensation program has been a major policy initiative of the Alaska Chamber for several years. Last session the Legislature also took on other aspects of the workers’ compensation system when it passed the governor’s House Bill 79, which Walker signed in August. Among other things, the legislation clarified who is an independent contractor and who needs to be covered by workers’ compensation insurance and eased the process for obtaining workers’ compensation exemptions, reporting data and making payments. Thayer said HB 79 “brought Alaska into the 21st century” but did nothing to address premiums. He said the Chamber will continue advocating for caps on legal fees for workers’ compensation cases and other changes, such as treatment guidelines. “There’s a lot of work that’s been done but a lot of work that still needs to be done,” Thayer said. ^ Elwood Brehmer can be reached at [email protected]

INSIDE REAL ESTATE: Anchorage construction activity down sharply

The Municipality of Anchorage building safety report, which compiles all new construction activity requiring a building permit, was recently released for the first four months of 2018 and it is not good news for the construction industry. All construction activity is down 19.7 percent when compared to the same time span in 2017. The report categorizes all residential types as well as commercial activity, including alterations (remodeling) and change orders. The permits value the cost for vertical construction only according to a formula internal to the department and does not necessarily reflect market value. It also does not include any valuation for the land. Its purpose is to provide fee income to development services and to assure the public of its health and safety in both commercial and residential construction. Most of the 19.77 percent decline has come from the commercial sector. Residential construction permits have actually stabilized with even a slight increase in activity. Unfortunately, this new bottom of “normal” still doesn’t help Anchorage’s housing crisis. Eight new single-family starts in 2018 have increased the number to 54 from 2017. Duplex permits are down 50 percent and 67 new multi-family permits were obtained year-to-date, an identical number to 2017. A multi-family permit is categorized as any building with three or more units. Spinell and Hultquist Homes remain the largest builders in Anchorage, clearly outpacing all other builders with 14 permits for Spinell and 13 for Hultquist Homes. Combined they make up 50 percent of all residential activity for single family and duplexes. Spinell also builds in the Matanuska-Susitna Valley and Eagle River while Hultquist Homes has a division in the Seattle area. In single family, the owner/builder outpaces both of Anchorage’s leading builders with 12 permits. An owner/builder is usually someone from the trades who does not have a residential endorsement. An owner builder may also be someone who hires a general contractor to build their home but obtains the financing and permit in order to keep more control of the project. The permits also track elevator applications which are down from 82 to 43, almost a 50 percent drop. No mobile home permits have been issued so far this year, which clearly indicates a lack of consumer confidence in the long term financial sustainability of trailer parks which are, ultimately, an interim land holding use. Structural, electrical and mechanical/plumbing permits have all increased substantially. Given the overall decline in permit valuations, perhaps that is an indication that now is a good time for owners to consider remodeling as general contractors try to keep their employees engaged and prices reasonable while waiting out the third year of Alaska’s real estate recession. Connie Yoshimura is the Broker/Owner of Dwell Realty. Read more columns by Connie at www.cyalaska.com. Contact her at 907-229-2703 or [email protected]

Federal fund injection boosts effort to relocate Newtok

Few in Alaska have the expertise to move an entire village, but a process at work now getting Newtok nine miles downriver to Mertarvik is a proving ground for figuring it out. The project is still massively expensive, now estimated to cost $100 million to $120 million, but it is about a quarter of initial guesses of as much as $400 million to move Newtok’s 350 people from their eroding village. Two recent developments have kept the effort advancing. One is the completion of an environmental impact statement on April 19 for the layout of Mertarvik. With it is a plan for how the village will be designed including the airport, a drinking water lagoon, fuel storage tanks, housing, a school, clinic and stores. The other addresses part of the funding conundrum. When Congress passed the omnibus budget in March, $15 million was added to the Denali Commission’s $15 million operating budget. The money is to go to help villages harmed by climate change. Since President Obama’s visit to Alaska in 2015, the Denali Commission has been designated the federal go-to agency to handle all village relocations. “But this was the first time we had the money to go with it,” said Jay Farmwald, the director of programs at the Denali Commission. The new village site is located nine miles south of Newtok on Nelson Island. It’s out of the way of the tidal activity of the Ninglick River, which feeds into the Bering Sea and is susceptible to storm surges. Newtok is surrounded by the Ninglick River on two sides. Though one year 300 feet of shore side slid away, the usual erosion rate is 70 feet per year. In the past 20 years, houses built on pilings sunk to ground level as the erosion came in two ways: melting permafrost couldn’t hold them up any more and water flooded in. A very real possibility is that Newtok residents may require evacuation before Mertarvik has services such as electricity and water available, said Romy Cadiente, a Newtok village relocation coordinator. “It’s not so simple as planning a move at some date in the near future. There’s a lot of planning, a lot of planning,” Cadiente said. “We’ve been blessed with the team that we have to help facilitate this huge movement. We’re in the process in getting a facility and we have scenarios and contingencies in the event we can be ready and provide for the folks if we have to move right now.” Newtok leaders say it’s important to stay together as a tribe in the face of advice that individual families should move away from their disappearing village lands. “Back in 2004, or even before when Newtok decided to relocate, elders told us why you cannot move,” said Andy Patrick Sr., the president of the Newtok Traditional Council who was born in 1947. “When they first planned this, they offered to send us to Bethel or wherever, and divide us up. But the elders told us to stay as one. We are an independent tribe, one of the 229 federally recognized tribes. We need to stay together, not divided.” Housing first The Denali Commission is focused on getting homes put in as its top priority, Farmwald said. “We’re using all of the $15 million allocation to move Newtok,” Farmwald said. “Most of the money will be spent on new houses and services to the houses.” An additional $5 million from the Denali’s budget also will go toward installing services at Mertarvik. At least two other villages among an identified 31 are in emergency mode for needing to move due to climate change’s loss of permafrost and the resulting erosion biting away at their lands. But with Mertarvik, Farmwald said, “we are setting down a template to help the next villages.” That template is currently a written plan that shows what the new village layout will be once completed. Villagers supplied their preferences for how public buildings should be grouped. Costs so far were contained by partnerships. For example, rather than each agency conducting its own required survey work — geotechnical, topographical and environmental — the Denali Commission did it. The geotechnical work cost the Denali Commission $450,000 to gather about 90 percent of the subsurface information needed to design Mertarvik infrastructure, including the airport, said Don Antrobus, an engineer in the U.S. Public Health Service who is on loan to the Denali Commission. “There are significant economies of scale if the money is released in one pot. Every project needs geotechnical, subsurface surveys,” he said. “It’s very expensive to mobilize the equipment. When you do a larger geotech investigation for the airport, road, school, landfill, lagoon — you only pay that cost once. If you do it project by project, then each agency needs to do its own geotechnical work and that’s expensive.” Now the Department of Transportation won’t have to do a separate “mobilization,” for example, Antrobus said. Mobilization is expensive in itself, meaning getting a drilling rig, equipment and crews on the ground, plus supplying food and housing for them while they do the survey work. Further cost savings came when surplus barracks from Joint Base Elmendorf-Richardson were donated last December. The pre-fabricated, single-story barracks are to be taken apart this spring and are expected to be barged to Mertarvik next summer. But the cost to barge and assemble them there is $4.5 million, of which Denali Commission is paying the bulk. The estimated cost is $450,000 each for newly constructed HUD, or Housing and Urban Development, homes. The barracks, once reconfigured into homes, will supply 13 houses, Antrobus said, at an average cost of $346,000 each. “It’s not free. But it’s about 75 percent of what new construction costs,” he said. The buildings are in good shape and together with the seven already built, there will be 21 homes by the end of summer 2019, if all goes as planned. More than 80 homes will be needed. Another partnership also has been a major contributing factor in saving time and money that resulted in the first road built at Mertarvik. The Department of Defense Innovative Readiness Training, or IRT, program performed the road building exercise in 2009 and returned each year through 2013 (except 2012) to build a bunk and kitchen camp for workers and storage buildings, as well as the site work for the Mertarvik Evacuation Center. They also opened a rock quarry that was used to build the road and will be used in foundation work for buildings. The IRT provides military personnel with real-world training opportunities on projects that benefit communities. At the time, the program manager, Lt. Col. William Morgan said the relocation effort of the village of Newtok provided a winning situation for both Newtok and the military. “To do something so far away from home, up in an Alaskan tundra that’s difficult to get to by boat or by air — this is exactly the type of challenge that will enhance our ability to go to war in the future, to do other engineering projects in remote locations,” he said. Their work resulted in a permanent road built to a white-rock quarry that will serve multiple construction needs as infrastructure and housing go in. When the IRT troops left, the road-building equipment they brought with them was left at Mertarvik for future work. The equipment belongs to the Tribe and was paid for by a grant. “That’s another opportunity for economy of scale,” Antrobus said. “If projects are done project-by-project or agency by agency, each brings equipment and when he leaves he takes it with him.” The IRT work amounted to a donation to the village, Antrobus said. The military transported, housed and fed more than 20 troops while they worked. When finished, the Mertarvik Access Road was built with gravel topped by polyethylene road mats, a technology used by oil companies on Alaska’s North Slope for road development on tundra. The 1,000-pound 8-by-14 foot polyethylene mats interlock to form a strong, stable and uniform surface over tundra. They cut down on dust and can be moved. Funding for the road came from the Department of Transportation and the Bureau of Indian Affairs. The Department of Commerce and Economic Development provided the majority funding and the U.S. Army Corp of Engineers provided $430,000 for a $7.5 million Mertarvik Evacuation Center, which is currently a platform on pilings. “This summer we will put on an exterior shell and plumbing and mechanicals,” Antrobus said. The MEC will be able to house Newtok residents should they need an emergency evacuation from their village anytime soon. It will also double as space for a clinic or a temporary classroom for kids. Currently there are seven homes built at Mertarvik. One is a prototype house designed by the Cold Climate Housing Research Center and funded by a BIA grant. The house is extremely energy efficient and moveable, since it was built on a skiddable foundation that can be towed across ice or tundra. All together, figuring out how to put new infrastructure in place without too many agencies stepping over each other is proving more economical, Antrobus said. “Over time, there have been some really astronomical cost predictions for this move, he said. “It has not cost anywhere near that.” In total, $47 million has been committed or spent on the move, including the projects completed to date. Back in Newtok Federal and state agencies continue to fund projects in Newtok. A certain number of people will need to live there for another five or 10 years, Antrobus said. One is an upgrade on the Newtok airport runway by the Alaska Department of Transportation and Public Facilities. The contract is for $1.8 million to resurface it, said spokeswoman Shannon McCarthy. Another is a water treatment plant improvement by the Alaska Native Tribal Health Consortium. Water from a lagoon source has been threatened in the flooding, Antrobus said. Newtok remains one of the villages on “honey buckets.” “One was a project that had funding to identify a new water source for Newtok. That was implemented last summer before we went into the winter,” Antrobus said. “There’s other money available for Newtok for improvement to the water treatment plant to heat it and keep it from freezing. Those projects will be done.” In the meantime, Newtok residents have gone through a lot of water insecurity issues. A $580,000 ANTHC project last year and this year paid for relocating the water supply plant to keep it safe from saltwater intrusion, said Gavin Dixon, an ANTHC engineer. The work is meant to help ensure water availability until the move. They are still on honey bucket style sewage. The only public place to fill water buckets and wash clothing wasn’t functioning properly and so the ANTHC work this summer will restore it to working order, Dixon said. “There’s been a lot of sickness from the water situation. It’s a public health solution to stabilize the village until they move.” It’s not a waste of money, Antrobus added, though the goal is to abandon the village as soon as possible. “Several hundred people will be living in Newtok for a period of time. It costs $100 million to $120 million to move and we don’t have anywhere near that,” he said. Even so, there isn’t much that can be moved when the big day to do it finally comes, Antrobus said. Of the 70-some homes at Newtok, “most are in poor or very poor condition.” “None of the homes can be moved,” Farmwald said. The design of the Newtok school was a modular building that can come apart in big wall panels, Antrobus said. “There’s the potential to take it down and transport it across the river and reassemble them. There’s been an analysis about what it would cost and it is not less than new construction,” he said. The Denali Commission and Newtok Planning Group are still exploring what other public buildings might be moved, and the means and methods to get them across the river on the ice. The problem is not being able to predict whether the river will freeze hard and deep enough to skid heavy buildings across it, Antrobus said. “The river freezing hasn’t been reliable,” he said. “Last year it did freeze, but late in season. The previous year it didn’t freeze.” Such is the conundrum of climate change, said Cadiente. “It’s happening faster than we can move,” the village relocation coordinator said. ^ Naomi Klouda can be reached at [email protected]

NANA strengthens in-state business holdings

NANA Development Corp. has bought back into Alaska after a challenging financial period pushed the company to sell several of its subsidiaries. Vice President of Operations Eric Billingsley said in an interview that the Alaska Native corporation pulled the Alaska branches of WHPacific Inc. and GIS Alaska back under its umbrella after selling the Outside offices of the companies. The moves are part of NANA’s broader overhaul of its business model to focus its commercial sector on growth in the state. NANA Development Corp. is the business arm of NANA Regional Corp., which is the Alaska Native corporation for the northwest region of the state. The former Anchorage office of WHPacific has been renamed Kuna Engineering and GIS Alaska’s fabrication facility in Big Lake is now again known as NANA Construction. “We’re glad to have these companies back operating inside of NANA,” Billingsley said. He called the 27-acre Big Lake tract the best fabrication facility in the state given its large size and location, which allows truckers hauling materials to and finished products from the facility to avoid the congested areas of Anchorage and Wasilla. Leaders of the parent company have been encouraged by the gradual but consistent increase in oil prices — now to the mid-$70s per barrel compared to less than $50 per barrel a year ago — as well as recent oil discoveries by ConocoPhillips and other companies exploring on the Slope as indicators Alaska’s oil patch is set to resume growth. “We believe in the state. We believe in the opportunities going forward and we want to continue to prove the services across the gamut to everyone involved, not just to oil and gas but to broad-based commercial businesses as well,” Billingsley said. Kuna Engineering currently has 37 employees and NANA Construction has a workforce of about 190, according to NANA spokeswoman Amy Hastings. She wrote in an email that employment at NANA Construction should remain steady for the foreseeable future and Kuna’s workforce could increase slightly given its work with Teck Resources. The Kuna Engineering team over the years has come to provide a large portion of the engineering work Teck needs at the Red Dog mine, according to Billingsley. Teck operates the Red Dog zinc mine north of Kotzebue, which is located on NANA Regional land. Last year Teck announced that a prospect it had been exploring on state land about 7 miles northwest of Red Dog could be another world-class zinc deposit near what is already a world scale zinc mine if further exploration drilling proves out the resource estimates. Red Dog is one of the largest zinc mines on Earth. Teck is also in the midst of a $110 million upgrade to Red Dog’s mill to increase its production capacity by about 15 percent. Increased zinc prices have helped NANA Development rebound from several tough financial years, according to company leaders. NANA Development, which has roughly 15,000 employees through its subsidiary companies, is also heavily involved in the federal contracting sector. In 2016, the company’s losses in the oil services sector of $61.5 million were part of an overall net loss of $109 million, according to the corporation’s annual report. The corporation absorbed losses in 2014 and 2015 as well. It sold NANA Oilfield Services to shipping and logistics giant Saltchuk in 2016 and also saw Moody’s downgrade $300 million of its corporate debt, citing deterioration in its core businesses, namely oil and gas. NANA sold off WHPacific’s Lower 48 offices last year after holding the company for many years prior. It purchased Grand Isle Shipyard Inc., or GIS, in 2011. GIS was focused on oil and gas support in the Gulf Coast region, according to a NANA release at that time. GIS was then merged with NANA Construction. NANA also operates NMS, a camp services and facilities management firm, and NANA WorleyParsons, an engineering and project management company. Both are significant support service providers on the North Slope. Billingsley said he thinks NANA is in a unique position as a resource owner and an active participant in the resource industry through its support service companies. Keeping businesses like Kuna and NANA Construction also help the parent company and resource owner ensure that development costs are reasonable, according to Billingsley. “There is a suite of services Teck needs to operate the mine and we have the skills and the opportunities to take advantage of those and contract those; so those dollars stay with NANA and we’re also able to provide wages and opportunities for our shareholders,” he said. Billingsley noted that NANA has provisions in its agreements with Teck about using its support companies, but typically doesn’t leverage those provisions. “We want the economically preferable provider and if we’re not, we need to reevaluate some decisions,” he commented. In addition to supporting Teck at Red Dog, Kuna is engaged in rural development work, such as alternative energy projects for Alaska villages. “Really, we believe in Alaska, so all the pieces that weren’t Alaska we just let go,” Billingsley said. Elwood Brehmer can be reached at [email protected]

JBER, Downtown Fairbanks among opportunity zone selections

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

Labor Dept. prepping for AK LNG job demand

Building a $43 billion project naturally requires a lot of labor. More specifically, the Alaska Gasline Development Corp. estimates its $43 billion Alaska LNG Project will generate upwards of 18,000 new jobs in the state over about six years of construction. Nearly 12,000 of those jobs will be directly dedicated to the project itself: 1,300 heavy equipment operators; 1,500 pipefitters and welders; 2,300 general laborers; and 3,500 truck drivers to move countless types of materials, modules and construction equipment — not to mention the 807 miles of steel pipe. Hundreds more electricians, carpenters, ironworkers and engineers will also be needed, as well as 1,600 people to feed, house and otherwise support those swinging hammers and welding pipe, according to AGDC. With Alaska LNG construction ramping up in a big way in 2020 based on the gasline corporation’s timeline for the project, the direct workforce should peak in 2023 at the aforementioned roughly 12,000 workers and fade to about 6,000 during the last major year of work in 2025. While certainly not all of the $43 billion will be spent in the state, another 6,000 or so indirect jobs could be generated as a side effect to all of the Alaska LNG Project dollars flowing through the state economy, AGDC predicts. The project will also require roughly 1,000 personnel to keep it up and running, with 85 jobs at the North Slope gas treatment plant; 330 pipeline maintainers; up to 400 individuals at the project’s Anchorage headquarters and 240 people manning the LNG plant in Nikiski. The new Gasline Workforce Plan outlines how the state Department of Labor and Workforce Development will make sure all of those jobs can be filled. Department of Labor Commissioner and AGDC board member Heidi Drygas acknowledged that Alaskans aren’t likely to fill all of those positions — there simply aren’t enough people in the state — but said one of her top priorities these days is assuring all Alaskans who do want to work on the project have the opportunity to do so. And that starts with the message that a gasline, the Alaska LNG Project, is real this time. “Yes, it’s been 40 years since we first started talking about a (gasline) project like this, but we finally have a team in place that can bring it to fruition and it’s exciting,” Drygas said in an interview. She noted that those already employed in the construction trades and the oil and gas industry should be able to easily transition to the Alaska LNG Project if they so choose, but individuals without that experience should be looking into training opportunities now. To that end, AGDC President Keith Meyer has stressed the message of “get ready” to those who want to be a part of the project. Alaska’s current recession would seemingly have expanded the workforce available to work on the project as most of the roughly 11,000 jobs lost over the last two years have been in the oil and gas and construction sectors. According to Labor Department data, the closely tied industries have contracted by a combined 7,100 jobs since 2015. However, Drygas said the lack of jobs in those industries in the state today is actually a challenge to assuring the needed labor force is in Alaska when work on the gasline gets going. “(Construction workers) have to have some jobs available leading up to the pipeline project. That is a barrier that we face right now when we are lacking the capital budget that we have seen in years past come out of the Legislature,” she said. Oil and gas and construction workers displaced by Alaska’s economic downturn could have gone elsewhere for work in the active Lower 48 economy or shifted to a different industry to find employment. Alaska’s robust network of technical education institutions, from the renowned state-run Alaska Vocational Technical Center, or AVTEC, in Seward to the unique Fairbanks Pipeline Training Center, the Alaska Construction Academies, the university’s numerous vocational programs and other regional training centers, provides residents many more avenues to prepare themselves for a gasline than when the Trans-Alaska Pipeline System was built in the mid-1970s, Drygas emphasized. The trick is getting young people into their classes. Nearly a quarter of the state’s current workforce in gasline-related occupations are nonresident workers and more than 30 percent are beyond 50 years old, according to the Workforce Plan. “We need to reinvigorate that interest in construction jobs again and that is part of our Gasline Workforce Plan, to educate students — all Alaskans — but we are going to target students in high school to make sure they are aware of the opportunities in apprenticeships, in process technologies, engineering with the university, with any number of jobs, but we really do need to address the issue of an aging construction workforce,” she said. Adding another layer of challenge to that effort is the fact that the state’s ongoing multibillion-dollar budget deficits have pushed the Legislature and the administration to cut the Labor Department’s discretionary budget by 37 percent since 2015, and the majority of that has come out of workforce training programs, according to Drygas. The Alaska Construction Academy budget, for example, has been cut from $3.4 million to $1.8 million, she added. Started in 2006, the construction academies are meant to introduce high school students and adults to career options in the industry through entry-level training. “We’re hoping that in better economic times we’ll be able to fund some of these programs again because that will directly impact our workforce development efforts for this gasline. We have too many construction workers retiring; we have to educate young Alaskans about opportunities in the trades,” Drygas said further. “And sure, it’s not for everyone but I think a lot of young folks just don’t know about it. What they Alaska Construction Academies did so well is to discover young talent in the construction industry.” In-lieu of state funding, the department is applying for more federal Labor grants that it would administer to support training in the trades statewide. Some legislators and representatives for Alaska trade unions have expressed concern that the joint development agreement AGDC signed in November with three large Chinese companies could preclude Alaskans from many of the jobs the project will offer. The joint development agreement indicates Sinopec, a state-owned oil and gas giant with nearly as many employees as Alaska has residents, could have roles in the final engineering, design and construction of Alaska LNG and although nonbinding, the agreement appears to be the framework for a deal that could underpin the project. Drygas said she is totally confident in AGDC President Meyer’s pledge to prioritize Alaska hire on the project. “One of the best ways to ensure Alaska hire is through a project labor agreement and the governor and President Meyer are committed to utilizing a PLA on the project,” she said. Project labor agreements are a pre-hire bargaining agreement of sorts that government entities or their contractors sign with labor unions to offer work to members of those unions. “When you know more about the leadership team in place at AGDC and the governor’s commitment to ensure Alaska receives the benefits from the project — I understand those concerns and I’m glad people voice those concerns but I am not concerned about that,” Drygas said. Elwood Brehmer can be reached at [email protected]

Oil sector leads construction spending rebound

The last couple years have been tough for Alaska contractors. While it took about two years to really be felt as money on large multi-year and preplanned projects continued to be spent, the precipitous fall of oil prices in late 2014 led to construction spending declines of 18 percent in 2016 and 10 percent in 2017 year-over-year. Not only did the price collapse hit contractors working in the state’s oil fields, but state capital spending has all-but disappeared since the oil revenues the State of Alaska relies on dried up as well. Similarly, Alaska’s construction industry workforce has declined by 17 percent since peaking in 2014 with a year average of 17,800 jobs, according to the state Labor Department. Last year the industry averaged 14,900 workers. It’s worth noting that those figures do not reflect construction jobs classified within the oil and gas sector, which has seen its workforce shrink by 5,000 jobs, or more than 30 percent, over the same period. However, there are signs of a turnaround. The 2018 Alaska Construction Spending Forecast, compiled by the University of Alaska Anchorage Institute of Social and Economic Research estimates “on the street” spending will increase 4 percent to more than $6.5 billion this year. Authors Scott Goldsmith and Linda Leask wrote in the report for the Association of General Contractors-Alaska that the modest increase will be driven by a rebound in spending by oil and gas companies that will more than offset continued declines in infrastructure investment by other sectors. At more than $2.5 billion, oil and gas company spending will be up about 15 percent from 2017 on the back of improved and stabilized, if not robust, oil prices in the $65 per barrel range, as well as continued work on a burst of potentially large oil discoveries in recent years and more favorable federal policies. For reference, Alaska oil and gas capital spending peaked in 2014 at $3.9 billion, according to ISER. “Perhaps the most significant recent federal policy change affecting Alaska is the decision to open the 1002 (coastal plain) region of the Arctic National Wildlife Refuge to exploration,” Goldsmith and Leask wrote. “That decision — along with the opening of federal offshore lands to leasing — will not immediately lead to spending, but it does demonstrate a renewed federal interest in the petroleum industry in Alaska.” ConocoPhillips has led greenfield activity on the Slope of late and is drilling five exploration and appraisal wells this winter, the company’s busiest exploration season in 15 years. Additionally, the company is finishing work on its roughly $1 billion Greater Mooses Tooth-1 development, which is scheduled to start producing oil late this year. Industry leaders in Alaska have said spending has been cut to the point where company’s budgets are again stabilized and at least incremental investment is a possibility. Further, Gov. Bill Walker has a bill in the Legislature to pay off the state’s $800 million-plus oil and gas tax credit liability in one lump sum, which administration officials believe could spur additional oil and gas activity if it passes. Walker has also proposed an $800 million capital projects plan to address the state’s deferred maintenance backlog, estimated at roughly $2 billion, and provide a small economic stimulus across the state. However, the funding source for the plan is a proposed temporary payroll tax that is politically unpopular and it’s unlikely the plan will pass this session. The mining industry is also projected to be on the rebound with $239 million of capital projects, up 6 percent from 2017 after years of subdued activity worldwide, according to the forecast. Teck, which operates the Red Dog mine north of Kotzebue, is exploring a large new zinc deposit and Trilogy Metals is continuing work on its prospects in the Ambler Mining District, also in Northwest Alaska. The U.S. Army Corps of Engineers is also expected to release a final environmental impacts statement for Donlin Gold’s massive gold project along the Upper Kuskokwim River later this spring. A favorable decision for Donlin will not mean more spending this year and company leaders have acknowledged the economic viability of the remote mine is very sensitive to gold prices, but if it goes forward Donlin likely represents $5 billion of work over several years of development. Another positive will come from the federal government in the form of Defense spending, which with six large military installations in the state is a significant contributor to the construction industry. The feds are expected to spend $630 million on Defense projects in Alaska this year, an 11 percent increase from 2017, according to the forecast. Missile defense work at Fort Greely will eventually add to the number of interceptor missiles at the Army base. The Air Force is in the midst of $325 million of work to install a long-range discrimination radar system at Clear Air Force Station near Nenana. Further work is also ongoing at Eielson Air Force Base in Fairbanks to prepare for the 2020 arrival of the first squadron of F-35 fighters that will be stationed at the base. The 2018 National Defense spending bill signed by President Donald Trump in December approved nearly $170 million in projects for the F-35 bed-down and $200 million for a new missile field at Fort Greely. Surface transportation spending, particularly on roads and highways, should be up about 6 percent to $667 million, Goldsmith and Leask project. While most surface transportation funding comes from the federal government with a small state match and is generally pretty stable year-to-year, the increase this year is due in part to money from a $453 million state bond package approved in 2012 finally “hitting the street.” “It can take considerable time for transportation appropriations to become cash on the street, so state funds from past capital budgets and bond sales are still contributing to current spending,” the forecast states. “Consequently, the level of spending this year will be a little higher than last.” Much of that money will fund major projects on the Glenn, Seward and Sterling highways. Capital spending in other sectors and industries is generally expected to fall by up to 20 percent year-over-year as bare-bones state capital budgets and the third year of Alaska’s ongoing recession continue to constrain investment. ^ Elwood Brehmer can be reached at [email protected]

LNG tank construction a sign of progress for Interior gas project

Backhoes are back digging in south Fairbanks as construction work is again underway on the Interior Energy Project. Ground-turning work on the effort to expand the natural gas supply to the region had been on hold since the summer of 2015 as IEP leaders looked revise the scope of the project in the face of challenging economics brought on by lower oil prices. The last physical work on the project involved laying gas distribution lines in North Pole and Fairbanks. Contractors for Pentex Alaska Natural Gas Co., which owns Fairbanks Natural Gas, began foundation work in the final days of December for a $48-million, 5.25 million-gallon LNG storage tank. As of March 1, excavation for the tank foundation has been completed, which meant removal of up to 15 feet of silt and ice-laden material at the site near the Tanana River. In place of the topsoil, a series of conduit loops and three feet of insulation have been laid. They’ll be buried under a new bed of gravel that will support the tank, according to Pentex CEO Dan Britton. The conduit will support a passive cooling system known as a “thermosyphon” to keep the permafrost under the foundation frozen and stable if Fairbanks’ climate warms significantly over the next 75 years, which is the planned life of the tank. The insulation and a separate heating loop will act as a barrier between the LNG tank, its super-cold contents and the ground below. Natural gas turns to LNG at about 260 degrees Fahrenheit below zero. Britton noted that while it is counterintuitive to refrigerate the ground beneath a facility that is as cold as the dark side of the moon, the whole system needs to be monitored and controllable. “The concern from the geotechnical engineers is that if we didn’t have an ability to create a thermal break, the LNG could make the ground too cold. It could take it from our desired temperature of about 28 to 30 degrees (Fahrenheit) down to zero, -10, -15 and then it will become a wick for water,” Britton explained during the March 1 Alaska Industrial Development and Export Authority board meeting. “They don’t want us to be wicking water from outside the foundation into the foundation and creating ice lenses and jacking the tank.” He added that if the thick layer of insulation works as intended, the glycol heating loop would be an idle insurance policy. AIDEA purchased Pentex and Fairbanks Natural Gas in early 2015 and is in the process of transferring it to the borough-owned Interior Gas Utility as part of a $331 million plan to integrate the utilities and expand natural gas availability in Fairbanks and North Pole. The tank itself will be a double-walled, fully contained facility with plenty of redundancy. Britton said the request for proposals Pentex issued last summer was for a single-wall tank because the large size of the site and its isolated location meant a single-wall design with an outer containment system would be adequate. However, when Boston-based Preload Cryogenics submitted a comparably priced bid for a double-wall tank, there was no reason not to go with the more robust protections, according to Britton. The outer wall of the roughly 100-foot diameter tank will be 10-inch thick reinforced concrete. The primary inner tank will be made of roughly one half-inch thick welded steel plates The steel comprising the tank will also be about 9 percent nickel to keep it from becoming overly brittle when in contact with the super-cold LNG. “If the inner tank were to breach for some reason the outer tank is designed to contain the full capacity of the LNG. It’s also designed to handle cryogenic temps,” Britton said. Between the walls will be about 3 feet of insulation — largely perlite similar to the white grains found in potting soil. Many important facilities have backups for key parts installed. Fairbanks LNG tank will be no different, other than the fact that it will have backups for the backups. Britton said the tank would have three pump wells, each fully capable of keeping the system operating on its own. Likewise, there will be double redundancy in its vaporizers. They system is also designed to accept LNG from the truck tankers if need be. “In the event we have a problem with the line from the tank feeding the vaporizers we can take LNG directly out of the trailers straight into the vaporizers and into they (distribution) system,” Britton said. “(We’re) trying to put as much redundancy in the system as we can.” More than just a visible indicator for area residents that the long-delayed Interior Energy Project is closer to reality, AIDEA board member Gary Wilken of Fairbanks has called the LNG tank the heart “of the Interior Energy Project.” That’s due in large part to the fact that just the storage tank will allow Fairbanks Natural Gas to nearly double the amount of gas it can provide customers even without additional gas supply. When the tank is finished in late 2019 — in time to capture a $15 million LNG storage tax credit from the state before it sunsets — it will allow Pentex to run its Titan LNG plant in the Mat-Su Borough full-bore nearly all year because it will now have a place to hold the LNG. That means LNG produced during the low-demand summer months can be stored and drawn down during the winter. Currently, with just several small portable storage tanks, the Titan plant, capable of processing about 1.5 billion cubic feet of gas, or bcf, per year, must be run to match immediate gas demand from end users. In recent years that demand has been for between 750 and 900 million cubic feet of gas per year, according to Britton. The 5.25 million gallon LNG tank will allow Pentex to run the Titan plant to process up to 1.4 bcf of gas, he said, allowing for a few weeks of maintenance downtime each year, he said. Britton described the tank as providing a “direct line of sight” to when more natural gas will reach Fairbanks customers. Finally, while the overarching contract for the tank went to an Outside firm, there is no shortage local contribution to the construction. “We have a lot of work that’s being completed by Alaskan contractors and Alaskans,” Britton emphasized. He listed 10 Alaska companies that are subcontractors for Preload Cryogenics on the project. Great Northwest Inc., a Fairbanks-area general contractor handled all of the site preparation and gravel fill. Anchorage Sand and Gravel is casting the outer tank panels, which will be trucked north to Fairbanks. Three of the 85-foot long concrete test panels will be started later this month and the first will head to the site in early June when spring weight restrictions on the highways are lifted, according to Britton. Elwood Brehmer can be reached at [email protected]

Duluth, Dave and Buster’s cushion recent Anchorage job losses

Ax throwing and log sawing contests vied for crowd approval outside but it was probably the flannel shirts or underwear inside that stole the show when Duluth Trading Co. staged its grand opening March 1. Duluth took over the 24,500-square feet former home of Sports Authority at 8931 Old Seward Highway, which closed in 2016. After an investment of $800,000 in renovations performed by local contractors H. Watt &Scott Inc., it took about a month to set up the store and hire 50 individuals, said manager Erik Hansen. The Wisconsin-based clothing company wanted a big Alaska entrance for its grand opening. One sure need when scouting out the store’s location was a high-visibility spot near a highway where motorists would frequently spot the brand name, Hansen said. It didn’t hurt when the festivities included its standard live shows that involved throwing axes and chopping wood. Inside, product lines spouted rhymes — “Crouch without the Ouch” pants and “Dry on the Fly” coats — had drawn hundreds of customers standing five deep by each cash register. “It’s been non-stop busy since we opened,” Hansen said. Duluth is opening just after some big names — Sports Authority, Sam’s Club and now, Sears — have exited the Anchorage market. But other big name stores are moving in to hire nearly the same number of workers displaced by a sum total of the closings, said Anchorage Economic Development Corp. CEO Bill Popp. What’s happened in Anchorage with the loss of big box stores involves corporate decisions based on a national level, Popp said. “It was impacted by what was going on in Alaska and may have been sped up a process … but it was not only the Alaska recession,” he said. He sees Dave &Buster’s — set to open March 19 — as a trendy entertainment chain and Duluth as “true retailers.” But each is very much customer experienced-base, he added. “Duluth is fun, energetic, engaging. The same will be true with the Dave &Buster’s model. These will be two good contributors to the economy,” Popp predicts. Between the two newcomers, about 350 jobs are getting filled, Popp said. When Sam’s Club closed, just fewer than 300 people lost their retail jobs. Sears’ economic descent in Anchorage meant steadily shedding jobs until near the end it employed just more than 100, meaning a more gradual loss of jobs for the economy to absorb, he said. “The job losses are replaced already,” Popp said. The next employment opportunity comes in constructing and filling the 60,000-square-feet of space now occupied by Sears where a grocery store will go in, Popp said, which will mean a few hundred jobs. Guitar World will be employing a “couple dozen” people as well, Popp said. Anchorage is likely to see additional national attention from companies that don’t yet have a presence here. “That is traditional in a business cycle, when a town is in a weakened economy,” Popp said. “Construction costs are down. Contractors are willing to sharpen pencils more sharply in terms of bids. Rent is cheaper. So a smart business operator who has the cash and financial ability to do so will take advantage of the bottom side of the cycle.” In releasing the AEDC 2018 economic forecast this January, Popp predicted the recession is “moderating quite a bit and potentially will end later this year, barring unforeseen circumstances.” The new mall businesses will help, he said. “They will help to moderate the losses and end the recession. Returning to growth, however, that’s different, That has to come from state fiscal policy to return to more robust growth,” Popp said. “But on a local level, retail wise, these are positive signs for retail and the service economy.” The recent bankruptcy declaration by the group owning Humpy’s Great Alaskan Alehouse, the Williwaw, Flattop Pizza and Bootleggers 8 Star Saloon is “concerning” in what it may forebode about the Anchorage service economy, Popp said. “There are signs of weakness in employment and we are hearing anecdotally they are struggling. I’m worried we will see a couple of those closing,” Popp said. “The recent announcement of bankruptcy by Humpy’s — that’s some of the concerns we have in that sector.” On the other hand, Popp added, it’s normal in a down economy for consumers to reduce dining out, even for businesses to tone back the lunch and catering dates. That trend negatively impacted local restaurants’ profits, he said. Alaska tested A line of 25 or so waited in single-digit temperatures for the doors to open at Duluth. “One man said he’s a big fan of our catalogue and took the day off work so he could be here for the opening,” Hansen, the manager, said. Alaska was a good match for Duluth’s product lines, Hansen said. “Three years ago they came here for a trades panel discussion and saw we would definitely have a customer base here,” he said. The trades panel is a made up of industry representatives from construction, commercial fishing and extreme outdoor adventuring like dog mushing. Duluth consults these representatives to gain feedback that then goes into how it manufactures outdoor gear after trials. Its Alaska Hard Gear line, which takes up a 1,600-square foot chunk of store space, was manufactured with the help of such feedback. The lines are manufactured by companies in and outside the USA, Hansen said. “We gained product feedback to see what’s needed: Is it the right length? Is it too heavy? If a coat is too heavy, they won’t wear it,” Hansen said. Wall illustrations of people wearing the apparel aren’t models but actual Alaskans who wore the clothing and evaluated its durability in a hardcore industry workout. Commercial fishermen from Sitka, construction workers and a dog mushing woman dominate the wall space. In 1998, the company was founded by brothers Bob and Dave Fierek in Belleville, Wis., after they designed a tool organizer they called the Bucket Boss. Still a best-seller, the tools can be tossed unsorted in a bucket. “Then you can organize them easier with the kit like this around the bucket,” Hansen said as he demonstrated. Since 2001, Duluth Trading Co., has been owned by investor Steve Schlect, now its CEO. The Anchorage location marks its 32nd store. Dave &Buster’s opening nears Duluth’s opening is to be followed by another major anchor for South Anchorage at the Dimond Center in Dave &Busters Sports Bar, a popular bar-restaurant chain from Texas that also prides itself on doing things large. Dave &Buster’s opens March 19, said Jared Hilliard, manager. They’ve hired about 300 service workers, though interviews conducted and wrapped up March 5. Some 1,400 people applied over the past few weeks, according to the company. The restaurant’s entry to Alaska required more than raising the roof at the Dimond Center. It also required legislation that was signed by Gov. Bill Walker in 2016 declaring the tokens or tickets that can be won in gaming are not classified as gambling. The 44,000-square foot business is to be located on the second floor of the Dimond Center, down the hall from the Regal Cinema movie theaters. The location will have a sports bar, dining, arcade gaming area and private dining areas for parties and events, said Dimond Center Marketing Director Brenda Steil. The $21 million investment was split by the Dimond Center owners the Ashlock family ($11 million) and Dave and Buster’s ($10 million), she said. The construction contracts were given to local companies. Between construction and Dave &Buster’s hires there were nearly 600 jobs created by this Dimond Center expansion, Steil said. The redesign of space involved major changes to the mall’s northern edifice and lifting the roof, which was built in the original mall design of 1977. Local companies WB Architecture, MCN Construction Inc. general contractors, BBFM Engineers, Allied Steel Construction Inc., RSA Engineering and Steel Erectors were all involved, with only one outside contractor, Rooflifters of Miami, Fla. Sears Mall transition Sears at its namesake the Mall at Sears is closing down, with plans for a new Safeway store to take up a majority of the space. Albertson’s, which purchased the Alaska Safeway chain of grocery stores in 2014, removed a main mall anchor when it closed down its Safeway store at the western end in 2015, said Linda Boggs, the mall’s marketing and leasing specialist. “I guess they missed it. Now they want to put it back in, but at the opposite end,” Boggs said. The mall, owned by national group Seritage Growth Properties, is giving out few details on its plans for releasing the space to new retailers. A press release the company put out stated only that Sears was closing in April and that the lease of 145,680 square feet in the store area and 17,390 square feet in the auto center for were each up for lease, all with the ability to subdivide. The western side of the mall — where the Carrs store formerly leased space — is currently in need of a company to lease it, Boggs said. A new name also is on the way to replace “The Mall at Sears,” Anchorage’s second oldest mall, built in January, 1968. (Montgomery Wards in the Northern Lights Center was first, built in the early 1960s.) “Just in time for its 50th anniversary, we will be revealing the new name,” Boggs said. “It will be something simple.” The public will hear about the new name in a “few weeks” she said, after the decision and the new signs are made. They also are waiting for Sears to close its doors sometime in April. Naomi Klouda can be reached at [email protected]

Homer grad finds career path at AVTEC

HOMER — Career in a year. That’s the motto at the Alaska Vocational Technical Center in Seward also known as AVTEC. “That catch phrase is one of my favorites,” said AVTEC plumbing and heating instructor Tim Shearer. “We teach skills that every employer is looking for. And not just skills, but also communication skills, job skills, all those skills that prepare a person to be successful.” That’s exactly what T.J. Thomas was looking for when increasing the number of employees at Anchorage-based Living Waters Plumbing and Mechanical. “Honestly, and I speak for pretty much anywhere in Alaska, any company is hungry for qualified and skilled technicians, right out of school with some experience that we can utilize. That is definitely a bonus,” said Thomas, one of the owners of Living Waters. Opened more than a year ago and with a crew of eight, the company serves Anchorage, the Matanuska-Susitna Valley as well the Kenai Peninsula and areas in between. The AVTEC philosophy also fit the bill for Luka Schulz, a 2016 Homer High School graduate, whose story illustrates how Alaska’s employee base is growing through a hometown-to-workplace collaborative effort. “I didn’t know what I was going to do,” said Schulz of the uncertainties he felt as classmates applied for college. Enter Monica Stockburger, Homer High teacher and coordinator of FOL, the school’s Focus on Learning program, and Cam Wyatt, the school’s career technical educator. Stockburger and Wyatt took time to talk with the student, assess his strengths, and offer possibilities Schulz hadn’t considered. “We felt he was a unique kid that had the brains to do anything he wanted to do, but we knew we had to find the right fit,” said Stockburger. As an instructor, Wyatt had witnessed Schulz’s ability to work with his hands, his interest in working independently, the ease with which he completed CTE classes, and his lack of interest in going to college. Putting it together, Wyatt suggested refrigeration as a path to Schulz’s future. In some ways, it followed the footsteps of Schulz’s father. After attending Paul Smith College in New York, Steve Schulz has had a career in the building trades, with his son often working at his side. “They did a lot of building things together, tinkering on dirt bikes and snowmachines,” said Schulz’s mom, Sharon. Her son did fine in school, “but he really preferred hands-on more than anything. So that’s why the teachers suggested maybe a trade school would be more interesting for him that a four-year college.” Stockburger and her husband Mike are active with Homer Marine Trades Association, a nonprofit whose membership promotes marine-related businesses and activities through numerous channels, including the annual award of a $1,000 scholarship for vocational education and skill training. Formed in 2011, the association also participates in Homer High’s FOL program. Stockburger helped Schulz complete the scholarship application and, after being named the recipient, Schulz applied it toward AVTEC’s refrigeration program. He began the 686-hour, four-and-a-half-month course of study in January 2017. Half classroom and half hands-on, the fast-paced program encompasses installation and repair of air conditioning and refrigeration systems, and diagnosing and repairing electrical controls. Once he completed that program, Schulz then enrolled in AVTEC’s plumbing and heating courses, another 686-hour, four-and-a-half-month program. “I had learned a lot, but didn’t know a lot about electrical systems and felt I could use some more experience,” said Schulz. An AVTEC discount for taking the programs consecutively helped with the cost. Also half hands-on and half in the classroom, the plumbing and heating program is divided into sections on electrical, natural gas-fired, oil-fired and hydronic heating systems; electrical plumbing and heating; and plumbing. The last week of the class is devoted to welding. Fortunately, Schulz had covered that during his refrigeration study, because in December 2017, one week short of graduation, he was hired by Living Waters. A division of the Alaska Department of Labor and Workforce Development, AVTEC offers 20 fields of training. In fiscal year 2017, which ended last June 30, 245 students attended AVTEC’s long-term programs and 1,145 were enrolled in short-term programs like refrigeration and plumbing and heating, according to Rachel James, job placement specialist in AVTEC’s Counseling Department. Students average 25 years of age and represent 187 communities, with 55 percent from Southcentral Alaska. In fiscal year 2016, 90 percent completed training/education and obtained employment in their field. In 2017, the completion rate increased to 97 percent. “AVTEC’s mission is to prepare students with career and technical skills required for success in the Alaska workplace,” James said. Students also are offered help refining career goals, developing job-search skills, resume writing and job interview techniques, as well as what Shearer considers soft skills. “Our advisory board, people in industry, keep us up to date on trends, advancements and technology. A lot of what I get from them is the importance of an employee that’s easy to get along with, shows up on time, is clear-headed and has a respect for authority,” Shearer said. “Luka fit that mold. He was an ideal student. He really had an appetite to learn, to be good and it showed.” Looking back, Schulz said, “I made the right decisions, got employed right away and am using my knowledge so I feel comfortable, but I know the right questions to ask if I’m stumped. That’s what AVTEC gave me, the knowledge to ask the right questions.” Thomas is happy to have him. “He definitely has a good attitude and just wants to work hard and make this a career,” said Thomas. “He’s setting himself up where within four or five years, he’ll be taking home $40-plus an hour in his check with a whole package of almost $80 with benefits.” Now retired, Stockburger continues to help students navigate school application hurdles and remains active with Homer Marine Trades Association. The association’s application for the 2018 scholarship is available at homermarinetrades.com. “This is what people in the teaching profession wait for, the moment in time when they get a call or hear about a young person being successful,” said Wyatt, who was awarded the Association for Career and Technical Education’s 2015 Promising Practice Award and named the 2016 Secondary SkillsUSA Advisor of the year. He is now principal of the Mesa County School District 51 Career Center in Grand Junction, Colo. “Career technical education is rebounding on a national level,” he said. “Homer High School continues to understand that and develop that area of the school.” Schulz recognizes the importance of that local support. “It definitely made a big impact,” he said. “It was really nice that I actually got a scholarship from my hometown.” AVTEC’s 2018 job fair will be April 15. Employers interested in participating should contact James at 907-224-6172. McKibben Jackinsky is a retired journalist and freelance writer who lives in Homer, Alaska. She is the author of Too Close to Home? Living with ‘drill, baby’ on Alaska’s Kenai Peninsula, published in 2016 by Hardscratch Press.

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