Construction

Industry Day event connects contractors with agencies

You won’t find Industry Day on any federal holiday schedules, but it’s still a big day for small contractors. Actually, it’s not a holiday but a networking event to help expose small businesses to bigger outfits and perhaps give them some information on upcoming contract opportunities. The Associated General Contractors of Alaska will sponsor Industry Day for the third time on March 21. It will take place at the Captain Cook Hotel in Anchorage from 9 a.m. to 6:15 p.m. Registration starts at 8:30 a.m. This is a chance for small businesses to network with larger ones while working to strengthen partnerships with the various agencies and organizations. Kimberley Gray of AGC said there are two major opportunities for Industry Day. One is to give an insight into what coming up that can be bid on. Another is to meet other departments and learn specifics about these private companies and state and federal agencies in attendance. The event is open to all small and large businesses. This includes Section 8(a) small disadvantaged businesses and Historically Underutilized Business Zone firms. “We’re trying to help the contractors in terms of everyone, from suppliers to general contractors, to meet the agencies,” Gray said. The U.S. Army Corps of Engineers will be a major participant. The Corps’ deputy for small business, Ivonne Drake, said the Corps will hold a workload presentation with project managers on hand to address questions. “This is for small companies and for big companies,” Drake said. “We want anyone to be able to ask any questions of the Corps.” Although the forecast may fluctuate, AJOC previously reported that the Corps has $460 million worth of construction projects for fiscal year 2012 with $325 million in military construction. Other participants include the U.S. Small Business Administration and the Procurement Technical Assistance Center. Speakers on behalf of the Corps will include Alaska District Commander Reinhard Koenig, Programs and Project Management Division Chief Larry McCallister and Contracting Division Chief Christopher Tew. They will speak during the morning sessions. Agency meet-and-greets will follow with a panel featuring Davis Constructors and Engineers, Osborne Construction Co., Watterson Construction, Kiewit Building Group, Neeser Construction Inc. and Unit Co. Gray said this panel will let smaller companies get a feel for what these contractors need and how to get in touch with them. Other sessions include those on post-award contractor responsibilities, avoiding litigation and presentations from SBA. The last Industry Day was packed with about 100 participants, and Gray is expecting no less than a sell-out crowd again this time.

CH2M Hill launches program to teach welding

Eighteen-year-olds Dakota Rudolph and Andrey Zagorodniy had spent all week behind protective gear as sparks flew by their faces or burning through metals with enough heat to turn a laptop into fertilizer ash. Both agreed: it beat a classroom, especially if it leads to a job. These two were part of CH2M Hill’s structural welding pilot program to help prepare young people to take on welding roles with the company. Two sets of classes of 20 students each used the Anchorage fabrication shop for a week to get hands-on exposure to welding, I-beams, scissor lifts and rigging training to cover the same things they will encounter on the job. The program is free and voluntary for the young folks. For many of them, it didn’t take much convincing. “This is definitely a lot of fun but this is what I love to do and greatest thing in the world. Next greatest is finding a job that’s going to pay you to do it,” Rudolph said. The two teens have a good feeling this experience will help with that. Passing students come away with structural certifications for one-inch plates and are also entered into a continuity log for six months and so can weld for CH2M Hill as opportunities come up. The program is for beginning welders but not necessarily for newcomers. Rudolph and Zagorodniy both are in the welding program at Colony High School, one of the participating partners in this venture, along with the King Career Center, the Alaska Vocational and Technical Education Center and Northern Industrial Training. Students like Rudolph and Zagorodniy have been learning the basics through Colony High’s welding program for a few years now. But their classroom experience has been just that. The idea is to expose them to a real work environment while receiving instruction from seasoned welding professionals. They do the same work they would be expected to on a job site and they’re expected to follow the same safety standards, especially after an intense safety training when they first come in. “They’ve given us a chance to use all their resources,” Zagorodniy said Throughout that work, they were coached by CH2M Hill welders, instructors and safety officers. Resource Manager Sara Gould said when a project manager stopped by to give instructions on what it’s like on a site, the students’ curiosity was so encouraging that this manager answered questions a whole hour longer than scheduled. “Our goal is to have good folks who have expressed interest, and not just the young people who think they want to be welders, they’ve already started somehow,” said David Hopkinson, CH2M Hill vice president of construction. This is why the company looked for students in schools who have made some strides in the profession. Workforce Development Manager Trevor O’Hara said of the majority of those in the program are still in high school. A few are recent graduates. He credited the school as being generous in freeing up the time for them. The program was also timed during the construction slow season, so the fabrication area would be clear and professionals would be more readily available. The participants hope that once things get busy in the summer, so will they. While there are no job guarantees, students are added to a list of available employees for when opportunities arise. Sparking a job plan O’Hara and Gould brought this pilot program into being. O’Hara has been tasked with creating new initiatives like this to focus on Alaska hires and other resources. “Of those plans, this was the one that really stuck,” Hopkinson said. “It’s one we thought we could do well. It’s one that we have the facilities, we have the people, the professional craftsmen that can actually do the training.” O’Hara said an advantage of starting with a structural welding program lies in both the demand for workers plus, the measurability of results. He said the tests involving vertical and overhead positions plus stick and wire are clear-cut ways to determine passing levels. The results are even X-rayed and checked through a third party to make sure students can do the job. Hopkinson said that moving them out of a classroom and into a fabrication shop helps introduce them to the demands of the oil and gas industries, safety standards and must-know features of the work, such as basic rigging and material handling. With this training, students from these four partners will be able to start work immediately as positions become available. Hopkinson said there is a gap in the industry and in Alaska hires, so the purpose is to prepare young people to fill jobs for the next several years. He describes the problem as a “70/30 gap,” with the average jobs filling with about 70 percent local hires over the last several years, but the more skilled labor jobs are more difficult to fill locally. Also, a lot of qualified people are leaving the state. “In this case here, after two class we’ll probably have 18 people certified. That’s 18 welders who weren’t here yesterday,” he said. O’Hara said that even though welding work is cyclical, the demand is there for such skill sets. “I’ve been in this industry for about nine years in the personnel side of things and I’ve seen where you cannot find enough structural welders or other trades as well, so we’re a trade-deficient nation and Alaska is no exception,” he said. With this program under their belts, Rudolph said they expect to be able to jump into work full-time this summer when things pick up. Rudolph would like to stay with CH2M Hill as a welder for at least a few more years to build up some savings before college or whatever else may lie ahead. He said welders make a good living, which is part of the driving force of his volunteering for the program. Rudolph and Zagorodniy are already certified through the Colony program, and this program will allow them to get additional qualifications through CH2M Hill. With the added skills and certifications, they expect to be able to hit the ground running when the work comes around. Rudolph said there’s more to the job for him. It’s become a true passion; it even helped him bring up his grades. “Welding’s definitely turned me around,” he said. The company spent about $1,000 per student for this program. O’Hara said this pilot program was a gamble, but more so with the work factor than the financial investment, since jobs are not immediately available and time will tell how that changes once summer rolls around. “This gamble’s saying yeah, we’re going to have the work or we will in the near future to out them to get them employed,” he said, noting that the company is careful not to overstep by giving false job promises. “Our company needs to gain the work as well,” he said. Hopkinson has been pleased with the results, saying 70 percent of the students have moved up enough to jump into a real work environment. Now that the pilot part is done, the question remains: what’s next? The administrators will evaluate how the students worked out and decide if another program will be in store. Hopkinson said a continuation could consist of another welding program. Another option is a similar program for pipefitting, which also is in high demand. “The long and short of it is this is one of those little operations that can turn into a great outreach,” O’Hara said.

Education construction spending gets boost in 2012

Construction spending for the schools gets another boost this year, and there are several projects to account for it. The Associated General Contractors of Alaska and Institute of Social and Economic Research forecast that education-related construction spending will get a 15 percent boost over last year to the tune of $408 million. AGC’s forecast states the increase comes from a $397 million state bond package passed in 2010 in addition to more local school district spending. The Matanuska-Susitna Borough School District wins a large prize at the local level with a five-year $214 million bond package and no shortage of projects to put it toward. Six new construction projects will go forward for the district. Most notably, there will be new school building construction with additional work on athletic field improvements, heating and ventilation work, generator replacements, bathrooms, signage and various other infrastructure needs. The Mat-Su district’s biggest project will be building its first middle and high school combination at the Knik-Goose Bay Road area. “That will help alleviate the crowding at Wasilla Middle and High School,” said district spokeswoman Catherine Esary. A new Valley Pathways building will be built using a modified design previously used at Su Valley Jr/Sr High School, which was lost to fire in 2007. Valley Pathways is an alternative high school serving about 250 students and is located on borough-owned land that was just re-zoned into the Wasilla area. Also on the list is a new Iditarod Elementary and a permanent building for the Mat-Su Day School, which currently uses portable classrooms on borough property but co-located with the District Operations & Maintenance Department. Mat-Su Career and Technical High School will be getting a phase III addition as well. The investments are subject to up to 70 percent of debt service reimbursement by the state. “The bond passed substantially and so we believe that that’s an indication that Mat-Su Borough voters are in support of education. They see the return on their investment. They see that our schools are doing a good job and they want to provide the best facilities,” Esary said. The Anchorage School District will place a $59 million bond proposition on the municipality’s April ballot with an anticipated 60 percent to 70 percent debt reimbursement for most projects. If passed, work will begin this year. Such work includes $23.9 million for life extension projects for schools based  on the district’s new facility condition index. Projects could include fire alarm upgrades, roof replacements, mechanical system work, lighting upgrades and other site improvements. The bond includes $23.8 million for career and technical education improvements with slightly more than half going toward a new structure for West High School. The rest will be to upgrade the programs at this school and allowing other middle and high schools to develop or enhance their own programs. Also, the bond includes $2.4 million to improve Girdwood K-8’s infrastructure, space and condition to meet educational needs, which it currently doesn’t and is overcrowded. Finally, the district must match $9.1 million to receive a $21 million state grant to renovate Service High School. The scope if this project has been reduced following two previously failed bond proposals. The Fairbanks North Star Borough School District also has quite a bit of projects this year that come from previous bonds and legislative action. Projects throughout eight schools will cover about $17.3 million, according to Assistant Superintendent Dave Ferree, who said this amount is up a little bit from the past couple of years. Ferree said the biggest one is phase III renovation at Barnette Magnet School that will cost $9.5 million, followed by a $3.1 million gym renovation at Lathrop High. Other projects covering septic and sewer systems, lighting, siding replacement, power and mechanical upgrades will each cost around $1 million or lower, some of them half or less. In the Juneau School District, work on Gastineau Elementary’s commons and gym renovations will finish up this summer, followed by its playground. Auke Bay Elementary renovations will immediately follow, allowing simultaneous construction. Building won’t be limited to K-12. The University of Alaska Anchorage will be doing hefty additions. The Seawolves will be getting a new 196,000-square-foot sports arena. It’s estimated to cost $82 million and to be completed in 2014. The school of engineering will get a new 72,000-square-foot building for $55 million while the old one is renovated for $11.5 million. A 500-car parking structure is included in the project for an additional $17 million. The whole thing could be completed by 2015. Lastly for UAA, a new Mat-Su Valley performing arts center should start this year and be completed in 2014 for $15 million. The 35,000-square-foot structure will house a 500-seat theater and classrooms. AGC reports that education spending’s biggest leap was between 2005 and 2006, which had a 107 percent increase due to expansive state grants and local bonds that virtually guaranteed reimbursement by the state for certain percentage of the repayments. The pattern leveled out more until 2008, which saw a 20 percent drop due to lower state spending on the K-12 level and less university spending. The forecast has gradually gone up since.

Anchorage construction to see moderate growth in 2012

Anchorage is in for some moderate construction growth next year, as predicted by ECI/Hyer Architecture and Interiors. Principal architect Brian Miessner recently addressed the 2012 forecast to BOMA Anchorage. Miessner said Anchorage’s construction could be on the rise again after a recent slump. 2011 showed a total of $404.9 million in permit values through November. This is a slight increase over 2010, when total values fell drastically from the previous year. Sixty percent of those building permits were for new construction projects, compared to 53 percent for new construction in 2010. “Which is a surprise because last year we didn’t see a lot of construction when I was doing this forecast,” Miessner said. Almost a third of those new construction permits were for commercial buildings, compared to a quarter being for new commercial permits in 2010. Only 20 percent of 2009’s permits were for new commercial construction. “So we seem to have turned a corner in commercial construction and that is played out with the level of activity we saw last year,” Miessner said. Miessner sees several trends developing, such as more smaller developments as larger projects from the past decade come to a close. An 84,000-square-foot crime lab is one example. It’s expected to be completed in July this year at an estimated construction cost of $68 million. Another trend is a decrease in private home construction to make way for a hot rental market. Miessner said this paves the way for a lot of smaller projects with rentals in mind. Miessner said he’s also seen a lot of homeowners getting ready from backfill opportunities from many of these big projects from the 2000s with many homeowners investing heavily in getting their homes looking good for that backfill. He cited the old veterans affairs clinic moving out of the Alaska Regional Hospital campus, clearing around 98,200-square-feet of possible leasing space for investors. Nearby housing rentals would be open for new workers there. Anchorage will be riper with smaller-scale projects than large ones. Renovations like those at the Sears Mall relate to forecasted projects for more cosmetic renovations to attract investors to the city. Such renovations will be especially prevalent in retail establishments. “There’s this pattern across town: owners trying to look better than the others and it’s because there’s more inventory on the market,” Miessner said. Other smaller projects slated for this year include a depot office for the railroad, a new downtown medical office, new offices on the south side and Verizon’s new switching center for its entrance into the Alaska cellular market. Bigger projects include the Anchorage Neighborhood Health Center and Alaska Native Tribal Health Consortium’s new buildings, both scheduled for completion this year with estimated construction costs of $17.2 million and $24 million, respectively. Construction on the Blood Bank of Alaska’s new facility will also get under way with an estimated cost of $36.8 million. It’s scheduled for completion in the fall of 2014. The forecast accounts for startups on the University of Alaska Anchorage’s new sports arena and engineering school facilities, each costing an estimated $82 million. No contractors have been selected yet. A smaller project will be work on a new performing arts center. The other big projector is for military construction. Miessner said there are 12 planned projects costing a total if $355 million, which he said is about 10 percent less than was spent the year before. Further military spending decline may be in store. “The bigger difference is when we look out in future years, the queue doesn’t exist anymore,” he said. This refers to the backlog of projects in the past that are no longer there due to defense budget cuts. There are several road projects but three in particular the firm is keeping an eye on, believing these could spark further development. These projects include continuing work on 40th Avenue, which Miessner said could open enormous investment potential. Another is on 88th Avenue in South Anchorage that one by Midtown Park. Outside Anchorage, the main projects that catch the firm’s attention are the State Archives in Juneau, a large clinic in the Kenai Peninsula and some UAA projects around Soldotna. Managing member Ted Jensen of Reliant LLC talked about the city’s Class A building construction. These buildings are generally bigger, have nicer finishes and are more expensive than Class B buildings. Jensen said new Class A office market will soften in 2012, but there will still be a healthy vacancy rate that will increase. This projects from the trend of companies moving their operations rather than new tenants coming in. He said this new supply with limited demand could slightly increase the Class A vacancy rate to just over 7 percent in a year’s time. Jensen said 200,000 square feet of Class A construction in Anchorage will go online in 2012. Most of these buildings will be to suit specific tenants. Only the Three Cedars Office Building will be speculative. Class A projects will include the Anchorage Neighborhood Health Center, the Glenn Olds Hall addition at Alaska Pacific University, the new Alaska USA building, the Alaska Native Tribal Health Consortium addition and the Dankor building in midtown.

Retail boom slows but new stores still coming

Alaska has experienced a huge retail market boom in recent years as several national brands set up shop here for the first time. That growth will continue, albeit more slowly, in the next few years. 2011 marked the latest year that several brands introducing themselves to the Alaska market. National brands like Apple, Aeropostale, Teavana, Bare Escentuals and most recently Olive Garden opened their first local stores and all in Anchorage. Olive Garden has already begun moving on a second location in south Anchorage. Before then, big names like Target, Walgreens, Bed Bath & Beyond, Kohls and others entered the state over the last several years, with 2007-2009 experiencing huge retail construction. Other stores here expanded into additional locations during that same period. The next few years will have their fair share of retail expansion as well, including new entrants. While the numbers are good, experts say this is still a slowdown from years past. “I think the boom years are probably gone,” said David Irwin, a Bellevue, Wash.-based developer and consultant who works with Alaska retail construction. “We’re at a good level pace. And I think that that’s we’re going to be for the next couple of years.” Commercial sales associate Brandon Walker of Bond, Stephens and Johnson said slowing new entry into Alaska is indeed a trend right now. Some factors to this include national brands achieving their exploratory goals in Anchorage or trying other locations. Some of these even include other parts of Alaska. Still, new entries will be here. Walker said Alaska represents a good growth market for companies that have exhausted other locations down south. This is supported by increased spending for each quarter in 2011, most notably in commercial real estate, which as up 13 percent that year. Alaska can now look forward to Verizon, AutoZone, Buffalo Wild Wings and Sport Clips this year and next. Charley’s Grilled Subs will be expanding into the Alaska civilian retail market this year with its first non-military presence at Anchorage’s Dimond Center. The sandwich chain currently has locations at Joint Base Elmendorf-Richardson and Eielson Air Force Base. Walker said there are several other tenants to watch out for this year, including some new retailers that could each take 20,000 to 40,000 square feet in Anchorage. Another potential fashion industry tenant could be constructing stores in Anchorage and Southcentral Alaska. National name expansion will also be happening. Notably, Petco and OfficeMax have just opened stores in Juneau, which Irwin said is the smallest market brands like that would consider. OfficeMax spokeswoman Nicole Miller said the office supply giant does have some other stores in similar size markets. Irwin worked on the deal for these stores’ placement in the capital city’s Nugget Mall. Irwin said a lot of brand expansions like this stem from retailers finding a good home in Anchorage, leading to the next step of branching out in the state. “You find that they typically enter Anchorage first and then see how they do,” he said. OfficeMax already has two locations in Anchorage and another in Fairbanks. Miller said the company recognized the demand in the Southeast area as well. “We’re very excited about the market. We think certainly based on our services out of our Anchorage stores that the demand for our business services here will be great and certainly with the residential communities as well,” she said. Juneau store manager Chuck Collins said the company already had existing customers in the Southeast, which helped cement the decision. He said the addition of more national brands in Juneau is a sign of the city’s maturation process as more have moved into the area. He said the store covers about 17,000 square feet and the staff of 25 are local hires. The new location also allows use of the office retailer’s newest store design format. Irwin said all but one of the national brands he works with already have presences in Anchorage, and most of them do well. Pier 1 Imports is in the middle of negotiating a second Anchorage location as well as one in Fairbanks. Some brands, like Starbucks and GNC, are expanding their store numbers, which Walker said may include more Alaska locations in the next few years. Walker feels that Alaska’s status as a growth market could also entice brands looking to build more stores, such as Big Lots, Rally’s, Sonic, Panda Express and others. Many other brands have explored here but have not committed to building. Walker said prices and vacancies in retail properties should remain stable due to increased confidence by local users and continued national expansion, although national growth will be tempered by a need for economies of scale. “One of the challenges with many of these tenants is basically that despite Alaska’s status as a growth market, the logistics of opening enough stores here to achieve an economy of scale can pose a hurdle,” Walker said. He said to meet this challenge, Anchorage, which is the hub most national retails had to first, will need more retail property. Walker surveyed about 40 percent of the 10 million square feet of retail space in Anchorage and found a 5.13 percent in Anchorage’s overall retail vacancy compared to a national retail vacancy rate of 12.9 percent. “While sellers may be making a little bit of concession, the buyers are making much greater degrees of concession to meet the sellers,” Walker said. He said that signs point toward good confidence in commercial real estate. Still, there are challenges. Walker said a certain degree of uncertainty is separating consumers and sellers, as property owners don’t need to settle since vacancies and interest rates are low. Meanwhile, buyers are concerned about national markets as well as Alaska’s resource development, contributing to unease for long-term commitments in entering the market here. As such, local business confidence may have slipped after 2010, however national markets have still been exploring Alaska as a growth alternative when they’ve already exhausted many other locations. Irwin said retailers have also been drawn to the state thanks to Alaska’s clamoring for new stores. Olive Garden is one example, as there has been local interest in the company for years. Walker also said co-tenancy is important and that national tenants are experience lower price elasticity of demand than local tenants. “Obviously, tenants want to be near other successful businesses,” he said. “But I think that we can see in price elasticity of demand of this more retail product that properties with the most sought after anchors and best co-tenants, they can generally name their price, whereas more of the aggressive price cuts at similar properties may generally be overlooked by national organizations.” Irwin said it’s not uncommon for names to look here for several years before committing. Even then, it takes a long time to get a store online, especially when having to work around the weather. In places like Fairbanks, construction can often wait until the next summer. Another Alaska construction liability is the inability to offer cheap rates, which Walker said can deter retailers like Dollar General. “It’s a long way to go if you’re just going to put two or three stores,” Irwin said. This matters to retailers even if sales are good. Irwin has been working with several national brand retail projects outside of Anchorage, including an AT&T building in Fairbanks, Petco and OfficeMax in Juneau and 12,000 square feet for a national retailer in Soldotna. Additional 6,000- and 10,000-square-foot retailers are on the docket in Fairbanks. He is also working on adding 8,000 to 10,000 square feet to an existing retailer in Anchorage.

Busy construction season slated for 2012

Alaska’s contractors are back in the upswing, according to the Associated General Contractors of Alaska. AGC released its annual construction spending forecast, and it’s good news for the most part, with total spending up, particularly in the private sector. Total spending for 2012 is expected to be up 3 percent to $7.7 billion compared to 2011. Without oil and gas spending, that amount is $4.6 billion, which is still an improvement. Wage and salary employment will remain unchanged from last year at 15,800. This is still down from the 2005 peak at 18,300. ACG’s forecast draws from data provided by the Institute of Social and Economic Research. ISER economist and researcher Scott Goldsmith joined AGC Executive Director John MacKinnon in addressing the numbers to expect this year. “Things look pretty healthy in spending from our private sector basic industries of oil and gas, mining. Some of us had hoped that they’d be a little bit higher than they are,” Goldsmith said. “In terms of our support industries, utilities and health care are strong and weaknesses in residential and commercial, we shall wait to hear some good news coming out of the economy.” Private spending will be up in all categories, most notably in mining, utilities and health, the latter two being helped by public funding for some projects. The biggest spending will remain in oil and gas construction at $3.1 billion. Most construction concerning the big three oil companies (BP, ConocoPhillps, Exxon) will be on infrastructure maintenance since they will not be doing exploratory drilling. Some will go to BP’s sustained production on light reserves with some heavy oil development. Work with ConocoPhillips and Exxon will go toward developing existing reserves. Work with other smaller operations will their support drilling programs, including ENI, Pioneer, Brooks Range Petroleum, Savant, Great Bear and Repsol. Construction spending relatively flattened over the last several years but is about double what it was in 2004, mostly due to work on existing infrastructure. “We’re seeing a tremendous amount of the increase is largely on the maintenance and structure side. It’s not on getting new production on oil,” MacKinnon said. Mining construction will see an 11 percent increase with significant spending related to the studies from the large-scale prospects of Donlin Creek, Pebble and Livengood. Capital spending will go down slightly at the large mines like Pogo, Kensington, Greens Creek, Red Dog, Fort Knox, Usibelli and Nixon Fork with efforts going more into facility upgrades than production. Utility work will see the biggest jump over last year as more effort goes into power generation, such as a new Anchorage Municipal Light and Power and Chugach Electric Association’s new gas-fired power plant plus wind farms at Fire Island near Anchorage and Eva Creek outside Fairbanks. There are hydroelectric projects under way at Blue Lake near Sitka, Terror Lake near Kodiak and Allison Creek in the Copper Valley. Many of these projects are being aided by increased state funds for fiscal year 2012. Work on other utilities like telecommunications and natural gas transmissions will go up too. Large federal funding will help push Native health projects forward this year, particularly on hospitals. Spending for other basic rural or commercial projects will remain unchanged, as will residential construction spending. Public spending will be down for traditional government purposes, particularly as the state will have to compensate for many projects as federal financing drops. This is especially evident with a sharp 67 percent decrease concerning the Denali Commission. The commission, like many public efforts, will see federal dollars getting tighter. “This may be a sign of things to come,” Goldsmith said of the state-federal partnership. This is also evident in defense construction, which will take a 17 percent hit this year at $460 million. This is compliant with nationwide defense spending cuts. However, many projects, particularly those related to transportation and education, will see hefty increases. Grant funds in the state capital budget will push highway construction spending up 10 percent, although federal funds continue to be the largest contributor in this area. This is also true for airports. Construction includes a number of projects at Ted Stevens Anchorage International Airport, ports and harbor work around the state and capital construction programs for modernizing the railroad. Education project funding will be up in part because of a $397 million statewide bond package that was passed in 2010. Goldsmith said Alaska is fortunate to have adequate funds in the capital budget for many public projects.

First hearings hydro project planned for March

JUNEAU — The Alaska Energy Authority and the Federal Energy Regulatory Commission will conduct  “scoping meetings” in March for the planned $5 billion-plus Watana hydro project on the Susitna River north of Anchorage. The meetings, planned for March 27 through March 30 in Anchorage, Wasilla, Talkneetna, Fairbanks and Glennallen, are the first step in a required federal environmental impact statement, or EIS, for the project, AEA officials told a state legislative committee in Juneau Jan. 26. The Federal Energy Regulatory Commission is the lead federal agency on the EIS, and will be the agency conducting the hearings. Following the “scoping” meetings, the next step would be preparation of a draft EIS document followed by a final EIS and record of decision, if the project is approved. On a separate regulatory track, FERC must also issue a federal certificate (a form of permit) for the project. AEA filed a Preliminary Application Document with FERC on Dec. 29 and anticipates filing a full application by the end of 2012, Wayne Dyok, Watana project manager for the Alaska Energy Authority, told the Energy Committee of the state House in the briefing.  An initial estimate of the project cost is $5 billon but Dyok said he expects to receive an updated cost estimate soon. The project would involve a 700-foot-high concrete dam at a location about 185 miles up the Susitna River from its mouth at Cook Inlet. It would create a lake 39 miles long by two miles at its widest, Dyok said. If it is built at the scale now planned, it would have a capacity of 600 megawatts and generate 2.5 million megawatt hours of power annually, which would meet about half of the electricity requirement expected in the future for communities in Interior and Southcentral Alaska now connected to the regional power grid, Dyok said. On its present schedule the Watana project would not be in operation until 2023. “We are still assessing the optimal size of the project and would have this at the time we file our formal application with FERC at the end of the year,” Dyok said. The project would be designed for expansion, most likely by raising the height of the concrete dam, he said. The powerhouse for the dam would be built from the start with sufficient capacity for expansion, he said. The agency is also still considering different route options for a road and transmission line corridor that would be built to the site. One is a route corridor from the Denali Highway south to where the project would be built. A second would be east from the Parks Highway near the Chulitna River bridge, and on a corridor north of the Susitna River. A third, the “Gold Creek” corridor, would also extend from the Parks Highway east to the project, but south of the Susitna River, Dyok said. Watana is a scaled-down version of the much-larger Susitna River hydro project planned in the 1980s which would have involved two dams on the river. If the project is built, it would generate electricity at a constant price for decades. Interior and Southcentral Alaska now depend largely on fossil fuels, mainly natural gas, oil and coal, for power generation, and the prices for natural gas and oil are subject to sharp swings. The state of Alaska conducted extensive studies in the 1980s for the large Susitna River project then planned, but dropped the project because of costs. It would have involved two dams, one at Watana and another upriver at Devil’s Canyon. The new version of the project involves just one dam at Watana and is smaller in scale. However, the AEA is now benefitting from a substantial amount of geotechnical work done in the 1980s that is still valid, Dyok said. That has reduced the amount of new geotechnical drilling needed, he said. Some new geotechnical drilling was done last summer, Dyok said. There were also a large number of environmental studies done for the earlier project which are valuable, although much of that information must be updated for the new EIS, he said. For example, federal definitions of wetlands have changed so that new wetlands mapping must now be done, Dyok told the committee. Last year the state Legislature appropriated $67 million, which is sufficient to fund planning and work on the FERC application through 2012, but more funding from the state will be needed to continue work after the application with FERC is filed late this year, Dyok said. If the project proceeds the state will have to decide at some point whether to make a large equity investment in the project, Dyok said. This could involve an appropriation of several billion dollars. AEA’s current plan for financing is to pursue a model similar to that used for the Bradley Lake hydro project near Homer, where utilities in Southcentral and Interior signed long-term power purchase agreements. On the basis of those the Alaska Power Authority sold revenue bonds to pay for construction of Bradley Lake. However, the state made a direct investment in the project, which lowered the amount of bonds that had to be sold, reducing payments and the price of power the utilities paid. Today Bradley Lake hydro power is some of the least expensive power available to the regional utilities, although coal-fired power, using coal from the Usbelli Mine at Healy, is also very reasonably priced compared with oil and natural gas.

Plea deal for one in massive contracting fraud case

WASHINGTON (AP) — A former Army Corps of Engineers employee has agreed to plead guilty for his role in what prosecutors say may be one of the largest and most brazen frauds involving U.S. government contracts, court papers show. Michael A. Alexander plans to plead guilty to charges of bribery and conspiracy to launder money, his attorney wrote in court papers, requesting a hearing as early as Monday. Alexander, another Army Corps of Engineers employee and two other men were indicted in October on charges of participating in a $20 million bribery and kickback scheme involving the awarding of government contracts. Alexander, a program director, and Kerry F. Khan, an Army Corps program manager, received kickbacks in exchange for directing government contracts to a subcontractor specializing in software encryption devices and other information assurance technology, prosecutors said. The kickbacks paid for luxuries including properties, Rolex and Cartier watches, sports cars and hotel accommodations, prosecutors said. The scheme, which authorities said spanned roughly four years, involved phony and inflated invoices for government contracts and millions of dollars in kickbacks that were funneled through a network of shell companies in the United States and around the world. Also indicted were Kerry Khan's son, Lee, and Harold F. Babb, the director of contracts for Eyak Technology LLC. Eyak Technology is a subsidiary of an Alaska native corporation with Virginia operations. It was the prime contractor for a five-year, $1 billion contract administered by the Army Corps of Engineers. The two Khans and Babb have pleaded not guilty, though two officials with an EyakTek subcontractor — Nova Datacom — have already pleaded guilty. It was not immediately clear whether Alexander planned to cooperate against his co-defendants, though his lawyer wrote that his client has agreed to plead guilty, "among other things," as part of a deal with the government. Alexander's lawyer, Christopher Davis, did not immediately return a call seeking comment Wednesday. A spokesman for the U.S. attorney's office in the District of Columbia, which is prosecuting the case, declined to comment.

Bids for Fairbanks' Illinois Street project under review

After 30 years, work is finally pushing forward on improving Fairbanks’ Illinois Street. The Alaska Department of Transportation and Public Facilities has opened bids to reconstruct a major throughway to help correct confusing lane configurations and improve safety conditions. Illinois Street is the city’s main access route downtown from the north. A number of safety concerns has spurred the state into pushing ahead. Bidding for the project is now closed and DOT is reviewing the bids, after which a Letter of Intent to Award will be issued to the lowest responsible bidder. HC Contractors Inc. of North Pole is the apparent low bidder so far with an unchecked bid of $21,965,862 but DOT spokeswoman Meadow Bailey said that all bids are still being reviewed. The work is intended to correct several issues. This includes improving inadequate pedestrian and bicycle facilities, as Bailey said there aren’t adequate sidewalks in the area. The work includes pavement improvements, drainage upgrades, lighting improvements and fixing sight problems. Bailey said this will improve safety condition and enhance the street’s long-term growth and redevelopment. The project also links College Road to a new bridge at the Chena River. Work is scheduled to begin this year and continue through 2013. “Work on the Illinois Street Reconstruction project started over 30 years ago,” she said. “To be at the point where we will see construction begin this summer is very exciting for everyone at DOT.” Bailey said the department fully supports the downtown development and that such work normally doesn’t take so long to get under way, but each case is different. It depends on funding, the state’s priority of the project and the transportation needs involved. “As transportation priorities have shifted, this project has risen to the top,” she said. Factors that helped influence these priorities include an accident rate at Cushman Street and First Avenue that’s three times higher than expected and poor sight distance at Church Street due to the road curvature. The unchecked bid is lower than DOT’s estimate of $22,687,027. The Fairbanks Daily-News-Miner has previously reported that the project would cost roughly $30 million. Bailey said construction has already been going on for three years, such as on the Barnette Street bridge. The bridge is not in use yet but is expected to be completed toward the end of the year.

Builders Choice cuts ribbon at new SD facility

See a link to story by KCAU-TV in Sioux City, Iowa, on the new Builders Choice facility.   Builders Choice celebrated its official opening in Vermillion, S.D., today with a ribbon-cutting ceremony at its new 45,000 square-foot facility. Anchorage-based Builders Choice, a modular building manufacturer, has already hired over 30 people at its Vermillion operation and expects to add approximately 30 more employees within the next year. “I have been very pleased with the skill level and work ethic of the Vermillion labor pool,” said Builders Choice President Mark Larson. “The South Dakota facility is already proving to be a good addition for our company, and we look forward to continued growth here.” The oil boom in North Dakota opened up a new market for Builders Choice products and caused the company to start looking at new facility options in South Dakota. “We obviously wanted to be physically closer to the expanded market, and Vermillion was able to put us within a desired proximity and offer us a strong workforce. This community is a great fit for us,” said Larson. South Dakota Governor Dennis Daugaard said the relationship between South Dakota and Builders Choice is mutually beneficial. “Together with Vermillion, we were able to meet the needs of the company and help poise it for growth,” said Daugaard. “And from a state perspective, it’s encouraging to find opportunities that allow job growth in South Dakota by leveraging the positive economic activity in North Dakota.” Steve Howe, Director of the Vermillion Area Chamber & Development Company said, “Builders Choice is great news for our community. The company is investing in Vermillion, creating jobs and helping us diversify our economy. We’re very excited to have Builders Choice in Vermillion.” Builders Choice builds modular solutions for both residential and commercial purposes. At the Vermillion facility, the company manufactures modular units for worksite housing, hotel and apartments, and office and administrative facilities. The company was established in 1996.

Construction job demand promising in Homer

  HOMER — Foundations going in, walls going up, roofs going on. Who knew this year's construction season was going to be so busy? Not Steve Bowen of Little Knife Construction. Every job that came Bowen's way this spring, he took. As it's turned out, the seven projects — some done by his company, some done as a project manager for Bruce Petska of Big Mountain Builders — are not only keeping Bowen busy, but also boosting his reputation as a builder. "He's been running my projects and doing most of the work this summer," said Petska. "A lot of people are starting to know him." For Petska, the tempo of this year's construction season is just about what he'd anticipated, with the bulk of his work focused on building homes or garages. "It's been right on par with about an average or as busy a year as we've had," said Petska. To keep busy, however, meant "we had to become a little more resourceful" and plan ahead "to make sure you can get a project off the ground. And we do some of our own construction financing, so that simplifies it." Three of the projects have been homes on Fairview Avenue — one near the high school, two near Fairview's intersection with Hohe Street. "People are looking for new, energy-efficient houses," said Bowen. "Having that (energy efficient) quality opens up the door for financing." The combination of energy efficiency, square footage — something in the 1,000-1,400 square foot range — and an affordable lot seems to be a winning combination right now. "That's the other thing we're up against in Homer, area lots available in a price range you can build an entry-level house on," said Petska. "If you get over $135,000-$145,000, you start to run out of clients. It's tough to build something for less than that in Homer. That's the fine line right now." Putting together that kind of a price requires advance planning. "People aren't aware a lot of times that they can get one for that price range if they work with the builder ahead of time," said Petska. Some new construction indicates a coming increase in the city's population, such as the house Rod Bennett of Bennett Construction is building for his two sisters. The 1,500-square-foot house is being done for his two sisters who grew up in Alaska, but currently live in Wasilla and Alabama. Smaller, more energy-efficient homes and new multi-unit housing developments suggest a possible trend toward affordable housing for low- to middle-income families and away from vacation and high-end retirement homes. Several large commercial projects and an increase in residential construction indicate more building going on in the city of Homer this year compared to 2010. City of Homer building permits for 2010 show the following: New residential permits for 2011 to date are 28 for a total of $5.5 million, compared to 17 permits at the same time last year. Commercial zoning permits are 4, for a total of $3.5 million, compared to two at the same time last year. The record low for residential permits was 16 in 1993 and the record high was 51 in 2005. Sheldon Beachy of Beachy Construction also was surprised at the number of projects in which his company is involved this year. "It started out a little slower, but right now we're almost swamped. We're pretty busy," said Beachy. The work he and his crew of eight to 10 employees are doing range from a smaller three-bedroom, two-bath home to a couple of 4,500-square-foot homes for retirees moving to Homer to a large remodel job that will be a 15,000-square-foot combined residence and bed and breakfast. "We're not complaining," said Beachy of the workload. In addition to single-family dwellings, several large construction projects are under way. The Kenai Peninsula Housing Initiative is currently building Alderbrook Apartments, a six-plex, and MainTree Supportive Housing, said Steven Rouse, KPHI executive director. The projects were competitively advertised. Architectural work was done by the Anchorage firm Bezek Durst Seiser; construction is being done by Sundance Construction of Kasilof; Shank Electric of Homer is doing the electrical work. "There is definitely a need for high quality, affordable rental properties in Homer and this is evidence of that fact," said Rouse. "We anticipate this to be the first phase and we are preparing to add another duplex in a couple of years at the same site." MainTree is a $1.9 million remodel and expansion project that is turning a four-plex formerly owned by South Peninsula Behavioral Health into a 10-unit supportive housing facility. Similar to KPHI's Brookside, built in 2004 on Mattox Road, it will offer independent living with supportive services on site for beneficiaries of the Alaska Mental Health Trust, individuals who are either developmentally disabled or have a mental condition requiring living skills training and medication management, said Rouse. Construction is scheduled to be complete by spring of 2012.    

Construction fatalities decline 


  The number of construction fatalities declined by nearly 10 percent between 2009 and 2010 and by almost 40 percent during the past five years, according to an analysis of new federal data prepared by the Associated General Contractors of America. Association officials pointed to an industry-wide commitment to improving workplace safety as a key reason for the safety improvements. The number of construction fatalities in 2010 was 751, down from 834 in 2009 and 1,239 in 2006, according to a written release. The construction industry has taken a range of steps to improve workplace safety during the past two decades, according to AGC. Safety planning is considered an essential part of all pre-construction plans. Construction workers also undergo rigorous and ongoing safety training both at construction sites and within company training rooms. Many firms also now regularly participate in association-led safety stand-downs, stopping all construction activity during a particular day to hold intense safety training and drills. The association has also worked to establish a host of safety programs and materials from which construction firms are benefitting. The work the association has done to train construction workers in fall protection measures in helping cut fall fatalities from 447 in 2007 to 260 in 2010, a 42 percent decline. He added that the association offers a wide range of safety training programs and tools to construction firms across the industry. Sandherr noted that the association remained committed to working with federal, state and local officials to continue improving workplace safety. “Nobody has a monopoly on improving workplace safety.”  

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