CIRI announces record profits, wins lawsuit

ANCHORAGE -- Cook Inlet Region Inc. posted a $434 million profit last year, a record for an Alaska Native corporation.That’s up from $102 million earned in the previous year.The Anchorage-based regional Native corporation saw profits swell after it sold off valuable investments in VoiceStream Wireless Corp.Revenue also skyrocketed, jumping to $857 million, up from $380 million in 2000."A milestone," said Carl Marrs, CIRI’s chief executive, describing the company’s success last year. "It’s going to be just impossible to match again for a while."CIRI, one of Alaska’s most successful Native corporations, will continue to be a cautious but aggressive investor, Marrs said. It is eyeing two potentially lucrative deals, one in oil and gas, the other in jet leasing, the chief executive said. He was reluctant to offer details until the deals are signed.On another matter, attorneys for CIRI scored a court victory in late March in a dispute over a controversial elders program the corporation launched two years ago. Under the program, shareholders 65 and older were given a quarterly dividend of $450.A small group of shareholders sued, saying the elder dividend violated corporate rules by creating a separate class of shareholders who received special treatment."It’s a corporate scheme that robs Peter to pay Paul," said Petersburg attorney Fred Triem, who represented the plaintiffs.CIRI is taking roughly $1 million a year that belongs to all shareholders and giving it to a group of 500 elders, Triem said."I have nothing against older people. I’m 62 myself," he said. But there are other CIRI shareholders, such as single mothers, the unemployed or infirm, who could use the money too, Triem argued.A three-judge panel of the 9th U.S. Circuit Court of Appeals disagreed. The Alaska Native Claims Settlement Act allows the corporation to offer the elder dividends, the court said. In addition, legislative history confirms that Congress intended that Native corporations provide the type of benefits provided by CIRI in this case, the judges ruled.

Business Profile: Alaska Telecom Inc.

Name of the company: Alaska Telecom Inc.Established: 1981Location: 6623 Brayton Drive, AnchorageTelephone: 907-344-1223Web site: www.alaskatelecom.comMajor focus of services: Alaska Telecom Inc. provides engineering, maintenance, design and integration, and construction and installation of communications systems including satellite, microwave, cellular and communications tower equipment. The company also resells cellular phone service from Alaska Communications Systems.History of the company: Alaskan Lloyd Morris founded Alaska Telecom to meet a need for providing telecommunications infrastructure in remote Alaska locations. That focus led the company to handle projects on the North Slope.Alaska Telecom has performed communications engineering and other services for Alyeska Pipeline Service Co. and AMOCO.At one time the company operated a wireless communications system, then a pre-cursor to cellular service, for northern Alaska through a sister company owned by Ukpeagvik Inupiat Corp. of Barrow.The company also has completed many projects around the world. In 1988 Alaska Telecom designed a radio system for NBC during its broadcast of the Olympics that year in Seoul. Alaska Telecom returned to the Olympics, providing a similar system in 1992 at Barcelona. Employees from Alaska Telecom also were among the first people to enter Kuwait after the Gulf War in 1991, where the company installed microwave communications equipment that served as the country’s chief telephone system. Alaska Telecom also has worked in Azerbaijan, Canada, Indonesia, South Korea, Russia, Saudi Arabia, the South China Sea, Taiwan and other locations.Alaska Telecom has developed a niche market by creating teams of employees who are skilled in several technical areas and able to work under severe climate conditions.The company, which has offices in Fairbanks and Deadhorse, typically employs 30 people.Top accomplishment of the company: One leading achievement is "the fact that we have been able to hire and employ and work with such fine people," Morris said. Another advantage is that Alaska Telecom tallies several long-time employees. The company also has worked with the latest communications equipment. "We’ve had the good fortune of dealing with technology in our industry that was leading edge," he said.Major player: Lloyd Morris, president, Alaska Telecom Inc.Morris, who earned college degrees in electrical engineering and business, moved to Alaska in 1969. He came to Fairbanks as an employee with General Electric Co. to repair KTVF-TV, which had been damaged in a flood. Later Alaska broadcaster Augie Hiebert asked Morris to work at Northern Television Inc., which operated KTVF and KTVA in Anchorage.-- Nancy Pounds

Knowles rejects Russian firm's salmon processing plan

JUNEAU -- Gov. Tony Knowles has turned down a Seattle-based company’s proposal to bring Russian fish processing boats into Alaska waters to buy salmon this summer.Knowles said the proposal did not comply with a federal law that prohibits foreign fish processing if plants within the state have the capacity, and the intent, to process all the fish landed here.In a letter to Oleg Nikitenko of Global Seafoods North America, Knowles said the state had surveyed salmon processors and concluded they can handle projected harvests and intend to do so."While some plants may not operate, or operate at lower capacity, other plants plan on operating as they did last year, or at higher levels," Knowles said.Nikitenko said he will not try to appeal the governor’s decision because even if he won, he would not win a permit in time to process fish this summer.He may still try to operate processing boats in waters off Metlakatla on Annette Island, unless he faces an expensive legal battle to do so, Nikitenko said. A processing plant in Metlakatla is closing this year, leaving fishermen there without a market. As an Indian reservation, it’s not clear how the federal law would apply to the island.Nikitenko said he plans to apply for a permit for other areas of the state again next year when a new governor is in office.He said he was ready to buy as much as 100 million pounds of pink salmon and 10 million pounds of chum salmon. The boats would have operated in Southeast Alaska, Prince William Sound and Kodiak Island waters."I would like to apologize to all the fishermen who are left without a market this year," Nikitenko said. "I hope they will survive this next year."He said he believes the governor relied on misleading information to make his decision."I was advised by different friends that what I’m doing is very good businesswise, not only for me but for Alaska communities, but it’s politically incorrect," Nikitenko said.Processors currently operating in Alaska opposed the permit, but some fishermen in Southeast had welcomed the prospect. Some had received layoff letters from processors telling them they would not be purchasing fish from them this year.King said the administration asked about those letters, which seemed inconsistent with processors’ claims that they would handle all the fish landed.The processors responded that they intended to increase efficiency by processing the same amount of fish, but dealing with fewer fishermen, King said."The governor’s very concerned about the jobs of Alaska fishermen, particularly in Metlakatla," King said. "At the same time the governor felt the law was very clear cut."

Around the World April 7, 2002

STATEBill lets commissioner overrule fisheries boardJUNEAU -- A bill clarifying when the Fish and Game commissioner can overrule Board of Fisheries decisions passed the state House April 1.House Bill 216 would let the commissioner open or extend a fishing season to prevent fishermen from losing a chance to harvest fish that show up in abundance, even if the change means superseding a board decision. However, the commissioner would not be allowed to use that authority to summarily change the way the board had decided to allocate fish among competing users.The bill’s sponsor, Rep. Drew Scalzi, R-Homer, said the measure simply clarifies the commissioner’s authority to allow more fishing during times of surplus.Rep. Fred Dyson, R-Eagle River, supported the bill, saying it would let the department respond to changes that could not be anticipated when board decisions were made."Adapting to what’s going on is a continually changing game for managers of those fisheries," Dyson said.Measure would make it easier to employ minorsJUNEAU -- The House of Representatives approved a bill April 1 aimed at making it easier for businesses to hire minors.Currently, employers must obtain a work permit signed by the commissioner of the Department of Labor for each minor they intend to employ.In a sponsor statement, Ogan had said the current law discourages farmers from hiring young workers for the harvest season because it takes too long to get approval.House Bill 128, sponsored by Rep. Scott Ogan, R-Palmer, would allow employers to get advance approval from the Department of Labor to hire teens 14 and older for certain types of jobs.That would allow businesses to hire teens and submit the work permit paperwork after the fact. A teen’s parents would still need to provide permission for the youth to work.The measure passed 29 to 0.Ogan, who is recovering from a heart attack in an Anchorage hospital, was not able to vote on the bill.NATIONGM, Ford report slower sales in first quarterDETROIT -- General Motors Corp. on April 2 reported U.S. vehicle sales slipped 1.7 percent last month compared with a year ago, while Ford Motor Co.’s sales sank 12.6 percent.GM, the world’s largest automaker, reported its light truck sales increased 8.7 percent over the same month in 2001, while passenger car sales declined 12.9 percent.The company’s Saab unit saw sales surge 59.1 percent over March of last year.Sales of Ford, Lincoln and Mercury cars were 12.7 percent lower in March than a year ago, and light truck sales decreased 12.5 percent.Ford’s Jaguar and Land Rover units reported record sales during March, with increases of 86.9 percent and 36.6 percent, respectivelyThe automaker’s Volvo unit saw sales drop 19.1 percent compared with March 2001.Among other automakers, BMW of North America LLC reported its best March ever.Subaru of America Inc.’s March vehicle sales fell 2.8 percent from the same month in 2001, weighted down by a 14.6 percent drop in sales of its Forester SUV.WORLDEconomic outlook low in Japan but may riseTOKYO -- Japanese business sentiment remained at a three-year low in the first quarter of this year, dampening hopes companies were becoming more optimistic amid the global economic rebound.The Bank of Japan’s quarterly "tankan" survey for March showed corporate confidence among large manufacturers at minus 38, unchanged from the previous survey in December. The index gives the percentage of companies saying conditions are bad subtracted from those reporting conditions are good.The March survey, released April 1, indicated Japanese companies were still reluctant to invest more despite tentative signs of a recovery in exports, the engine of the nation’s economy.However, many large manufacturers predicted conditions would improve in coming months.Business sentiment has deteriorated sharply since last year as the slump in the information technology sector and the U.S. economic downturn hurt exports and sent industrial output into its steepest dive since 1975.-- Compiled from business wire services.

Bone density scanner expands services available at Kenai clinic

KENAI -- Adult bone density peaks at age 30. The chances of losing bone mass increase, particularly in women, beginning around age 40. Since last fall, Central Peninsula General Hospital’s Kenai clinic has been using new technology to identify osteoporosis, the thinning and weakening of bones.The clinic is in the Kenai Health Center on Barnacle Way."It’s a state-of-the-art machine," said CPGH spokesperson Bonnie Nichols of the bone densitometer, which uses X-rays to measure bone and body density.CPGH acquired the $130,000 piece of equipment in October, shortly after the health center opened, and imaging technologist Margaret "Muggs" Prestwick said the center has screened more than 100 patients for osteoporosis since then."There has been more emphasis on bone density screening in the last three to four years," Prestwick said. "They (doctors) are repairing so many fractured hips, wrists and legs."Osteoporosis affects about 28 million Americans, according to CPGH-provided information. Eighty percent of those cases reported are women, in whom the hormone estrogen stops replacing bone matter that is continually deteriorating, and bones become brittle and susceptible to breaking.The condition is responsible for more than 1.5 million fractures each year, including 300,000 hip fractures, 700,000 vertebrae, or back, fractures, 250,000 wrist fractures and more than 300,000 fractures in other sites.The densitometer offers an efficient way to identify a problem, and, after nearly 15 years of earlier models, is safe and takes little time, Prestwick said."The exam time has gone from minutes to literally seconds," she said. "It gives off very minimal doses of radiation. I’m right here (next to the machine) all through the day."Nichols said the machine is very popular with Kenai Peninsula residents, who before had to make a day’s drive for this type of screening."It’s been requested over and over again by patients going to Anchorage," she said."Women who needed that baseline bone density testing to make sure that they weren’t losing bone as they age have somewhere nearby."The machine is set up much like a physician’s table, with the mattress for a patient to lie upon during the examination. A boom extends above the table and is attached to a motor beneath that slowly moves the arm back and forth over the patient’s body, sending radiation through to a sensor underneath.This sensor is connected to a computer, where the information is processed.Prestwick said the entire process takes roughly 30 minutes, although much of that time involves gathering patient information -- measuring height and weight, and assessing potential risk factors -- and analyzing the data collected. X-rays are typically taken of a patient’s spine, hips and a forearm."Those are the spots that are sensitive to breaking," Prestwick said.She said the machine offers another benefit above and beyond scanning for bone tissue loss. The densitometer can tell one’s body fat percentage."Because of the process, the equipment can measure body tissue, body mass and the whole body composition," she said. "Some of the health nuts are more interested in this than the average patient."Prestwick, who has been doing medical imaging for 30 years, said the cost of a bone density test is $260 for the entire analysis. She said those who discover a problem often begin hormone replacement therapy to return bone mass to their bodies.The risk of osteoporosis in women increases after menopause and with smoking or drinking. Women with low body weight, insufficient calcium in their diets, poor exercise habits, family histories of osteoporosis or medical histories of liver disease, anorexia or overactive thyroid glands can also be at risk.But, Prestwick said, it is still imperative to detect osteoporosis as early as possible."It’s difficult to gain back bone density you’ve already lost," she said. "We can arrest it, but we can’t reverse it."

Kohring wants trail funds to go to gravel roads

Efforts are under way in the Legislature to carve out a new, separate category for rural "rustic" roads within the federal surface transportation funds Alaska receives each year.This comes just weeks after the state Department of Transportation and Public Facilities adopted new regulations establishing percentage levels for categories of highways, roads and trails.House Bill 502, sponsored by Rep. Vic Kohring, R-Wasilla, would mostly shift federal funding now designated for recreational trails and roadside amenities into financing construction of new gravel roads in rural areas.Hearings on the bill have been under way in the House Transportation Committee, on which Kohring is chairman.The state now allocates about $15 million in federal funds received annually into trails and recreation access projects. Kohring would reduce that by about half, putting the remainder into construction of new rural roads.Mike Downing, assistant commissioner of the Department of Transportation and Public Facilities, urged the Transportation Committee to give the new DOT funding allocation regulations a chance before placing new categories in the statute.He warned legislators that the proposal in HB502 could lock the agency into narrow funding categories, reducing flexibility.Kohring’s proposal addresses a long-standing point of conflict between many legislators and Gov. Tony Knowles. They believe the governor is reluctant to tackle construction of new roads to communities that are now isolated or into undeveloped areas to stimulate development.Lawmakers, including Kohring, also feel Knowles has placed too much emphasis on recreational trails at the expense of roads, particularly a controversial proposed extension of Anchorage’s Coastal Trail that has seen major cost increases.As a way of addressing the cost issue, HB 502 also includes a new section taken from another measure, HB473, which requires that the Legislature be informed when costs of a transportation project, after design and engineering, exceeds 50 percent of the original estimate, or that three years have elapsed since the Legislature approved the project for the statewide transportation improvement plan.The measure requires the Department of Transportation and Public Facilities to prepare a written justification for a project’s higher cost, or its delay beyond three years, and that the justification be inserted into the annual capital budget submitted by the state administration to the Legislature.In that way, the Legislature will review the project as it conducts its review of the capital budget, according to Rep. Joe Green, R-Anchorage, the sponsor of HB473. If lawmakers decide to abandon the project because of the higher cost or delays, they can do so through the capital budget, Green said.Green argues that the Legislature needs a way to take another look at projects that have seen major cost increases or delays. Under the current procedure, once lawmakers have given their approval for a project to be on DOT&PF’s statewide plan, they have no formal way to review it again if costs increase, he said.Although most of the cost of these projects are paid by federal funds, the state must provide matching funds. Because of that, a project with runaway costs does affect the state general fund and the state fiscal gap, Green said. The state is expecting a deficit of more than $800 million this year.However, Downing said the requirement to prepare a new justification for cost increases or delays would simply add another step in an approval process for public transportation projects that is already long and complex.The section of the bill that troubles DOT&PF the most is the requirement applied to projects taking more than three years for construction to begin once funds have been approved for design and engineering.That will particularly affect large or complex projects that require a federal environmental impact statement, Downing said. An EIS usually adds a year and a half and can add two years to the time needed to get permits for a project, he said.A recent example of a large project delayed by an EIS is the Whittier tunnel rail/road conversion. Other examples are the Anchorage Coastal Trail and a major project to improve Gambell Street in downtown Anchorage.The Legislature has several ways to intervene in a project once it has been given initial approval, Downing said.However, Anchorage attorney Geoffrey Parker disagreed with Downing. In a presentation to the House Transportation Committee in Juneau, Parker said DOT&PF should be required to do a new cost-benefit analysis if a project exceeds original estimates by 50 percent.This is needed for the state to get the "most bang for its buck" from the available federal transportation dollars, Parker told the committee.Parker, who represents an Anchorage homeowners group, cited the proposed Anchorage Coastal Trail extension as an example of a project that has seen major cost escalation, but with no apparent way for the Legislature to "get at" the project.The 12-mile recreational trail project, a high-profile priority for the Knowles administration, was originally funded at $300,000 for design and engineering. The latest estimates for design and engineering are now $2.2 million, Parker said, and an unknown amount of money must still be spent for construction of the trail through the wetland area.Other examples Parker cited of DOT&PF projects experiencing major cost increases are the Ship Creek trail in Anchorage, with costs increasing from $5.7 million to $9.3 million, as well as planning for rural highway construction projects in Western Alaska.During meetings of the House Transportation Committee, rural legislators on the committee, Rep. Al Kookesh, D-Angoon, and Rep. Mary Kapsner, D-Bethel, expressed concerns that road projects in their areas might never pass a benefits/cost hurdle because of small populations.Green responded that the requirement for legislative review didn’t mean lawmakers would terminate a rural project, only that they would be informed of it."There are many times we approve projects that don’t pass the traditional cost/benefit analysis, because of social reasons," Green said.Kookesh wasn’t satisfied, however, given the domination of the Legislature by urban districts, he said. To deal with the concerns, the committee exempted transportation projects of less than $1 million from the requirement.Downing said DOT&PF’s major problem of further segmenting of federal funds into categories is the reduced flexibility.If 5 percent of funds are set aside for unpaved "rustic" roads, the money will be taken out of other categories and the state will have less flexibility to shift funds to different kinds of projects, he said.Under the plan proposed in HB 502, funding for major highways would remain the same, or 48 percent of available federal funds; funds for state roads outside of municipalities would be reduced 1 percentage point, from 8 percent to 7 percent of federal funds; money for "community," or local government, roads would be reduced 1 percentage point, from 33 percent to 32 percent of federal funds; and money for trails and recreation access would be reduced from 8 percent to 5 percent.The combined reductions would allow for 5 percent of federal funds to go to the new rustic roads category.Downing said the new allocation in the bill would actually put more money, on a lane-mile basis, into rustic roads serving small communities than would be available on major highways serving large population areas."That doesn’t seem right," Downing said.

Movers & Shakers April 7, 2002

Denali Alaskan Federal Credit Union has selected Gordy Miller as human resources director. Miller is responsible for planning all aspects of human resources programs in the credit union’s statewide offices, including employee training, compensation and benefits, policy administration and employee relations. Miller has been employed by Denali Alaskan for nearly five years. Miller previously worked in human resources for J.C. Penney for more than 32 years. Carmela Warfield has been promoted to assistant manager in the electronic services department. Warfield’s responsibilities include supervising the inbound call center staff. Warfield has more than six years of financial industry experience and has worked at the credit union for more than two years. Government Technology magazine and the Center for Digital Government have chosen Lt. Gov. Fran Ulmer as one of America’s top 25 government technology leaders. The State of Alaska received a perfect score from the group in its October 2001 survey of how states use technology in government. Individuals on the list, who were selected from state and local governments, were chosen for playing an integral part in promoting the value of information technology in the government workplace. Ulmer has lead Alaska’s Telecommunications Information Council as chairwoman since 1995. Jory Abrams has been promoted to transportation business group manager for CH2M Hill’s Northwest Region that includes Alaska, Washington, Oregon, Idaho, Montana and Hawaii. Abrams has been employed by the company since 1977 and previously served as regional project delivery manager and senior project manager. Abrams will lead the firm’s technical and business growth in the region for highways, bridges, transit, ports, ferries, airports and related defense facilities. The American Hotel and Lodging Association has selected three Alaskans as 2001 National Stars of the Industry Award winners. Patrick Lopez of the Comfort Inn Fairbanks won the Outstanding Manager of the Year award in the small property category of hotels with 100 rooms or less. Heidi Loop of Land’s End Resort in Homer received Outstanding Employee in the same category. Delia Agbayani with Alyeska Prince Hotel in Girdwood was selected Outstanding Manager of the Year in the large property with more than 300 rooms category. Recipients were recently selected as state winners by the Alaska Hotel and Lodging Association. The national level competition received 130 nominations while only 10 winners were selected. Alison Lane, Sam Steele, Jay Osborne and Alexis Page have joined Prudential Jack White Real Estate as residential sales associates. Lane has a background in broadcast news reporting and has been affiliated with several area news stations. Steele has worked for the University of Alaska Anchorage as an advisor for pre-college programs since 2000. Osborne previously served in the U.S. Air Force as a supervisor/manager for 16 years. Page has experience in the hospitality industry. Anchorage-based Art & International Productions has hired Leah Burke as a project manager. Burke will work with clients of the graphic design and marketing company and oversee project development. Burke has a background in marketing and advertising. The Anchorage ATHENA Society recently honored the following new members at its annual luncheon: Teresa Ascone, Ascone Artworks; Micky Becker, assistant to the president, Phillips Alaska Inc.; Sue A. Brogan, director, Volunteer Center, United Way of Anchorage; Carol Comeau; superintendent, Anchorage School District; Christina L. Congdon; account executive, CSX Lines; Maria Downey; executive producer, KTUU Channel 2; Sue Foley, senior vice president, First National Bank Alaska; Cheri R. Gillian, vice president, First National Bank Alaska; Chris Hyatt, attorney, Hartig Rhodes Hoge & Lekisch; Mio Johnson, projects engineer, Municipal Light & Power; Jewel Jones, director, Department of Health & Human Services; and Nina Kemppel, cross country skier. Also honored were: Julie Kitka, president, Alaska Federation of Natives; Cecelia Pudge Kleinkauf, owner of Women’s Flyfishing; Suzanne Linford, chief executive/president, Linford of Alaska Inc.; Athina Maroudas, owner of Pizza Olympia; Nafla Michael, general manager, Michael Investments; Jessica Newton, victim/witness coordinator, Federal Bureau of Investigation; April Powers, on-air talent/morning show host, MAGIC 98.9/Clear Channel Radio; Leslie J. Schmitz, owner of Leslie J. Schmitz CPA; Ida Solomon, project analyst I, General Communication Inc.; Cathie Straub, financial advisor, Financial Resources Inc.; Lori Wing, senior vice president, Brady & Co.; Margaret A. Yaege, vice president, pipelines and Greater Prudhoe area, Phillips Alaska Inc.; and Rosella Young, contract worker. Pat Gilmore has rejoined Cathcart Ltd. and will serve as a new producer. Gilmore worked for Cathcart Ltd. in the 1980s and previously worked in the industry for another broker. Gilmore has 17 years experience in all commercial lines of insurance. Impact LLC, an Internet company, has hired Carin Bailey as administrative assistant. Bailey assists Impact’s production team with content, project development and copy writing. Bailey also provides administrative support for the staff. David "DC" George has joined Prudential Vista Real Estate. George has more than 27 years of real estate experience. George was an associate broker of Heritage Homes and Investments in the 1980s and later owned a real estate company and The Real Estate School of Alaska. Sukumar Bandopadhyay has been appointed dean of the University of Alaska Fairbanks School of Mineral Engineering. Bandopadhyay has served as interim dean since July 2001 and has been at UAF since 1982 as a professor and department head. Bandopadhyay is a registered professional engineer in Alaska and also will serve as the director of both the Petroleum Development Laboratory and UAF’s Mineral Industry Research Laboratory. Peggy Robinson has been chosen as the state administrator for the Alaska Association of Student Governments. Robinson will help plan and organize two AASG state conferences, spearhead the summer leadership training camp and coordinate Alaska participation in the national conference. Robinson will also administer the association’s record keeping, funding efforts, financial transactions and reports. Robinson has served on the Anchorage School Board since 1993 and is completing her fourth year as its president. R. Kevin Tune has earned the designation of certified internal auditor from the Institute of Internal Auditors. The designation is awarded to internal audit professionals who have met the requirements of the institute’s certified internal auditor program, including a four-part examination and high standards of character, education and experience. Tune is director of internal audit for Alaska Housing Finance Corp., where he has worked since March 1993. The U.S. Department of Energy has selected Mimi Burbage of the Alaska Housing Finance Corp. and Dan Berube of the Alaska Community Development Corp. as two of 10 candidates nationwide in its Outstanding Contribution to the Weatherization Program. Burbage received the honor for her overall contributions to the weatherization program. Burbage worked for a Fairbanks nonprofit agency for 12 years as a field liaison to implement the weatherization program in Fairbanks and villages throughout the state. Burbage has worked for AHFC as manager of the program statewide since 1990. Berube was honored for technical training. Berube has been a technical trainer for the weatherization program for 20 years in Oregon, Washington and Alaska.  

Huge port expansion proposed

For the past year and a half, engineers at Tryck Nyman Hayes Inc. have been drawing up plans for a new deep-draft dock expansion at the Port of Anchorage.Now, the $1.5 million plan for the more than $225 million project may be shelved in favor a new design its engineers say is bigger, better and millions of dollars cheaper.Peratrovich, Nottingham & Drage Inc. in March submitted a plan for port expansion north and 400 feet seaward of the existing dock, incorporating about 9 million tons of fill to create a nearly mile-long dock. Some 85 acres would be added to the port’s existing 100-acre footprint.The cost: $146 million.Bill Sheffield, port director and former Alaska governor, shared the new plans with the Port of Anchorage commission members March 27.Sheffield said the city-owned port will double in size by 2020, if expansion and renovation of the port is done to handle the increased growth.Already, the port serves more than 80 percent of Alaska, with an annual economic impact of $725 million, Sheffield said.Sheffield told the Journal he is leaning toward PN&D’s plan, which he said would make the Port of Anchorage viable well into this century."We owe it to ourselves to make the right decision for the next 40 to 50 years," Sheffield said.Sheffield said the project would be split into phases and could be completed in the next four years.The expansion could be paid for with port profits and state and federal grants, Sheffield said.The Legislature last session approved the first $6 million toward dock expansion.Sheffield said he’s already been in contact with Alaska Republicans, Sen. Ted Stevens and Rep. Don Young, who have been supportive toward funding the newest port expansion project."I think it is doable," Sheffield said. "They think it is doable."Anchorage Mayor George Wuerch appointed Sheffield to the post last spring. He officially took over as the port director June 19.The plan being crafted by engineers at Tryck Nyman Hayes began before Sheffield became port director. It calls for a new deep-draft, multipurpose dock extension that would accommodate ships up to 1,000 feet long. Other work includes deepening the harbor from 35 feet at low tide to 45 feet; installing larger container cranes; renovating and widening the current dock; and developing some 40 acres of land to support the new dock.The new Intermodal Marine Facility would handle cargo much more efficiently and enable large vessels to moor in Anchorage, such as homeported military vessels and cruise ships.John Daley, project engineer with Tryck Nyman Hayes, said the design his company has been working on for the last 18 or so months was won based on a competitive request for proposal.The design, Daley said, "meets the needs identified by the port and as outlined by the 20-year master plan."Tryck Nyman Hayes has been paid $1.5 million for the work, Daley said.PN&D’s expansion study was commissioned by Sheffield at a cost of $30,000."We’re a little frustrated," Daley said, adding his company and many other engineering firms, including several in the Lower 48, would have bid on the study given PN&D."It wasn’t a standard contracting method used for public projects," Daley said. Sheffield said he has the authority to ask for an alternative proposal.Daley called PN&D’s study an "interesting proposal which significantly alters the port master plan."PN&D’s plan may not be as cost-effective as it appears, he said."We believe there are an awful lot of hidden costs in it," Daley said, adding that his company is calling for a third-party review of the project and its cost.Sheffield said he intends to do that, and city officials should decide within a couple of months on which plan to adopt.Daley said his company will complete its design by the end of the year, which would enable construction to start by next spring. But a two-month delay in the process now would probably push the project back by a year, he said.Since 1961, the port has grown from a single pier handling 38,000 tons a year to a five-terminal dock that in peak years has handled more than 3 million tons of cargo, petroleum and cement annually, according to port officials.The existing dock is too small, outdated and is "experiencing severe corrosion of support piles and loose sediment buildup underneath," according to PN&D’s study.Engineer Dennis Nottingham of PN&D said that adding to the existing dock structure is nothing more than a piecemeal approach that would have a short useful lifespan."The port plan has to go 50 or 100 years," Nottingham said.His firm’s approach looks long range and takes advantage of modern dock-building technology PN&D developed in 1980, which uses sheet pile membranes to create a bulkhead for holding compacted gravel.Called an open cell system, the dock technology is used extensively in the Lower 48 and Alaska, including more than a mile of combined dock length in Cook Inlet from Kenai to Anchorage, Nottingham said.Most recently, the technology was used to construct an 1,100-foot long dock at the Williams Petroleum Terminal near the Port of Anchorage.The firm’s design has won several engineering awards, including one which Nottingham called the Nobel Prize of engineering.But when the design was used across Knik Arm at the new $8 million port at Point MacKenzie, it raised concerns by U.S. Army Corps of Engineers who noted possible signs the dock is shifting. The Corps also said soil underlying the dock contained a weak layer that could cause the dock to collapse in an earthquake.PN&D officials have disputed the claims about the integrity of the dock, which opened last May.The project has been peer-reviewed by three separate engineering firms, who found nothing wrong with the design, Nottingham said.A federal review of the dock has not yet been completed, said Marc Van Dongen, Port MacKenzie port director.Van Dongen said the solution to the concerns is to compact the gravel dock, a process being planned for this summer."There is nothing wrong with this dock," Van Dongen said. "Once it is compacted, it will be the safest piece of real estate in Southcentral Alaska. It won’t go anywhere in the event of a major earthquake."

1967 agreement shelves Alaskaland development

FAIRBANKS -- An agreement made by the state of Alaska 35 years ago has halted plans to develop Alaskaland into more of a tourist attraction.In 1967, the state accepted $400,000 from a federal fund under an agreement that Alaskaland would be a certain type of park, mainly one with no covered buildings and no profit-making enterprises."It’s one of those federal mandates that seems frustrating," Fairbanks North Star Borough Assemblyman Rick Solie said at a recent Alaskaland Committee meeting.Borough Mayor Rhonda Boyles is working to have the limits lifted, but it could take a land swap or an act of Congress, the Fairbanks Daily News-Miner reported."There never should have been this type of money put on a historic park," Boyles said.The $400,000 came from a fund called the Land and Water Conservation Fund.The borough hasn’t always followed the stipulations to the letter, but a plan in the works to overhaul the park could move the park dangerously further from fund guidelines. Doing that means cutting off future money from that fund for the whole state."We have stretched for the wheelhouse. We have stretched for the Railroad museum," said Boyles. "I will never make a decision like that again."So Boyles is working closely with federal and state officials to see what projects in the plan could fall within fund rules and to have the rules lifted so the borough can freely develop the park.Boyles and Bea Hagen, an attorney for the borough, believe the chances are slim Congress will lift the limits just because the borough wants them lifted."Politically, it may be difficult or impossible," Hagen told the Alaskaland Committee. "I really think the land swap might work, but it’s going to take Congress a long time."To do a land swap, the borough needs to set aside land the fund limits could apply to in place of Alaskaland. Boyles has identified South Davis Park, an undeveloped plot of land off the Mitchell Expressway, as a possibility. Birch Hill is another prospect.This would need Congressional approval as well, and Boyles is asking Alaska’s congressional delegation for help.

Business Profile: The Sport Shop

Name of the company: The Sport ShopEstablished: 1995Location: 570 E. Benson Blvd., AnchorageTelephone: 907-272-7755Major focus of services: The Sport Shop sells women’s athletic and travel clothing and also carries some gear including hiking boots and trail running shoes.History of the company: Owner Liz Johnson began researching the idea for a women’s outdoor and athletic goods store in 1987. She realized the state had large population of active women in all age groups and pinpointed a need in the Anchorage market for women-specific clothing and gear. The Sport Shop opened in 1995 and has grown steadily since then."At the time and still there are only six (women’s sporting goods stores) in the nation," Johnson said. "This is the largest and most diverse."Since The Sport Shop opened more companies have begun selling athletic gear for women, following a trend of more women participating in sports."The women’s part of the outdoor industry hardly existed when I opened the store," she said.The Anchorage store has a steady customer base because of the significant amount of women who have a wide range of interests, Johnson said. She cited several women-specific annual area events. Anchorage has the oldest women’s only triathlon, the Gold Nugget triathlon. The Alaska Ski for Women is the largest and only women’s ski event, and the Run for Women is one of the nation’s largest women’s running races. Anchorage also is home to strong women’s rowing, basketball and hockey teams among other activities, she said."My guess is that per population we have the most active women’s population in the U.S.," she said.The Sport Shop has altered its product mix since opening, expanding its swimming and biking sections. Cross-country ski gear also is a top-selling section.The retailer employs three full-time and two part-time employees including Johnson.Top accomplishment of the company: Johnson cited the store’s ability to prevail past its early years. The women’s outdoor gear industry also has matured. "It makes it easier for me because there’s so many more things to buy," she said. She also praised loyal employees and customers.Major player: Liz Johnson, owner, The Sport Shop.Johnson came to Alaska in 1977. She worked as a trial attorney for 13 years, then served as a part-time administrative law judge for the state. She also handled construction project management duties for a company and worked on other business projects.-- Nancy Pounds

Railroad technology puts caboose into retirement home

The end is near for the lowly caboose.That little boxcar linked to the back of a freight train, used primarily as an observation platform for railroaders, has all but been replaced by modern technology.The Alaska Railroad Corp. is one of the last railroads in the United States to use cabooses, but it is phasing out the cars as electronic monitoring equipment and automated switches are replacing the eyes, ears and muscle of trainmen.Decommissioned railroad cabooses now are a hot item for roadside coffee stands, storage sheds and cabins, fetching thousands of dollars apiece in surplus sales."That’s a good use for them," said Ernie Piper, Alaska Railroad’s assistant vice president of safety and operations.For more than 160 years, the caboose has been used as a lookout point for railroaders and as a place crews could eat, sleep and do paperwork. The jobs of brakemen, switchmen and flagmen who often rode in the last boxcar have been affected by automated switches and brakes and other equipment, resulting in cheaper, safer and more efficient operations, Piper said."The technology involved in running trains has improved vastly over the last couple of decades," Piper said.The demise of the caboose has not put anyone out of work at the Alaska Railroad, said Pat Flynn, railroad spokesman."Our freight traffic is increasing so there are jobs at the railroad for people whether they are at the front, back or in-between on the train," Flynn said.Alaska Railroad still uses cabooses on its work trains and on long gravel trains, where an extra set of eyes and ears still is preferred for monitoring cars ahead, Flynn said.The railroad’s work trains run backwards as much as they do forwards, and so a caboose is a useful in those operations, Flynn said.Trains moving fuel on the Alaska Railroad used cabooses for a time after a 1999 derailment north of Talkeetna at Gold Creek, where 15 cars left the track, five of them spilling more than 120,000 gallons of jet fuel.The railroad blamed the spill on a buildup of ice and snow on a manual track switch.Piper said the cabooses are no longer used because remote-controlled switches, including heated ones, have been installed along the line. It’s part of an ongoing $60 million program to be completed by 2004 to replace 694 manual switches that were kept open and free of snow by crews using shovels and brooms.Cabooses were used on the Whittier Shuttle, which hauled passengers and cars for 35 years. The train stopped operating in 2000 after an $80 million tunnel opened to automotive trafficOn the end of regular freight and passenger trains, cabooses now are more like rolling symbols of being behind the times for a railroad, Piper said."They’re like a canary in a coal mine. The fewer cabooses you see, the better we’re doing improving operations, safety and efficiency," Piper said. "The sooner we can get rid of them, the better off we are."The railroad March 18 sold one of its nine remaining cabooses to Chris Alexander, general manager of Alaska Metals Inc.Alexander paid $4,000 for the caboose, built in 1949 by the Pacific Car and Foundry in Renton, Wash.The 53-year-old caboose spent its entire working life in Alaska, along the 470-mile line, said Tom Burkquist, Alaska Railroad’s surplus sales department manager.The railroad was asking for a minimum bid of $7,000, but there were no takers. Burkquist said several people inquired about the caboose, including many from the Lower 48, but only Alexander submitted a bid.Burkquist said Alexander got a good deal."They’re going for $12,000 to $14,000 in the Lower 48," Burkquist said.The caboose, No. 1776, is unique because of its Bicentennial colors and theme, a popular practice with railroads in 1976, Burkquist said.Alexander said he intends to resell the caboose and has gotten interest from folks who want to turn it into everything from a gift shop to a coffee shack. One woman is interested in selling drinks from the roadside, and plans on naming it the "Juice Caboose.""Everybody sounds like they have a different use for it, and I know it sounds funny, but I’m going to make sure it finds a good home," Alexander said.Decommissioned Alaska Railroad cabooses in the past have been sold to the U.S. Coast Guard, which uses one for an office in Whittier, and to the Boy Scouts, which uses one near Talkeetna as a storage area, Burkquist said.Buying a caboose is one thing; moving it is another, said Mike Wilson of Fairbanks, who along with his wife, Susan, runs the Forget-Me-Not Lodge/Aurora Express.The Fairbanks bed-and-breakfast uses a caboose and seven other Alaska Railroad cars as rooms.It is a popular stay for railroad buffs, Wilson said.The Wilsons bought caboose No. 1068 from a Fairbanks attorney who purchased it from the railroad as a present to his wife.The caboose turned out to be trouble for the lawyer, Wilson said."It wasn’t quite what she had in mind," Wilson said.Wilson gave the lawyer $2,000 for the caboose, which came complete with a hobo."Some bum had been sleeping in there," Wilson said.Wilson said the caboose is 14 feet high, 41 feet long and weighs 52,000 pounds without the rail trucks."It’s stout, built in America when a nickel was worth five cents," Wilson said. "It’s not a piece of cake to move but it does make a good little room."

House OKs buyback law changes

JUNEAU -- A bill aimed at making it easier to buy back commercial fishing permits cleared the House March 20.Rep. Drew Scalzi, a Homer Republican, proposed the measure as a tool to improve efficiency in Alaska’s troubled salmon fishing industry."Mainly what it does is it allows the commercial fishermen to create a buyback program and pay for it themselves," Scalzi said.Alaska’s commercial salmon fishermen have found it increasingly difficult to stay afloat financially, partly because of competition from farmed salmon.House Bill 288 is intended as a potential tool to reduce the number of fishermen chasing salmon in Alaska, so those who remain stand a better chance of making money and delivering a good product to market.The bill doesn’t set up a buyback program, but it fixes problems in the state’s buyback law so it could be used if needed, said Mary McDowell of the state Commercial Fisheries Entry Commission."It’s a statute that’s been broken since it was enacted, but it just hasn’t been a front-burner issue because nobody’s been interested in using that statute before," McDowell said. "We need to have a mechanism in place in case we really do need to do this."The bill changes the law to allow a buyback program to purchase only a fisherman’s limited entry permit. Current law requires purchase of not only the permit, but also a fisherman’s boat and gear.That change would make a program less cumbersome and expensive, Scalzi said.The measure allows a buyback to be paid for through a tax on fishermen who remain in the fishery after others were bought out. That’s the same as existing law.But the bill removes language on the handling of those tax revenues that conflicts with the state Constitution’s prohibition against dedicating funds for a particular purpose.The measure leaves open the option that other sources besides a tax could pay for a buyback, such as federal funding, McDowell said.The bill also lets the entry commission do a study of the optimum number of permits for a fishery without being locked into buying back permits if the study shows too many permits are in the fishery.Current law mandates a state-run buyback program if a study shows too many fishermen are chasing the fish, McDowell said.The change would provide flexibility if fishermen wanted to look at alternatives to a state-run buyback, McDowell said.The state recently started a study of the optimum number of limited entry permits for the Bristol Bay drift gillnet fishery, McDowell said. If it passes, House Bill 288 could guide what happens when that study is finished.Rep. Eldon Mulder, an Anchorage Republican, said he supported the bill because a buyback would be a "self-funded effort," and fishermen would not be looking to state coffers to pay for the program.He said the measure is just one step toward addressing the industry’s problems, and he hopes a long-term strategy for the industry can be developed.The bill passed 38 to 0. It now goes to the Senate.

Longliners leaving the docks with hopes for $2-a-pound halibut

KODIAK -- Coastal communities are humming as fishermen head out for this year’s halibut season.Starting March 18 and continuing through mid-November, Alaska longliners will share a halibut catch of nearly 62 million pounds, up from roughly 58 million last year. Fishermen were hoping to get more than $2 a pound for the first, fresh flats of the year, and that would be consistent with past seasons.Last year, there were the usual dips and spikes in fish prices, but overall the fleet averaged $2.07 a pound for halibut, down 26 cents from the year before."Any time you’re getting $2 or better, there should be no whining," said Bob Alverson of the Fishing Vessel Owners Association.Going into the season, halibut harvesters have the law of supply and demand on their side. Holdings in our nation’s freezers at the end of last year were about 7.5 million pounds, down a million pounds from a year earlier.The pricey black cod, or sablefish, season opened at the same time. That catch was also boosted a bit this year to more than 30 million pounds, up 15 percent. Nearly all of Alaska’s black cod goes to Japan, where demand has been very strong. Sales topped 700 tons at Tokyo Wholesale Market in December, a record. Inventories were also almost depleted in both the United States and Japan.As with other state agencies, the commercial fishing division of the state Department of Fish and Game is facing the possibility of big budget cuts by Alaska lawmakers.According to a department impact statement, programs that would be cut include the genetics program, some wildlife conservation programs and Bering Sea/Aleutians shellfish management.If the cuts are approved, the state would be forced to hand over the reins of Alaska’s largest crab fisheries, which it has held since statehood, to federal managers.Even though crab fishing takes place in federal waters, more than three miles from shore, the federal government has delegated management responsibility to the state."We’re to the point where we simply can’t keep doing more and more and more with less and less money," said Fish and Game’s Doug Mecum. The Bering Sea crab fisheries are valued at more than $120 million each year at the docks.Fewer buyers in the bayLook for fewer roe herring buyers at Togiak/Bristol Bay. Continuing weak market conditions in Japan have resulted in U.S. processors again cutting back on their operations at Alaska’s biggest roe herring fishery at Togiak.According to market watcher Bill Atkinson, only three of the six shore-based processing facilities will operate this year, along with seven or eight floating processors. Japanese buyers estimate about 22,000 tons of roe herring will be produced in the Togiak and Security Cove fisheries, with an additional 8,000 tons expected from Norton Sound.Based on an estimated 8 percent roe rate, or percent of body weight, Alaska processors are expected to offer their frozen roe-herring to Japanese buyers at about $1,000 a ton."This could be difficult, however, in view of the 17 to 18 percent decline in the value of the yen over the past year," Atkinson said. This year’s sales of roe herring will also be affected by the very depressed market for herring carcasses.Alaska’s roe herring fisheries began at Sitka Sound in late March and will end at Norton Sound sometime in May.Global warming and fisheriesSubstantial new commercial fisheries can be expected to develop in the Arctic Ocean as the polar ice cap continues an apparent and rapid meltdown, according to a new report from the U.S. Navy.The report, written in part by a panel of cold-region experts, says seasonal sea lanes through the formerly ice-locked Arctic could appear as soon as 2015, and the ice cap could disappear altogether in summer by 2050. The report summarizes an April 2001 symposium in Washington, D.C., on the potential need for Navy and Coast Guard patrols in what would amount to a new ocean.The report predicts that the Russian coast and the Canadian Archipelago will be ice-free and navigable in summer by vessels not strengthened for ice, and in five to 10 years the Sea of Okhotsk and the Sea of Japan could remain ice-free all year.The polar ice cap is getting thinner and ice is receding farther from shore in summer off Russia, Alaska and Canada, the report says. If boats are able to work in the Arctic Ocean during summer, "then we should expect a fishing industry will develop," the report says.The report notes that salmon have been seen in rivers near Barrow, well north of their normal range. Strictly to stimulate discussion at the symposium, participants talked about the potential for international clashes between Russian, Japanese and U.S. fleets on the new, northern fishing grounds."The response of marine species to changing climate is very difficult to predict but northward migrations are likely," the report says. "In particular, northward movement of Bering Sea species into the Beaufort/Chukchi Sea region north of Bering Strait is likely."Kodiak-based free-lance writer Laine Welch can be reached via e-mail at ([email protected]).

Boston's, Chili's and IHOP to open shortly in Anchorage

Three new franchise restaurants are scheduled to open this spring in Anchorage. Construction crews are handling final phases of building for Boston’s the Gourmet Pizza, Chili’s Grill & Bar and the International House of Pancakes.Boston’s the Gourmet Pizza, at Benson Boulevard and C Street, is scheduled to open April 23, said Anchorage franchise operator Don McMillan. As general manager of franchisee Great White North LLC, McMillan also runs a Boston’s pizza restaurant in Salmon Arm, British Columbia.McMillan’s franchise agreement allows him to develop three restaurants in the Anchorage area, although future plans depend on Alaskans’ response to the initial restaurant, he said.The restaurant’s menu features pizza, pasta, soups, sandwiches and salads with a sports bar on one side and a restaurant on the other.Earlier this month, builders had finished the bar section and were working on the restaurant section, he said. Kitchen equipment was to be installed in March, he added. Construction began in late September, led by general contractor Anchorage-based Linder Construction Inc.The restaurant measures 5,600 square feet and will seat 204 diners including 73 in the sports bar, he said. Another 52 seats will be available on the patio.Another franchisee acquired the rights to operate a Fairbanks restaurant, which could begin construction this year.Boston Pizza Restaurants have found success across the border in Yellowknife, Northwest Territories, and in Whitehorse, Yukon Territory, where the company has operated restaurants for six years.The Richmond, British Columbia-based restaurant, which now operates more than 150 locations in North America, tallied more than $300 million in 2001 annual revenue.Meanwhile, construction continues at Alaska’s first Chili’s Grill & Bar, being built in Southeast Anchorage at 88th Avenue and Abbott Road. That restaurant will tally 5,500 square feet and seat 215 diners.The restaurant, originally scheduled for completion in late February or early March, will open May 13, franchise officials said.Alaskan David Duke formed Duke Investments LLC, which received a development agreement with Chili’s parent Brinker International of Dallas to build three Chili’s in the first five years of the agreement.Duke, who operates Duke’s 8th Avenue Hotel in Anchorage, already is planning a second Chili’s at Tudor Road and C Street.Another new national restaurant, International House of Pancakes, is to open in late April or early May, said Mel Tipton, one of three partners in franchise operator Goldrush North LLC.A record snowfall in March slowed construction, although work is now back on track, he said.The 5,000-square-foot IHOP, which will seat 176 diners, is at Tudor Road and Denali Street near Home Depot. The general contractor is Anchorage-based Kaer Craft.The franchisee acquired franchise rights to build three Alaska IHOPs in the next three years based on performance.Glendale, Calif.-based IHOP lists 965 locations in 41 states.

Enron shows need for duty of care

National news has been abuzz with reports of one very large energy company, Enron, falling on hard times and declaring bankruptcy.While we have yet to hear the whole story, it is amazing to me how those in charge of that company have so quickly tried to distance themselves from having any knowledge of, or culpability for, actions that led to the company’s weakened position.To what standards should corporate directors and management be held when carrying out the affairs of a company? More precisely, to what duty of care are directors and officers of an Alaska company held?Duty of careFor-profit corporations formed in Alaska have a guideline for directors and officers carefully carrying out their respective duties. It’s called a duty of care. This duty is set forth in the Alaska statutes as a part of the Alaska Corporations Code. It centers on the competency of directors and officers in addressing their responsibilities to their company.The prudent Alaskan who is an officer or director would be well served to understand and apply the provisions of the duty in the best interest of his or her company.Basic functionsAddressing the elements of duty of care first requires an understanding of the setting under which the duty might be applied.The basic functions of a board of directors are to hire top management, call annual shareholder meetings, set corporate policy and direct management to carry out that policy. The basic functions of management are to carry out those policies and directives of the board and to conduct daily company operations.Elements of director duty of careThe director duty of care, as specified in state law, applies to a director when performing as a member of the board, as well as a committee of the board on which the director serves.Under the duty, a director must serve with both: Good faith and in a manner that the director reasonably believes is in the best interest of the company; and Care, including reasonable inquiry, that an ordinarily prudent person in a like position would use under similar circumstances.The second part of the director duty must be read in the context of the company’s business.For example, a director of an energy company might be held to a different standard than that applied to a director of a commodity futures investment firm, if the issue before the respective boards was to determine whether to proceed with a corporate acquisition of a pork belly investment.Here, the presumption is that pork bellies are not a normal investment for an energy company. In contrast, such an acquisition is not necessarily an abnormal investment for a commodity futures investment firm.Conversely, if the issue presented to a board involved establishing an audit committee as required by federal regulation to which both companies were subject, the same standard for like positions and similar circumstances would likely apply to directors of both companies.State law provides that a director may rely upon information, opinions, reports or statements when prepared or presented by any of the following: Officers or employees of the company, limited to only when the director reasonably believes the persons are reliable and competent to provide the information; Council, public accountants, and other persons, limited to persons as to matters that the director reasonably believes to be within the professional or expert competence of the person; and Board committees, limited to a committee on which the director does not serve, and further limited to matters that are within the authority of the committee and the director reasonably believes the committee merits confidence.State law specifically provides that a director is not acting in good faith when he or she has knowledge concerning the matter that would make reliance otherwise permitted under the section unwarranted.For example, a director of the commodity futures investment firm, aware that pork bellies have gone soft because of fraudulent offers in the market, who does not urge management to check with federal regulators as to any violations by the pork belly investment, would likely not be acting in good faith under the director duty.Furthermore, in this instance the director may be derelict in his or her duty by voting for, or encouraging other directors to vote for, a board resolution approving the company’s investment in pork bellies.The law further provides that a director has an absolute right to inspect and copy all company books, records, and other documents. The director also has an absolute right to inspect the company’s physical properties. With those rights goes the responsibility of their exercise as a part of the director duty.Elements of officer duty of careThe officer duty of care applies to an officer when performing as an officer of the company, such as president.The officer duty is similar to that outlined previously for a director duty of care. However, in the officer duty the level of good faith is not conditioned as serving in a manner the person reasonably believes is in the best interest of the company. That is, officers appear to be held to a higher standard of care than directors.The exceptions to the officer duty are more limited than those for directors under the director duty. State law provides that an officer may rely upon information, opinions, reports or statements when prepared or presented only by legal council or public accountants. That is, officers, unlike directors, may not, in properly exercising their duty of care, rely upon information produced by other officers or employees of the company, a committee of the board, or other persons.State law specifically provides that an officer is not acting in good faith when he or she has knowledge concerning the matter that would make reliance otherwise permitted under the section unwarranted.For example, an officer working on the pork belly investment for the commodity futures investment firm, aware that pork bellies have gone soft because of fraudulent offers in the market but who does not investigate the background of the pork belly investment, would likely not be acting in good faith under the officer duty.Furthermore, in this instance the officer may be derelict in that duty by pursuing acquisition of the pork belly investment for the company.Similar duty of care requirements apply in one form or another in most states. They undoubtedly apply to the directors and officers of Enron. Duty of care is bound to be an issue in any lawsuits stemming from that company’s collapse.Julius J. Brecht is an attorney and managing shareholder of the Anchorage law firm of Wohlforth, Vassar, Johnson & Brecht. The content of this article was not prepared as, and must not be construed as, legal advice to anyone. He can be reached via e-mail at ([email protected]).

House members wrestle with sales vs. income tax issue

Sharp differences of opinion have developed over a state personal income tax vs. a state sales tax among Republican legislators in the state House.The two options were being considered as part of a package of new revenue measures being developed to cover a long-term state budget deficit. The new taxes will likely be combined with a tap on some earnings of the Alaska Permanent Fund to help fund the state budget, now short of revenue because of declining oil royalties and taxes.On one side of the debate were Reps. Bill Hudson, R-Juneau, Lisa Murkowski, R-Anchorage and a group of other Republicans, who at times seemed ready to join with several minority Democrats in the House to pass an income tax bill over the opposition of conservative Republicans who control the House leadership. For their part, the conservative wing of the House majority favors a sales tax over an income tax."Almost everyone I talk to (in the House) agrees that some kind of broad-based tax is necessary, along with some use of permanent fund earnings," Hudson said. "The defining question is choosing the broad-based tax, a sales tax or a personal income tax."Many who oppose an income tax argue a sales tax would spread the burden across a broader part of the state’s population."Most of the income tax bills I’ve seen (before the Legislature) leave a substantial number of Alaskans out of it," said Rep. Con Bunde, R-Anchorage.Bunde’s concern is that the income tax burden would be concentrated on moderate or upper income taxpayers. A sales tax, in contrast, would be paid by everyone who purchases goods in the state, so a larger number of people would help pay.However, Rep. Peggy Wilson, R-Wrangell, sharply opposes the sales tax because many Alaska municipalities already have sales taxes and a new state tax on top of the local tax would encourage consumers to buy outside the state, hurting local businesses.In Wilson’s home town, in Southeast Alaska, there is now an 8 percent sales tax. A proposed 4 percent state sales tax would mean local merchants in Wrangell would have to charge a combined 12 percent tax on sales.A sales tax at that level would be a significant disincentive for local purchases, University of Alaska economist Scott Goldsmith told the House Finance Committee March 20."It would have a significantly detrimental effect on sales in Wrangell. People interested in buying big-ticket items would be encouraged to go elsewhere," Goldsmith said.Alaskans already pay a substantial amount of local sales taxes, Hudson said. "According to the Alaska Municipal League, about $125 million a year is now paid in sales taxes and another $45 million in special sales taxes," like hotel bed taxes, Hudson said.Goldsmith also told the House Finance Committee that the relative burden of a sales tax would be much greater on Alaskans than an income tax, mainly because state income taxes can be deducted from federal income tax while sales taxes cannot.The actual impact on Alaskans of an income tax would be about 75 cents on a dollar of new state revenue because of the deduction from federal tax and because a number of nonresident workers in the state would also pay the tax. In contrast, Alaska residents would wind up paying about 95 cents of every dollar paid in sales tax. While tourists and out-of-state visitors would pay some of this, the amount is estimated to be about 5 percent to 7 percent of total sales taxes paid, Goldsmith told the committee.Rep. Norm Rokeberg, R-Anchorage, challenged Goldsmith on the income tax calculation, arguing that because the data is lacking on the profile of Alaska federal income tax payments it is difficult to calculate the effect of the deduction against federal tax.Goldsmith acknowledged that the 75 cents-per-dollar estimated effect is rough.Ernie Hall, an Anchorage businessman who appeared before the House Finance Committee to urge action on a fiscal plan, said most people he talks to oppose new taxes."But when you explain to them that many aspects of the quality of life we enjoy, such as public services and the benefits of state entities like the Alaska House Finance Corp. with its lower-cost home mortgages ... they agree they will pay a tax. They still don’t like it, of course."People are worried that new state taxes will target segments of the population, Hall said."The real concern is that new taxes be fair and equitable," he said.

Economist urges legislators to phase in fixes to fiscal gap

A group of business and community leaders has handed state legislators a plan for raising new revenues and bridging a billion-dollar state fiscal gap without disrupting Alaska’s economy."This is a gradual plan that would phase in over several years, so the hit to the economy is not too hard," said Scott Goldsmith, a University of Alaska economist who is working with the Fiscal Policy Council, a private group headed by Marc Langland, president of Northrim Bank."We have the resources to get through this transition and out the other end with a healthy economy," Goldsmith said, "but our tools are limited."Goldsmith spoke to the House Finance Committee in Juneau on March 20.Dave Rose, a former executive director of the Alaska Permanent Fund, agreed with Goldsmith."I can’t urge you strongly enough to act now to adopt a plan like this, with an incremental phase-in. Past fiscal plans have failed because they were too painful," to the public and the economy, Rose told the legislators.A generic fiscal plan was developed by the council and given to the Finance Committee during the meeting. It was intended to be a model for a plan the legislators would prepare.Goldsmith said there are six parts to the generic plan: A broad-based tax, either a personal income or sales tax, that could be imposed at gradually increasing rates over five years, so as to lessen any harm to the economy. A cut in permanent fund dividends, which would make more money available to the state from earnings of the fund. The reduction would be managed to match the amount imposed in a broad-based tax. In this way the pain of the taxes and reduced dividends would be spread broadly and equitably, Goldsmith said. Use of several billion dollars in the permanent fund’s earnings reserve, an account of surplus fund earnings that has accumulated, to help fund the state general fund during the transition. After a few years the permanent fund would shift from its current method of distributing money to a yearly payout of 5 percent of the fund’s market value, a method used widely by endowment funds. A package of miscellaneous new revenues should be included, such as higher taxes on alcohol or taxing cruise ship passengers. Budget reductions, or at least holding the line on spending, should also be a part of a plan. The generic plan submitted by the Fiscal Policy Council would cut spending by an amount equal to money brought in by broad-based taxes.Goldsmith said his analysis indicates that by 2010 an Alaska household of three would be paying about the same amount in new state taxes as it receives in permanent fund dividends.The dividend would be about $2,000 in 2010 in nominal terms, or inflated "dollars-of-the-day," or about $800 in today’s dollars, adjusted for inflation, he said.

Airport may get 2nd cargo port

One of the largest architectural firms in the world is eyeing some of the last remaining developable land at the Ted Stevens Anchorage International Airport.Chicago-based VOA Associates Inc. wants to build a staging area and transloading facility on 40 acres of airport land near the Federal Express facility at Anchorage International.The $43 million facility would have enough parking room for a dozen of the largest wide-body freighters in service, said Lee Nunn, an Anchorage engineer with LRN Consulting Inc., a company working with VOA.Nunn said he could not give specifics because the project is still in the early planning stages; he refused to name investors."This is a real project," Nunn said. "We believe we have something to offer that will improve several operational aspects at Anchorage International that will allow for strong future growth."The proposed facility would compete with Williams Lynx Alaska CargoPort, a $22 million 105,000-square-foot commercial warehouse and transloading facility that opened in October 2000.Ken Lythgoe, the CargoPort’s general manager, said there are two things working against VOA: the economy and the land on which a competing facility would be built."Their proposal is foolish," Lythgoe said.A fickle worldwide economy, particularly in Asia, has airlines taking a cautious approach on expansion in Anchorage, or anywhere else at this time, Lythgoe said, adding that his company is poised for a multimillion expansion, if the market were there.Air cargo operations slid more than 3 percent last year at the Anchorage airport, according to airport statistics.According to aircraft maker Boeing Co., the world air cargo industry is in its worst slump in more than 30 years, more from ailing Asian and domestic economies than from the impact of the terrorist attacks on the East Coast.But the slide should be short-lived, as growth levels are projected to increase to historic levels of 6 percent to 8 percent by next fall. Despite the largest dip in three decades, the Seattle-based aircraft maker still expects air cargo traffic to triple in the next 20 years.New cargo rules after the terrorist attacks of Sept. 11 also have airlines taking a wait-and-see approach, Lythgoe said."There is nobody out there knocking our door down at this time," Lythgoe said. "In five years, who’s to say."The CargoPort has more than 500,000 square feet of tarmac -- enough parking space for six 747 wide-body freighters. It could double in size in less than four years, Lythgoe said.A $15 million expansion would double warehouse and office space and extend the tarmac to allow 13 747 freighters to be parked at one time for fueling and transloading, Lythgoe said.The CargoPort is a joint venture between the Lynx Group of Austin, Texas, and Williams Alaska Petroleum Co.Airlines operating at the Cargo-Port are Northwest Airlines Cargo, Atlas Air Inc., and United Airlines.The land VOA wants to build on is a bog covered by at least 15 feet of peat moss.Lythgoe said his company, and others including FedEx and United Parcel Service, have looked at the site, "but it would cost $5 million to $10 million just for fill. It just doesn’t pencil out."VOA’s Nunn said the proposed site has more like 19 feet of "muck" that would have to be removed and replaced with about 1.5 million cubic yards of fill material.He agreed with Lythgoe that it would likely take the better part of $10 million just for site preparation.That doesn’t necessarily kill the project, Nunn said.Nunn said that depending on permitting and a review by the state-owned airport, construction could begin this summer and be completed within two years."Competition is good," said Mort Plumb, airport director.Plumb said leasing the land would garner the state about $100,000 annually. Additional revenue would come from landing and fuel-flow fees. The money is multiplied further by way of additional crew stays in hotels and the money crews spend visiting Anchorage.Plumb said the airport has not made a decision on VOA’s proposal so far."We’ll have to see what their business plan says before a lease is signed," Plumb said.

AHFC approves a sale of bonds for vet loans

The Alaska Housing Finance Corp. board recently approved the sale of $97.5 million in collateralized bonds. The tax-exempt bond issue will provide financing for 577 loans as part of AHFC’s Veterans Mortgage Program.The veterans bond must be guaranteed by the state government. However, the state cannot guarantee the bond until receiving approval from voters in a statewide election, according to AHFC officials. AHFC is working to secure legislative approval to place authorization for the bond on the next state ballot.More than 12,600 veterans have obtained Veterans Mortgage Program loans from AHFC since the program was created in 1983. That year voters passed an amendment to the state constitution and gave initial bonding authorization of $400 million, AHFC reported.Since 1983 AHFC has issued more than $2.1 billion in bonds for the program. Alaska is one of five state eligible to participate in the program. Other states are California, Oregon, Texas and Wisconsin.Based on congressionally approved regulations, to qualify for the program a veteran must have entered active duty service before Jan. 1, 1977, must not have been discharged more than 30 years before the date of application for a loan commitment and must have been discharged under honorable conditions.AHFC also reported it has provided more than $34 million in financing for multifamily housing around the state between June 1 and Dec. 31.The state agency helped finance 783 units in 44 projects during the first half of its fiscal year.In Anchorage AHFC financed 681 units at 33 properties representing a total of nearly $29.7 million. In Eagle River AHFC financed 75 units at three properties for almost $3 million. Thirteen units were financed at one Fairbanks property for $280,000.AHFC also helped finance multifamily units in Kenai, Ketchikan, Kodiak, Palmer, Sitka and Wasilla.AHFC programs help finance multifamily, special needs and senior housing loans. The programs have helped acquire, refinance and develop nearly 10,200 affordable housing rental units in Alaska, AHFC officials said.

Report details Native economic impact

A new assessment of the financial performance and economic impact of Alaska Native corporations in the state shows that 12 Native regional corporations and 11 village corporations had combined revenues of $2.5 billion in 2000, employed 10,600 people, paid $350 million in payroll in the state and distributed $64.5 million in dividends to shareholders.The report, by the Association of ANCSA Regional Corporation Presidents/CEOs, was released March 21. It is an update and expansion of a similar report given last year on 12 regional corporations and three village corporations.The corporations were formed under terms of the Alaska Native Claims Settlement Act in December 1971.Besides payroll from business activities and dividends paid out in 2000, Native corporations contributed $9.6 million to charitable organizations in Alaska and awarded $4.3 million to 3,400 scholarship recipients, according to the report."By way of comparison, the charitable contribution is more than the entire United Way campaign in Anchorage, which raised $9.2 million in 2001," the report noted.Of 10,600 Alaskans working for the Native corporations, mostly in business and industrial service subsidiaries, 3,400 are Alaska Natives, according to the report.When a multiplier effect is included, using an economic model developed by the University of Alaska’s Institute of Social and Economic Research, the payroll and dividend payments generated another 3,280 jobs and $91 million in income, according to the report.The new survey includes 11 of 168 village corporations in Alaska, compared with three village corporations included in last year’s report. Like the regional corporations, many village corporations are engaged in business activities of substantial size.For example, Juneau-based Goldbelt Inc. owns a hotel and is a major operator of tourism businesses. Klukwan Inc. of Klukwan in the past has been a major operator in timber harvesting, stevedoring services and construction. Ukpeagvik Inupiat Corp. of Barrow is heavily engaged in construction and marine transportation, and is better known for its subsidiary, UIC Construction.Alaska’s Native regional corporations span a wide variety of business activities, ranging from Barrow-based Arctic Slope Regional Corp.’s oil and gas services to mining by NANA Regional Corp. of Kotzebue; to timber harvesting by Sealaska of Juneau; and to a variety of technical service companies by Koniag Inc. of Kodiak.The 13th Regional Corp., based in Seattle, does most of its business Outside and was not included in the survey.Total revenues of the 12 regional corporations surveyed increased more than $500 million between 1999 and 2000, and have increased at an average compounded rate of 15 percent annually over the last 10 years. In 1991 the combined revenues of the corporations were about $500 million.Of the $2.5 billion in 2000 regional corporation revenues, almost half is accounted for by two corporations. Arctic Slope Regional Corp. of Barrow, which has invested heavily in oil field service companies, had revenues of $1 billion that year. Cook Inlet Region Inc. of Anchorage had revenues of $380 million.Despite the growth of revenues, however, net income of the 12 regional corporations declined from 1996 through 1999 and dropped sharply in 2000 because of a combination of declines in investment portfolio earnings and problems some corporations encountered in business activities.Combined net income of the 12 regional corporations in 2000 was $35 million, compared with about $135 million in 1999. Eight of the regional corporations enjoyed $167 million in net income during the year, but four corporations suffered losses of $134 million.The biggest loss, $122 million, was reported by Sealaska Corp. of Juneau. The corporation’s downturn was caused by declines in the stock market, poor timber markets and problems with other businesses.


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