Railroad wants longer land leases

Saying it will foster commercial and residential development in four communities along the Railbelt, the Alaska Railroad Corp. wants to extend leases on its land from 35 to 55 years.Alaska Railroad officials say developers are having difficulty securing financing for large projects under current state law that limits leases to 35 years.Sen. Loren Leman, R-Anchorage, is sponsoring a bill that would allow the railroad to lease some 8,000 acres of its land in Anchorage, Fairbanks, Seward and Healy for up to 55 years, making commercial and residential development more attractive.SB209 was introduced late in the legislative session last year, but was not acted on by state lawmakers.The bill has since gained support from various lending institutions, developers and chambers of commerce, said Wendy Lindskoog, the railroad’s director of external affairs.Supporters of lengthening the leases include the Anchorage Chamber of Commerce and the City of Seward, Lindskoog said."Business organizations and city groups have been highly supportive,’’ Lindskoog said. "There is a definite economic benefit.’’Among the projects that could immediately benefit would be a senior housing development near Government Hill in Anchorage, Lindskoog said. The Department of Housing and Urban Development will not commit to a project on railroad land unless it has at least a 50-year lease, Lindskoog said.Wal-Mart also has expressed interest in railroad land and other sites in Fairbanks, according to railroad officials.Extending leases on railroad land would increase financing options, spurring investor interest, Lindskoog said. New leases mean additional revenues for the railroad, and infrastructure development and an increased tax base for communities.Lenders and developers have balked at large, expensive projects on railroad land since there was no assurance the land would be available after 35 years, Lindskoog said.Some banks require a lease to exceed loan maturity by at least 10 years. And increasing the lease term to 55 years allows companies to amortize debt longer, Lindskoog said.Extending leases to 55 years also would give the railroad equal footing with other state agencies. The University of Alaska and the state Department of Natural Resources can lease land for up to 55 years under state law, Lindskoog said.Under the proposed legislation, the railroad can terminate any lease after 35 years if the land is needed for railroad purposes.Leman, state Senate majority leader, said he doesn’t see any major hurdles for the legislation next session."This is win-win,’’ he said. "I think it makes some sense.’’"I think it will pass in both the House and the Senate if we keep it clean and on this issue and not let it become a Christmas tree,’ where people begin venting frustration on the railroad in general," Leman said.Some lawmakers want to sell the railroad to a private corporation, as was the intent when the federal government transferred the line to the state in 1985."There is still the mentality to transfer the railroad to the private sector,’’ Leman said. "We need to maximize the value of the railroad when and if that ever occurs, or whatever we do with it in the future.’’Established in 1914, the Alaska Railroad was operated by the federal government until it was purchased by the state. Along with the railroad came 36,228 acres of land in Seward, Crown Point, Portage, Whittier, Anchorage, Talkeetna, Curry, Hurricane, Healy, Clear, Nenana, Fairbanks, Valdez, Birchwood and Eagle River. About 13,700 acres are devoted to right of way, and 4,520 more acres are used for railroad operations.About 18,000 acres remaining along the 525-mile line are either leased or available for lease, said Pat Flynn, the railroad’s public affairs officer.The railroad earns about $10 million annually from leasing land, or about 9 percent of its annual revenues, Flynn said.Along with passenger and freight revenues, money from leases is used for operating expenses, capital improvement programs, track maintenance and federal grant matches, Flynn said. The railroad receives no money from the state."You don’t hear a lot about it -- it’s sort of a dark horse -- but leasing land is extremely important for the railroad,’’ Flynn said.Leasing railroad land also is important to communities like Healy, about 100 miles south of Fairbanks. Usibelli Mines Inc., the state’s only producing coal mine, leases about 350 acres of railroad land and subleases it to Healy residents and mine workers who have built about 60 homes on it."It’s been a godsend to the people of Healy,’’ said Steve Denton, Usibelli general manager.Usibelli also leases another 86 acres of commercially zoned land, where the mining company’s offices are located, as is the town’s fire department and community center.Two years ago, the Legislature, recognizing the importance of the issue to the small mining community, passed a law to allow the railroad to increase its lease limits in Healy from 35 to 65 years.

Senate Finance Committee takes on Alaska's fiscal gap

Most Alaskans agree that development of a long-range fiscal plan is one of the greatest challenges facing our state. Before considering major new taxes on Alaskans, state government should first be as well run as possible. This means continuing our work for a smaller, smarter state government and government reform to achieve maximum efficiency and fairer spending. The Senate Finance Committee has developed a package of fiscal reform legislation. This package presents the first step of a new long-range fiscal plan that has the potential of reducing the fiscal gap by more than $12.5 million the first year with reductions increasing to more than $100 million a year within 10 years. The basis of government in Alaska is our constitution. When we start to create a new financial plan we need to make sure our state constitution is functioning properly. Two parts of our state constitution that deal with fiscal policy are not: the constitutional appropriation limit and the Constitutional Budget Reserve provision. Ensuring state fiscal discipline The first step to the Senate Finance Committee’s fiscal plan limits the expansion of government spending through the adoption of Senate Joint Resolution 23, which revises the existing constitutional appropriation limit. Government spending is limited to about $6 billion; however we only currently spend about $3 billion. The enormous size of the current appropriation limit occurred because the constitutional provision has a built-in escalator clause for inflation and population. To correct this, our most recent version of SJR 23 proposes to base any allowable increases on previous year’s budgets and to limit those increases to 2 percent. Amending the Constitutional Budget Reserve The Constitutional Budget Reserve language of the constitution is not working as intended to control spending. The reserve was established in 1990 and has been used to help fill the gap between state revenues and expenditures. The original idea of the CBR was that funds could be withdrawn with a simple majority vote to cover a budget deficit as long as current spending did not exceed the previous year’s spending. However, a three-quarters vote of the Legislature would be necessary to withdraw any funds in excess of the previous year’s spending. In 1994, the Alaska Supreme Court misinterpreted this provision to require the three-quarters vote to withdraw any funds from the CBR. This creates a situation in which small groups of legislators can "blackmail" the majority and hold the budget hostage. These legislators can trade their votes, which are crucial to withdraw CBR funds and balance the state’s budget, in exchange for additional spending. We estimate the cost this year to access the CBR with the three-quarters majority vote to balance the budget was nearly $150 million. Senate Joint Resolution 24 corrects this bizarre imbalance of spending power by proposing a constitutional amendment that makes it clear a three-quarters vote is not necessary when spending does not exceed the previous year’s. This would encourage fiscal discipline and make it more difficult to increase state spending. Pending legislation In addition to these two measures, there are a number of other proposed bills that further the promise of fiscal discipline. They include: Senate Bill 180, which would adjust the geographic differential, equalizing state employee salaries across the state. This could potentially save $183,600 per year for the first six years and $312,000 per year thereafter. Senate Bill 181 could provide savings to the state of $500,000 per year by eliminating discriminatory below-market rates from the Alaska Housing Finance Corp.’s Housing Assistance Loan Fund. This fund provides loans to only certain areas of the state and was recommended for elimination by a recent audit because of misuse and the discriminatory nature of the program. Senate Bill 182 encourages accuracy and accountability in the budget process by requiring proration of program benefits, such as welfare, to be paid based on actual funding levels rather than prescribed levels. Annual savings depend on program funding levels in the budget. Senate Bill 183 adopts a uniform standard for the payment of attorney’s fees for litigants, including public interest litigants. It will bar litigants from collecting huge attorney’s fees for unsuccessful claims. Savings could average $117,100 annually based on current fees paid out annually. Senate Bill 184 provides an opportunity for, but does not require, local governments to contribute to the Village Safe Water Program. If local governments chose to contribute 5 percent of the cost of projects benefiting their area, the state could save as much as $2.7 million per year. Senate Bill 185 revises the formula under which power cost equalization is paid. State expenditures could be reduced by as much as $9 million per year. Senate Bill 186 would limit a municipality’s allowable bonded indebtedness, or acceptable debt, to $15,000 per municipal resident. This will potentially increase state revenues by more than $100 million per year within 10 years.The response to this package has been very positive. Both proposed constitutional amendments and three of the bills have passed the Senate and have begun hearings in the House. The remaining four bills are progressing through the Senate.These proposals are the first steps of a new multi-year fiscal plan. They are essential cornerstones to any new comprehensive plan and give Alaskans a guarantee of continued state fiscal discipline. Sen. Dave Donley, R-Anchorage, is co-chairman of the Senate Finance Committee.

Award winners offer advice for tough times

Small businesses are an important part of the Alaska economy, and in challenging economic times, advice gleaned from others can be valuable. According to the U.S. Small Business Administration’s most current statistics, out of Alaska’s 16,136 employer businesses in 1999, 97 percent were small businesses, or firms employing fewer than 500 people. In 1998 Alaska small businesses employed 118,592 of the state’s 196,135 nonfarm private sector workers. The state Department of Labor’s 2000 list of 100 largest private employers records 59 that have fewer than 500 employees. Several Alaskans have developed a proven equation for small business success. The Small Business Administration annually selects a Small Business Person of the Year, honoring the award winner for building his or her business and other specific achievements. State winners advance to the national level. Alaska has had one national SBA Small Business Person of the Year, according to Ron Veltkamp, business development officer at the SBA in Alaska. In 1965 Don Donatello was chosen for his work at Alaska Mill & Feed Co. The list of previous honorees also includes former Anchorage Mayor Rick Mystrom for Mystrom Advertising in 1982; Paul Reid of the New Sagaya stores in 1991; and Peter Eden of Alaska Wild Berry Products in 1989; as well as winners from Fairbanks, Soldotna and Southeast. The Journal interviewed several recipients from past years, seeking their counsel for current or future small business operators. Finding partners Last year’s recipient, David Cottrell of Mikunda, Cottrell & Co. Certified Public Accountants, believes Alaskans looking to start a service-oriented small business should consider teaming up with others. He is president and managing partner for the Anchorage-based Mikunda, Cottrell & Co., which is the largest locally owned accounting firm. He was chosen for the firm’s growth in sales and employees, financial stability, innovation of products and services, response to adversity and community contributions, according to SBA officials in Alaska. Cottrell, an Anchorage accountant and a founder of the firm, says service businesses include attorneys, accountants, insurers, dentists or physicians. Starting service businesses differs from starting construction or manufacturing companies, he said. The first step in creating such a business is analyzing the market to see if one’s services are in demand, he said. Then prospective small business owners should consider the possibility of combining skills with another business person, perhaps one who is already running a firm. "If you think you have a good market, don’t always assume that going it alone is better than with a partner," he advised. "As a team you can actually have a broader base of services." With a little help from friends Barbara Cash, president and chief executive of RIM Design, was SBA’s Small Business Person of the Year in 2000. The company previously operated under the name Interior Space Design, which has a 22-year history in Anchorage. The change to RIM Design allows Cash to bring together interior design talents and resources from the RIM Architects Guam and Hawaii offices. She urged future and current small business owners to talk to Small Business Development Center staff. "They have professionals there to help you. They have classes in how to write a business plan or how to start a business," she said. "They will help you do everything from planning and marketing to understanding payroll taxes."

Small businesses see a slowdown

Many Alaska small business operators believe a changing economy -- resulting from slowing growth since the Sept. 11 terrorist attacks -- will have an affect on their companies, according to a recent survey.Representatives from the Alaska Small Business Development Center distributed the survey to gauge the extent and type of impact on area businesses. The Alaska SBDC is a partnership between the U.S. Small Business Administration and the University of Alaska.The two-page survey, coupled with feedback from business operators at two forums, will help the organization develop strategies to help businesses respond to an altered market, said Jerry Anderson, Anchorage director for the University of Alaska Anchorage Small Business Development Center."We’re trying to assess the changing economic environment so we can be as responsive as possible," said Jean Wall, associate state director for the University of Alaska SBDC.Such assistance could be critical to the survival of small businesses, which in turn drive the economy, she said."I think we have found in periods of economic distress it really boils down to small businesses," she said. "If there are things we can help them do then we can all move through this new economy much more smoothly."Tactics businesses can use include improving cash management, reducing overhead or targeting different customers, she said.The two forums were conducted in late October.Participants identified tourism, transportation, hotels and lodging, and restaurants as sectors most likely to be affected.Seventy-one percent of survey respondents believed their businesses would be directly affected as a result of the East Coast attacks. About half of those respondents felt the impact would be a negative one. Forty percent noted the events would positively affect their business, and 10 percent cited positive and negative effects.Businesses participating in the survey represented seven Anchorage zip codes. They averaged about eight years in business with seven staff members. Most of them listed their businesses as stable or expected to grow before the terrorist attacks.Participants at the forums expressed ways their companies have been affected.At a forum at Harry’s restaurant, co-owner Sam Senner noted he had seen some impact.The restaurant had four banquets scheduled between Sept. 11-13, but those were canceled after the attacks, Senner said. Banquets at Harry’s typically range from 25 to 50 people.For two weeks after the East Coast attacks, sales at the restaurant dropped, he said. Sales have since rebounded, said Senner, who has logged 35 years in the industry including 11 years managing the Village Inn on Dimond Boulevard."I think it was an immediate impact, not long term," he said.The business also had submitted an order to Frontier Printing to print new menus listing special items. That business was vandalized in what is being investigated as a possible hate crime related to the attacks, and the restaurant was unable to promote the menu items as it had hoped. Consequently, the restaurant was unable to sell the inventory for the menu items, although products did not spoil, he said. Some menus were completed and returned to Senner Nov. 1.The restaurant employs 57 full- and part-time workers.Larry Wilmarth, owner of The Surveyors Exchange, also noted a swing in business."Everyone’s sitting on their pocket books pretty tight," the Anchorage businessman said.

Dividend checks expected to decline in the years ahead

The Alaska Permanent Fund took its lumps last year like most investment funds, but its managers say the fund did better than most pension funds and, despite a down market, beat the "benchmark" indexes and other funds that the fund’s trustees used as measures for performance comparison.The annual dividend paid to Alaskans went down this year, and because of the annual five-year averaging of cash income used to calculate the dividend, the amount allocated for payments is expected to decline for the next five years, according to the permanent fund’s latest estimates.According to an analysis of the past year, the fund’s total market value, the principal and the earnings reserve, declined from $26.5 billion on July 1, 2000, to $24.8 billion on June 30, 2001.Short-term negative returns inevitably occur."It’s as inevitable as rain in Juneau, snow in Anchorage and cold in Fairbanks," said state Revenue Commissioner Wil Condon.Still, "the fact that this is the first time in 25 years that we have had a negative annual return only shows what a remarkable run of good fortune the fund has had," according to Robert Storer, the permanent fund’s executive director."The eventual certainty of a down year is factored into the fund trustees’ analysis each year when they make the long-term asset allocation decisions," he said.An averaging of five years’ of income is used to calculate the dividend, which is intended to soften the effect of yearly volatility in earnings on the amount of the annual payment. This year the dividend would have declined even more had it been based on income for the year, rather than based on an average of five-year income.But even though the fund is projecting a return to earnings growth in the current year and continued increases in following years, the money available for dividends under the five-year averaging will decline. That, combined with expectation of continued population growth, will translate to lower dividends.For the current year, cash income of $1.864 billion is estimated compared with $1.199 billion last year. Estimates are the fund will earn $1.952 billion in 2003, $2.051 billion in 2004 and $2.161 billion in 2005.Because of the five-year averaging, however, the annual amount distributed for dividends will decline from $1.113 billion in fiscal year 2001, the year ending June 30 on which dividends are being distributed this fall, to $1.095 billion in fiscal 2002, the current state fiscal year, to $975 million in 2004 and $969 million in 2005.In 2006 money for the dividend is expected to begin increasing again, with $1.082 billion in cash earnings estimated for that year.For the past year, unaudited figures show the fund’s domestic stock portfolio was down 13.1 percent while foreign stocks were off 22.9 percent. Stocks account for about half the fund’s investments.The other half of the fund, bonds and real estate, did better. Domestic bonds were up 11.4 percent in value, and foreign bonds were up 0.8 percent. The fund’s real estate holdings were up more than 10 percent in value.Cash income by the fund, which is what is used to determine the annual dividend payout, was $1.2 billion for the year. This included dividends from stocks, interest on bonds, real estate earnings and about $150 million in gains from sales of assets during the year.During the fiscal year, about $1 billion was added to the protected principal of the fund, which included some $686 million in "inflation-proofing" payments made from the earnings, and $339 million from state oil and gas royalties."Despite the negative return, each of the portfolios of the fund, consolidated by asset class, beat its benchmark," Storer said."The fund’s U.S. stocks outperformed the Russell 3000 broad market, the non-U.S. stocks outperformed the EAFE index, and the bond portfolio outperformed the Lehman Brothers Aggregate Index," he said.Alaska’s investment fund did better than most pension funds because pension funds typically have a higher allocation to stocks than the permanent fund, Storer pointed out."We also stayed the course with our long-term asset allocation, which balances the risk of short-term losses against the reward of long-term gains," he said.Evidence of the wisdom of sticking to a consistent plan was the fund trustees’ decision last March to sell $750 million in fixed income and reinvest the money in stocks, a "rebalancing" of assets.Since that decision was made, the Standard and Poors Index of stocks has increased 4.8 percent, Storer said.

Amend your retirement plan now

After years of delay, it is now time to amend every qualified pension and profit-sharing plan to comply with the provisions of four major tax laws that were enacted from 1994 through 1997. These amendments are collectively known as the GUST amendments. The first letter of each of these acts make up the acronym.If you sponsor a 401(k), pension, profit sharing, employee stock ownership or employer-contributed 403(b) plan, you may be required to amend your plan as early as Dec. 31 -- that’s less than 60 days away.General amendment requirementsIf the plan document is not on a form that has been pre-approved by the Internal Revenue Service (prototype or volume submitter documents are pre-approved), and the last day of the current plan year is Dec. 31, the plan must be amended by that date. All employee stock ownership plans and most defined benefit plans employ individually designed documents.If the current plan year ends on a date other than Dec. 31, then the plan must be amended by the last day of the plan year ending in calendar year 2002.If you adopt a plan that is a prototype of volume submitter plan sponsored by a provider, such as a mutual fund company, an insurance company, a bank, a law firm, a certified public accounting firm or a third party administrator, and that provider submitted its lead documents to the Internal Revenue Service for review and approval by Dec. 31, then a plan sponsor who intends to adopt one of those documents has an extended remedial amendment period.If you are, or intend to be, an adopter of a prototype or volume submitter document that was timely submitted to the IRS, then you will have until 12 months after the document sponsor receives its final approval letter from the IRS, or until December 31, 2002, if later.If you have previously adopted a prototype or volume submitter document, and: Your previous provider has timely submitted and you plan to adopt their new plan, you have to take no action to get the extended reliance period (December 31, 2002 to adopt the amended plan). If your previous provider is no longer providing a prototype or volume submitter document or if you intend to adopt another provider’s plan, then both you and the new provider need to certify that you are intending to adopt that other provider’s document and the other provider is intending to provide that document to you. If you presently maintain an individually designed plan but are planning on adopting a prototype or volume submitter plan, then both you and the other provider must certify your intent to adopt.If you fail to timely adopt the GUST amendments, your plan risks disqualification and/or you may face monetary sanctions.Contact your third party administrator or financial institution to find out your status with respect to your plan document. It is a good idea to do that before the end of the year, just to be sure.J. Michael Pruett is president of Cache Pension Service Inc. in Anchorage. He can be reached via e-mail at ([email protected]).

Railroad predicts rise in revenue, steady passenger total

The Alaska Railroad Corp. is on track to match ridership numbers from 2000 and should show a slight increase in revenues this year, according to railroad officials."Looks like we’ll be down only 1 percent, for a total of about 500,000 (passengers) again,’’ said Patrick Flynn, the railroad’s public affairs officer. "Considering the slump in tourism statewide, we did OK."Passenger numbers last year were 501,000, down from 679,000 in 1999. In those two years, revenues slid from $14.6 million to $13.1 million, according to the railroad.Revenues for 2001 should fall somewhere in between the last two years’ profits, probably around $13.7 million, said Steve Silverstein, vice president of the railroad’s Markets, Sales and Services Division.The reduction in ridership and revenues over the past two years can be partially blamed on the 2.5-mile Anton Anderson Memorial Tunnel, which opened Whittier to road traffic in June 2000, railroad officials said.The state-owned railroad has taken steps since then to move more passengers along its 525-mile line.Earlier this year, the railroad streamlined its sales operations by combining freight and passenger marketing services.In 2000, the railroad added 16 new locomotives and several custom-built passenger coaches."Our new locomotives are 50 to 100 percent more efficient than the old locomotives, which allows us to run more trains and make better use out of our passenger equipment,’’ Flynn said.The railroad offers several daily routes in the summer, including the Denali Star, which departs daily from Anchorage and Fairbanks with stops at Talkeetna and Denali; the Coastal Classic serves Anchorage and Seward; and the Glacier Discovery connects Anchorage and Whittier.The Grandview, a new five-time weekly charter service, has proved very successful for the railroad and has helped offset some of the losses from the Whittier road tunnel, Flynn said.The train, which began service late last season, transports cruise ship passengers between Seward and Anchorage. The train used to haul passengers in Florida, before it was purchased for Alaska."Diversifying our passenger base proved to be a good move,’’ Flynn said.The railroad is forecasting freight revenues to be $80 million for 2001, up $10 million from a year ago; freight revenues have more than quadrupled in the last five years.To see the passenger revenues perform similarly, more people are going to have to know what the railroad has to offer, and that will take some "refocusing" in the marketing department, Silverstein said.Riding a train on the Alaska Railroad is one of the top sightseeing experiences anywhere, especially the trip to or from Seward, Silverstein said."It’s the best train trip in North America,’’ Silverstein said. "We have a great product. The question is, how do we get people to know what the product is?’’

Around the World November 18, 2001

STATEDismal sockeye run predicted for Bristol BayANCHORAGE -- The forecast for Bristol Bay reds doesn’t look promising.Alaska’s largest and most valuable salmon fishery is expected to produce an extremely low commercial red salmon catch next summer, according to government and university forecasts being released Nov. 13 in Seattle.The state Department of Fish and Game was expected to predict a catch of 9 million fish. Last year’s catch was 14 million reds -- in itself a weak harvest, considering the usual average of more than 25 million fish.The University of Washington also has prepared a forecast that also is expected to be low. That forecast was done with funding primarily from Seattle-based fish-packing companies.Should the numbers turn out as expected, business could be worse than even the disastrous catches of 1997 and 1998. That could add further injury to Alaska’s salmon industry, which is already suffering from low prices because of competition from foreign farmed salmon.AIDEA sells former MarkAir hangarFAIRBANKS -- A former MarkAir facility at Fairbanks International Airport is once again in the hands of an airline. The structure, vacant since MarkAir’s 1995 demise, was finally sold by the state agency that’s owned it for a decade.The Alaska Industrial Development and Export Authority earlier this month announced the sale of the facility to a company owned by Fairbanks businessman Robert Everts, owner of Air Cargo Express and the Tatonduk Flying Service.The hangar complex will be used for maintenance, administration and storage associated with Air Cargo Express and Tatonduk, as well as Everts Air Fuel Inc., a company owned by Everts’ father.AIDEA had owned the building since it agreed to help out MarkAir in a 1991 attempt to expand the airline. AIDEA was left with the hangars when MarkAir declared bankruptcy and ceased operations in 1995.Ketchikan borough calls loan to millKETCHIKAN -- The Ketchikan Gateway Borough Assembly has voted to foreclose on its 1999 loan of $7 million to Gateway Forest Products, the struggling veneer maker at the former site of the Ketchikan pulp mill.Gateway is continuing to produce veneer at the Ward Cove site with more than 50 employees as it attempts to rebuild the business under Chapter 11 bankruptcy protection.The $7 million loan from the borough came from a federal disaster fund. It was used to build the veneer mill.As collateral, the borough got mostly undeveloped lands, valued at about $7.7 million, around all three sides of Ward Cove. The loan was part of about $16.5 million the company owes the borough. That money all came from the disaster fund.Gateway purchased Ketchikan Pulp’s property at Ward Cove in 1999 and built the veneer mill in 2000.NATIONWholesale prices take a plungeWASHINGTON -- Wholesale prices, helped by sharp decreases for energy and new cars, plunged 1.6 percent last month in the biggest decline in more than a half-century of record keeping. Analysts said recession in the United States would keep the lid on inflation for many months to come.The bigger-than-expected drop Nov. 9 in the Labor Department’s Producer Price Index highlighted one of the few benefits a weakening economy can provide."The worsening downturn in industrial activity has spilled over into a general recession that is driving down prices,’’ said Jerry Jasinowski, president of the National Association of Manufacturers.GM announces SUV recallDETROIT -- General Motors Corp. said Nov. 9 it is recalling 86,312 2002 Chevrolet TrailBlazer and GMC Envoy sport utility vehicles for a problem that could cause the gear shift lever to suddenly move out of "park.’’The shift collar on some of the vehicles was not machined according to specifications, GM spokesman Michael Morrissey said.There have been no accidents, deaths or injuries reported as a result of the problem, he said.-- Compiled from business wire services.

Rocket destroyed after Kodiak launch

ANCHORAGE -- A rocket sent aloft from the Kodiak Launch Complex had to be destroyed seconds after lift-off Nov. 9 when trackers lost communication with the missile.It was the first time a rocket used in testing for the missile defense program had to be destroyed after launch, said Col. Rick Lehner, spokesman for the missile defense program in Washington, D.C.The rocket was launched from the complex, operated by the Alaska Aerospace Development Corp., at 9:12 a.m. It was destroyed 52 seconds later when launch officials lost telemetry data and data transmission from the missile, Lehner said."It seems to be a telemetry problem and safety rules dictate that, if you lose that type of data transmission, you have to destroy the missile," Lehner said. Despite the loss of data, the rocket remained on course until it was destroyed. A board would be convened to investigate the problem, Lehner said.

Entrepreneurs gear up for competition

Investment experts, entrepreneurs and students are gearing up for the second annual Alaska Business Plan Competition, beginning at 7 p.m. on Nov. 28 at Alaska Pacific University’s Atwood Building.The contest is the brainchild of APU assistant professor of entrepreneurship Bruce Borup, who saw it as a way of getting his masters in business administration students involved in a real-world funding exercise.The judges were recruited by Allan Johnston, regional manager for Wedbush Morgan Securities. They include representatives from the Alaska Industrial and Export Authority, the Alaska Manufacturers’ Association, First National Bank Alaska, First Interstate Bank, Key Bank, Northrim Bank, Wells Fargo Bank Alaska, and Alaska Growth Capital.During the competition, the entrepreneurs will be given eight minutes to make their case to the judges and then answer questions. The winner will be featured in the Alaska InvestNet Venture Fair in March, an event attended by numerous investors, including venture capital firms from the Lower 48.Borup said that the competition is more than just an exercise -- it could lead to funding for the start-up companies."Entrepreneurs can’t reach these type of investors in any other format," he said.Johnston said he is working to expand the competition to include other universities and to hold preliminary competitions throughout the state. He said his long-term goal is to encourage Alaska students to start new businesses in Alaska with funding from Alaska firms."We’re growing leaders, and when you do that, you grow the future," he said.The competition is open to the public at no charge.

Business Profile: DAT/EM Systems International

Name of the company: DAT/EM Systems InternationalEstablished: 1985Location: 8240 Sandlewood Place, Suite 101, AnchorageTelephone: 907-522-3681Web site: www.datem.comMajor focus of services: DAT/EM Systems International develops software and hardware products for digital mapping and photogrammetric applications.History of the company: The firm originally was an internal department at Aeromap US, an Anchorage aerial mapping company. DAT/EM began in 1985 and its products were commercially available in 1987.The company has grown from a handful of employees to a total of 15 employees today. DAT/EM serves more than 350 photogrammetric companies, engineering firms and government agencies in more than 50 countries. Clients range from the U.S. Geological Survey to governments in Asia.The map making industry has changed in recent years, shifting from reliance on precise mechanical instruments to software programs and special computer hardware.DAT/EM General Manager Jeffrey Yates listed several advantages to operating from Alaska although most clients are outside the state. From the Alaska time zone DAT/EM employees can telephone Europe in the morning and dial Asia in the afternoon. One challenge to the location, though, is finding skilled employees to fit the company’s needs, he said.Top accomplishment of the company: Yates cited DAT/EM’s record of "establishing ourselves as being one of the major players of manufacturing software and hardware in the field." The firm sets itself apart from others in the industry by its pricing and service to clients in fine-tuning products per their requests.Major player: Jeffrey Yates, general manager, DAT/EM Systems International.Yates, who came to Alaska in 1982, has a background in surveying. He was one of DAT/EM’s initial software developers before working on the firm’s sales and marketing efforts. In 1995 Yates was chosen general manager of the company.-- Nancy Pounds

NovaGold lives on gravel waiting for gold

Despite lackluster metals markets, one Alaska-based mining company is profitable this year thanks mainly to sales of sand and gravel for industrial and real estate development.But looking to the long term, NovaGold Resources is plowing its profits back into minerals development, notably the company’s project to develop the large Donlin Creek gold mine on Calista Corp. land near the Kuskokwim River.NovaGold took over the Donlin Creek project last year from Placer Dome, a major mining company, on a farm-out agreement that allows NovaGold to earn an interest in the mine by investing in exploration. Placer still owns the lease with Calista Corp., the Native regional corporation for Southwest Alaska.Donlin Creek has an estimated 13 million ounces of gold resources, NovaGold said in its financial statement released Oct. 31.Unlike most of the other "junior" mining companies operating in Alaska, which finance their exploration out of stock sales, NovaGold owns producing assets that provide income for investment in exploration. The company purchased land and property formerly belonging to Alaska Gold Co. near Nome.The company also has no debt, and thanks to the Donlin Creek venture, has access to one of the largest undeveloped gold prospects of any junior mining company, according to NovaGold President Rick Van Nieuwenhuyse.In the latest financial report, NovaGold said revenues for the first nine months of 2001 were up 11 percent to $2.45 million compared with $2.2 million for the same period of 2000. Most of the increase is the result of sales of sand and gravel from the company’s holdings near Nome, on the Seward Peninsula.Revenues of $4 million for this year from operations at Nome are expected."Currently, two very large commercial and industrial projects related to the Nome airport and Port of Nome expansion are expected to have a favorable impact on the company next year," Van Nieuwenhuyse said.NovaGold has just concluded a program of 42 drill holes at Donlin Creek, involving 42,000 feet of drilling. Assay results have been obtained from the first 29 holes and all have intercepted significant high-grade gold mineralization, Van Nieuwenhuyse said.The project is intended to demonstrate the presence of enough high-grade gold mineralization at Donlin Creek to make a smaller-scale development possible. Placer Dome had earlier done extensive work on the entire ore body, which contains substantial amounts of lower-grade gold mineralization.Once a mine is in operation, the hope is that it can be expanded to eventually produce the low-grade ores, according to Jeff Foley, a geologist with Calista Corp., the landowner.

Economic town meetings announced

WASHINGTON -- The Bush administration will convene a series of economic town meetings around the country in coming months to assess how businesses are coping in the wake of the terrorist attacks, Commerce Secretary Don Evans said Nov. 13.Evans said that he and other members of Bush’s economic team would schedule round-table discussions in various cities and report back to the president on what more needs to be done to deal with the disruptions caused by the Sept. 11 attacks and the slumping economy.He said that those invited to participate will include small business owners, workers, economists and chief executive officers of major U.S. companies."It will be a chance to listen and to learn," Evans said in speech to be delivered to the National Association of Manufacturers. A copy of his remarks was obtained by The Associated Press.The aim will be to assess how the government’s various efforts to deal with the terrorist attacks and stimulate the economy are working and determine what more needs to be done.In his speech, Evans joined a chorus of other administration officials in urging quick congressional passage of an economic stimulus package.

Restructured plans point to opening of Kensington mine

JUNEAU -- Coeur Alaska Inc. says it has restructured its plans for the Kensington mine, a hard rock gold mine 45 miles north of Juneau, to meet environmental objections and reduce costs.Opening Kensington mine would create 325 jobs at the peak of construction, 225 jobs during operation and 180 support jobs, said Rick Richins, senior vice president of Coeur, at the Juneau Chamber of Commerce luncheon Nov. 9 at Guesthouse Inn and Suites.Construction would cost about $155 million, and the company would pay an estimated $9 million in local taxes and $21 million in local purchases during the anticipated 10-year life of the mine, plus additional expenditures during two years of reclamation after it closed, Richins said.Coeur has been working with Goldbelt Inc. and Sealaska Corp., possible subcontractors, to solve objections raised in the past to its Kensington project, Richins said. Goldbelt is Juneau’s urban Native corporation and Sealaska is the Juneau-based Southeast regional Native corporation."We have also been talking to legislators and the fishing community and are about to talk to the environmental community" about adjustments made in Coeur’s operating plans for the mine, Richins said."We have had no negative feedback so far," he said, and have made friends with commercial fishermen "who like this project better than the project currently permitted."Sarah Keeney, mining specialist with the Southeast Alaska Conservation Council, did not attend the chamber meeting and said she did not know the specifics of Coeur’s new plan."But this company has put forth so many plans, I am skeptical," Keeney said. "The devil’s in the details."The new plan would replace a previously proposed onsite work camp with bringing in workers daily by bus and boat. Without a work camp, the site would have reduced inventories of supplies and fuel and less possibilities of spills.Transporting workers and supplies would mean two to three trips a day by water bus across Berners Bay and two to three shipments of ore concentrate a month, "so we are not talking about a huge amount of traffic," Richins said.Instead of damming tailings, which are the crushed rock that results after ore is extracted, they would go into 180-foot piles near Comet Beach, sandwiched between layers of drain rock and capped. Some tailings would go to the bottom of a 40-acre muskeg called Slate Lakes and be capped when the mine closes.The company wouldn’t use cyanide at the site because it would take the gold ore concentrate elsewhere for processing, Coeur said.A tunnel connection with the historic Jualin mine would keep all mining underground. The mine would disturb 120 acres compared with 250 acres under the previous plan, the company said.Much of the work would be on patented land, which would minimize federal involvement, Coeur said.In a deal made in 1987, Coeur shared ownership of Kensington with Echo Bay Mines. Coeur subsequently bought out Echo Bay and became primary developer, Richins said. Since 1997, Coeur has spent about $20 million on environmental impact studies and permitting for the project, he said.In 1992, mining was permitted at the site with two elements that concerned environmentalists and fishermen: building a 280-foot-high dam across a creek bed to contain tailings and running a discharge into Lynn Canal.Both were "controversial," Richins said, "so we decided to redesign the project." Use of cyanide at the site was "another hot button," he said.Since 1989, the price of gold fell from $480 an ounce to $280, so Coeur would have to cut costs to make operating the mine profitable. In the past two years, Coeur has spent millions coming up with an alternate, cheaper plan, Richins said."We have good feedback from the (U.S.) Forest Service so far to carry out the permitting in 12 months," Richins said.He said the U.S. Environmental Protection Agency has been "waffling" on the subject of tailings in lake waters, claiming such waters become "not waters of the nation but a waste treatment facility."The Forest Service and the EPA could not be reached immediately for comment."It’s going to really take your continued support to push this thing through," Richins told the chamber audience, "and we won’t be bashful about coming to you and asking for it."Mike Dalessi, vice president of investments and branch manager for Salomon Smith Barney Inc., was optimistic. "I think that anything that creates jobs for the city is a good thing," Dalessi said.

Committee seeks way to bring gas to Inlet

The Joint Committee on Natural Gas Pipelines, chaired by Sen. John Torgerson, R-Kasilof, wrapped up two days of hearings in Kenai Nov. 8. The purpose of the meetings was to evaluate the supply and demand for natural gas in Cook Inlet."Natural gas will run out in Cook Inlet, and we need more to come here from different areas," Torgerson said. "All agree that if there are no changes, and we go full speed ahead, by 2015 we’ll be dry."He said if new discoveries in Cook Inlet are brought on line, the reserves could be pushed seven to 10 years further out. There are "really wide swings" in what reserves may or may not be out there, he said.Committee member Rep. Mike Chenault, R-Nikiski, said that for years petroleum companies did not seek gas, only oil. Now that they are looking for gas again, new reserves could be found.No matter how much gas is found in Cook Inlet, it will run out at some point, Torgerson said. The solution is a natural gas pipeline from Prudhoe Bay to Cook Inlet."And the sooner the better," he said. "We can’t go into the future without a plan."A gas pipeline from the North Slope to Nikiski is not the front-runner in the pipeline scramble, but a spur line from either the Alaska Highway or Prudhoe Bay to the Valdez route could be possible."It’s very, very important that natural gas come to the Kenai Peninsula and Cook Inlet basin," Torgerson said.Alaska’s vast natural gas reserves on the North Slope, estimated at more than 35 trillion cubic feet, have lacked markets in the past. But rising demand and declining supplies are likely to make their development feasible before the end of the decade.Torgerson said the Nikiski petrochemical industry would be the first to go if reserves began to dwindle. Two, and soon three, North Road plants depend on natural gas: The Phillips Petroleum Co. creates and ships liquefied natural gas to Japan, while Agrium turns gas into fertilizer. BP’s gas-to-liquid pilot plant will turn gas into synthetic crude oil once it is operational."We certainly don’t want to see our industry shut down, so timing is essential," he said.Tony Izzo, president of Enstar Natural Gas Co., showed slides of the company’s projected demand and supply for the next 15 years. By 2010, if no new natural gas is discovered or brought into Cook Inlet, one slide showed Enstar’s demand outstripping supply more than two-to-one.Enstar purchases its gas under long-term contracts with Marathon Oil Co., Chevron, Municipal Light & Power and Phillips. It has two new contracts, one with Moquakie, comprised of Anadarko and Phillips, which starts Jan. 1. The other with Unocal starts in 2004. The company supplies natural gas to 160,800 homes, Izzo said.A chart he displayed showed the supply of known gas reserves in Cook Inlet falling below Enstar’s average peak demand in 2003 and the average daily demand in 2006, if industrial use were cut in half by 2010."Putting on my Enstar hat, if pushed, I think curtailing industrial use could be considered, but that is the last thing we would like to see," Izzo said.Chris Tworek, vice president of supply management for Agrium, said bringing North Slope gas to Cook Inlet would create more jobs for Alaskans if the company expanded its Nikiski fertilizer plant.Richard Peterson, president of Alaska Natural Gas to Liquids Co., or ANGTL, spoke about transforming North Slope natural gas into synthetic crude and indicated the company would be interested in building a GTL plant in Cook Inlet.He said if the United States really wants to reduce dependence on imported foreign oil, it should look to North Slope GTL, which could add 1 million barrels a day that could be shipped down the trans-Alaska oil pipeline."This can be built in Alaska and provide jobs for Americans," he said.A GTL plant could provide steam, hydrogen and nitrogen to be used as feed stock for fertilizer plants, as well as the synthetic crude for oil refineries.He said the GTL process also can be applied to coal-bed methane, which Alaska and the nation have plenty of. "There is enough coal (methane) reserves in 38 states across the nation to make over 10 million barrels a day of synthetic motor fuels for over 200 years," he said.Mark Sexton, president and chief executive officer of Evergreen Resources of Denver, testified by telephone how his company is poised to drill for coal-bed methane, which he described as nearly identical chemically to natural gas.Sexton said Alaska has half the known coal reserves in the nation, and that the Cook Inlet area possibly holds 200 trillion cubic feet of coal-bed methane. Torgerson estimated that was probably a 1,000-year supply. However, efforts to extract the methane in the Cook Inlet basin have been unsuccessful, he said.In Sexton’s presentation, he described how the company had developed its own technology to extract the gas in Colorado. Torgerson said he was glad to see the company has had success with the technology.Evergreen acquired rights to drill for coal bed methane near Wasilla this year and has sunk several wells.Scott Heyworth, head of an initiative group to promote an all-Alaska natural gas pipeline, wants a line to Valdez where the gas would be turned into LNG for shipment to the Pacific Rim.The plan of the Alaska Natural Gas Development Authority calls for a spur line to supply Cook Inlet electric, heating and industry needs."This plan assures cheap gas to Cook Inlet," Heyworth said. "The Beaufort and highway routes have no provisions."The Beaufort Sea gas line route would ship North Slope natural gas to Canada’s Mackenzie River Delta area where it would then make its way to market. The Alaska Highway route would follow the trans-Alaska oil pipeline to Fairbanks and then follow the highway into Canada."(The all-Alaska route) is the gas line project Alaskans want to see," Heyworth said.

Bypass mail limits could ruin some carriers

Thanks to massive government subsidies, mail is what fuels the airline industry in Bush Alaska.About 35 air carriers, large and small, vie for federal money that comes from tons of mail dispatched from Anchorage and Fairbanks daily to hub communities throughout the state and then on to smaller villages.But now, federal legislation is being drafted to limit the number of air carriers that can handle Alaska mail, which includes everything from food and building materials to medical supplies.The new proposals are being pushed by large "mainline carriers" including Air Cargo Express, Alaska Airlines, Lynden Air Cargo and Northern Air Cargo.Smaller carriers say if new rules become law many of them will go out of business and passenger and cargo service to the Bush will be reduced dramatically and become more expensive.In July, legislation was drafted in the U.S. House that, among other things, allows the Postal Service to tender most mail out of Anchorage and Fairbanks only to an airline that had operated large aircraft since Jan. 1.That legislation drew heavy criticism from small operators and some Bush residents."The major carriers want a greater share of the mail, more revenue and less competition,’’ said Hank Meyers, an aviation consultant representing several of the small airlines.A Senate version of the bill, which is being drafted, will give small carriers a smaller portion of the mail, said an aide to Republican Sen. Ted Stevens, who asked not to be identified.The new legislation, due to be introduced sometime this month, would give small operators up to five years to acquire aircraft that would handle passengers and mail.Stevens secured Alaska’s current "bypass mail" law, a unique system begun in 1970 where shipments of at least 1,000 pounds are stamped air mail but never touched by postal workers and delivered to Alaskans at cheaper parcel post rates.The intent of this bypass mail system, Stevens’ aide said, was to give airlines additional revenue so that Bush communities could have passenger and freight service. In many communities, markets are too small for airlines to serve without the subsidy.Bypass mail is divided equally among all carriers in any given community. Bypass mail has spawned many cargo-only shippers who only fly bypass mail."The system needs to be repaired,’’ Stevens’ aide said. "There are too many carriers that are providing little or no passenger service.’’He said Fort Yukon, a community of less than 700 residents, is served by up to 10 air carriers daily.Steve Deaton, network planning specialist for the U.S. Postal Service in Anchorage, said more than 2 million pounds of bypass mail is tendered out of Anchorage and Fairbanks weekly. Bypass mail represents 75 percent of Alaska’s total mail volume and costs the Postal Service about $10 million monthly, he said.Over the course of a year, the Postal Service loses about $70 million on bypass mail alone, Deaton said.Congressional estimates run as high as $170 million in losses in Alaska, or 10 percent of the service’s red ink nationwide."What we charge does not cover the costs,’’ Deaton said. "If it wasn’t for mail, passenger and air freight service would be decimated. Mail is what makes the airline industry go.’’Airlines are paid $1 to $1.75 per pound shipped, depending on distance.Mail historically has been such a contentious subject between air carriers in Alaska that the airlines’ state association forbids the topic from being raised at its meetings."It’s taboo," said Fred Ciarlo, general manager of Tanana Air Service in Fairbanks.Ciarlo said legislation favoring only mainline carriers will likely sever service to many communities, especially tiny villages.Airlines like his are providing essential and frequent service to the Bush, but they can’t do it without bypass mail, he said."I’m a passenger carrier but 85 percent of my revenue is from mail,’’ Ciarlo said.As an example of bypass mail, Ciarlo said 59 pounds of milk containers strapped together has postage of $8.98 stamped on it. He is paid $60 to ship it to a village less than an hour away.Butch Hallford, Northern Air Cargo vice president in Anchorage, said that a few years ago Kotzebue was served by about four air carriers; now there are 16.Northern Air Cargo hauls about 30 million pounds of mail annually for the Postal Service, Hallford said.His company strongly supports limiting the number of airlines handling mail in the Bush."Nobody is making any money,’’ Hallford said. "The safest air carrier is the air carrier that is making money, period. There were four (airlines) making money in Kotzebue. Now there are 16 losing money. What’s that tell you about safety?"

This Week in Alaska Business History November 11, 2001

Editor’s note: "This Week in Alaska Business History" revisits events that shaped our past."Those who cannotremember the past arecondemned to repeat it."- George Santayana, 1863-195220 years ago this weekAnchorage TimesNov. 14, 1981Visitors’ center planned for old Federal BuildingBy Bill WhiteTimes WriterThe U.S. Park Service has proposed spending $1.7 million to convert the old Federal Building on Fourth Avenue into a visitors’ center featuring exhibits on the state and a multiprojector slide show on the different cultures in Alaska.Janet McCabe of the U.S. Park Service said the state would split the cost of remodeling the 9,000 square feet of the building the visitors center would occupy.She told the Alaska Land Use Council that the Park Service has been working with state and federal agencies on the project, which was called for in last year’s Alaska lands bill.The old Federal Building was chosen for three reasons, she said. A building already existed. The building is near hotels and stores. The building is listed in the national register of historic buildings.Anchorage TimesNov. 15, 1981Project 80s sparks construction boomBy Sean HanlonTimes WriterProject 80s, Mayor George Sullivan’s ambitious plan to build Anchorage using state oil revenues will mean a $200 million construction boom in 1982.The construction effort will involve some 150 different projects - ranging from the municipality’s new $43 million headquarters library to a $500,000 mini-city hall in Eagle River.The effort represents a continuation of the trend of ever-increasing construction work within the municipality. The money earmarked for road and drainage work alone gives one indication of the boom in construction stimulated by state oil money.In 1978, Anchorage spent $6.4 million on roadwork. Expenditures on road and drains increased to $12.4 million in 1979, $30 million in 1980 and $58 million in 1981.Although cost estimates have been made for the major projects, the exact price tags are as yet unknown."We are having a problem. Many of these projects have been estimated two or three years in advance," said Everett Diener, director of the Anchorage public works department.10 years ago this weekAlaska Journal of CommerceNov. 11, 1991Anchorage airport ramp repair called into questionBy Margaret BaumanAlaska Journal of CommerceAn inquiry into repair work on a controversial auto ramp at Anchorage International Airport has been ordered after reports that the ramp problems were not corrected.The inquiry was ordered by Keith Gerkin, deputy commissioner of the state Department of Transportation and Public Facilities.Gerkin said he was checking on concerns voiced by Dennis Nottingham, president of Peratovich, Nottingham & Drage Inc., an Anchorage engineering firm, that the size and number of reinforcing rods added to the ramp were inadequate to provide necessary support in the event of a major earthquake.Nottingham implied the method of attachment of those rods is not sufficient and questioned how much strength was developed across the joints by the repair work, Gerkin said."The overall design criteria used is minimal; the repair job is substandard," Nottingham said, after reading a report on the job specifications. "What they did is just cosmetic."Alaska Journal of CommerceNov. 11, 1991Cordova Road loses federal fundsBy Bob TkaczFor the Journal of CommerceState Department of Transportation work during the past summer to extend the Copper River Highway to Cordova may have made the project ineligible for federal highway funds, according to a Federal Highway Administration memo.Based on a DOT cost estimate of up to $95 million for a year-round road that would qualify for up to 90 percent federal funding, the 40 miles of pioneer road built during the summer would cost the state $85.5 million in FHA money. The Sept. 30 memo is from Thomas O. Willett, director of the FHA office of engineering, to Gene McCormick, deputy administrator of the agency."Very likely Alaska has already pre-empted the possible later use of federal highway funds," McCormick wrote across the top after reading the memo.- Compiled by Ed Bennett.

KNOWLES ANNOUNCES HOMELAND SECURITY INITIATIVE, HONORS VETERANS

ANCHORAGE -- During a special tribute to Alaskas veterans before the Anchorage Chamber of Commerce today, Gov. Tony Knowles announced a new Homeland Security Initiative designed to increase Alaska’s security and preparedness against possible terrorist attacks.The five-part plan, estimated to cost about $100 million in state and federal funds, would improve the security of Alaska’s communications, transportation and public utilities infrastructure; expand the state’s ability to detect and respond to biological and chemical terrorism; and better train those who would be called on for a first response to a contaminated environment.Much of the initiative will be submitted to the Legislature for approval next year. "Make no mistake -- America is at war. Nearly everyday we receive new reports of potential terrorist acts -- nuclear, chemical, biological, radiological -- which until September 11th had been only the stuff of science fiction," Knowles said. "In addition to securing our own population, Alaska is uniquely positioned to respond to attacks elsewhere, given our geographic proximity to the Lower 48, Europe and Asia."The security initiative is the result of two months of careful analysis of Alaska’s security capacity since the Sept. 11 terrorist attacks on America. Led by state Adjunct Gen. Phil Oates, commissioner of the Alaska Department of Military and Veterans Affairs, with the governor’s Disaster Policy Cabinet, part of the initiative calls for creation of an Alaska Office of Homeland Security, to be housed within Oates department.Working with its federal counterpart, the Office will coordinate with military, federal, local, educational, and private agencies, including other states and Alaskas Canadian neighbors."There is an increased price of freedom in this new era of terrorism," Knowles said. "It will require additional Troopers and public safety personnel, increased levels of training and equipment for haz- mat teams and public health officers and increased security procedures. For the coming 18 months -- the remainder of the current fiscal year and Fiscal 2003 -- the Alaska Homeland Security initiative is estimated at about $40 million each in state and federal funds and another $15 million from other sources."The governor also used the speech, delivered on the state and federal holiday of Veteran’s Day, to recognize and honor Alaska’s veterans. Alaska is home to more than 65,000 veterans, more per capita than any state but one.Knowles presented the Governor’s Veteran’s Advocacy Award to two veterans and awarded World War II High School Diplomas to more than a dozen other veterans who left high school for service in World War II and never had the opportunity to return to obtain their high school diplomas.This year’s winners of the annual the Governor’s Veterans Advocacy Award are Anchorage residents Robert O. Bowen and Robert J. Nelson. Recommended by the Alaska Veterans Advisory Council (AVAC), the award recognizes individuals who demonstrate an extraordinary personal concern, compassion, and commitment to veteran’s causes and their families.The plaques were presented by the governor, Gen. Oates and AVAC Chairman Pat Carothers, a retired U.S. Marine colonel who at the time of his retirement was the most highly decorated marine in America. "Bob Bowens record of service to veterans and veterans causes is a mile long and twice as deep," Knowles said, citing his service in World War II and a prisoner of war for three years in a Japanese camp. He later started a Chapter of the American Ex- Prisoners of War organization in Anchorage. Recently, Bowen spearheaded the installation of the bronze statue of the rifleman on Anchorage’s Park Strip, in partnership with the AFL-CIO.Bob Nelson is a veteran of two wars -- Vietnam and the Gulf War -- and retired as a Command Sergeant Major from the U.S. Army. Currently a counselor at the Veteran’s Center, he is a former chair of the Municipal Veterans Commission and has long been a host of the Alaska Veterans Update on Channel 11. Last month, Nelson volunteered to counsel recovery workers at the World Trade Centers Ground Zero.About a dozen WWII veterans attended the ceremony with family and friends to obtain their long-awaited high school diplomas under a program began earlier this year. "For a lifetime of learning, the state is honored to confer a high school diploma upon our World War II veterans," Knowles said.Knowles also noted other recent veterans initiatives, including the newly named Eagle River Veterans’ Memorial Highway, establishment of a Veterans home page and legislation creating the Alaska Pioneers’ and Veterans’ Home system, introduced last session.Calling 2002 the "Year of the Veteran," Knowles announced he would introduce legislation next session to create an Alaska Veterans Memorial Endowment. Through the generosity of dozens of Alaska businesses, more than $125,000 in pledges already have been made to fund the endowment.Next session, the governor will ask the Legislature to match the privately raised funds with $125,000 in public money and to create the endowment in state statute. Interest earned on the endowment would be given out as small grants to make sure that memorials are ship-shape when Alaskans and tourists visit them. "Places of remembrance need to be properly maintained. For Alaskas veterans who took care of America, its time we take care of the memorials that celebrate their sacrifice," Knowles said.At the state’s veterans memorial at Byers Lake the roads leading to it are now named Medal of Honor Loop and Purple Heart Lane, the governor announced. The rest area at the memorial is now known as the POW MIA Rest Area. The signs were donated and will be dedicated next Memorial Day.

Council offers route, other advice

Twenty-eight Alaska business and community leaders gave Gov. Tony Knowles their advice on state natural gas policies, as the Natural Gas Policy Council formed by Knowles early this year wrapped up its recommendations.Not surprisingly, the council recommended the state push for a southern route for a North Slope gas pipeline through Interior Alaska instead of a northern, offshore route that is being studied as an option by gas producing companies.Knowles has endorsed a southern route that would follow the Alaska Highway into Canada.The council also affirmed a recommendation agreed on several weeks ago by one of its committees, that the state not invest in a gas pipeline.The panel also handed Knowles 42 other recommendations dealing with a range of topics from training Alaskans to environmental policies, and a lengthy, complex set of recommendations dealing with state royalty policy and regulatory authority on shipments of gas to points within the state.On state investment, Juneau businessman Bill Corbus told Knowles his committee had first thought the state owning a percentage of the pipeline might solve certain problems, such as guaranteeing access to gas for fuel.But as the committee dealing with the ownership issue held meetings through the summer, it became clear there were other ways to solve those problems, and that owning part of the pipeline wouldn’t do the job, Corbus told the governor Oct. 31.The investment would earn the state an attractive return, he said, but his committee felt that the state could do as well or better by putting its resources in other investments with less risk, Corbus said.Brian Davies, a retired British Petroleum manager, presented recommendations of the council’s environmental policy committee, which recommended adequate funding for state agencies performing oversight on the pipeline project, and a full or supplemental environmental impact statement.This was a bit of a setback for Foothills Pipe Lines Ltd. of Calgary, which has been arguing that an environmental impact statement done for the Alaska Natural Gas Transportation System in the 1970s is still valid. Foothills holds permits for the ANGTS project, which follows the Alaska Highway.Ken Thompson, a retired Atlantic Richfield Co. executive, served as chairman of a council committee considering state royalty gas policy, access to gas by Alaska communities and possible new manufacturing in the state based on natural gas.Thompson told the governor that his committee recommends the state pursue a mix of sales of royalty gas, some left with the producers and sold to other companies, to increase competition and gain the best returns.The state should also base its royalty values on actual sales of gas in the market rather than accepting a formula to determine market value, as has been done with state royalty oil, Thompson said.This should include the value of "affiliated sales" of natural gas liquids shipped along with the gas, instead of a value based only on the energy content, or heating value, of the gas, Thompson said. As state royalty policy is now constructed, the values of these affiliated sales could be left out of the royalties paid to the state, he pointed out.Thompson’s committee also made a number of recommendations on state and federal regulatory authority on a gas pipeline. The first recommendation is for the state to press to include in federal legislation a provision giving the Regulatory Commission of Alaska authority to regulate tariffs and other charges related to gas moved through the pipeline but sold in Alaska.This is similar to provisions in the federal Trans-Alaska Pipeline Act of 1973 that gave Alaska authority to regulate intra-state shipments of oil.If the state fails in securing that legislation, Thompson suggested the state seek a Joint Board of the state RCA and the Federal Energy Regulatory Commission to consider issues related to sales of gas in Alaska. Although the Joint Board would only be advisory to the FERC, it would still give the Alaska regulatory agency a formal role in considering Alaska issues, Thompson told Knowles.Mike Navarre, a Kenai businessman and former legislator, briefed Knowles on recommendations of the "Alaska-hire" and "Alaska-build" committee he headed.Navarre’s panel recommended more state funding for training but noted that construction manpower was already scarce in the state and that a gas pipeline construction project would strain the state’s skilled manpower resources further.

Alaskans committed to the future

Due to its geographic challenges, Alaska is exactly the type of environment that should best be able to take advantage of new technologies for business development, and in turn build a dynamic infrastructure that will retain vital talent.In my search for signs of alternative life forms in Alaska’s new technology, nontraditional business environment, I am heartened yet realistic about our prospects. The good news is that there are committed individuals who love Alaska and see its potential and are working hard to nurture a fledgling social entrepreneurial community here.When deciding on a graduate school, I chose the law school at Santa Clara, in the heart of Silicon Valley, primarily for the strength of its high-tech law program and the exposure that being in such a vibrant environment could afford me. Many naturally assumed that I would be led elsewhere due to the lack of depth present in Alaska in my interests: "So this means you won’t want to come back?"The reality is that I very much want to come back to Alaska and I hope the specific expertise I am able to bring back with me makes me invaluable to the mix. However, I don’t necessarily want to come back at the sacrifice of opportunities in my interests in international, entrepreneurial and technological issues. Ideally, I would like to return with my education and skills and continue to help with exciting new ventures in the state.The rhetoric on state priorities focuses on a need to diversify Alaska’s economic base from its traditional reliance on natural resources and government. Alaskans need to back up this rhetoric with the reality of a strong infrastructure for new business ventures that could constitute anything from soap to high-tech software, judging from the businesses represented at a recent InvestNet marketing seminar.The Alaska Science and Technology Foundation is a state agency that invests money to improve Alaska’s economy and its science and engineering capabilities. ASTF and its progeny are making a difference on the Alaska business landscape.Recognizing a need for know-how to help with the sophisticated nature of new venture deals, ASTF established InvestNet in 1998. Among the entrepreneurs involved with InvestNet, the only statewide capital matching network, funding sought ranges between $100,001 and $250,000 for businesses seeking equity investment of more than $1,000,000.Products include sand and gravel; real estate; bottled water; thermal environmental control systems; laser lighting products; pharmaceutical discovery; software for medical billing and human capital management; and Web-based grant-seeking services for nonprofits.With the thought that these organizations would be on the front line of any development related to technology and start-up interests in Alaska, I worked with ASTF and InvestNet this past summer. Through my work with InvestNet, I also connected with and started working for PeopleMatter LLC, a promising Alaska-based start-up company specializing in human capital management software.The irony is that Alaska itself could probably stand to be evaluated in terms of how human capital is being drained from or retained by the state.If we attempt nothing, then we can achieve nothing. But if we try and fail, we still can gain.What is it going to take to grow Alaska’s economic base? It takes bona fide Alaska "angels" to invest in homegrown enterprises rather than forcing promising Alaska start-ups to look Outside. If companies have to look Outside for venture funding, they run the real threat of having relocation dictated by outside investors. It takes those in positions to affect change within the state to create high-tech infrastructure - and high-paying, cutting edge work - as a way to attract and retain the "best and the brightest" to Alaska.It takes individuals who not only spew the rhetoric of new technology and social entrepreneurship, but individuals who are willing to get their hands dirty with the work of building that vital infrastructure. It takes people willing to step outside traditional work patterns and pursue creative problem-solving solutions to help build Alaska’s economic base.Jeanne HuangLi served as an intern at Alaska InvestNet in Juneau this summer. She can be reached via e-mail at ([email protected]).

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