PPP rules loosened, but some businesses still struggle to find aid

Congress continues to expand the COVID-19 economic safety net as it becomes clear it still isn’t catching some small businesses that have not been able to secure any of the several forms of government aid. President Donald Trump signed the Paycheck Protection Program Flexibility Act June 5, just 10 days after it was introduced in the House. As the name implies, the legislation significantly eases spending parameters for the federal government’s primary aid program to help small businesses survive the pandemic. It loosens the restrictions on how businesses can spend their PPP funds without being required to repay them; extends the time businesses have to spend the money from eight to 24 weeks; extends the loan maturity period for businesses that do have to repay at least a portion of their PPP aid from two to five years; and reduces the amount of a loan that must be spent on payroll from 75 percent to 60 percent; among other changes. Seeded with $660 billion over two installments, the Small Business Administration had dispersed more than $511 billion in loans — that turn into grants if the spending parameters are followed — through Paycheck Protection Program to more than 4.5 million businesses nationwide as of June 6. In Alaska, 10,265 small businesses had received more than $1.2 billion, according to the SBA. However, those figures have hit a plateau in recent weeks. Just 215 PPP loans totaling approximately $5 million had been approved in the past two weeks, according to SBA figures, despite the fact that more than $130 billion remains available. The state had nearly 71,000 small businesses in 2018, according to the SBA. “The PPP has served as a critical lifeline to keep our small businesses afloat through the peak of the coronavirus pandemic. I am glad to see these common sense changes to the program pass the Senate, changes that will undoubtedly give small businesses greater flexibility and the ability to keep their workers on their payroll,” Sen. Dan Sullivan said in a formal statement. Sen. Lisa Murkowski said the PPP changes should especially help seasonal business that make up a large share of the Alaska economy. “It’s got to help,” Anchorage Economic Development Corp. CEO Bill Popp said of the PPP Flexibility Act. Popp expects the changes will encourage new PPP applications and he hopes they do because he said AEDC staff has been consistently hearing from “dozens” of small business owners who previously couldn’t qualify for government aid to weather the pandemic. “Those (initial requirements) were all just too tight given the fact that business was just shut down for a period of time,” he said. “I’ve dealt with some pretty angry calls from people looking for someone to vent to.” Alaska Small Business Development Center Executive Director Jon Bittner similarly said he’s heard from individuals frustrated by some of the challenges and inconsistencies in the aid programs. Bittner said many small business owners will likely apply for a grant through the state’s $290 million AK CARES program being administered by Credit Union 1 before trying — sometimes again — to get a PPP loan because the state program is currently limited to those businesses that have not received federal aid. SBDC staff are hearing from some business owners who have received just a small Economic Injury Disaster Loan, or EIDL, from the SBA he said. “If you got $3,000, that’s not why (the state) was excluding people,” Bittner said. Kenneth Wake, who owns of Prepper’s Pack, a small emergency equipment and tactical outdoor gear shop with his wife in South Anchorage is one of the emerging group of business owners who didn’t initially qualify for PPP aid; and the changes don’t appear to have helped, either. Wake said the couple does not take regular paychecks from the business; they draw on their investment and then pay taxes off of that, meaning they don’t have the documentation the application process requires. The couple does not have any employees. The PPP Flexibility Act does not amend the loan application requirements. “We can’t show proof of income,” he said. Prepper’s pack closed March 23 and did not reopen for nine weeks. In the interim, Wake, a former hotel security director, accepted a security job so he didn’t apply for unemployment. The state Labor Department is also requesting his wife repay unemployment benefits because the couple’s income records are not standard issue, he said. “It shouldn’t matter how we pay ourselves to be self-employed,” he said, noting unemployment benefits have been extended to self-employed individuals during the pandemic. Wake first applied for an EIDL of up to $10,000 and was unsure of the status of the application when a $2,000 advance showed up in his account. However, that $2,000 in federal aid has prevented him from applying for an AK CARES grant of between $5,000 and $100,000 as well as Anchorage’s Small Business and Nonprofit Relief Grant Pilot Program. Wake said he filled orders for protective equipment from the Anchorage Airport Police and medevac services while Prepper’s Pack was closed to the public but estimates he gave up approximately $17,000 in revenue while the store was closed. He said their landlord forgave part of the April rent payment for the store and the couple paid part of May but they still owe for June. Business has gradually improved in the days since Prepper’s Pack reopened, but Wake said he is still unsure about the future of the business. “I’m hoping and praying we get through this but I tell you what I won’t be holding my breath,” Wake said. Bittner suggested that business owners having trouble finding assistance at the state and federal levels should begin to look locally for at least some sort of aid. He noted that nearly $600 million of the $1.5 billion the state received from the CARES Act is going to local governments that are setting up their own business assistance measures. “Those are going to be small pots of money,” Bittner said, but “There is some more funding on that level that should be easier to get.” Officials in Gov. Mike Dunleavy’s administration have said the rule limiting AK CARES grants to those who had not received federal help was written in late April when the PPP loan pool was first exhausted. It was intended to ensure as many Alaska businesses as possible got some help. Administration officials, House and Senate leaders have all said they want to remove the federal aid restriction for the program but it is unclear exactly how that will be done. Wake sent an email June 2 to Sullivan, Dunleavy’s Chief of Staff Ben Stevens and the legislators on the bicameral Legislative Budget and Audit Committee, which handles out-of-session fiscal matters, explaining his situation and expressing his frustration with the requirements for the various aid programs. He said he had not received any responses as of June 9. Credit Union 1 had accepted 1,224 AK CARES applications through June 8, according to spokeswoman Jessica Gallagher. Elwood Brehmer can be reached at [email protected]

Stadium virus prevention steers spotlight toward fan privacy

The metal detectors every sports fan has become accustomed to at the gate might soon be accompanied by thermal body scanners as part of the gargantuan task of preventing the spread of the new coronavirus and other airborne diseases. And that might be just one thing the public will need to be comfortable with in order to bring games back for in-person viewing. Tickets have widely transitioned from paper souvenirs to smartphone screens, but how about using your face as your proof of purchase Nascent forms of crowd monitoring — like laser-driven density detection and camera-based calculations of line length — will likely grow faster in a post-pandemic era of live sports that must highlight hygiene. “The pandemic really ups the need for greater assurance of stadium safety,” said Bob Boland, an athletics official who teaches at Penn State and has more than two decades of experience in sports and law as an instructor, consultant and agent. “Vaccine treatments, containment, they all could be game-changers, but people will need to be comfortable with mass body temperature screening and other technology that could be in play.” Not unlike the aftermath from the 2001 terrorist attacks, when long waits to pass through magnetometers and have a security guard wave a wand over pants pockets became the norm. “After 9/11 we overdid it, meaning we were so intent on making every building be safe and everyone safe that we made it extremely inconvenient to go to games and events. But we said that it would get better over time, and it did,” said Marc Ganis, cofounder of the Chicago-based consulting firm SportsCorp. “Now how do you do that?” Technology will be a vital piece of the puzzle. It will also further test a fan’s willingness to potentially sacrifice a little more privacy in exchange for the opportunity to sit courtside or behind the plate again. “Can I say both?” said Jim Mueller, a Milwaukee Bucks season ticket holder who also buys partial packages to Milwaukee Brewers and Green Bay Packers games. “I understand it from the Bucks’ perspective and the NBA perspective, but as an American I don’t want to be traced.” Dave Karls has Bucks season tickets, too, eager enough for his next visit to Fiserv Forum that having his location trackable in the arena would not interfere with the enjoyment. “I’d much rather have that than not be able to attend the game at all,” Karls said. Any concerns depend on an individual’s definition of surveillance, a word that carries a nefarious connotation in some corners. In some countries, the effort this year to stem the outbreak of COVID-19 with contact tracing has included citizen consent to location registration. Activity at a sporting event in the U.S. would likely only be collected in aggregate, like an elevated skin temperature flagged during a walk through a thermal scanner. That’s not a piece of data tied to someone’s actual identity that could run afoul of federal privacy laws. Perhaps QR codes will be used for patrons to self-report current health conditions. Carrying a smartphone and using it to shop already opens a user to some form of location tracking and direct marketing. Team-sponsored apps allowing fans to order burgers and beers directly to their seats and receive push notifications for merchandise already provide a framework for what could be next. “I think the stadiums could probably say, ‘Hey, we’ve got 50 people in the bathroom right now,’ in the aggregate because you already downloaded that app,” said Nerissa Coyle McGinn, a Chicago attorney with a practice in advertising, technology and privacy who has worked with sports teams including the Chicago Bulls, Detroit Red Wings and New York Giants. “You’ve agreed to their privacy policy, and sharing aggregate information isn’t considered sharing personal information.” The algorithms caused a bit of controversy at Alabama, where football coach Nick Saban’s frustration with students leaving blowout games early and a nationwide attendance decline prompted establishment of the “Tide Loyalty Points” program that rewarded fans for their fourth quarter presence with prizes and priority purchasing for in-demand events. Bluetooth technology is used in that case for tracking; it’s only functional inside Bryant-Denny Stadium. “The more information you can give to somebody, the more likely they’re willing to consent to the question of this type of data,” said Nan Sato, a Philadelphia attorney with a focus on the intersection of technology and sports. “Who’s getting the data? How is it being stored and used, how long is the data going to be retained, and how the privacy of the fans is going to be protected?” Screening technology that scans a user’s eyes, face or fingerprint has multiplied in recent years, particularly in airports to speed up security lines. Two years ago, Major League Baseball struck a deal with a biometric identification system, Clear, to accelerate ballpark entry by body part — fingerprints, for now, but perhaps one day a fan’s face will serve as his or her ticket. “When you kind of pull back the layers, people aren’t fearful of the facial recognition technology itself. They’re fearful of what happens to that data after. It’s more a matter of transparency on our clients’ front: ’Hey, we’re not going to sell this data to a third party. It’s maintained in an encrypted way,” said Shaun Moore, a former SMU football player and the co-founder of Trueface, a software startup with customers in a variety of sectors including sports. “We never see any of the data. We don’t know who’s in the database. So that’s one way we keep privacy in mind when developing these tools. There needs to be transparency in how the data flows and who has access to it, how long it stays in the system. Is it 30 days? Is it two days? Where is it being used?” AP Sports Writers Larry Lage, Steve Megargee and Dave Skretta contributed to this report.

Corps OKs $618M plan for Port of Nome

A long-sought plan for a deepwater port in Western Alaska appears to finally be gaining momentum. U.S. Army Corps of Engineers commander Lt. Gen. Todd T. Semonite approved a $618 million plan June 1 to expand the Port of Nome, leaving approval from Congress as the last major hurdle for a project that many officials hope is just the first in a series of infrastructure developments in the region. The Port of Nome Modification Feasibility Study is the latest iteration in a series of proposals made over the past decade to upgrade maritime facilities along Alaska’s largely undeveloped western coast. Army Corps Alaska District Acting Commander Col. David Hibner said in a formal statement that the existing port facilities in Nome are overcrowded and restrict vessel traffic because of water depth limitations. “We’ve developed a feasible engineering solution that provides safe, reliable and efficient navigation improvement to support a critical region of the state. Delivery of this important infrastructure will help to strengthen commerce and national security in the Arctic,” Hibner said. Earlier concepts to further develop Nome port or build a wholly new deepwater facility elsewhere on the Seward Peninsula were based on the expectation that the oil and gas industry was poised to start large-scale operations in the Beaufort and Chukchi seas. In 2015 the Army Corps of Engineers released a $210 million plan to expand the area of protected water in front of Nome and dredge the area for larger vessels. The Corps’ work on that plan started as early as 2011. However, when Shell announced later that year that its $7 billion Chukchi oil exploration effort had come up empty and it would cancel its offshore Arctic drilling program later, the corresponding plan to renovate Nome’s port to better handle oil and gas industry support vessels was scrapped as well. Congress then turned around in 2016 and subsequently broadened the scope of potential benefits the Corps is allowed to evaluate when considering marine infrastructure projects in Alaska to include “the viability of regions,” rather than strictly looking at a direct and immediate cost-benefit review for a given project. The latest plan — released in draft form in January — calls for roughly doubling the length of the port’s existing west causeway to reach approximately 2,100 feet farther into Norton Sound with a nearly 1,400-foot breakwater to protect harbor entrance from incoming waves. The L-shaped barrier would also hold two new 450-foot and one new 600-foot dock to handle the larger vessels that have started calling on Nome, according to Corps officials. The existing east causeway-breakwater would be demolished and replaced with a larger, 3,900-foot causeway-breakwater that would greatly expand the port’s outer basin. Approximately three-quarters of the material from the existing east causeway would be used to build its replacement, according to the study. The bigger outer port basin would also be dredged deeper — from 22 feet currently to 28 feet — and the three new docks would be near the end of the longer west causeway-breakwater in an area dredged to at least 40 feet deep. The 2015 plan called for adding 2,150 feet to the existing west causeway and dredging the harbor entrance channel to a maximum depth of 28 feet. The primary benefit to residents of Nome and outlying communities would be potentially lower-cost goods brought in by larger vessels and to realize that local officials will likely need to contribute significantly to funding the project. The $618 million price tag breaks down to $386 million funded by the federal government, largely for the in-water dredging and construction. The City of Nome would have to contribute nearly $123 million for the navigation features and another $128 million for infrastructure deemed “local facilities” such as access roads, docks, utilities and other things, according to Alaska Corps officials. Nome Port Director Joy Baker wrote via email that local government leaders are working with consultants on a plan to fund the project from several possible sources, but they are not yet ready to disclose the details. The 2020 American Water Infrastructure Act passed out of the Senate Environment and Public Works Committee May 11 containing language directing Corps leaders to expedite approval of the Nome project. Sen. Dan Sullivan, who serves on the EPW Committee, said during a May 27 videoconference discussion hosted by Commonwealth North that members of Congress from other states are starting to recognize the need to focus attention on the Arctic as countries like China and Russia grow their icebreaker fleets and continue to grow their presence in the region that is believed to hold vast stores of energy, minerals and other resources. “There has been an Arctic awakening, there’s no doubt about it. It is across the board; Democrats, Republicans, Senate, House and it’s coming up all the time,” Sullivan said. Currently, Dutch Harbor is the only deepwater port in Western Alaska capable of being the homeport for large vessels — whether they are for research, spill response, search and rescue or industry. “It’s going to be expensive but the key is it’s going to be the first port” in the Arctic, Sullivan said of the Nome project. The Alaska delegation, state lawmakers and Defense and Coast Guard leaders in the state for years have emphasized what they believe is a need for an Arctic deep-draft port in Western Alaska as shipping traffic through the Bering Strait increases as a result of the ever-receding sea ice. City officials hope the project can relieve congestion at the port and generally make it easier for vessels of all sizes to utilize the facilities, according to Baker. Baker also expects more activity at the port from fishing fleets as populations of cod, Pollock and other species historically confined by water temperatures to the southern Bering Sea move north with warming water over the long term. Congress would still need to appropriate funding for the federal portion of the project in a spending bill even if it is ultimately authorized through the traditionally noncontroversial water infrastructure bill, as expected. Elwood Brehmer can be reached at [email protected]

OPEC, allied nations extend nearly 10M barrel cut by a month

DUBAI, United Arab Emirates (AP) — OPEC and allied nations agreed June 6 to extend a production cut of nearly 10 million barrels of oil per day through the end of July, hoping to encourage stability in energy markets hard hit by the coronavirus-induced global economic crisis. Ministers of the cartel and outside nations led by Russia met via video conference to adopt the measure, aimed at cutting the excess production depressing prices as global aviation remains largely grounded due to the pandemic. The curbed output represents some 10 percent of the world’s overall supply. But danger still lurks for the market, even as a number of nations ease virus-related lockdowns, and enforcing compliance remains thorny. Algerian Oil Minister Mohamed Arkab, the current OPEC president, warned meeting attendees that the global oil inventory would soar to 1.5 billion barrels by the mid-point of this year. “Despite the progress to date, we cannot afford to rest on our laurels,” Arkab said. “The challenges we face remain daunting.” That was a message echoed by Saudi Oil Minister Abdulaziz bin Salman, who acknowledged “we all have made sacrifices to make it where we are today.” He said he remained shocked by the day in April when U.S. oil futures plunged below zero. “There are encouraging signs we are over the worst,” he said. Russian Energy Minister Alexander Novak similarly called April “the worst month in history” for the global oil market. The decision came in a unanimous vote, Energy Minister Suhail al-Mazrouei of the United Arab Emirates wrote on Twitter. He called it “a courageous decision.” But it is only a one-month extension of a production cut that was deep enough “to keep prices from going so low that it creates global financial risk but not enough to make prices very high, which would be a burden to consumers in a recessionary time,” said Amy Myers Jaffe, senior fellow at the Council for Foreign Relations. “There is so much uncertainty that I think they took a conservative approach,” she said. “You don’t know how much production is going to come back on. You don’t know what’s going to happen with demand. You don’t know if there’s going to be a second (pandemic) wave.” Jaffe said improved oil demand in China and Asia and a gradual stabilization of demand in the United States and to some extent Europe, where there’s some cautious economic reopening, were encouraging for producers. OPEC has 13 member states and is largely dominated by oil-rich Saudi Arabia. The additional countries involved part in the so-called OPEC Plus accord have been led by Russia, with Mexico under President Andrés Manuel López Obrador playing a considerable role at the last minute in the initial agreement. Crude oil prices have been gaining in recent days, in part on hopes OPEC would continue the cut. International benchmark Brent crude traded Saturday at over $42 a barrel. Brent had crashed below $20 per barrel in April. Earlier this year, when demand was down, Saudi Arabia was flooding the market with crude oil, helping to send prices down to record lows. That prompted the U.S. government in April to take the unusual step of getting involved in OPEC’s negotiations, pressuring members of the cartel to agree to cuts to help end the oil price free-fall. At the time, President Donald Trump said the U.S. would help take on some of the cuts that Mexico was unwilling to make. And perhaps more importantly, a group of U.S. senators upset over the impact on U.S. shale production said at the time that they had drafted legislation which would remove American forces, including Patriot Missile batteries, from Saudi Arabia. Under a deal reached in April, OPEC and allied countries were to cut nearly 10 million barrels per day until July, then 8 million barrels per day through the end of the year, and 6 million per day for 16 months beginning in 2021. In a Rose Garden speech on June 5, Trump took credit for the April deal. “People said that wasn’t possible but we got Saudi Arabia, Russia and others to cut back substantially,” he said. “We appreciate that very much.” U.S. Energy Secretary Dan Brouillette tweeted his applause June 6 for the extension, which he said comes “at a pivotal time as oil demand continues to recover and economies reopen around the world.” However, some countries have been producing beyond quotas set by the deal. One was Iraq, which remains decimated after a years-long war against the Islamic State group. Iraq Oil Ministry spokesman Assem Jihad said in a statement that Baghdad had “renewed its full commitment” to the OPEC Plus deal. Analysts had expected only a one-month extension given the still fluctuating level of demand. “If the demand is great, countries like Russia will want to produce more oil, so they probably won’t want to get locked into a longer-term deal that may not help them,” said Jacques Rousseau, managing director at Clearview Energy Partners. In a research note, Clearview also said Saturday that the producers group “appears to be going to great lengths to keep the deal together despite unequal compliance” — trying to avoid public fights on the issue. “That solution might work today, but not repeatedly,” it said, citing reports of rising Libyan output and the end of production cuts from Mexico that will heighten the need for compliance. Major production cuts are simply untenable for countries such as Iraq, Oman and Ecuador, whose economies depend nearly exclusively on petroleum income, as they could face debt default. Bajak reported from Boston. Associated Press writer Cathy Bussewitz in New York contributed to this report.

Virus leaves the US travel industry struggling to recover

U.S. air travel down almost 90 percent from a year ago. A ghostly emptiness at Hawaii’s tourist hotels. Deserted Las Vegas casinos counting the days to reopening. Few sectors of the economy have endured as much devastation from the coronavirus as the travel business. Surveying the wreckage, economists and company leaders say it will take years to regenerate the $1.1 trillion the industry produced last year, potentially leaving many airlines, hotels, rental car companies and restaurants in peril. And as long as travel remains depressed, the economy could struggle to accelerate. About 10 percent of all jobs flow from the travel sector. Industry-wide unemployment now tops 50 percent, government reports suggest, a level that could presage bankruptcies and business closures. Spending by business and leisure travelers had provided an engine of growth that helped power the economy until the virus struck. “While the rest of the country is moving into a recession,” said Tori Emerson Barnes, an executive at the U.S. Travel Association, “the travel industry is already in a depression.” The industry’s collapse is unrivaled in recent memory. The closest parallel, the 9/11 terrorist attacks, closed airports for four days. The industry needed roughly two years to match its previous passenger levels. The cost this time is estimated at nine times the damage from 9/11, Barnes said. The industry was once a reliable gauge of economic health. From business people on high-priced overseas trips to tourists flying to Disney World, the industry benefited from steady spending. Not this time. Travel might be one of the last sectors to recover. “Usually travel would be a good leading indicator of confidence and discretionary spending,” said Gregory Daco, chief U.S. economist for Oxford Economics. “But in the wake of the global coronavirus recession, it’s likely to be a lagging indicator.” With revenue all but dried up, U.S. airlines are burning through cash and planning for layoffs this fall, when a no-layoffs provision in federal aid to the carriers will expire. That aid includes nearly $25 billion in payroll assistance and an additional $25 billion in loans. Even before then, American and United Airlines have said they will slash management and support staff by 30 percent — about 8,500 jobs between them. Delta has launched an early-retirement offer and warns of layoffs if there aren’t enough takers. Those moves don’t include the tens of thousands of union pilots and flights attendants who are likely to be furloughed in October, The U.S. Travel Association is urging the government to provide more help through individual tax credits worth up to $4,000 for domestic travelers. The industry also wants to make business meals and entertainment fully tax-deductible for companies. Stock market investors are embracing a future with less travel. Shares in Zoom, the now-ubiquitous video conference company, have more than doubled since mid-February. Delta, United and American, the nation’s three largest airlines, are worth — combined — $27 billion less than Zoom. Across the hotel industry, mid-priced companies are managing better than luxury ones. Hotels near beaches and in smaller cities are faring better than urban locations. Lodging that draws nearby tourists is doing far better than those that rely on airports. “We are seeing strength in drive-to destination travel,” said Geoffrey Ballotti, CEO of Wyndham Hotels and Resorts. The Wyndham Grand in Clearwater, Fla., was full Friday, Saturday and Sunday nights over the Memorial Day weekend. Most guests had come from within a three-hour drive. Danny Aderholt runs a company that owns eight hotels along highways in Ohio and West Virginia and one in downtown Pittsburgh that remains closed. Guest cancellations, he said, started in March. Then new bookings stopped. Each of his hotels is operating at an average monthly loss of about $35,000. The hotels that previously employed 20 now have about eight. “We let go of quite a few people,” Aderholt said. Nowhere is the devastation as severe as in Nevada. The state leads the nation with a crushingly high 28 percent unemployment rate — above the worst U.S. jobless rate recorded in the depths of the Great Depression. Once-jammed sidewalks of the Las Vegas Strip are sparse. The gambling and entertainment mecca has suffered a 97 percent drop in visitors in April from a year ago, the most recently available data show. Normally packed hotels had less than 2 percent occupancy, according to the Las Vegas Convention and Visitors Authority. Casinos gaming revenue almost entirely disappeared in April. Casinos reopened on June 4. Hawaii has similarly suffered, with 22 percent unemployment. Other states, especially those with major airline hubs like California, New York, Texas, Illinois and Georgia, have also endured deep layoffs in the tourism sector. Airport officials in Orlando estimate that travel to the home of Disney World and Universal Studios won’t return to previous levels until sometime between 2022 and 2025. The number of passengers screened at airport checkpoints remains down nearly 90 percent from a year ago. The average domestic flight is carrying fewer than 50 passengers. Airlines are hoping for a slow pickup by late summer. But they’re wary of making predictions, not when people like David Ward worry about getting on a plane. A retired investor from Ohio, Ward was stranded in Morocco when it shut down travel in March. He’s still fighting to get refunds for cancelled flights. But to him, flying now feels risky. “You never know who is coughing and sneezing on you in a plane,” Ward said. Mark Miller, an executive in Boston, is accustomed to flying about 100,000 miles a year. He hasn’t ruled out a couple of trips late this summer and around the holidays. But he has no other immediate flight plans. He’s instead planning driving trips around New England. Even travel industry types have qualms. Terry McClintock, a Texas consultant who advises airlines, is taking his first COVID-era flight next week to meet with colleagues in Las Vegas, confident that the plane and airport will be cleaner than ever. He is drawing a line, though, at international travel. He isn’t eager to wear a mask for a long flight or face a possible quarantine overseas. “I’m bullish on getting back in gear, but not crazy,” he said. Neither are many other travelers, which is why U.S. airlines are burning through cash. Airline executives say that after the most immediate threat from the pandemic subsides, the carriers will likely shrink, with fewer jobs and fewer destinations. Already, cities like Erie, Pa., and Peoria, Ill., are losing some of their service, a trend that could accelerate after federal regulation of airline routes expires this fall. In the end, the industry won’t fully recover until nearly everybody feels safe about flying. “Honestly, we don’t think that will happen until there is a vaccine,” said United Airlines CEO Scott Kirby.

FISH FACTOR: Crucial fish surveys curtailed by COVID-19 precautions

Surveys of Alaska’s fish, crab and halibut stocks in the Bering Sea have been called off or reduced due to constraints and dangers posed by the coronavirus. In what they called an “unprecedented” move, NOAA Fisheries announced in late May that five Alaska surveys will be cancelled this summer “due to the uncertainties created by the COVID-19 pandemic, and the unique challenges those are creating for the agency.” NOAA said in a statement that they found “no way to move forward with a survey plan that effectively minimizes risks to staff, crew, and the communities associated with the surveys.” The annual surveys are the cornerstone of Alaska’s sustainable fisheries management and provide data on how fish stocks are trending, where they are and, ultimately, how much will be allowed for harvest each year. The cancellations include bottom trawl surveys at the Aleutian Islands, the eastern Bering Sea and the northern Bering Sea, the Bering Sea pollock acoustics survey, and the fall ecosystem survey. To reassure stakeholders, NOAA said “we are fortunate to be working in a robust management system with a long time series of fisheries and ecosystem data and stock assessment models which helps ensure there is limited conservation impact from the loss of survey data this year.” The agency also plans to use three wind-powered Saildrones equipped with echosounders to survey Alaska pollock stocks, which over 60 days will cover nearly the same area done by research vessels. NOAA also will gather data from state and industry partners and from fisheries observers. That’s small comfort to some, notably, fishing towns that count on cod. The Gulf of Alaska cod fishery was closed this year due to a collapse of the stocks from extremely warm water temperatures over several years that killed off two age classes. “We are concerned that with no surveys, the stock assessment will remain status quo and the GOA Pacific cod federal fishery will again be closed for 2021,” Alvin Osterback, mayor of the Aleutians East Borough, wrote in a letter to the North Pacific Fishery Management Council, which oversees the stocks from three to 200 miles offshore. Likewise, Bering Sea crabbers are feeling uneasy. While they “understand the constraints the agency is under given this pandemic,” crabbers worry the lack of surveys could result in more conservative catch levels. “We’re very disappointed and concerned given the status of many of our crab stocks,” said Jamie Goen, executive director of Alaska Bering Sea Crabbers, a trade group. “Our bairdi Tanner fishery was closed this past year and our red crab fishery is approaching thresholds of closing. We rely on having a survey every year.” The complex process of setting crab harvest limits already includes a myriad of built-in protection buffers, Goen said, and the lack of one data point should not add more. Goen credited NOAA’s “crab team” for working closely with the industry and said ABSC already is looking towards next year. “How can we start planning now so that this doesn’t happen again if we’re still under the same restraints with a pandemic?” Goen asked. “Generally, the government only allocates survey money for one year. Can they guarantee that we’ll have that money next year? What if there’s constraints on government staff? One of the things we can do in advance is a lot more planning for next season.” “We all need to be understanding that the whole world is adjusting to a different situation right now,” Goen added. “Our fishing industries in Alaska are suffering and it’s a lot more expensive and stressful just getting our operations out the door. We’ve all got to roll up our sleeves and help each other out and find solutions to make sure we can continue to put food on people’s tables.” Halibut surveys reduced Similarly, the annual survey of the Pacific halibut stock also will have a “reduced footprint” this summer. A total of 898 stations will be surveyed, down 385, or 30 percent, from the originally planned 1,283 stations “as a result of the impacts and restrictions that the COVID-19 pandemic has had on our field operational capacity and concern for our fishing communities coastwide,” according to a May 29 announcement by the International Pacific Halibut Commission. There are a total of 1,890 set line halibut survey stations ranging from the west coast states and British Columbia to the far reaches of the Bering Sea, and typically 1,100 to 1,200 are assessed each year, said IPHC Executive Director David Wilson. About 17 longline vessels are usually contracted to conduct the surveys; this year 11 boats will participate. The survey duration also is reduced to July 1 through Aug. 31, instead of starting in June. The areas that will forego surveys this summer include waters off California, Oregon and Washington. For Alaska, areas 4CDE in the Bering Sea near the Pribilof Islands were cut, along with Areas 4A and 4B of the Aleutian Islands near Unalaska and Adak. “We also thinned out a little bit in 3B, the Western Gulf of Alaska, and we also removed the stations off Vancouver Island,” Wilson explained. He added that low halibut prices also affected their decision to reduce stations. The fish caught are sold to cover the costs of the surveys. “We’re looking at getting paid about 25 percent to 30 percent, less than in 2019,” Wilson said. Wilson agreed that when annual survey data is missing, it increases the level of uncertainty in stock assessments. But the IPHC believes it is acceptable for one year, Wilson said, adding, “we don’t have to sample every station every year.” “We’re going to maintain sampling in the core regions where about 74 percent of the known distribution and biomass of the halibut stock resides. So it’s still going to be a robust survey,” Wilson said. “The other thing to note is that we do this on an annual basis, and I don’t think there are any other surveys of this nature on this scale which then feed into annual stock assessments. We actually ran the scenario of what happens if we don’t survey this year at all and we would still feel confident that we would have very robust estimates of spawning stock biomass and mortality limits (catch limits) for 2021.” Free salmon updates More Alaska salmon fisheries are opening up around the state and weekly updates track catches and trends in every region. “We email them out at the beginning of every week that cover the prior week’s salmon harvests statewide, broken out by region,” said Garrett Evridge, a fisheries economist with the McDowell Group in Anchorage. “The goal is to provide context for what our state is harvesting relative to the prior year and historical averages and to highlight interesting things that are happening in near real time throughout the salmon season.” His team compiles the weekly salmon send outs under contract with the Alaska Seafood Marketing Institute, and they work closely with the Alaska Dept. of Fish and Game to get the weekly numbers out as quickly as possible. “Over the last few years, we’ve narrowed the delay from about a week to 10 days to just a few days,” Evridge said. “Fisheries are happening statewide that conclude on the weekend and by Monday and Tuesday, we’re getting that information out to everybody. So it’s near real time.” Sign up for the free weekly salmon updates at [email protected] Fish subscriptions and feeding the needy Alaskans Own, the state’s first ever Community Supported Fishery, or CSF, is celebrating 11 years of its subscription service to seafood lovers. “A Community Supported Fishery project relies on forward funding from subscribers who pay in the beginning of the season and then receive fish on a regular basis, in our case, it’s once a month,” said Linda Behnken, executive director of the Alaska Longline Fishermen’s Association in Sitka. Up to 80 local boats supply a mix of salmon, halibut, rockfish, lingcod, sablefish and more to the program. “And the idea behind it is that consumers are getting to support the small scale, community-based fishermen who are bringing them the highest quality product, and we’re keeping more of that great Alaska seafood in Alaska,” Behnken added. Just 1 percent of Alaska’s billions of pounds of seafood remains in-state, and while many of their nearly 300 subscribers are from the Lower 48, Behnken says Alaska residents make up a good chunk of supporters. Subscribers also get seafood cooking lessons via Zoom. “Most people in this country eat seafood more at restaurants than anywhere else, and many people still are daunted by cooking seafood at home,” Behnken said. “So, one of the benefits we offer to our customers is that after they get their fish, a chef will make dinner with them through Zoom.” All CSF proceeds fund ALFA’s Fisheries Conservation Network in which fishermen and scientists partner on projects like mapping bycatch hotspots, testing electronic monitoring, fuel efficiency projects and strategies to avoid longline predation by sperm whales. Shortly after the coronavirus hit, Alaskans Own also started working with the Seafood Producers Cooperative and Sitka Sound Seafoods to donate fish to needy families. “We’ve set up a system where people can contribute to support the cost of processing, the cost of delivery and the fish is donated,” Behnken said. “We’ve been supported by the Sitka Legacy Fund, Silver Bay Seafoods, Slow Fish, along with 25 individual donors.” More than 800 pounds have been delivered to local families so far and Behnken said the donations will continue into the fall. Learn more at alaskansown.com. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Travelers confused, uncertain about Alaska testing requirement

Gov. Mike Dunleavy’s announcement May 29 that Alaska will require COVID-19 tests for incoming travelers set the phones ringing at the Denali Lakeview Inn in Healy. Not in a good way. At the 21-room hotel 10 miles from Denali National Park and Preserve, owners Daryl and Tara Frisbie estimate they’ve lost more than $700,000 so far this season as tourists sacrifice Alaska trips amid the uncertainties of the coronavirus pandemic. Bookings were already down by 85 percent when the governor held his press conference on May 29, according to Daryl Frisbie. “The 15 percent left were kind of hanging on to see what the governor was going to say,” Frisbie said June 1. “That next morning, Tara was taking nothing but cancellations.” Dunleavy that day announced that travelers entering the state could avoid the existing quarantine if they get a COVID-19 test within 72 hours of a trip, starting June 5. Without one, they could submit to a rapid test at the airport upon arrival or, failing that, comply with a two-week quarantine on the books since March. No other states are asking for COVID-19 tests around travel. But confusion is high among potential travelers. There’s been no additional guidance on the specifics of the new mandate and how it dovetails with the existing 14-day quarantine mandate due to expire June 5, which is not being enforced but instead relies on voluntary cooperation. The governor said he’d hold a press conference June 1 to answer questions. The event was canceled. He said the state would publish an updated travel mandate June 2 making the new policy clear. As of June 2, the state had posted this on the COVID-19 mandate website: “Additional information about updates for the mandatory self-quarantine order for international and interstate travelers will be released later this week. Travelers should continue to self-quarantine for 14 days upon arrival to Alaska.” The Alaska Department of Health and Social Services tweeted a message about details coming this week late Monday: “Travelers, changes are afoot! Beginning June 5, proof of a negative result on a qualifying COVID-19 test obtained before arriving in AK allows visitors, workers &residents to enter without a 14-day quarantine.” Travelers weighing trips to the state this summer have far more questions than answers. So many questions. How do I get a COVID-19 test when doctors in my community are only referring people with symptoms? What’s the point of a 72-hour window when I can get exposed to more people on the flight than anywhere else I’ve been for months? How do I get test results back in such a short time? If I wait and get tested at the airport in Alaska, how long do I have to wait there? What happens if I test positive after I arrive? The test itself also has false-negative issues for people without symptoms. Physicians say someone can test negative right after they’re exposed to the virus, only to test positive a week later — or become exposed en route to the state. Sheri Woodbeck was supposed to fly to Alaska June 9 from her home near Minneapolis. She had a motor home rented and a three-day halibut charter booked. Her doctor told her she could get tested June 7. “But I wouldn’t get the results back until maybe Tuesday (June 9). By then I’m going to be on the plane,” Woodbeck said. “What happens if I did test positive? I would be in trouble.” She canceled her flight this week. Camille Hammond decided to cancel her family’s trip to Alaska from Oregon rather than deal with the testing requirement. Hammond called her doctor. She was told she couldn’t get tested without symptoms. She and her husband would be traveling with their three children, ages 7, 10 and 11. She didn’t want to submit them to invasive nasal swab testing at the Anchorage airport, if that’s what it came down to. She wondered why the state can’t require temperature screening or mask-wearing like other places do. “We were planning on camping and fishing, doing things that are outside,” Hammond said. “But the bottom line is right now in Oregon, we can’t get tested if we don’t have symptoms and it just seems foolhardy to wait till we get up there and cross our fingers it all works out seamlessly.” Blaze Baker, a civilian flight chief at Buell Air Force Base in Northern California, still hopes to visit family in Alaska. An annual event for two decades, the trip hinges on camping, fishing, berry picking and — this year — celebrating Baker’s 50th birthday. Baker originally planned two different trips, one in July and one in August. He’s still hoping to come but is waiting to see what the state decides. Maybe he’ll forgo the test and quarantine for a couple weeks, then head out. Baker said the idea of forcing a test on someone is “kind of creepy” and raises constitutional questions but also said he couldn’t get tested anywhere near his home community. “I’d be more comfortable if I knew everybody on the plane was tested, but it’s simply not available. I don’t know what to do. I’ll probably play it up to the last minute,” he said June 2. “It was a nice idea but practically I just don’t think it’s implementable.” Travel reductions in the face of the pandemic have crushed the state’s tourist industry. More than 1.4 million visitors — just less than twice the state’s total population — were expected to arrive here this summer, many on cruise ships that canceled most sailings. Most of the rest come on planes experiencing drastic passenger reductions. Health officials say Alaska benefited from its ability to curtail the flow of visitors from states with more virus cases through a ban on non-essential travel and the 14-day quarantine enacted in March. A number of physicians in the state urged the governor to ban travel as much as possible. There were just over 100 active cases here this week out of a total of 487. About 10 percent of the state’s total cases, 47 people, have gotten sick enough to require hospitalization. Ten Alaskans with the virus have died. In Juneau, where the loss of cruise ships has hammered the economy, the Juneau Assembly held a public hearing June 1 about enacting a local 14-day quarantine for people coming from Outside to Juneau. Martin Stepetin testified that 500 respondents to a Facebook poll supported the quarantine and 100 opposed it. Several others testified in support of testing if it allowed travelers to avoid a lengthy quarantine, including Dr. Steven Greer, who travels for work between Juneau and Oregon. Greer suggested a policy where travelers get tested before they fly to Alaska, and then again upon arrival, with a quarantine of about three days while they wait for the results from the second test. The assembly postponed a decision until a special meeting June 3. “We really need to hear the specifics of the governor’s plan,” said assembly member Maria Gladziszewski. Alaska’s chief medical officer, Dr. Anne Zink, and state Department of Health and Social Services Commissioner Adam Crum have agreed to participate in the meeting, officials say. The only other state with similar isolation and travel policies is Hawaii, where an enforced, 14-day quarantine remains in effect. Last month, Lt. Gov. Josh Green proposed a “Travel With Aloha” initiative: Anyone wanting to travel to Hawaii must first get a rapid turnaround test for COVID-19 or undergo a test upon arrival. A negative result could exempt them from the mandatory, 14-day travel quarantine. As of this week, the initiative remains a proposal only. There is no set date for Hawaii to revise its quarantine requirements. At the Denali Lakeview Inn on Monday, Tara Frisbie continued fielding phone calls from frustrated visitors canceling their trips north. She said a comment from a guest that day summed up her frustration: “It’s like your governor doesn’t want people to come visit your state.”

Movers and Shakers for June 7

Bering Straits Native Corp. hired Viktor Baklanov as vice president of Finance. Baklanov is an experienced Certified Public Accountant with a background in operational, financial and accounting management. Before joining BSNC, Baklanov spent the last 10 years working across multiple departments within Arctic Slope Regional Corp. and its subsidiaries. He most recently served as the director of Operations at ASRC supporting the strategic direction of the company while assisting in investment analysis. Prior to serving ASRC, Baklanov worked as the senior audit associate for KMPG LLP. Baklanov graduated cum laude with a bachelor’s degree in accounting from the University of Alaska Anchorage and completed multiple executive education courses at Northwestern University’s Kellogg Business School.

FISH FACTOR: Grundens partners with Alaskans for recycled net fishing gear

Recycled fishing nets from Cordova will soon help launch a new clothing line by Grundens, the maker of the iconic foul weather gear “built by fishermen for fishermen for over a century.” The Copper River Watershed Project is “refreshing” its net recycling program underway for a decade that’s been backed by the Pacific Marine States Commission. Now, the program wants to broaden its base and stand on its own, said operations manager Shae Bowman. “The vision with a new program is to create a self-sustaining recycling program that is a valued asset to the commercial fishing fleet. We also want to provide a high quality product to recyclers. And we don’t want to have to be constantly chasing down grants and sources of funding,” Bowman said, adding that the project has recycled more than 200,000 pounds over 10 years. Enter Nicole Baker, founder of Net Your Problem, who since 2015 has jumpstarted net recycling programs across Alaska. Her work so far has included gathering and shipping primarily plastic trawl nets to Europe where they are recycled into pellets for sale to makers of a myriad of products from skateboards to cellphone covers. “I think the gillnet fleet is pretty dialed in, but seines are made out of the same type of plastic that gillnets are, so those two gear types can be recycled together,” Baker said. A goal is to fill a 40-foot shipping container this summer. But changes in the recycling market mean that unlike before, the nets must be clean and stripped before drop off. “You have to collect a really high quality product that somebody wants to buy,” Bowman explained. “We don’t want to collect something that’s full of garbage and that’s the problem we’ve been struggling with. I really want to get the word out that we need to recycle nets better. Our nets coming in need to be clean and stripped of any non-nylon material; that’s the cork lines, the lead lines, the hanging twine, all that needs to be removed to increase our quality.” European recyclers will turn the Cordova nets not into pellets for making other plastics, but yarn for clothing. Enter Grundens. “Our statement as a brand is ‘we are fishing,’” said Mat Jackson, Grundens chief marketing officer. “We believe it’s really important to use our brand voice and strength to help protect and maintain healthy marine environments and to lend a hand where we can. But at some point, you’ve got to just start doing it and making the process happen. And when talking with Nicole, Cordova became something that seemed like a tangible opportunity.” Jackson said the net recycling project also dovetails nicely with Grundens new clothing line. “In 2021 we are launching a full line of products from technical outerwear to more lifestyle casual items like shorts built out of “Econyl” regenerated nylon, which is largely comprised of recycled fishing nets and has been a main source that Nicole has been pursuing in terms of shipping this gear out of Alaska and into a recycler supply chain,” Jackson said, adding that he believes it is “a really powerful package.” “Our consumer base is commercial fishermen, but it also includes recreational fishermen and delivering them a product that fits their needs, performs at a high level, and is built from recycled material that our core customer uses to make a living, we just feel is an incredibly powerful message to help put the spotlight on these efforts and hopefully build a coalition around this process,” Jackson said. “Because it’s going to take more than just our brand getting involved. This really has to become an effort that the whole industry starts to embrace.” Bowman agrees. “My big hope,” she said, “is that if we can get this program to work out, it can serve as a model for other commercial fishing communities in Alaska as they look into setting up a recycling program. Seafood Council redux “Got Milk?” … “Beef – It’s What’s for Dinner!” … “Pork – The Other White Meat” … “The Incredible, Edible Egg” … those are familiar brand slogans, all backed by the producers who pitch their products with a unified voice. From livestock to fruits and dairy, most U.S. food makers have some sort of national marketing board supported by federal and industry dollars to promote their products. Seafood could soon be among them. Reviving a dormant National Seafood Council is gaining steam among industry members, especially as Covid-19 upends markets. About a year ago, Seafood Source reports that the Marine Fisheries Advisory Committee brought up the idea to restart the council. MAFAC is a federal advisory committee to the Secretary of Commerce and NOAA Fisheries. Since then, the idea has met with lots of enthusiasm, and MAFAC has formed an 11-member task force to move forward. A National Seafood Council was created by the U.S. Fish and Seafood Promotion Act in 1987. It operated for five years before running out of money and becoming quietly defunct. MAFAC members agreed that if any food could now benefit from more consumer education, it’s seafood. A National Seafood Council could help with marketing, research, and educational awareness for all U.S. fish and shellfish products, both farmed and wild. It also could improve consumer confidence by allaying concerns about seafood safety and sustainability, and highlighting its many proven health benefits. The MAFAC committee’s first task is to define what direction a promotional council could take. Another is checking the language in the 1987 Act to make sure it is meeting the needs of today. The core mission would be simple: to get Americans to buy and eat more seafood. Patron saint of salmon As Alaska’s salmon season gets underway, it seems appropriate to acknowledge the patron saint of salmon: Saint Kentigern of Scotland. Born long ago in 518, Kentigern was the illegitimate son of a king’s daughter. He trained as a priest at a monastery, where his sainthood evolved around a dangerous love-triangle. Legend has it that the king suspected his wife of having an affair, because she had given one of her favorite rings to a court favorite. The king took the ring when the man was sleeping and threw it far out into the River Clyde. When he returned home, the king angrily demanded that his wife show him the missing ring and threatened her with death if she could not produce it. In her misery, the queen beseeched the priest Kentigern to help her. Kentigern took a fishing rod to the spot where the ring had been flung into the river and quickly caught a salmon. Amazingly, upon cutting it open the ring was found in the salmon’s belly. The queen was able to deliver the ring to her doubting husband and peace was restored. From the time of his death in 603, Kentigern was regarded as Scotland’s patron saint and the cathedral at Glasgow was built in his honor. To this day Kentigern’s figure and symbols, including a salmon, make up that city’s coat of arms. So who knows? Perhaps a quick prayer to the patron saint of salmon will lead more fish to your nets. ^ Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Small improvement seen for Copper River run

The Copper River sockeye run has improved after an abysmal start, but not enough for managers to allow for normal fishing periods in the famed early season fishery. Alaska Department of Fish and Game biologists appear to have correctly predicted a smaller than normal 2020 Copper River sockeye run, but it is shaping up to be even less than expected. Fish and Game Area Management Biologist Jeremy Botz said June 2 it was unlikely the drift gillnet fishery would be opened for a regular 12-hour period June 4, as sockeye passage past the Copper River sonar at Miles Lake was only about half of what managers expected it would be. Through June 1 just 79,482 sockeye had been enumerated at the sonar in the lower river. Comparatively, more than 220,000 sockeye had moved past the sonar by the same time last year despite additional fishing time in the commercial fishery. The low sockeye escapement figures continue despite managers closing the regular, 12-hour Thursday fishing periods during the second and third weeks of the fishery. The Copper River District normally opens in mid-May with 12-hour fishing periods on Mondays and Thursdays. “We’re just going to be watching that sonar real close and hoping to get a few days of 20,000-plus (sockeye),” Botz said. Botz said the sockeye run appears to be late and small, while the Copper River chinook run — expected to be strong this year at roughly 60,000 fish — also appears to be smaller than forecasted, although getting an accurate early read on the chinook return is more difficult, Botz noted. Overall, department biologists forecasted a smaller Copper River sockeye run of 1.5 million fish this year compared to a 10-year average of 2.1 million wild fish. The Gulkana Hatchery supports a small portion of the annual Copper River sockeye run. The department’s official forecast estimated a commercial sockeye harvest of 771,000 fish versus a harvest of 1.2 million sockeye last year. The Copper River chinook return and harvest was initially expected to be strong with a total run of 60,000 fish and an all-fishery harvest of up to 36,000 fish possible. Fishing improved for the gillnet fleet during the May 25 and June 1 openers, with 33,777 and 31,522 sockeye taken during the respective periods. The larger catches followed drastically low catches in the first two openers of the season in which the combined harvest was just 6,071 sockeye, which led to the restrictions on fishing time. According to Botz, ground prices for the prized Copper River salmon have improved somewhat from initial low prices of $3.25 per pound for sockeye and $6.25 per pound for chinook, but only to the $4 per pound range for sockeye and nearly $7 per pound for chinook. Widespread restaurant closures in the Lower 48 have greatly reduced the traditional primary market for Copper River salmon. The run is still better than 2018 when low sockeye returns forced managers to greatly restrict fishing time to achieve sufficient escapement. Just more than 44,000 sockeye were harvested during the entire 2018 Copper River season and only 45,000 fish had passed the sonar by June 1 of that year, compared to the 79,000 fish this year. Chinook catches have also been low this year, with 5,751 fish caught during the first five openers, but with no other way to track the Copper River chinook return until the fish reach counting stations at upriver tributaries, Botz said the time restrictions put on the fishery because of the low sockeye counts could have allowed a significant number of fish into the river. It’s just too soon to know for sure. Cordova District Fishermen United Executive Director Chelsea Haisman said the fishery has been disappointing so far, but fishermen understand the need to restrict time and allow for adequate fish passage into the river. “We certainly wouldn’t want to see the run put in jeopardy in the long-term,” Haisman said. ^ Elwood Brehmer can be reached at [email protected]

Banks issuing deferrals as economic impacts arrive

Alaska’s banks generally had a solid start to 2020 but what’s in store for the rest of a tumultuous year is anyone’s guess. First National Bank Alaska, the state’s largest local bank, ended the first quarter of the year with assets totaling nearly $3.86 billion, up from approximately $3.81 billion to start the year. FNBA netted $14.1 million in the first quarter, which is in line with the bank’s performance in recent quarters, according to figures in reports published by the Federal Deposit Insurance Corp. Anchorage-based Northrim Bank held more than $1.67 billion in total assets on March 31 — a 2.4 percent increase during the quarter — and generated $2.3 million in net income during the first quarter. In Fairbanks, Denali State Bank surpassed the $300 million mark in assets, finishing the first quarter with $306 million in total assets for an increase of 3.4 percent in the first quarter. Denali also netted $552,000 during the quarter. Denali State Bank CEO Steve Lundgren said in an interview that the community bank finished the first quarter “on budget” and has since seen its loan portfolio grow by nearly 20 percent, largely due to participating in the Small Business Administration’s Paycheck Protection Program, which provides low-interest loans to small businesses seeking help for payroll and other fixed costs to weather the coronavirus-induced economic upheaval the country is facing. According to Lundgren, Denali has processed about 430 PPP loans totaling roughly $41 million. He said most of that cash went into the bank in the form of deposits. The vast majority of PPP loans are expected to convert to grants as long as borrowers use the financial aid on qualifying expenses and don’t reduce their workforce after receiving the funds. Despite the ostensible economic shutdown that caused Alaska’s unemployment rate to jump from 5.2 percent in March to 12.9 percent in April, according to the state Labor Department, Denali has not seen a corresponding spike in loan delinquencies or charge offs, according to Lundgren. “I tell my staff, I tell my board that’s because we process a significant amount of loan deferrals,” he said, adding that most of the deferrals are for three months. Lundgren said Denali customers have mostly been proactive and requested help if they saw personal financial trouble on the horizon. The true test to the effectiveness of the bank’s help — and that from government on all levels — will be in late summer when those payment deferrals expire. Denali leaders in May used an increase in revenue to fund their loan loss reserve for the entire year, according to Lundgren. The bank had a loan loss allowance of $3.3 million in the first quarter, according to the FDIC reports. “I’m cautiously optimistic that as the state continues to open up we won’t see many delinquencies,” he said. Northrim Chief Lending Officer Michael Huston said he couldn’t speak to what bank leaders are seeing internally in the second quarter until the final numbers are published, but added there is a general concern among financial analysts nationwide about banks’ ability to handle the stress that could be coming. “I think there’s a fair amount of concern about credit quality among banks,” Huston said. Wells Fargo Alaska Commercial Banking Market Executive Joe Everhart said in an interview that he was among the many close observers who had a very positive view of the Alaska economy as recently as late February. However, he now expects the state’s economic recovery from the pandemic to lag behind the rest of the country because Alaska’s economy is largely built on industries that have been hit hardest by the global shutdown — oil and tourism. Wells Fargo loan officials began reaching out to borrowers early and processed many 90-day loan deferrals, according to Everhart. He said they’re starting to work on the steps for the next 90 days if business conditions don’t quickly improve. Officials for the very large national bank are adapting their policies to where they’re working, Everhart said, noting the bank is even processing some 14-month payment deferrals for businesses, such as those in the tourism sector, that might not have meaningful revenue until a year from now. “To expect a customer to have income to make payments when they don’t have revenue is challenging,” he said. There are still reasons to be optimistic amid the challenges and uncertainty, according to Huston. “I think most of our customers are working with their customers. We’re all in this together,” he said. Everhart also noted that through various aid programs Alaska residents, businesses and local governments are cumulatively expected to receive roughly $3 billion in federal assistance — a lot of money for a small state. “I have to think that’s going to provide a great backstop in this (economic) storm,” he said. Elwood Brehmer can be reached at [email protected]

Biz community seeks expansion of grant program

Lawmakers are looking for ways to expand the number of small businesses that can qualify for $290 million in COVID-19 aid just as the state’s program set up to disperse the funding is getting up and running. Anchorage-based Credit Union 1 began taking applications from small businesses for pandemic relief grants June 1 through the AK CARES program that is being administered by the Alaska Industrial Development and Export Authority, the state’s development bank. At the same time, legislative leaders were in discussions with officials in Gov. Mike Dunleavy’s administration on ways to reverse limitations on eligibility for the grant pool codified only a few weeks ago when the Legislature briefly reconvened in Juneau to appropriate pandemic aid funds on May 20. The $290 million available to small businesses through AK CARES is part of the roughly $1.5 billion of federal money allocated to the State of Alaska through the federal CARES Act approved in late March by Congress and President Donald Trump to help businesses and individuals impacted by the economic restrictions imposed to limit the spread of COVID-19. When Dunleavy administration officials began writing the rules for the AK CARES program in late April they excluded small businesses that had already received some sort of federal pandemic aid from being eligible for the state program — seeded with federal money — in order to spread assistance to as many businesses as possible. But state officials and lawmakers have since heard from many small business owners that they need to be able to get help at both the state and federal levels to survive, and even that may not be enough for some. As it stands, Alaska-based and operated small businesses, sole proprietorships and many nonprofits that employ 50 or fewer full-time employees that have not received other federal COVID-19 aid can apply to Credit Union 1 for AK CARES grants between $5,000 and $100,000, according to a checklist provided by the state Department of Commerce, Community and Economic Development. Credit Union 1 was chosen to lead the program through a competitive bidding process that will be reopened soon for other lenders interested in assisting with grant administration, according to AIDEA spokesman Karsten Rodvik. The grants can be used to cover payroll; utilities; rent or mortgage payments; personal protective equipment; re-opening expenses and short-term loan payments or credit debt incurred as a result of the pandemic, according to the Commerce Department. Marijuana businesses, those that are a secondary source of income for the owner and businesses that have previously filed for bankruptcy are not eligible for AK CARES grants. Alaska Senate President Cathy Giessel said in an emailed statement that the Senate is “deeply concerned” about the availability of grants to small businesses and is working with administration officials to expand eligibility for AK CARES. “We must ensure Alaska small businesses receive this money as soon as possible,” Giessel said. House Majority coalition spokesman Austin Baird similarly wrote in an emailed response to questions that House leadership wanted to expand the pool of businesses eligible for AK CARES assistance when the total $1.5 billion was appropriated in late May, but the Legislature ultimately decided to approve it with the administration’s sideboards rather than delay the release of the funds. Giessel believes the rules can be amended administratively or through the Legislative Budget and Audit Committee and will not require the Legislature to reconvene. The Budget and Audit Committee generally handles fiscal matters when the Legislature is not in session. House leaders are less confident that a legal fix to the issue can be made as easily, but lawmakers are consulting with the Legislature’s attorneys on a possible remedy, according to Baird. Dunleavy spokeswoman Lauren Giliam wrote in an email that the governor wants to see eligibility for the AK CARES program expanded and it was limited because the rules were drafted when the PPP loan fund was depleted. “There were many Alaskan businesses that had not been able to access federal funding, so the program was structured to ensure access to some type of relief for as many businesses as possible,” Giliam wrote. She also noted that while the rules currently restrict access to AK CARES funds, local governments can still use their federal CARES Act funds to provide similar small business aid. It’s unclear exactly when the issues might be resolved but Anchorage Economic Development Corp. CEO Bill Popp said many small business owners need all the help they can get as soon as they can get it. “We have thousands of businesses that are in a cash crunch right now,” Popp said. He emphasized that grants are necessary because even low-interest loans put businesses at a significant disadvantage at a time when cash flows are uncertain to nonexistent. And while Dunleavy has lifted most of the state’s health mandates and allowed all businesses to reopen, the customers are not always returning. “Consumers are not flocking to businesses like they have before,” Popp said. He cited an April survey by AEDC of more than 250 business owners that found 38 percent of those surveyed feel it is likely or possible that they will go out of business soon. “Even with all this assistance a lot of businesses are going to go away,” Popp said. Anchorage Chamber of Commerce President Bruce Bustamante largely echoed Popp’s sentiments, adding that he’s hearing from business owners concerned that the assistance isn’t being made available quickly enough for some to survive. “If you’re a business in trouble you need cash immediately,” Bustamante said. Through May 30, the federal Small Business Administration had processed 10,135 Paycheck Protection Program loans in Alaska totaling just more than $1.2 billion, which was just 95 more loans than had been handled a week prior, according to SBA figures, indicating demand for the program is dwindling. The vast majority of PPP loans are expected to convert at least partially to grants as long as businesses apply the funding to qualifying expenses, such as payroll, utilities and rent; 75 percent of the loan amount must be spent on payroll in order to be converted to a grant. Alaska had nearly 72,000 small businesses in 2018 that accounted for 99.1 percent of all Alaska-based companies according to the SBA. Michael Huston, chief lending officer for Northrim Bank said the Anchorage-based lender, which has processed more than 2,400 PPP loans, has had to decline a “pretty small number” of PPP applications, mostly for businesses that either didn’t qualify for the program or had incomplete or dual applications through other lenders. Without firm numbers, Huston estimated Northrim has denied less than 5 percent of PPP loan applications. Credit Union 1 received 470 AK CARES applications in the first day of the program, according to spokeswoman Jessica Gallagher. Elwood Brehmer can be reached at [email protected]

King Cove land swap rejected once again

President Donald Trump’s Interior Department is now 0-2 attempting to get a land swap to facilitate a road out of the village of King Cove through the courts. U.S. District Court of Alaska Judge John W. Sedwick threw out a July 2019 land exchange agreement between Interior Secretary David Bernhardt and King Cove Corp. leaders on June 1, marking the second time in just 14 months that the courts have rejected such a deal that is a precursor to building a long-sought but contentious emergency access road through what is now wilderness-designated territory in the Izembek National Wildlife Refuge on the Alaska Peninsula. Sedwick ruled that Bernhardt rushed the process to complete the land deal with the Alaska Native village corporation and in doing so violated both the federal Administrative Procedures Act and the 1980 Alaska National Interest Lands Conservation Act, or ANILCA, that largely guides federal land-use policy in the state. The ruling is similar to one issued in late March 2019 by Federal District Court of Alaska Judge Sharon L. Gleason for a nearly identical agreement approved by Bernhardt’s predecessor, then-Interior Secretary Ryan Zinke in 2018. Both judges ruled that the Republican Interior leaders did not adequately justify their rationale for reversing the department’s policy from a 2013 decision by Obama-era Interior Secretary Sally Jewell to deny a land exchange for the road in the interest of preserving the wilderness area of the Izembek Refuge. In both instances Trump’s Interior secretaries were sued by a coalition of conservation groups led by the Anchorage-based nonprofit environmental law firm Trustees for Alaska. Trustees attorney Bridget Psarianos in a prepared statement called land swap deals “failed attempts to dodge the laws mandating protections of our national wildlife refuges.” “We are thrilled the court rejected this corrupt and illegal land exchange, finding that it is contrary to the purposes of Izembek and ANILCA, and that such an exchange could not be done without congressional approval,” Psarianos said. “We hope this is the last time we need to ask a court to reject such an exchange.” An Interior Department spokesman wrote in an emailed statement that, “The Secretary firmly believes that the welfare and well-being of the Alaska Native people who call King Cove home is paramount, and the Department stands behind its decision.” A spokeswoman for King Cove Corp. was not immediately available for comment. King Cove leaders and Alaska lawmakers have long petitioned federal officials to approve the 11-mile gravel road extension through the Izembek wilderness; they see it as an essential link for emergency services when bad weather prevents flights out of King Cove or boat travel across Cold Bay. Opponents to the road argue allowing a road of any kind through what is now congressionally-designated wilderness would set a terrible precedent for future development of public lands and King Cove leaders and administration officials have arbitrarily rejected all other transportation options. In late 2013, then-Interior Secretary Sally Jewell rejected a land swap deal passed by Congress in 2009 after a U.S. Fish and Wildlife Service environmental review determined the road would irreparably damage critical waterfowl habitat in the 315,000-acre Izembek Refuge. In summer, the refuge is home to 98 percent of the world’s population of Pacific black brant, a goose that breeds there, according to the Interior Department, as well as other sensitive wildlife and waterfowl. With a paved runway longer than 10,000 feet, Cold Bay’s airport has one of the longest civilian runways in the state and is the area’s main link to Anchorage 600 miles away. The old military post was built during World War II. King Cove’s airport has a 3,500-foot gravel runway for the community with roughly 950 year-round residents. Over the years 18 people have died in plane crashes or waiting to get medevac service out of King Cove, according to the Interior Department. However, no one has died trying to leave since 1994. Sen. Lisa Murkowski, who was enfuriated by Jewell's decision in 2013 and has largely led the effort in Washington to get the road built, called the ruling "another bitter disappointment" for the people of King Cove in a statement to the Journal. "I continue to believe the Department of the Interior has full authority under existing law to complete this land exchange, that the federal goverment has an obligation to protect local residents' health and safety, and that a gravel, one-lane, life-saving road is the best way to meaningfully accomplish that," Murkowski said. "I refuse to give up on helping the people of King Cove." The initial agreement signed by Zinke contained no rationale for the policy change — which led to the court’s conclusion that it violated the Administrative Procedures Act — but Bernhardt attempted to remedy the situation by attaching a 20-page memorandum outlining the reasons for the policy reversal to the agreement. According to Bernhardt’s agreement, the land swap would be an equal-value trade not subject to acreage limitations. However, King Cove Corp. would agree to relinquish its rights to 5,430 acres of land it had selected within Izembek under the Alaska Native Claims Settlement Act but has yet to be conveyed. The Native village corporation would still have rights to other yet-to-be-conveyed selections outside of the refuge. Sedwick ruled that despite the memo, in which Bernhardt argued other options are unreliable and human safety should be prioritized over wildlife habitat, the secretary failed to support the policy change with new information and did not offer to restrict use of the road. Prior agreements stated the road would be open only to emergency-use by residents to counter opponents’ claims that it would benefit fish processors in the region wanting to ship their products out of the Cold Bay airport. “The Secretary offers no new information or data to justify his contrary finding that the value of the added acreage to the refuge system (from King Cove Corp. lands) counters the negative effects of a road through Izembek,” Sedwick wrote of the APA arguments. Attorneys for King Cove Corp. also argued in supporting briefs that the land exchange is a new policy instead of a change in old policy because it does not specifically authorize construction of the road. However, Sedwick concluded that the argument does not hold water because Interior officials have explicitly stated that the reason for the agreement is to build the road. Regarding ANILCA, he also concluded that Bernhardt did not provide enough justification for reversing Jewell’s 2013 decision. Interior attorneys stressed in written arguments that the latest land swap would advance the economic and social interests of King Cove residents who regularly engage in subsistence activities in the refuge, but Bernhardt’s memo does not address the issue, according to Sedwick. “The 2013 (record of decision) indicated that the effects on subsistence use stemming from a land exchange would be neutral,” the judge wrote. “The Secretary does not point to evidence that counters this finding, nor does he provide analysis to explain why a road’s benefits would outweigh its detriments in terms of effect on subsistence users and uses.” ^ Elwood Brehmer can be reached at [email protected]

Lawsuit against MARAD may proceed

A federal judge denied the U.S. Maritime Administration’s motion for judgment in Anchorage’s lawsuit against the agency over more than $300 million in failed construction at the city’s port done more than a decade ago. U.S. Court of Federal Claims Judge Edward J. Damich rejected the Maritime Administration’s arguments that memorandums of understanding signed in 2003 and 2011 outlining the city’s and agency’s roles in the Port of Anchorage Intermodal Expansion Project were cooperative, and therefore not binding agreements. Agency attorneys argued that the MOUs were more ceremonial in nature and did not make the government responsible for the project. The Anchorage port was renamed the Port of Alaska by city officials in 2017. Damich concluded that the MOUs are “binding and valid contracts” that have not been voided largely because the Maritime Administration, commonly known as MARAD, spent at least $14 million in Municipality of Anchorage and State of Alaska money on non-construction project costs such as legal fees, audits, salaries and contract claims out of a total of $163 million transferred to the agency for the project. MARAD was tasked with participating in the city port construction project — a first for the agency — partly as a means to more easily direct federal funding to it following discussions between the members of Alaska’s congressional delegation and former governor and Port Director Bill Sheffield, according to court documents. The port expansion work also benefited Joint Base Elmendorf-Richardson, which is adjacent to the port. Damich wrote that the costs MARAD paid with city and state money “clearly fall within the guise of administrative expenses” and well exceed the 3 percent administrative fee the agency was to receive under the 2003 MOU. Attorneys for Anchorage argued the administrative costs supported their assertion that the municipality “hired” MARAD to oversee the project and therefore is liable for the work that went wrong. According to accounting records submitted by government attorneys, MARAD used approximately $9 million of state and port money fund a settlement with Integrated Concepts and Research Corp., the prime contractor on the project, in October 2012 as part of an $11.3 million settlement and another $1.6 million of nonfederal project funding in a $4.1 million January 2017 settlement. Municipal attorneys allege those settlements were deliberately made without the city’s knowledge, which MARAD’s lawyers don’t dispute. The city is seeking more than $320 million from MARAD to recoup the $163 million of local money spent on the project as well as the money port officials estimate it will cost to fix what is left from the failed work that ended in 2010. ICRC was owned by Koniag Inc., the Alaska Native Regional corporation for Kodiak, when the project started but was sold to a Virginia company in 2007. The municipality first sued a suite of contractors, including ICRC, involved in the dock design for the expansion project in March 2013. That lawsuit netted $19.3 million for Anchorage through seven individual settlements made in early 2017. The dock designer maintains faulty construction methods caused sheet pile facings supporting the new docks to fail nearly immediately after installation at the port. Damich’s ruling followed a two-day “mini trial” held Feb. 18-19 in a San Francisco courtroom in which attorneys for both sides called witnesses to make their arguments in the complex and drawn out case. It sets the stage for a full trial, which municipal attorneys have said could be held this year. The current members of Alaska’s congressional delegation have said resolving the lawsuit is important if the city hopes to capture very large sums of federal money for the scaled back port modernization program that is currently underway. MARAD awarded the port a $20 million in grant Feb. 11 to help fund the new petroleum and cement terminal under construction at the port, which is expected to cost more than $200 million. Elwood Brehmer can be reached at [email protected]


Subscribe to Alaska Journal RSS