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REGIONAL FOCUS: Valdez-Cordova Census Area Economy

Remaining stable with commercial fishing, oil and gas, tourism and government jobs

Situated along Prince William Sound, the Valdez-Cordova Census Area encompasses about 40,000 square miles of majestic mountains, glistening glaciers, wetlands and incredible wildlife. Prince William Sound is surrounded by the Chugach National Forest—the second largest National Forest in the country—and contains Columbia Glacier, the largest tidewater glacier in Southcentral Alaska.

With a population of 4,350, Valdez occupies the Southcentral region on the northeast tip of Prince William Sound. The city is 305 road miles east of Anchorage and almost 370 road miles south of Fairbanks. Valdez has the largest port in Prince William Sound and is the country’s most northern ice-free port. It also has the distinction of being the southern terminus of the trans-Alaska oil pipeline, which transports crude oil down from the oilfields at Prudhoe Bay on Alaska’s North Slope.

Cordova is a small town gently nestled at the head of Orca Inlet on the east side of Prince William Sound. The city, which has about 2,300 residents, is located within the Chugach National Forest. Cordova is the gateway to the Copper River Delta and is well known for its freshwater and saltwater fishing.

The remainder of the Valdez-Cordova Census Area is comprised of smaller communities like Chenega, Glennallen, Whittier and Willow Creek. The region’s entire population is slightly fewer than 10,000 people, based on the 2010 Census. That’s considerably less than the area’s population was in previous years, according to Alyssa Shanks, an Alaska Department of Labor economist. For example, the population was around 10,200 in 2005; then it dipped down to 9,500 in 2010. “It’s not an enormous drop, but when you’re dealing with a small population even minor drops can be felt,” Shanks says.

The population of the census area was stable during early 2000, but started dropping off around 2006. Shanks says she's not certain if the decline could be attributed to fewer people being born there or more people relocating.

Surprisingly, there wasn’t a reduction in employment to coincide with the dip in population. In general, the economy of Valdez-Cordova has been stable.

“Going back a couple of years, it looks like things have remained flat,” Shanks says. “Usually, if we have employment that’s stable, we end up with a population that’s stable.”

 

Key Industries

In Valdez, the pipeline is one of the most stabilizing factors in the economy. To a great extent, Shanks says, you won’t see a drop in employment as long as oil is moving down the pipeline.

Although Valdez and Cordova share the same census area, statistically, the communities have very little in common beyond the fishing industry, according to Shanks. The largest employment sector in the area is the government, particularly local government. Government jobs represent 29 percent of the area’s employment in 2012. Transportation and warehousing jobs comprise 13 percent. However, transportation jobs in Valdez-Cordova are primarily related to the water and pipeline, which normally isn’t the case in other parts of Alaska. Food manufacturing (particularly seafood processing) is also a sizeable employment piece.

Food service and accommodations jobs accounted for 300 positions or 7.6 percent of the area’s employment. Health care is increasingly claiming a larger share of the economy. “We’re slowly getting more of those services (available) closer to home,” Shanks says.

While commercial fishing is a major industry of Cordova’s economy, tourism is a major economic driver in Valdez. An estimated 75,000 people visit the town each summer, with around 10,000 visiting each winter season, according to Colleen Stephens, interim executive director of the Valdez Convention and Visitors Bureau. About 30 percent of these visitors are from Alaska, 63 percent are from the rest of the country and Canada, and 7 percent are from other countries. In winter, the visitor ratio is 50 percent from within Alaska and 50 percent from outside the state.

So what’s the attraction to Valdez? During summer, Stephens says, people are drawn by sport fishing, hiking, kayaking, glacier and wildlife sightseeing. In town, they can explore museums, tour the Valdez Fish Hatchery or browse through shops that are locally owned and operated and exude an authentic flavor. Tour operators offer excursions to nearby spots like Thompson Pass and Columbia Glacier. “You can define your adventure in Valdez,” Stephens says.

During winter, Valdez is a virtual playground for snow enthusiasts. Snow machining, snowboarding, snowshoeing and various types of skiing are popular activities.

Valdez hosts a variety of events throughout the year for local residents as well as visitors. The summer season kicks off with the Valdez Fly-In and Air Show—featuring hundreds of bush planes, charity rides and educational seminars—the Valdez Halibut Derby and the multi-sport race Summit to Sound Challenge. Other major events include the Pink Salmon Derby, Gold Rush Days, the Richardson Highway Rendezvous Music Festival, and the October Festival and Home Brew Competition. Wintertime activities include Mountain Man Hill Climb, Frosty Fever Festival and Flow Tailgate Alaska.

Stephens says the tourism industry in Valdez has had some challenging past few years, but it’s holding steady: “Like most of the rest of Alaska, we are happy maintaining the numbers we have had for the past few years.”

 

Economic Development

The City of Valdez has historically been a transient community with many people coming in to work in the oil industry, retiring and then moving on. It also has a huge influx of tourists during spring and summer. That means businesses have to survive on the income they generate during the busy months. But astute business men and women seem to do very well, according to Valdez Mayor Dave Cobb. “If you provide a good quality service and have the loyalty of the people, you can sustain a business here,” he says.

Cobb says Valdez’s people and quality of life are part of what make the city a great place to live and do business. The oil and gas industry provides strong support for the local economy and a great deal of hope for the future. He says: “We’re all looking forward to a gas pipeline and opportunities to grow our community. I think we have a receptive population that encourages and supports new businesses coming to town.”

The new cold storage facility is a recent example of how economic development is enhancing the community. The facility, which should open in the spring with a storage capacity of 500,000 pounds, will provide year-round storage. It presents an opportunity for companies to bring in larger quantities and will have some costs saving associated with transportation. The facility will also increase business at hotels, retail shops and other establishments. “That’s a huge opportunity for the community,” Cobb says.

Other examples of economic growth in Valdez include the construction of a new warehouse complex by Lynden Transportation and Wilson Brothers Distributors and an increase in the number of U.S. Coast Guard personnel being stationed in the area.

Like many places around the country, Valdez has an ongoing beautification program to make its environment pleasing to the eye and conducive to economic growth. “Visitors, residents and potential new businesses see that it’s a clean, nice and well-laid-out town, and that promotes economic development,” Cobb says.

 

Quality of Life

Cordova, like Valdez, touts its high quality of life as a primary factor in economic development. Excellent schools, great transportation and low taxes—which the city works hard to maintain—are also major contributors to business growth, according to Cordova Mayor Jim Kallander.

The city has a year-round, 6 percent sales tax, which is challenging to maintain with its fluctuating population. “We have to have infrastructure for 5,000 people when only about 2,200 are living here year round,” Kallander says.

He adds that Cordova is continually working to keep taxes low without cutting services. Tax relief is generally addressed through property taxes.

Kallander characterizes Cordova’s economy as “strong and growing.” But like many small Alaska communities, the difficulties of operating a business in Cordova include a shortage of employees and higher costs for real estate, freight transportation and energy.

Kallander says there’s an opportunity for economic development in the tourism industry. “We need skilled workers for ship repair, diesel engine repair, welding and fabrication.”

Cordova’s commercial fishing industry is also expanding. Trident Seafoods recently invested more than $40 million in a new plant with the capacity to process a much higher volume of fish. “Support industries are having to ramp up because it’s so much more throughput,” Kallander says. “Services that would normally be slowing down in the winter have seen increases in their businesses, from welding to retail to lumber.”

Other seafood processors in Cordova are also making capital improvements. There are also many new and upgraded commercial fishing boats, as well as more young fishermen are getting into commercial fishing as a career.

 

Commercial Real Estate

The commercial real estate market in Valdez is quite stable, according to Sound Realty Broker Alice MacDonald. The Valdez-based Realtor says there’s an adequate supply of commercial real estate available in the area. And she’s noticed higher-than-normal activity in commercial sales in the past few years “You may see a for sale sign on a commercial property on our Main Street for several months or maybe a year even,” she says. “But there have been a lot of properties transfer hands."

Currently, several parcels of land and a few commercial buildings are available in Valdez. For example, there’s a large retail store available on our Main Street and a few parcels in the downtown area.

The rental market is very busy in Valdez, according to MacDonald. The town has had several investors purchasing rental properties this year.

In Cordova, the commercial real estate market is challenged by the city’s location. Surrounded by the Chugach National Forest, Cordova is built on the side of a mountain. “We’re pretty well penned in,” Kallander says.

The city had been sitting on land for years and years. But its land disposal policy has made it easy for commercial development, and now it’s running out of land. There’s some private land that’s suitable for commercial and some industrial property available. But retail property is pretty scarce. “Because of the scarcity of property, I think we’re getting close to where we’re going to start seeing teardowns,” Kallander says.

The city continues to sell commercial property for development, including spaces for retail and service businesses. It’s also working on expanding the area near the shipyard.

 

Infrastructure

One of the most important elements of Valdez’s infrastructure is its totally ice-free port. The Port of Valdez is navigated by hundreds of oceangoing oil tankers each year. Valdez has the largest floating concrete dock in the world, as well as a small harbor that can accommodate more than 500 commercial fishing boats and recreational vessels.

Transportation components of the city’s infrastructure also include the Valdez Pioneer Field Airport, with a 6,500 feet-by-150-feet paved runway, and a seaplane base at Robe Lake. In addition, the Richardson Highway connects Valdez to Alaska's road system.

Other assets of the community include Providence Valdez Medical Center, Valdez Community Hospital, Valdez Native Tribe Clinic, a convention center that can host groups up to 500, and Prince William Sound Community College.

In Cordova, the key infrastructure includes a large harbor with deepwater docks for large vessels and a shipyard with a 150-ton travel lift for hauling vessels out of the water. The harbor is vital to the local commercial fishing sector, which is seeing increases in the industry, according to Kallander. “More vessels are home ported in Cordova and the processors continue to expand in recent years,” he says.

A recent addition to the city’s amenities is the new Cordova Center. The 33,929-square-foot, multi-use facility will include a museum, library, performing arts theater/auditorium, meeting rooms, education rooms and associated workspaces. The current city hall, museum and library were built many years ago and have continual maintenance problems and are very expensive to heat. However, the new facility will solve many of these issues plus provide cost savings. “It will make a nice addition to the quality of life in Cordova,” Kallander says.

The exterior of the building is already completed, and the interior work is under way. Kallander hopes to see the entire project finalized within a year.

 

This article is a web exclusive to the December 2012 edition of Alaska Business Monthly.

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