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Alaska Native Corporations Develop Opportunity

Oyster farm near Kake, Alaska, is a partnership between Pearl of Alaska and Haa Aani LLC.

Oyster farm near Kake, Alaska, is a partnership between Pearl of Alaska and Haa Aani LLC.

PHOTO: Courtesy of Sealaska

Growing shareholder employment through partnerships

A question that has puzzled America for years also confronts Alaska—how can people live in the smaller communities when jobs are scarce, money is tight and the cost of living is high? Alaska Native regional corporations are tackling that thorny question of rural sustainability across the state.

Southeast Alaska’s regional corporation, Sealaska, has created a subsidiary to focus on helping its villages and its region improve their economic conditions. Haa Aani LLC’s President and Chief Executive Officer Russell Dick said Sealaska mandated the Haa Aani’s management to help stimulate the region’s economy.

To do that, Dick said Sealaska capitalized Haa Aani with $5 million and expected him and his team to leverage those funds and form partnerships to shore up the rural economy. “We wanted to bring in business, philanthropic, state and federal partners,” Dick said.
One partnership Haa Aani entered into was with the Yakutat Village Corp. to create a small oyster farm. “Now, they have farming expertise to meet the requirements and have access to the U.S. Department of Agriculture’s Farm Services Program and its benefits,” Dick said. “This is one example of the mariculture work under Haa Aani. Other communities we’ve worked with include Kake, which has reopened the community’s fish plant. We helped bring more management expertise and provide market access on a very small scale. We don’t go in on a scale that isn’t sustainable.”

Additional business opportunities Haa Aani is pursuing include an expansion of alternative energy sources such as tidal, wave and wind energy. “In 2008 we began investigating woody biomass and saw an opportunity to take it into the communities on the residential level. Sealaska converted its building to wood-pellet heat a year ago—the first commercial building in the state to be heated by a renewable energy source.
“Since then,” he added, “GSA and the U.S. Forest Service have converted their buildings in Ketchikan and the Coast Guard is in the process of converting its building in Sitka. Now, we’ve shown it can be done—the demand has been created and we’ve demonstrated that we can provide a consistent supply of wood pellets quickly.”

Haa Aani is also working to become a Community Development Financial Institution through the U.S. Department of the Treasury, giving them even more access to capital, technical assistance and expertise.

As for success? Dick said that comes when the community no longer needs Haa Aani’s help.

 

REGIONAL ECONOMIC FOCUS

Farther north, NANA Regional Corp. works with its tribes, regional and nonprofit organizations, and state and federal partners to develop the regional economy as a whole. Through the Northwest Arctic Leadership Team, NANA works with the borough, Maniilaq Association and the school district to collectively advocate for projects and funds for its region.

NANA also directly provides jobs to shareholders. Currently, NANA companies provide shareholder jobs in the hospital in Kotzebue and in health centers and schools in each of the villages. NANA also has the Red Dog zinc and lead mine 90 miles north of Kotzebue, and its partnership with Teck Alaska spells out provisions for shareholder hire.

“In fiscal year 2010 NANA received $146.3 million in net proceeds from the Red Dog Mine,” said Shelly Wozniak, NANA’s Corporate Communications manager. “Of that, $82 million was distributed to other Alaska Native corporations under the 7(i) sharing provisions of ANCSA. More than 340 NANA shareholders were employed at the mine—approximately 58 percent of the mine’s total workforce,” she added.

“We have about 12 NANA companies operating at the mine, all those employ shareholders, as well,” said Chuck Greene, vice president of Community and Government Affairs.

Elizabeth Qualluq Moore, Community and Government Affairs manager, said NANA Management Services provides both jobs and training for many shareholders through janitorial and cafeteria contracts in schools across the district. “NANA has a new hotel and restaurant in Kotzebue and we employ many of our shareholders in Anchorage, as well,” she said.

According to NANA, approximately 1,315 of its shareholders were employed by its family of companies in 2010, earning about $48.1 million in total wages. The corporation also contributes to a trust that provides shareholder scholarships.

In addition to employing and developing shareholders, Greene added that NANA promotes the development of Cape Blossom as a deep-water port and the Star of the Northwest Magnet School as a residential high school program offering focused programs in academic and vocational areas for careers in Alaska occupations. He also said NANA is addressing the high cost of energy through investigating alternative energy sources such as hydro and natural gas and is working to improve broadband Internet availability.

Dean Westlake, the director of Village Economic Development for NANA, said the region has actually grown in population, but villages continue to face the problem of economics. “We try to help people access the broader Alaska economy through resource technicians in every village,” he said, “and we’re working to build multipurpose community buildings in each village in the most energy-efficient way possible.”
Other potential economic engines in Northwest Alaska include the Upper Kobuk Mineral Project. NANA recently signed an exploration agreement with NovaCopper to explore in the Ambler District. “Even though this project is in the exploration phase, it’s already providing jobs for our shareholders,” Wozniak said.

Whatever NANA does to increase economic activity in the region, however, it does with Inupiat values in mind, added Elizabeth Saagulik Hensley, NANA’s Public Policy liaison. “One of those values is cooperation.”

NORTHERN SEA ROUTE POSSIBILITIES

On Alaska’s western coast, Bering Straits Native Corp. is setting its sights on commerce through the Northern Sea Route and Northwest Passage to help build the region’s economy. As climate change progresses, the sea ice that locks the waterway during winter is lessening. Today, only ships strengthened against ice can ply those waters and only during the summer. Soon, though, there may be more ice-capable ships traveling the shorter distance between Asia and Europe carrying commercial trade items, and the Bering Straits region is right on the route.

Matt Ganley, vice president of Land and Resources for BSNC, said he thinks there will be a dramatic increase in traffic with the opening of the passage, particularly with the current exploration and development of oil and gas resources in Russia.

“Our region lies on the chokepoint of the strait, the narrowest part, with Diomede Island on the Russian-American border,” Ganley said. “So we’re watching developments there and preparing for it as much as we can. We have property interests we’d like to see developed and infrastructure is vital to that development. I’m sure we’ll see expansion of our infrastructure in conjunction with the sea opening.”
Otherwise, Ganley said there isn’t much industry in his region—no large-scale energy production, no highway or railroad infrastructure. “Prices for everything just skyrocket when there’s no infrastructure,” he said.

BSNC’s President and CEO Gail Schubert said a subsidiary, Bering Straits Development Co., operates in Nome and specializes in building construction and renovation.

“Last year, the development company employed 50 shareholders building teacher housing and other projects,” she said. “We also have a trucking operation that employs shareholders and a hotel in Nome.

“We are currently evaluating the possibility of reopening Rock Creek Mine,” Schubert added. “It employed about 156 shareholders and other residents in 2008, but it never really went into production.”

Schubert and Ganley both talked of investment in wind energy. “Three years ago,” Schubert said, “Sitnasauk (the Nome village corporation) and BSNC made a several-million-dollar investment and installed 18 turbines that add power to the Nome grid.”

In addition to the regional corporation itself, regional nonprofit Kawerak Inc. helps to provide jobs and educate shareholders for jobs both within and outside the region. Together with the Bering Strait School District and Nome Public Schools, Kawerak helped develop the Northwestern Alaska Career and Technical Center to help prepare students with career and technical skills, career exploration, life skills and work-readiness skills.

Ganley added that airlines—particularly Era and Bering Air—employ quite a few shareholders in the BSNC region, as does the State of Alaska and some federal agencies. “There’s new housing construction, roads, airports and schools,” he said.

“We’re also catching up to the rest of the world with high speed cable,” Schubert said.

ALYESKA CONTRACT PROVIDES JOBS

One of the Southcentral corporations, Chugach Alaska Corp., holds regional summits to help bring its shareholders together and to provide a forum for communication. In addition to economic issues, Sheri Buretta, chair of the board for Chugach, said the corporation has included energy, transportation, communication and education issues, as well.

“Communication is a major issue,” Buretta said, “so we’ve come up with a shareholder and regional portal to get information out to the region, to talk about projects, what other regions are doing and about ways in which we can work together.”

There are several ways in which Chugach helps shareholders in its villages earn a living – one, Buretta said, is through a contract with Alyeska Pipeline Service Co. in which shareholders provide oil spill response and maintenance services through Tatitlek Chenega Chugach LLC, a joint venture. “This contract has been in place since 1994,” Buretta said, “and we have the largest number of Alaska Natives working under that contract. It allows all the communities within our region to be able to have jobs and many shifts allow workers to return to their communities when they have time off.”

Buretta added that Chugach also has been seeking construction contracts in Cordova, and is working with tribal councils in Nanwalek/English Bay and Port Graham to identify economic opportunities when a new runway is built. They are creating a 20-year plan for training and employment at the airport and the cannery.

“We focus a lot of our efforts on academic and vocational education,” she said, “providing scholarships and internships to further our shareholders’ educations. We also have a small business assistance program and entrepreneurs in villages can apply for grants to help them start or grow their businesses.”

Other employers in the Chugach region include nonprofits, the State of Alaska and the federal government. “The state has jobs to keep runways clear,” Buretta said, “There are post office jobs and village corporation jobs. The real challenge is to balance the lifestyle and culture with economic opportunities. We don’t want to take a quantity of a resource out of the region. We have to keep in mind the needs of the people, too.”

Buretta also pointed out that, although Alaska Native regional corporations can and do help their shareholders, the State of Alaska and the federal government both have a responsibility to them, as well.

DCCED Commissioner Bell agreed. Bell said the state provides economic opportunities in all regions through four key agencies: the Division of Community and Regional Affairs, the Alaska Energy Authority, the Alaska Industrial Development and Export Authority, and the Division of Economic Development.

DCCED has many assistance programs and grant opportunities for tribal governments, communities and entrepreneurs, and is working to help bring energy costs down to rural Alaskans, Bell said.

“Marketing Alaska’s products and services is one of DCCED’s strongest functions,” she said, “from fish and seafood to tourism, minerals, film and timber products. We’re also helping strengthen Alaska’s broadband services through the Connect Alaska project and the statewide broadband task force.”

This article first appeared in the February 2012 issue of Alaska Business Monthly magazine.

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