One of the goals of the Afognak Board of directors is to “ensure that shareholders will have opportunity to belong to the Alutiiq community and share a connection to our culture and history.”
Alaska’s Native Village Corporations create prosperity, opportunity
In recent years, Alaska’s Native village corporations have been making big economic waves in the state. In fiscal year 2016, 22 percent of the total revenue generated by Alaska-based businesses came from village corporations, about $2.7 billion.
Add in the revenue from Alaska Native regional corporations, and the number grows to more than 70 percent of the $14.8 billion in revenue from Alaska-owned business.
The corporations were created under the 1971 Alaska Native Claims Settlement Act (ANCSA), which granted Alaska Natives title to 44 million acres of land and $962.5 million to clear land claims. Under ANCSA, 12 Alaska-based regional corporations and more than 200 village corporations were created, with the dual mandate to make money and provide for the educational, social, and cultural well-being of the shareholders. A thirteenth corporation was later set up for Alaska Natives living outside the state, but it did not receive a land distribution and was dissolved in 2013.
“We all have similar missions in terms of providing for our people and the well-being of our shareholders,” says Hallie Bissett, executive director of the Alaska Native Village Corporation Association. “The biggest difference between the village and the regional corporations is the land ownership. Regional corporations own the subsurface estate and the village corporations will typically own the surface estate.”
Youth at a Dig Afognak bonfire.
When regional corporations develop resources such as timber or oil and gas or zinc, they have to share those resource revenues with the villages through the 7(i) and 7(j) clauses of ANCSA, Bissett says.
“Any time there’s a resource development within a Native community’s private lands, that really impacts the entire state of Alaska,” she says. “Through 7(i) or 7(j), every single village corporation gets revenue from that.”
The 7(i) clause requires regional corporations to annually redistribute 70 percent of net revenues from resource development among all twelve Alaska-based regional corporations. Clause 7(j) requires the regional corporations to redistribute half of those payments to village corporations and at-large members.
The clauses were included as a way to level the playing field between corporations in traditionally resource-rich areas and those in other places. According to a study released in February, “Successful resource development by one regional [Alaska Native corporation] means success for all.”
The study (by the McDowell Group for ANCSA Regional Association) notes that between fiscal year 1982 and fiscal year 2015, approximately $3.1 billion (adjusted for inflation) has been distributed to all Alaska Native corporations under 7(i). About half of that amount was distributed to village corporations under 7(j). The overall amount has generally increased over time and totaled $234.5 million in fiscal year 2015. For many of the smallest corporations, the infusion of 7(j) revenues was a major part of their budget.
“That’s basically the mechanics of the relationships between those two entities,” Bissett says. “Other than that, they’re typically the same. They’re all for-profit corporations, with specific sets of bylaws and ways of operating.”
Although some village corporations focus on local activities such as the power systems and tribal duties, others have waded into the corporate world. And while the regional corporations have traditionally been the powerhouses, village corporations are increasingly right alongside them.
In fiscal year 2016, three village corporations were among the ten largest Alaska-based corporations: Chenega Corporation reported revenues of $927 million, Afognak tallied $474.3 million, and Ukpeaġvik Iñupiat Corporation reported revenues of $424.3 million.
Chenega Corporation has had great success in government contracting but has been working to diversity its portfolio and now owns the majority of the electrical contractors in the state, Bissett says. Its government services arm operates in multiple business lines with several companies in each.
Shareholder Susie Malutin leads a cultural workshop with youth at Dig Afognak.
“Quite a few of the larger village corporations have significant investments in government contracting, which is true of the regional corporations, as well,” Bissett says. “Village corporations such as Chenega and Afognak started out in government contracting, but in recent years have been working to diversify their revenue streams.
“They’re using their 8(a) moneys to invest in ongoing businesses right here in our state,” she says. “That’s kind of become the Alaska business entrepreneur dream. That you form a company, build it up, and get bought out eventually by a Native corporation.”
Each corporation interpreted its mandate to benefit shareholders in its own way. The Eyak Corporation (TEC) is the village corporation for Cordova, one of five villages in the Chugach region. Although the bulk of TEC’s operations are in government services, it is also looking at how it can directly improve life for its shareholders.
In 2011, TEC acquired an ownership interest in Native American Bank, which serves Alaska Native corporations, tribes, and Native enterprises as well as Native individuals. It recently invested in Baxter Senior Living, which is building an assisted living center in Anchorage. The investment allows TEC to help create badly needed housing for elders, as well as provide more job opportunities for shareholders. TEC is actively looking for additional investments in Alaska.
Locally, TEC supports community activities in Cordova, such as the Native Village of Eyak’s elder programs, a cemetery cleanup day, and a monument to recognize veterans.
Traditional dancers perform at the Afognak Native Corporation headquarters in Kodiak.
Alutiiq culture is the guiding principle for Afognak Corporation, says Malia Villegas, vice president of corporate affairs.
“A big part of our work is to make sure our business lines and operations stay true to our Alutiiq values,” Villegas says. “Even in things like engineering services, we’ve been able to tie our Alutiiq values and traditions. We’re very effective at using the materials around us in a resourceful and respectful way. It’s so critical to what anchors us.”
The corporation includes the Kodiak Alutiiq people of Afognak and Port Lions and it represents nearly 1,000 shareholders. Its early operations focused on timber and land management, which it invested successfully into the government services fields.
Today Afognak, its wholly-owned subsidiary Alutiiq, and their subsidiaries have about 5,000 employees in nearly every state and around the world. They provide government services in a variety of fields, including a commercial leasing division with facilities on the North Slope. Another contract includes Job Corps, with “a pretty extensive youth services footprint,” Villegas says.
In addition to business operations, corporations such as Afognak host a variety of community programs. This summer, Afognak will host its third annual Afognak Youth Charity Golf Tournament at the Anchorage Golf Course. Proceeds directly benefit the tribal youth education programs operated by the Native Village of Afognak and the Native Village of Port Lions. Those include Dig Afognak Camp, an Alutiiq cultural camp for youth that has operated since 1998; preschool and afterschool activities; Alutiiq language lessons; and Alutiiq Cultural Activities. The corporation also works closely with its sister tribes in Afognak and Port Lions and helps sponsor a series of camps focused on subsistence, Alutiiq culture, and languages.
The corporation also still maintains a timber business. Villegas notes one of the nearby bays is named after her grandmother.
Eklutna Inc. focuses on opportunities within the state, Bissett says. “They have a very impressive portfolio. They do construction; they have a bunch of real estate.”
As the largest private land owner in southcentral Alaska, Eklutna owns 90,000 acres within the Municipality of Anchorage and has extensive holdings in the Matanuska-Susitna Valley—prime real estate in an increasingly crowded metropolitan area. In 2016 Eklutna Construction and Maintenance won the contract to dismantle the obsolete eighty-foot Eklutna Dam, which was built in the 1920s, and the process of restoring the river is underway. The wholly-owned subsidiary also worked on an upgrade to the FBI offices in Anchorage and renovated a swimming pool at Fort Wainwright’s Melaven Fitness Center. It is also building a substance abuse recovery facility for Cook Inlet Tribal Council. The center, which will have sixteen beds, offices for twelve personnel, a commercial kitchen, dining area, group room, and carving studio, is expected to be complete in December 2018.
The Kuskokwim Corporation (TKC) was created in 1977 when ten smaller village corporations along the middle part of the Kuskokwim River merged. It owns more than 950,000 acres of surface estate in western Alaska, which includes what may become one of the largest gold mines in the world: Donlin Gold.
The mine, with provable and probable reserves estimated at 33.9 million ounces of gold, is owned by subsidiaries of Novagold and Barrick Corporation. Calista Regional Corporation owns the subsurface estate. It is a region with few jobs, but that is expected to change.
The mine is expected to be a huge economic driver for the region, on par with Red Dog zinc mine’s impact on Northwest Alaska. As many as 3,000 jobs are expected during construction and the mine would create about 1,400 jobs for the duration of its planned twenty-seven-year life. So far, about 90 percent of the jobs created during the early phases have been local hire, and Donlin says it’s committed to hiring residents from the region. The mine has worked closely with residents, providing information and presentations in both English and Yup’ik.
TKC has partnered with Donlin to form a private foundation to support expanded educational and vocational training for shareholders interested in the mining industry. In addition, TKC has been working closely with the Kuspuk School District, EXCEL Alaska, and the Association of Village Presidents to connect shareholders with educational programs. In addition, Calista would generate royalties from the gold, 70 percent of which would be distributed to other Native corporations statewide.
Working in government contracting has connected village corporations with organizations and people around the world. One of Sitnasuak’s subsidiaries, SNC Technical Services (SNCT), is based in Puerto Rico. The island was pummeled by hurricanes Irma and Maria, with major destruction to its infrastructure and electrical grid.
Sitnasuak’s newsletter in March details some of the ways its employees in Puerto Rico dealt with the storms and their aftermath. “Camping is fun,” says Enrique Denegri, chief operating officer for SNCT. “But even after camping, after three days you want to go home.”
SNCT’s facilities, which employ about 700 people who manufacture uniforms and tactical gear for the US military, were largely spared from the damage, so Sitnasuak set up leadership teams to help with the larger problem of restoring electricity. It offered subsidized lunches to employees and onsite daycare for their children.
In addition, Sitnasuak sent satellite phones, generators, fuel, camp stoves, water purification systems, and ice makers. According to the newsletter, ice was in especially high demand and SNCT distributed as much as it could from its own machines. Nearly 300 employees’ homes were damaged and some were totaled.
The company was one of the few to start manufacturing clothing again soon after the storms, so employees were spared being out of work for weeks.
“We tried to maintain some sense of normalcy and community by providing meals, supplies, and secure jobs,” says Humberto Zacapa, CEO of SNTC.
SNCT shares that attitude of caring with its parent company.
“Our Iñupiaq values are part of our approach to business,” writes Roberta Quintavell, president and CEO of Sitnasuak. “We are all responsible for each other, regardless of whether you’re an employee in Nome or at a subsidiary halfway around the world. As Iñupiaq, we take our responsibility to take care of one another seriously.”
‘Hitting Their Stride’
Bissett says the village corporations are just starting to hit their stride. “The interesting thing for me about village corporations is they recapitalize every single year,” Bissett says. That creates opportunity for future leaders in the Native community who have gone to Ivy League schools and have a business background to come and lead these organizations.
“They’ve been in business now for fifty years, a typical time for a normal entrepreneur or business person to really learn the ropes.
Kymberlee Blondin, an Afognak/Alutiiq descendant, dances.
SHAREHOLDER LYDIA OLSEN
You don’t hear about a lot of successful twenty-somethings… there are some unicorns out there, but when it comes to the maturity of these organizations, I think you’re going to hear more and more about village corporations.”
This is an updated version of the original June 19th posting. It has been corrected to show Calista Regional Corporation owns the subsurface estate.
Julie Stricker is a journalist living near Fairbanks.
This year the Alaska Railroad is celebrating 100 years of transportation people and cargo around Alaska. While the railroad is one of the states oldest transporters, it certainly isn’t the only one, and in this issue of Alaska Business we also check in on the Marine Highway, Span Alaska, and the White Pass & Yukon Route. For those interested in Southeast, our focus on that region provides updates on Kensington Mine, Tongass FCU, the troll fishery, and Juneau’s growing landfill.