Archive for October, 2008

Alaska Native Corporations may lose advocate in Senator Stevens

Wednesday, October 29th, 2008

The New York Times

October 30, 2008

Facing a Loss in Alaska

The Alaska Native corporations have had Senator Ted Stevens to thank nearly every step of the way.

In 1971, a few years after he was first elected to the Senate, Mr. Stevens helped write the Alaska Native Claims Settlement Act. Also known as the “Billion Dollar Deal,” the act established more than 200 corporations to manage almost 45 million acres and gave $962 million to Alaska Natives in return for their ceding of all aboriginal land rights.

When the Alaska Native corporations struggled in their early years as they tried to turn people who had survived on fishing and hunting into business managers and to teach thousands of villagers to call themselves shareholders, Senator Stevens was there, too.

He helped corporations with financial difficulties by persuading Congress to approve a provision in the 1986 Tax Reform Act allowing the corporations to sell their accumulated tax losses to profitable companies seeking tax write-offs.

That same year, Senator Stevens introduced legislation that allowed Alaska Native corporations to participate in a Small Business Administration 8(a) contracting program, a provision that has proven lucrative to many of them.

And just a month ago, in the wake of questions that some of the corporations were misusing the contracting program, he successfully pushed Congress to remove a provision from the 2009 Defense Authorization Act that would have limited their access.

After his conviction on Monday on charges he violated federal ethics laws by failing to report tens of thousands of dollars in gifts and services he had received from friends, Senator Stevens’s future in Congress is uncertain.

But Louis A. Thompson, 72, who has run one of the corporations, Kavilco Inc., for 36 years, said the companies had grown into sophisticated operations that could stand on their own. “Senator Stevens was very helpful early on and not just to Alaska Native corporations, to all Alaskans,” he said. “But times have changed.”

Indeed, the Alaska Native corporations have made strides since the early days, when they built seafood plants before negotiating for fish deliveries and constructed hotels in remote villages that had never seen tourists. Today, they consistently rank among state’s largest businesses. The small-business 8(a) contracting program has been important to that success.

As of May, 187 Alaska Native-owned companies were participating in the 8(a) program, according to a report by the Small Business Administration’s Office of Inspector General. From 2000 to 2006, Alaska Native corporations won nearly $13 billion in federal contracts.

Maver E. Carey, 41, the leader of one of those corporations, sees the federal contracts as the future of her business. And other small corporations are looking to her to help them navigate the complicated and expensive path to federal business.

Her enterprise, the Kuskokwim Corporation, represents Aniak and nine other remote Alaska communities. Its responsibilities cover a geographic area larger than New England, but without cellphone towers, major road systems or many jobs. “In Kalskag, one of our largest villages, there are 80 homes and 40 of them don’t have running water,” Ms. Carey said.

Kuskokwim’s 2,903 shareholders want regular corporate dividends, and many also seek educational and employment opportunities from the corporation.

Kuskokwim was founded in 1977 when 10 village corporations decided that they did not have the staff or resources to build businesses alone. The merged entity formed a headquarters in Anchorage and eked out dividends primarily through investments in Alaska real estate and a conservative portfolio of stocks and bonds.

Ms. Carey, whose maternal grandparents are Yupik Eskimo and Athabascan Indian, turned to Kuskokwim in 1994 after earning a college degree, working for an engineering firm and being laid off. “My village corporation offered me $9 an hour and I took it thinking I’d continue to look for a real job,” she said. By 2003, after she had worked in every corporate department, the board asked her to become the chief executive.

She pushed diversification, with a goal of building Kuskokwim’s shareholder equity to $100 million by 2015. Last year, it topped $18 million, up from $14 million in 2006. In 2005, the company started TKC Development Inc. to focus on federal contracting. TKC subsidiaries have won work from the United States Navy and the Army Corps of Engineers.

Last year, Ms. Carey started an Alaska Native village corporation association. Her inspiration came from conversations with other chief executives facing challenges similar to her own. A membership drive under way has registered about 50 Native corporation executives.

Their goal is to be as successful as the Afognak Native Corporation, one of Alaska’s largest businesses. Afognak is owned by 700 shareholders descended from the Alutiiq people of the Kodiak Archipelago. In 2006, its profits reached $18.8 million on revenue of $537.9 million, the latest figures available. That year, each shareholder received a dividend payment of $21,688. Afognak employs 5,000 people globally, and about 50 of them are shareholders.

Afognak is now run by a non-native chief executive with significant government experience. It won the first of its major contracts in 2000, when it secured a deal to operate Kirtland Air Force Base in New Mexico. In recent years, it has won a contract to build a brigade combat team complex worth more than $100 million at Fort Bragg, N.C., and another worth more than $50 million to renovate the United States Embassy in São Paulo.

Still, there have been questions about the 8(a) contracts that have gone to Afognak and other Alaska Native companies. A 2006 study by the federal Government Accountability Office called for better S.B.A. supervision of Alaska Native corporations that hold 8(a) contracts. The agency’s inspector general is currently conducting an audit of S.B.A. oversight of 10 to 15 of the largest Alaska Native corporations engaged in federal contracting.

In August, it found that two companies, Goldbelt Raven L.L.C., owned by Goldbelt Inc. of Juneau, and APM L.L.C., a subsidiary of the Cape Fox Corporation of Ketchikan, violated terms of the contracting program by entering into agreements that resulted in millions of dollars in 8(a) revenues being paid to companies owned by non-native managers. The administration suspended them from the program and moved to end their eligibility. Both companies are appealing the move, according to officials representing Goldbelt and APM.

Steve Colt, the interim director at the Institute of Social and Economic Research at University of Alaska, who has studied Alaska Native corporations, said that many of the corporations struggled to stay afloat in their first two decades of operations and that Mr. Stevens and the rest of the Alaska delegation worked hard to keep them in business.

“If you look at the historical record, there were lots of incidents of Stevens being very helpful to Alaska Native corporations,” Mr. Colt said. “But I suspect that the number of assists has decreased over time.” He predicted that whoever holds the United States Senate seat for Alaska in the future will fight for legislation that protects Alaska Native corporations because they now have a major impact on the state’s economy.

Hoonah Totem Corp. succeeds in Tourism destination

Friday, October 17th, 2008
Hoonah Builds Tourism hotspot, avoids tourist trap

By Charles L. Westmoreland
Capital City Weekly/Morris News Service-Alaska
Publication Date: 10/19/08
HOONAH – Huna Totem Corp. opened Icy Strait Point to cruise ships in 2004 with some apprehension. At the time Hoonah’s reputation was that of a quiet, pristine fishing and logging community; untouched by the flamboyant commercialism of other Southeast Alaska ports.

Like many remote Alaska villages, with local jobs dwindling away, a new viable source of income was needed. But marketing Hoonah as a tourism hotspot without turning it into a tourism trap was a challenge.

Tourists who disembark at Icy Strait Point, an early 20th century cannery located a few miles outside Hoonah, at first were kept away from the heart of the town so as to not disturb the everyday life of residents. But Hoonah’s 850 citizens didn’t just embrace their new role of host to as many as 2,500 travelers daily – they craved more direct involvement.

“At first everybody was deeply concerned about tourism coming to town because of what (Hoonah) could turn into,” said Bob Wysocki, CEO of Huna Totem, a Native corporation formed by the 1971 Alaska Native Claims Settlement Act. “People quickly realized the impact wasn’t like everywhere else. Folks went from being concerned too many people would be in town to (Huna Totem) getting a lot of heat for not enough people coming into town. The community really opened up and embraced it.”

Wysocki said Huna Totem has allowed only one cruise ship to port each day, though he is looking at the possibility of allowing two ships at a time next season. Hoonah saw a drop off from 80 ships in 2007 to 59 last year due to scheduling conflictions among cruise lines.

“We’re not just about the mighty buck and bringing in three or four ships a day,” Wysocki said. “That just wouldn’t work. We’d burn out our employees and risk guest satisfaction.”

Hoonah has been an easy destination for Wysocki to market. Chichagof Island has one of Alaska’s highest concentrations of brown bears, and nearby Point Adolphus is known as one of the richest humpback whale feeding grounds in Southeast Alaska. Tourism activities are enhanced by the village’s remoteness and other factors, such as Hoonah’s predominantly Alaska Native population, and how subsistence hunting and fishing remain a staple of everyday life.

Huna Totem uses that cultural authenticity to its advantage, involving elders and youth in the showcasing, storytelling and presentation of their history, artwork, values and lifestyles to travelers. Many of Huna Totem’s 130 workers wear their Tlingit name on their badges next to their English name.

Faggen Skaflestad, a lifelong Hoonah resident and owner of Janaggan Touring and Guiding, said little has changed in the town in the past five seasons.

“It’s nice having (Icy Strait Point) out the road because tourism hasn’t changed the town,” he said. “As far as the economy, (tourism) definitely hasn’t hurt us. I believe next year will be the telltale of what will transpire.”

Tourism may very well have saved Hoonah after the village saw its fishing and logging industries dwindle during the 1980s and 1990s. Icy Strait Point employs about a quarter of the Hoonah’s population, most of whom also are shareholders in Huna Totem.

“We’ve maintained about 90 percent local hire and 85 percent Native hire over our five-year history,” Wysocki said. “With most Alaska villages declining in population and economic activity, Hoonah and Icy Strait Point stand out as proof that a culture can be maintained and that an economic base can be built providing jobs that keep the village and culture alive.”

Huna Totem Corp. purchased Icy Strait Point in 1996, and it is now home to more than a dozen locally owned and operated shops, including four restaurants, a museum, theatre and gift shops. Huna Totem invested millions in the project, to include building the world’s largest zipline, but Wysocki was hesitant to disclose how much money has been invested so far.

Huna Totem’s practice of hiring locally and creating business opportunities for the community earned it the Travel Industry Association and National Geographic Traveler magazine’s “Travel to a Better World” award this month for sustaining an indigenous culture and community. Hoonah’s seasonal unemployment has dropped below 1 percent since Icy Strait Point reopened.

“Darn near anybody who wants a job has got one,” Wysocki said. “If you can show up, be clean and straight and come to work every day, we hire just about anybody who walks through the door.”

Hoonah Mayor Dennis Gray said tourism has done more than just create job opportunities; it also has led to much-needed infrastructure improvements in the town. A new ferry terminal will be built next year and a 220-ton boatlift is expected to be operational by next summer.

“We’ve seen a few local business owners open gift shops and other stores,” Gray said. “People have disposable income to go shopping and are keeping dollars in town and putting them into the economy. (Tourism) saved the city in sales tax and revenue.”

Hoonah Harbormaster Paul Dybdahl anticipates more businesses moving in once the projects are completed. He’s already seen an increase in independent charter vessels trying to cash in on Hoonah’s tourism.

“I see the infrastructure changing even more,” he said. “Mechanics, fiberglass workers and shipwrights will need shops to support (the lift). We’ve already had people who perform these services call about setting up shop.”

Dybdahl’s brother, Johan Dybdahl, oversees special projects for Icy Strait Point and said the cannery is finished expanding for now. The infrastructure can accommodate up to 5,000 visitors at a time, and with cruise ships expected to dock five days a week next season, its limits will be tested. That’s especially if tourists keep making return visits.

“This year we had a lot of people come back because they visited once before, and they keep telling us not to change a thing,” he said. “They really appreciate getting on the ground and skipping rocks on the beach, going into the forest to see wildlife. Some even claim we control our whales because we haven’t missed on a whale watching tour in five seasons now.”

Julie Kitka defends success of SBA 8(a) program; asks ADN to retract editorial

Thursday, October 16th, 2008

Economy, Native businesses succeed together

An editorial in the Anchorage Daily News on Oct. 7 (“No-Bid Preferences”) irresponsibly indicts Alaska Natives for the alleged impropriety of two companies associated with a recent and isolated Food & Drug administration government contract.  It also illustrates a fundamental misunderstanding of our history, the work of our business leaders and employees, our contribution to our country and the greater Alaska economy.

The U.S. Congress settled the land claims of Alaska Natives on Dec.18, 1971. The settlement was the largest, most complex Indian land settlement in the history of the United States. In addition to retaining 44 million acres of our original homeland, the Congress authorized Alaska Natives to organize and set up corporations to hold our land and resources. Our Native people were each issued 100 shares of stock in the newly formed Native corporations. We became shareholders and had to learn quickly what that meant and what the corporate structure was all about.

It is 37 years since the initial settlement and we have gained an incredible amount of experience with the corporate structure, with economic decision-making and competing in our rapidly changing capitalistic society. Over the years, we have made mistakes and we have learned. Now, many of our Native corporations are very successful. We have Alaska Native people at the helms of these economic engines. We are proud to contribute to both the Alaska and U.S. economy in significant ways.
The Anchorage Daily News editorial on government contracting was a huge disappointment to us. First of all, it tarred and feathered us all. It did not distinguish between our companies who are working hard and delivering real value and savings to the U.S. government — following the rules and exceeding government standards and expectations — and those few who may have made a mistake and must be accountable for their actions.

Congress authorized and required us to use corporations to implement our settlement. And Congress authorized Alaska Natives to participate in the Small Business Administration’s 8(a) Businesses Development Program. The purpose of the U.S. national Indian policy in the 8(a) program was to allow our businesses to participate in the work the government was contracting out to the private sector. It was to allow our Native shareholders to benefit from our successful completion of government work, which met strict standards. If we were not successful in delivering quality work on time, within budget and within appropriate standards to the government, we would not be successful in competing for other work. This 8(a) government contracting is not a handout.

In many ways, Alaska Native corporations cannot be compared to any other business in America. The U.S. Congress created a vast experiment in 1971 and its success and failures have never been fully documented.  When I talk to respected individuals around the world, they are amazed by what has happened with our land claims. For example, Hernando de Soto, a world renowned Peruvian economist told us this: “Alaska Natives are living proof that life is not a roll of the dice, harsh and brutal.  Government can set in place policies and structures to allow people to help themselves”. When de Soto told us this I was amazed — someone saw what was happening in Alaska. He saw how hard the Alaska Native community was working to make our land settlement a success; he saw how we have shaped the corporate structure with our own values and culture; and saw that we are a contributing member of society.

The 8(a) program is allowing Native Americans, including Alaska Natives, to help ourselves and contribute here in Alaska and across the country. Unlike other 8(a) businesses that are individually owned, Alaska Native corporations are charged with the monumental task of lifting entire communities — representing hundreds, and often thousands of disadvantaged individuals. Therefore, placing caps on awards Alaska Native corporations receive through the 8(a) program or eliminating our corporations’ ability to create subsidiaries with the 8(a) program would suffocate the ability of our corporations to build capacity and expertise which is needed to compete in the global economy and greatly reduce the dividends, scholarships and our efforts to lift our people out of poverty. It would turn the clock back on the very people our government reached out to help.

As with industry, Alaska Native corporations that do not follow the rules and regulations of the 8(a) program must be disciplined individually — not collectively.  The Anchorage Daily News’ advocacy for collective punishment of all our corporations would condemn the entire Alaska Native population to further reliance on the American taxpayer, rather than furthering the cause of self-determination and economic independence.

Alaska Native businesses support 20 percent of Alaska’s population. In 2006, they generated a combined payroll of $695.25 million to over 15,000 Alaska employees, over $1.11 billion in payroll to almost 40,000 employees worldwide, and paid over $60 million in federal taxes. Progress has been made, but much more must be done. Dramatic economic disparity between Alaska Natives and other Americans still exists and must be overcome. Disparities continue in education, in health and life expectancy, even infant mortality. The Alaska Native leadership is committed to doing everything we can to eliminate the disparity in life opportunities and create a chance for every child to have a healthy and productive future.

It is unfair and irresponsible for your paper to call for sweeping changes to a government initiative which is working. On behalf of the Alaska Native leadership, we ask the Anchorage Daily News to retract their editorial and provide us an opportunity to meet to discuss your concerns.
Julie Kitka is president of the Alaska Federation of Natives

In response to Evon Peter, Native Corporations aren’t all bad news

Wednesday, October 8th, 2008

In response to the essays entitled, “Alaska 101 for presidential candidates” and “An Alaska Native speaks out on Palin, Oil, and Alaska” by Evon Peter. 

I would agree that much of the original Alaska Native Claims Settlement Act (ANCSA) had “assimilation devices” built in.  However, the 1991 amendments and more than one hundred amendments since have addressed many of these concerns.  Currently, there are bills in the House and Senate that continue to amend ANCSA.

Through 7(i) sharing, the native corporation I belong to receives funds that keeps our corporation’s doors open and allows us to employ shareholders.  Of course, the bulk of this money comes from oil and mining through successful ventures of NANA, Arctic Slope and others.

In the recent “Alaska Business Monthly” list of top 49 Alaskan-owned companies, two-thirds are Alaska Native.  Eight out of the top ten Alaska businesses are Native Corporations.  Economic strength provides Alaska Native Corporations the ability to make significant positive changes for their tribal shareholders and their respective communities.  They are major stakeholders in Alaska and relevant players in today’s world.  This is not all bad news.

Leisnoi village status upheld in Court

Wednesday, October 8th, 2008

The Kodiak Daily Mirror reports that The U.S. Court of Appeals for the 9th Circuit ruled in favor of Leisnoi Inc., Monday, in the case of Stratman v. Leisnoi, effectively ending the nearly 30-year-old lawsuit.  This is possibly the end to a long struggle between these two parties.  For the full article, click here.

In 1974, the Department of the Interior certified Leisnoi, Inc., as a Village Corporation for the Native Village of Woody Island.  Leisnoi thus became eligible to select over 115,000 acres of land, which it would hold and manage on behalf of the Native Village of Woody Island.  Leisnoi selected some land on Woody Island, as well as some land on Kodiak Island and Long Island.  For more information on the legal cases between these two parties visit the ANCSA Resource Center site.