Foam Panels, Excerpt

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INTRODUCTION a) Kotzebue and the Northwest Arctic Borough Kotzebue is in dire need of more housing and more jobs. The catch is, now we have the opportunity for people to get good home loans through our HUD programs, but the population has been growing steadily and there hasn’t been a new house built in Kotzebue in the last 3 years. A good interest rate isn’t going to do any good if there’s no new houses to buy and no jobs to help our people pay back those loans. - Walter Porter, Director, Tupiq Services, Inc., a housing services subsidiary of Kotzebue IRA The Kotzebue IRA represents the Native people of Kotzebue, Alaska, a small city of almost 3,000 people, 75% of whom are Alaska Native. The vast majority of Kotzebue’s Native population are Inupiat Eskimos, and are direct descendants of the people who have resided in the region since time immemorial. The Northwest Arctic Borough Kotzebue serves as a hub community for ten outlying villages which are closely linked to the city by cultural, familial and economic ties: Ambler, Buckland, Deering, Kiana, Kivalina, Kobuk, Noatak, Noorvik, Selawik and Shungnak. These eleven communities are represented collectively by the Northwest Arctic Borough at the state level, and their Native populations are represented collectively by the Northwest Arctic Native Association, a for-profit corporation commonly known as NANA. All of these communities are primarily Inupiat and they are united by their strong commitment to the Inupiat language, culture and values. Subsistence activities such as hunting, fishing and berry picking are important in all of these communities, and traditional dance is performed and enjoyed by young and old alike in every village. As of 1990, the Northwest Arctic Borough had both the highest percentage of Alaska Natives in the population of any region in the state, at 85.2 percent, and one of the highest unemployment rates of any region in the state, at 20.3 percent. Employment opportunities in the region have improved somewhat over the past 10 years due to the opening of the Red Dog Mine, the world’s largest zinc mine. However today, the Northwest Arctic Borough still has an average annual unemployment rate of 16.1 percent, more than twice Alaska's annual average of 7.9 percent.1 This does not count the high proportion of discouraged workers who no longer apply for jobs. 1

“A Profile: The Northwest Arctic Borough” in Alaska Economic Trends, January 1999. Alaska Department of Labor.

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In Kotzebue, 12.7 percent of the population lives at or below the poverty level, and poverty levels in the outlying villages range as high as 30 percent. As of January, 2000, 317 individuals in Kotzebue were receiving some form of public assistance according to the Alaska Department of Health and Social Services. In recent years, as economic conditions have gradually improved and more tribal members have completed higher education degrees, the people of the region have begun to focus on achieving greater self-determination in all areas of social and economic development. As part of this effort, the Kotzebue IRA applied for and received funding through the Department of Housing and Urban Development’s new Native American Housing and Self-Determination Act (NAHASDA) to address Kotzebue’s housing shortage. These funds were used to improve sub-standard housing and to plan activities that would address the tribe’s existing and future housing needs. The concept for the Nunavik Manufacturing Plant grew out of this process. b)The Nunavik Manufacturing Plant: Overview of Benefits The plant will use Expanded Polystyrene Foam (EPS) to produce insulation products for civil, residential and commercial use. Examples of the various applications for this product include building homes with Structural Insulated Panels (SIP) composed of EPS sandwiched between layers of wood; using the insulation in renovation and weatherization projects on existing homes; and using the insulation to protect roadways, airstrips and utility pipes from weather conditions and permafrost. All of these applications have already been used in the Kotzebue area on various development projects over the past few years. EPS products have proved to be a great success in terms of standing up to arctic conditions, producing structures that look the same as any other on the outside, but are more resistant to both wind and moisture than stick-built buildings. Developers in the area say they would use EPS and SIP products more frequently if not for the high cost of “shipping air” by paying the freight costs for bringing the lightweight but bulky foam panels to Kotzebue by barge or plane. The plant will help to address unemployment in Kotzebue and the surrounding region in three ways: • •

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In Kotzebue, Nunavik will create 13 new permanent jobs during the first year of operations, with more new jobs anticipated in future years. Kotzebue IRA will provide paid training in the use of EPS and SIP products for construction to Alaska Natives in Kotzebue as well as to Natives from any other villages of the Northwest Arctic Borough where Nunavik products are being used. Numerous large-scale construction projects are planned throughout the region over the next 10 years, so Nunavik will be a source of both local materials and local labor, creating several seasonal jobs each year and helping to keep more of the money spent on housing and infrastructure in the region. Nunavik will make it possible for the Kotzebue IRA to create more middle income and low income housing in Kotzebue. This housing will make it possible

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for Inupiat from the villages who wish to find employment reasonably close to home to take some of the available jobs in Kotzebue. In addition, Nunavik will help residents of the region stretch their incomes further by minimizing some of the factors which give the Northwest Arctic Borough an exceptionally high cost of living, such as: •

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Shipping: Shipping costs greatly increase the cost of a new home in the arctic. In the case of stick-built homes, all materials must be imported since Kotzebue has no trees. In the case of existing EPS structures, builders had to pay for “shipping air” because the polystyrene was expanded before it was sent to Kotzebue. By importing condensed polystyrene beads and expanding them in Kotzebue, the plant will reduce shipping costs, and ultimately, reduce the costs of a new home by as much as 20 percent. Fuel: Most homes in the region rely on oil for heating, which currently costs $3.00/gallon. EPS homes are more fuel efficient than stick-built homes by a minimum of 15 percent, and using EPS to weatherize existing homes can improve their fuel efficiency by as much as 50 percent, saving families as much as $200/month. Outside labor: Working on stick-built homes typically requires years of training as an apprentice. The training process to participate in SIP construction projects will take 3 weeks and will be available in Kotzebue. This means that the ultimate cost to the home-buyer will not include the costs of transporting workers from elsewhere. Training costs for local workers will be supported through grant funds or contributions by local organizations. Rental rates: The housing shortage has led to exorbitantly high rental rates in Kotzebue. The creation of more new housing will also bring rental costs down over time, reducing one of the largest areas of expense for lower-income residents.

By linking the creation of employment and the creation of housing, Nunavik will literally make room for economic development in Kotzebue to occur. Nunavik will serve as one of the few rural Alaska development projects designed to supply local needs and keep local dollars in circulation, rather than seeking to sell natural resources to national or international markets. Nunavik’s own employees will be among its earliest clients and will also serve as some of its best advertising. Kotzebue IRA will accomplish these goals through a public-private partnership, relying on local organizations as partners in order to keep the profits within the Northwest Arctic Borough. So far, Kikiktagruk Inupiat Corporation (KIC), which represents the Native people of Kotzebue as shareholders, has made a $750,000 contribution and will share in profits from the plant. KIRA is also negotiating with NANA, the for-profit regional corporation representing the Native population of all eleven communities, to be a partner in the project through a contribution of cash or in-kind. NANA is currently completing a due diligence process prior to investing in Nunavik, but has indicated an interest in investing as a 25 percent equity partner (See Letters of Support – Appendix 8).

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c) Expanded Polystyrene (EPS) and Structural Insulated Panels (SIP) The Nunavik Manufacturing Plant is part of Kotzebue IRA's overall plan for establishing greater self-determination in the process of constructing and rehabilitating homes for the Native population of Kotzebue. KIRA wants to help solve the current housing shortage and overcrowded conditions through the production of better, faster, cheaper housing, allowing families to buy or rent a home that is suited to arctic conditions. In addition, the plant is expected to create local employment opportunities and to be a revenue source for the tribe. It is estimated that 60 percent of the Plant's overall revenue will come from the sale of EPS Board Insulation for civil and mechanical applications. This type of insulation is already in use throughout the region to protect roads, utility pipes and runways from the impact of permafrost. Projects of this nature are undertaken every year throughout the arctic regions of Alaska, creating a steady market for EPS Board in varying densities. The other 40 percent of the Plant's revenue will come from the sale of Structural Insulated Panels (SIPs) for residential and commercial structures. As shown, SIPs consist of EPS Board "sandwiched" between two pieces of exterior-grade plywood known as Oriented Strand Board (OSB). Houses built with SIPs are faster and easier to put together, allowing workers to be "weathered in" by the second day of construction, an important consideration for extending the building season in arctic regions. The homes are better insulated, sturdier, and more resistant to drafts and moisture than stick-built construction. A house built with SIP panels saves the homeowner over 15 percent on the heating costs they would pay for a comparable stick-built unit. SIP construction is also environmentally sound both because it conserves energy and because it requires less wood than a stick-built home, and the OSB sandwich on the outside of SIPs can be made from recycled wood or young scrub trees. In the arctic, where timber is not locally available, this also contributes to a substantial cost-reduction on building materials. The Plant will import polystyrene beads and use an environmentally safe steam heating process to cause the beads to expand and bond within a mold built to sizes that are typically needed by the local market.