Wood Products, Ketchikan

Contents Section

Page

I. PROJECT THEORY, DESIGN, AND PLAN

1

I(a). Description of Target Population, Analysis of Need, and Project Assumptions

1

I(b). Project Strategy and Design: Interventions, Outcomes, and Goals

4

I(c). Work Plan

5

II. SIGNIFICANT AND BENEFICIAL IMPACT

10

II(a). Quality of Jobs and Business Opportunities

10

II(b). Community Empowerment Consideration

11

II(c). Support for Non-custodial Parents

12

II(d). Cooperative Partnership with Designated Agency for the TANF Program

12

II(e). Cost per Job

12

III. ORGANIZATIONAL EXPERIENCE IN PROGRAM AREA AND STAFF SKILLS, RESOURCES, AND RESPONSIBILITIES 13 III(a). Agency Experience and Commitment in Program Area

13

III(b). Staff Skills, Resources, and Responsibilities

17

IV. PROJECT EVALUATION

19

V. PUBLIC AND PRIVATE PARTNERSHIPS AND RESOURCES

20

VI. BUDGET APPROPRIATENESS AND REASONABLENESS

21

Appendices APPENDIX 1: APPENDIX 2: APPENDIX 3: APPENDIX 4: APPENDIX 5: APPENDIX 6: APPENDIX 7: APPENDIX 8: APPENDIX 9: APPENDIX 10:

Resumes Business Plan Letters of Intent and Support Evaluator’s Resume Non-Custodial Parents and TANF Administrator’s Contract Third Party Agreement and IWP Articles of Incorporation Non-Profit Status Indirect Rate Agreement Pacific Log and Lumber Supporting Documentation AVI Annual Report

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Project Narrative I. PROJECT THEORY, DESIGN, AND PLAN Overview. Interior Wood Products (IWP) is a proposed project to create meaningful employment opportunities for low-income individuals in the Interior region of Alaska. The project will focus on equipping members of the region’s workforce with skills in value-added processes. The Ketchikan Gateway Borough, the area that will directly benefit from the jobs and economic impacts created by the project, is a designated HUBZone with an unemployment rate at 197% of the statewide rate. I(a). Description of Target Population, Analysis of Need, and Project Assumptions

Target Population. The IWP project is designed to serve and will target low-income individuals in the Ketchikan Gateway Borough. The Ketchikan Gateway Borough encompasses 1,233 square miles of islands in the far Southeast corner of Alaska and is connected to the rest of the state only by air or by water. The Borough consists of the cities of Ketchikan, with a primarily white population of almost 8,000, and Saxman, with a 1

Interior Wood Products

Office of Community Services JOLI Program Proposal

primarily Alaska Native population of 431 (2000 census). Another 4,000 people live within the Borough but in non-metropolitan areas. Additional details about characteristics of the Borough are noted below: •

The population is declining and the probable cause is loss of jobs. There were 14,716 people in the Borough as of 1993 (Alaska Department of Labor and Workforce Development) and only 13,548 ten years later (2003 State Demographer Estimate), a decline of 8%.

•

164 families live in poverty, 82 of these (50%) are families with a female householder with children under the age of 18 and no husband present.

•

Both Ketchikan and Saxman are qualified as HUBZones due to their American Indian/Alaska Native population levels, and although there are no reservations in Alaska, they are considered Indian Reservations for designation purposes. The total American Indian/Alaska Native population of the Borough is 2,689 (19%). Of the 881 Native households in the Borough, 153 (17.4%) receive public assistance income. (American Factfinder, 2000 Census Data).

•

The number of adults not in the labor force increased from 23.8% in 1990 to 32% in 2000. A typical developed U.S. community has 20% of adults unemployed or no longer seeking work (Alaska Department of Commerce, Community and Economic Development).

•

The greatest single impact on the Borough’s economy was the closing of the Ketchikan Pulp Company in 1997, at which time 516 workers were laid off. Ongoing challenges are a decline in the timber harvest from the Tongass National Forest and a sharp drop in earnings from commercial fishing. These natural resource based industries were attractive forms of employment for Alaska Natives and American Indians, who have been hardest hit by the recent changes.

Analysis of Need: Poverty in Rural Alaska. Alaska Natives, who are the primary beneficiaries of the jobs that will be created, continue to make up the largest group in Alaska to live in poverty. More than 26 percent of 49,537 Natives in rural Alaska have incomes below federally recognized poverty levels, compared to 9 percent of the population across the state of Alaska. Alaska Natives have extremely low incomes and living standards, perpetuated by isolation from the mainstream cash economy. In 1994, the Joint Federal-State Commission on Policies and Programs Affecting Alaska Natives noted, “in one out of every eight villages, unemployment among Native men is in excess of 50 percent; in one-third of all Native villages, male unemployment—at 32 percent —is nearly quadruple the statewide average unemployment rate.” Because of the severely limited employment opportunities in most communities, percentages of so-called “discouraged workers” are believed to be much higher than official estimates. The University of Alaska Anchorage published the following findings: “Poverty among Alaska Natives is still widespread… as indicated by their reliance on public assistance programs. Alaska Natives make up about 40 percent of the enrollment in the state’s core

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public assistance programs, although they represent only about 14 percent of the total state population.” Ketchikan Wood Products Industry Overview. According to statistics maintained by the Alaska Department of Commerce, Community and Economic Development, the average annual monthly employment in the wood products industry in Ketchikan Gateway Borough fell from 927 jobs in 1990 to 383 jobs in 2000, a decline of 242%. This number does not even include over 500 jobs lost due to the Ketchikan Pulp Corporation closure in 1997. A study by the Alaska Department of Labor and Workforce Development found that, while the Ketchikan economy was able to absorb most of the 299 pulp mill employees who chose to remain in the area, by 1999 their average earnings were at only 65% of what they made in their former jobs, and 24.5% of the workers were holding more than one job to make ends meet (Alaska Economic Trends, January 2001). In a report titled The Alaska Wood Products Industry in 2001, the Institute of Social and Economic Research of the University of Alaska Anchorage provided the following information about declines in the state’s wood products industry: •

“The Alaska wood products industry has been experiencing significant market changes for the past several years. The industry has declined by all economic measures. As a result of this, the social and political structure in some Alaskan communities has also changed from a more timber supportive environment to one focused on non-timber related jobs and skill sets.”

•

“The Alaska forest products industry faces many barriers. The recent economic downturn in the Asian market has brought about change, forcing mills in Southeast Alaska to close and placing hardships on others.”

•

“Timber harvests in Alaska have declined from approximately 900 mmbf (million board feet) annually in the past to a recent 283 mmbf. As of June 2000, forest industry employment statewide had dropped 65 percent from its peak.”

Project Assumptions. The project assumptions are as follows: •

Residents of Rural Alaska communities need new sources of employment to offset job losses in traditional industries and to raise their income levels.

•

Numerous high-paying timber and wood products industry jobs held by Native Alaskans have been lost in the targeted region over the past decade due to the effects of globalization and loss of global export markets.

•

The proposed intervention–participation by Alaska Village Initiatives (AVI) in the expansion and market growth of an already successful value-added operation that is manufacturing building materials–will (1) facilitate the re-employment of individuals with adaptable skill sets who have been forced into a low-income status by market changes and (2) create job training, marketable skill sets, and higher income opportunities for other low-income individuals with current skill and employment limitations.

•

The IWP project will target job creation for low-income residents of the Ketchikan Gateway Borough. 3

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•

Current training and placement services provided to low-income individuals seeking employment are not equally matched by employment opportunities in the local market.

•

Projected wages for the jobs to be created will range from $11/hr to $20/hr depending on the specific job. The average wage of $15.50/hour is __% higher than the typical wage of TANF recipients in the Ketchikan Gateway Borough.

Identification and Removal of Personal and Community Barriers. Problems specific to employment of low-income individuals in the Ketchikan Gateway Borough include limited opportunity for job creation, resulting from inability to attract industry and commerce, and isolation due to the lack of road access to other communities. The social services provided for these communities are, of necessity, operated in the regional center of Fairbanks. Consequently, individuals must leave their home communities to reach the center that provide family social services and job training, traveling by airplane, boat, or snow machine in winter. The vast distances, remote locations, and lack of road access are barriers to providing services to low-income rural Alaskans. By creating employment opportunities, the IWP project will remove the systemic barrier of limited job opportunities for low-income individuals. Removal of the barrier will be accomplished through a comprehensive and coordinated effort with the local TANF services provider, in which project participants and their families will be fully supported and provided with the necessary services to ensure that their employment is both successful and long term. Job retention will be enhanced by the creation of local jobs that permit families to remain intact, reducing the strains of absent family members and returning the pride of selfsufficiency. The employment opportunities will enhance self-image, reduce the likelihood of substance abuse and family violence, and foster new skills.

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I(b). Project Strategy and Design: Interventions, Outcomes, and Goals The primary social strategy of the IWP project is to promote economic self-sufficiency through the creation of job opportunities for low-income individuals in an economically depressed region. The implementation tools are effective mobilization and leveraging of technological, financial, public, and market resources. The desired outcome will be accomplished through the development of a regional center for the processing of locally harvested raw timber resources creating products needed in residential and commercial construction. Immediate Interventions. IWP will expand a local value-added business that will further act to displace treated timber imports from foreign sources. Currently, the primary source of treated wood products is from outside the United States. This project will expand a local source for building material to meet local and statewide demand. The IWP penetration into the treated wood market will help to contain the deterioration of this community. Intermediate Interventions. Intermediate interventions will include the creation of a sustainable market for new value-added products and the associated employment opportunities. Furthermore, job training will improve the marketability of skilled labor from the region, and will help to create cluster economies built on available renewable resources. Immediate Outcomes. The immediate impact will be the creation of 52 additional employment opportunities for disadvantaged workers. Training in specific job skills will help to immediately improve the local labor force. The projected impact will also significantly improve the well-being of families from the region, by immediately increasing income for the neediest households. The job skills training will have the further benefit of raising self-esteem among chronically unemployed region residents. The training will help participants with eligibility for a wide array of industries, including construction, manufacturing, and other resource base industries. Intermediate Outcomes. The creation of a “cluster economy” for value added timber processing will stimulate further development in the wood products industry. The addition of business for harvesting, processing, constructing, distributing, and other associated business activities will create a wider labor market for project participants, helping to introduce further benefits by increasing prevailing wages for the region and improving the overall employment situation. Goals. The overall objective of the IWP project is to contribute to a healthy regional economy by using local resources and local labor in a market sustainable fashion. The IWP project will accomplish this by immediately creating employment opportunities, and will stimulate the development of a cluster economy centered around the treatment of locally harvested timber. The project will act as a catalyst for change in the surrounding region, helping to alleviate the extreme poverty and under-utilization of human and natural resources. These changes will foster a positive attitude among regional residents and act to build confidence, encouraging communities to take control of their future. 5

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I(c). Work Plan The work plan for accomplishing the IWP project charts the development of capacity to manufacture and deliver treated-wood products. The milestones and schedule are summarized in the table immediately below. Following an overview that describes the evolution of Pacific Log and Lumber Ltd. and identification of the market opportunity targeted by the business expansion, the work plan tasks are described. Other subsections address use of funds and the potential for obstacles. The business plan is provided in an appendix. TASKS AND SCHEDULE FOR WORK PLAN MILESTONES Task No.

Activity

Milestone Completed

1.

Business entity creation

November 2004

2.

Facility construction

April 2005

3.

Equipment procurement and installation

May 2005

4.

Development of sales and distribution network

May 2005

5.

Recruitment and hiring of staff

June 2005

6.

Training of employees

July 2005

7.

Product testing

August 2005

8.

Fully operational facility

August 2005

9.

Assessment of project success

March 2006

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Note: Ketchikan is unlike other regions of the state in that it is possible to conduct construction and timber p activities year-round in Ketchikan due to the milder climate of Southern Southeast Alaska.

The Pacific Log and Lumber Ltd. Facility, looking East towards downtown Ketchikan Background. Pacific Log and Lumber Ltd. is a small business founded in 1998 to produce rough-cut lumber. In March of 2002, the company received a U.S. Forest Service matching grant to purchase a kiln and compete in the value-added lumber market. The company currently employs approximately 40 individuals on an annual basis. Pacific Log and Lumber Ltd. produces rough lumber, house, logs, and beams. Products also include exterior siding products and interior wood finishes. The business is currently providing log lap siding, spruce pole interior, ceiling panels, and other products to Home Depot, as well as various building products to retail and commercial customers. The ability to treat wood products with a new process that successfully extends service life has been identified as a significant market opportunity. Currently available products, which

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are largely imported from Canada, do not endure in Interior Alaska applications for foundations and boardwalks. AVI owns the licensing for a successful treatment process that has demonstrated unmatched success in wood preservation (during University of Alaska Fairbanks product testing). Through a joint effort between AVI and Pacific Log and Lumber Ltd., IWP will provide several distinct advantages in business expansion. Consequently, the jointly supported and owned IWP enterprise will succeed in tapping a greater share of the value-added wood products industry, as well as offer a vehicle for expanding the existing value-added processing of Pacific Log and Lumber Ltd.. The treatment process that will be used by IWC offers the ability to produce mass and ordered-to-specification products for the building industry. Products can be cut to size first, then treated to weatherproof them. Because the products are thoroughly saturated with the treatment solution, rather than just treated on the outside, they will retain their durability far longer than wood treated with traditional weather-proofing techniques. The initial products will consist of shakes (used primarily as roofing), boards, beams, and timbers. In addition to treating the shakes, IWC will produce and market a new shake product consisting of 16-foot lengths of prepared roofing that offers the advantage of installation in 10% of the time required for traditional shingle products. More than 75% of the jobs created by the business expansion are expected to employ lowincome individuals and individuals on public assistance, resulting in the following direct community benefits: •

The jobs will provide opportunities for low-income individuals to develop new technical and career-building skills.

•

IWP training and employment will advance the careers and future hiring prospects of the employed individuals.

•

The income from the jobs will contribute to improved family and community welfare.

In summary, IWC will be an expansion of the successful Pacific Log and Lumber Ltd. to provide a business dedicated to manufacturing value-added wood products. The firm will also add new treated wood product lines. The manufacturing enterprise will benefit from the use of technology licensed to AVI, as well as the financial and marketing expertise of AVI (see Element III). The following work plan tasks will accomplish the business expansion. 1. Business Entity Creation. The IWP business structure will be a for-profit class C corporation. The company will be jointly-owned by AVI and Pacific Log and Lumber Ltd.. The legal agreement outlining ownership, monetary and equity, and company management will be prepared and reviewed by the boards of directors for the parent firms. These activities will be completed and the Alaska business license will be obtained by November 2004. 2. Facility Construction. Construction of the building to house the value-added and operations and support services, including sales and administration, will be completed in April 2005. A key objective will be advantageous layout and efficient use of mechanical systems to create a safe and healthy environment while delivering the electricity and chemical handling capacities to meet the production needs. The 6,000-square-foot facility 8

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will accommodate future expansion, as well as provide space for manufacturing during the startup phase of IWP. 3. Equipment Procurement and Installation. Preparation of the facility for the manufacturing process will require acquisition and installation of the following equipment: •

Storage tanks

•

Piping

•

Valves, flowmeters, alarms, and other system components

• Overhead crane The identification, purchasing, receipt, installation, and functionality testing of these items will be completed by May 2005. The existing equipment used already by Pacific Log and Lumber Ltd. for producing value-added products, such as molding machinery and a kiln, will also be installed in the facility. 4. Development of Sales and Distribution Network. During the facility preparation tasks (Tasks 2 and 3), contacts will be made with potential buyers for the finished goods to be produced by the IWP facility. This task also will be completed by May 2005. During meetings and other communications, additional information to refine product specifications or that may identify future product expansion will be gathered. The existing contacts and purchasing agreements of Pacific Log and Lumber Ltd. will provide a leg up in sales, marketing, and distribution for IWP. 5. Recruitment and Hiring of Staff. Workers will be recruited to fill the positions required to operate the wood treatment operation. This will be done in partnership with both the Tribal Temporary Assistance to Needy Families Program run through Central Council of Tlingit and Haida Indian Tribes of Alaska and the State Division of Public Assistance. IWP, which will seek to employ low-income and displaced workers in the new jobs created by the project, will benefit from the established recruitment procedures of these organizations. Candidate interviews and hiring will be completed in June 2005. 6. Training of Employees. The IWP new hires will receive training in health and safety practices and hazardous materials awareness. A local firm that routinely provides classes for workers and has demonstrated success in communicating with the targeted population will be retained to conduct the specialized training. In addition, employees will be trained in the skills required for their respective positions. The orientation to the duties will include hands-on practice under the close supervision of a qualified trainer. In addition to gaining technical knowledge, the manner in which training is conducted will be consistent with ongoing development of less tangible skills such as teamwork, planning and scheduling, cross-cultural communications, and time management. The training will occur in July 2005. 7. Product Testing. The prototype wood treatment and product manufacturing will be completed in August 2005. This task will involve use of equipment to verify functionality. It will provide the opportunity to adjust the wood treatment process to improve efficiency and

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convenience. The testing will also verify production output expectations and help refine cost information. 8. Full Operation of Facility. The IWP facility will be fully operational in August 2005. This milestone will permit scheduled distribution of treated product, in addition to the ongoing shipments of other value-added products, to major Pacific Log and Lumber customers and to new customers identified during the networking process. 9. Assessment of Project Success. The first formal assessment of project success, which is described in Element IV, Project Evaluation, is scheduled for March 2006. The outcome of this task will be identification of strengths and weaknesses that will promote business improvements and verification that employment goals are being met. Critical Issues and Potential Problems. In developing the IWP business plan, the lack of barriers to success has become apparent. Issues and problems have been addressed through the agreements with CCTHITA and the State Division of Public Assistance for employment services targeted at low-income individuals; the inclusion of AVI financial expertise and licensed technology; and the existing distribution channels, excellent reputation, and industry-specific business savvy of Pacific Log and Lumber Ltd.. Although a catastrophic wildfire could reduce available timber, the tremendous amount of resource available in the immediate area could sustain a huge loss without adversely affecting IWP, and wildfires are unusual in the temperate rainforest environment of Southeast Alaska. Funding and the Use of the Financial Assistance. AVI is seeking funding from the Job Opportunities for Low Income Individuals (JOLI) program of the Office of Community Services (OCS), so that it can leverage private investment from financial institutions, private companies, and existing applicant resources. For the IWP project, $500,000 in funding under the JOLI program is sought. This grant will create 52 jobs for an average yield of $9,615 per job. The grant funds will be used for the following purposes: 1. Engineering and Design of the Treatment Equipment. These activities will be conducted to ensure that the most effective use is made of funds available for equipment purchase. Engineering and design are estimated to cost $10,000. Work will be competed by a qualified engineer from the local region. 2. Purchase of the Treatment Equipment. Purchased equipment will consist of piping, tanks for treating the lumber, and pumps. It is estimated that this equipment and necessary components will cost $160,000. 3. Installation of the Treatment Equipment. Installation of equipment into the treatment facility is estimated to cost $30,000. 4. Training on use of the Treatment Equipment and Administration. IWP will use $100,000 of the grant funds to train workers on safety, job-specific skills, and other tasks. This training will be conducted primarily in the first three quarters of the project period. Additionally, some of these funds will be allocated to administration of the entire implementation process and overseeing recruitment and training.

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In addition to the grant funds, the IWC business expansion will be financed through cash and other contributions of AVI and Pacific Log and Lumber. AVI and Pacific Log and Lumber will contribute $??? in property, facilities, equipment, and working capital to IWP to facilitate a cooperative development in a depressed region. To reach the identified goal of 52 jobs, IWP will seek maximum leverage of private investment. The breakdown below identifies the components of and total private funding to IWP project: NON-FEDERAL PROJECT CONTRIBUTIONS Contributor

Amount

Source

Type

Alaska Village Initiatives

$175,000

Wells Fargo Equity Placement

Cash

Alaska Village Initiatives

$100,000

Alaska Village Initiatives

License - In-Kind

Pacific Log and Lumber Ltd.

$160,000

Pacific Log and Lumber Ltd.

Cash

Pacific Log and Lumber Ltd.

$75,000

Pacific Log and Lumber Ltd.

Equipment – In Kind

Pacific Log and Lumber Ltd.

$36,000

Pacific Log and Lumber Ltd.

Equipment – In Kind

Pacific Log and Lumber Ltd.

$140,000

Pacific Log and Lumber Ltd.

License – In Kind

Subtotal

Alaska Village Initiatives

$275,000

Subtotal

Pacific Log and Lumber Ltd.

$411,000

Project Total

$686,000

A copy of the third-party agreement and three years of financial statements for PLL are included as attachments.

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II. SIGNIFICANT AND BENEFICIAL IMPACT II(a). Quality of Jobs and Business Opportunities The jobs created by IWP activities will take advantage of existing skill sets among workers displaced by wood products industry jobs lost [see Element 1(a)] and will train individuals entering the industry. In addition to direct employment at IWP, indirect jobs will be generated by the business expansion. These positions include timber harvesting by vendors supplying product, road maintenance workers, and community retail and service positions reflecting the increased spending of employed individuals. The quality of the jobs created will be far higher than other options currently available to the targeted population. Aspects that make the employment opportunities attractive include the following: seasonality, productive use of natural resources, and opportunities to contribute to aesthetically pleasing new construction. Some jobs will be seasonal, a job characteristic that is compatible with the desires of many individuals in the targeted region. It is recognized that seasonal employment, although considered non-traditional in other areas of the United State, is a standard preferred by many rural Alaska residents. Employment based on resource extraction is consistent with Alaska Native heritage. The productive use of timber assets is a source of pride and satisfaction for those who consider themselves closely tied to the land, as Tlingit and Haida peoples do. The availability of the new products will increase the use of wood products for regional construction. The wood products already produced by Pacific Log and Lumber have been embraced for use in large log facilities for tourism and Native organization facilities. These structures promote development of attractive buildings that blend with the surrounding environment. Pay will be in keeping with industry standards, and will be well above the Federal Minimum Wage, with even the lowest paying positions starting at $11 per hour. Advancement and training opportunities will also be available, because local management and participation are key objectives of the program. Job Creation. The following table identifies jobs that will be created through the IWP project. The total number of jobs created is estimated at 52 positions.

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JOBS CREATED BY IWP PROJECT Job Classification

No. of Individuals Employed

Administration for Facility Operations

6

Marketing and Research

2

Loggers

6

Transportation and Warehousing (for both harvesting and plant operations)

3

Shop/Maintenance (for logging and plant equipment)

2

Yard Maintenance (for logging and plant operations)

4

Road Maintenance (access to harvesting and access to facility site)

4

Plant Operations (includes supervisor, laborers, fabricators, kiln/boiler operators, and other support)

8

Plant Quality Control and Product Testing

1

Product Installation (construction crews for installation of roofing and siding products)

12

Lodging Facilities/Camp Support (for crews remaining in area or relocating to area)

4

II(b). Community Empowerment Consideration Most of the affected communities served by AVI are located in HUB Zones, where unemployment and poverty are pervasive problems. Many of the participant communities for IWP are members of AVI, which is a membership-based community development corporation. Through membership, communities dictate the direction and actions of AVI and ensure that AVI has no programs that are not in keeping with community standards. Pacific Log and Lumber Ltd. is a HUB Zone Certified Contractor in the targeted community. (See appendices). Together, AVI, Pacific Log and Lumber, and IWP will work to equip region residents with job skills, training, and general employment experience. This employment initiative will help to further the employability of project participants in other industries. Additionally, through the creation of a local industry centered on the use of local resources, IWP will act to empower local communities to participate in the improved use of those resources. The IWP project plan also supports the Comprehensive Economic Development Strategy (CEDS) prepared by the Borough in 1999. The plan also is supported by the regional non-profit organization serving the Yukon-Koyukuk region, Tanana Chiefs Conference. Because the IWP project plan enjoys the support of both organizations, it is compliant with the region’s strategy for economic recovery. (is this still a question I need to deal w/ in this year’s guidelines?) 13

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II(c). Support for Non-custodial Parents IWP has entered into a memorandum of agreement with both CCTHITA and the State Division of Public Assistance, who serve as the local TANF and CSE provider of support services for Non-Custodial Parents for the Native and non-Native populations of Ketchikan, respectively. As part of these agreements, these organizations have agreed to assist IWP in identifying qualified non-custodial parents for employment. Through employment, the noncustodial parents will be able to meet their obligations and improve the economic well-being of their children. The full agreements are included in the appendices. II(d). Cooperative Partnership with Designated Agency for the TANF Program The partnerships described above include agreements that these organizations will provide assistance in the identification of qualified TANF recipients for placement with IWP, and in return, IWP agrees to hire and train qualified applicants. The full contract is included in the appendices. This qualifies for the full five points allowable under this section. II(e). Cost per Job The federal cost-per-job ratio for the 52 jobs to be created by IWP (75% or more of which will be for low-income residents of rural Alaskan communities) is $9,615. This cost-per-job ratio is below $10,000 per job and qualifies for the maximum point value.

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III. ORGANIZATIONAL EXPERIENCE IN PROGRAM AREA AND STAFF SKILLS, RESOURCES, AND RESPONSIBILITIES III(a). Agency Experience and Commitment in Program Area Alaska Village Initiatives (AVI) is a non-profit organization and a Community Development Corporation (CDC) dedicated to improving the well-being of rural Alaska communities, families, and individuals. AVI promotes the economic well being of rural Alaskans through economic development, assistance, networking, advocacy, and education. Formerly known as Community Enterprise Development Corporation of Alaska, the corporation was formed in 1968 to create new economic activities in distressed communities. Today AVI has more than 170 member organizations, which in turn represent more then 50,000 Rural Alaskans. The corporation is controlled by a 23-member Board of Directors representing rural communities and organizations from across the state. AVI provides a wide variety of services in its primary service area of rural Alaska. AVI programs are designed to provide employment and business opportunities for low-income residents of rural communities. These programs strengthen local economies by creating jobs and skills and by promoting financial self-sufficiency of individuals and families. Executive Leadership and Agency Resources. Tom Harris, President and Chief Executive Officer of AVI, reports to the AVI Board of Directors. He is supported in program delivery by AVI program directors and accounting and finance managers. Mr. Harris will ensure that the proposed project remains a priority activity of AVI and has received direction from the Board of Directors to advance this project based on membership input to the board. Managerial oversight and accounting services for the proposed project will be provided by AVI. Experience in Program Area. Relying on knowledge gained during 35 years of experience with rural Native small business assistance, AVI has concluded that with the economic distress brought about by the crash of commercial salmon fishing and timber, rural Alaska Natives are looking for new opportunities related to resource extraction that rely on existing local resources and local skills. History. In its more-than-30-year history, AVI has devoted its efforts to providing opportunities for rural Alaskans to enter into the socioeconomic structure of a cash economy. Toward that end, AVI has provided seed capital, training, and technical assistance to more than 1,100 individuals and locally owned businesses in Native villages throughout the state. As the state has changed, so AVI has changed. Before the Alaska Native Claims Settlement Act was passed, AVI worked primarily to develop and fund cooperatives, because it was virtually impossible for individuals in a village to amass adequate funding and expertise to start a business. When ANCSA created 225 village corporations and 13 Regional corporations, AVI provided accounting and management assistance to the corporations. This assistance helped communities transition into a business world. Retail stores, fishing boats, and fish processing plants were the primary types of businesses receiving AVI financing and technical assistance. 15

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The historic Alaska Commercial Company was the largest rural employer in the state when it was owned by AVI. (The Alaska Commercial Company is a chain of retail stores in more than 20 rural communities, and was founded in the 1800s as the Russian America Company.) Understanding of and Experience with Existing and Historical Assistance Programs. AVI has provided technical assistance to and financed more than 1,100 community-owned businesses in more than half of the communities in Alaska. Loans to these businesses have totaled roughly $40 million. More than 7,600 jobs were created and more than $35 million has been leveraged from local, state, and private sources to develop enterprises and provide technical assistance to others. During its ten years of operation, one program alone, the Minority Business Development Center, assisted more than 900 clients in many business areas, including obtaining enterprise financing of $34.37 million and procurements and contracts amounting to $53.11 million. AVI developed and maintained an extensive Web site for this program, with links to several other assistance programs. In addition to solid client and member relationships, AVI has ongoing relationships with the public and private sectors. The following are examples of these relationships: •

Contracts with the State of Alaska for economic development initiatives throughout Alaska, including a rural tourism grant and business assistance contracts and grants

•

Contracts with the U.S. government agencies to administer loan and technical assistance programs, including the Economic Development Administration boat loan program, Cooperative Development Center (U.S. Department of Agriculture [USDA]), and Rural Development Loan Fund (USDA)

•

Investment grants from the Office of Community Services and its predecessor, CSA

•

More than 20 directorships held by members of AVI management in Alaska business ventures, Native organizations, private non-profits, and governmental commissions and committees.

The following table identifies AVI program experience. In keeping with the mission of AVI, all of these programs have promoted job creation and enterprise activities for low-income people. Evaluation and data collection have been part of many programs and are requirements of all loan programs. Through the administration of its many programs, AVI has maintained meticulous records. AVI is subject to periodic audits of an outside CPA firm because of work conducted under funding from federal grants. RELEVANT PROGRAM EXPERIENCE Program Name

Years

Purpose

Achievements

Technical Assistance Alaska Cooperative Development Center

1998-Present

Provide co-ops with management, marketing, finance and operational assistance

Clients: 8

Professional Services Group

1994-Present

Provide training and technical assistance to rural businesses & communities

Projects: 300+

SBA Microloan Technical Assistance

1993-1995

Provide technical assistance to

Clients: 14

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RELEVANT PROGRAM EXPERIENCE Program Name Program Rural Small Business Conference

Years 2001-2002 1992-Present

Purpose

Achievements

Microloan borrowers Annual conference to provide variety of information and technical assistance to rural small businesses

Attendees: 150+ annually

Norton Sound Fisheries Program

1992-1997

Provide technical assistance for Norton Sound Fishery development

Affected more than 140 fisheries

Minority Business Development Center

1984-1994

Provide technical assistance to minority Alaska enterprises

Contracts: $53,110,000 Loans: $323,500

Village Entrepreneurship Project

1985-1985

Training workshops, problem solving seminars and technical assistance

Distributed: 600 copies “How to Start a Village Business”

State of AK Business Development Assistance Program

1981-1982

Provide technical assistance to Alaskan enterprises

Clients: 33 Funding: $4.9 million

Alaska Consulting Group

1981-1982

Provide technical and business assistance to small businesses

Rural Development Loan Fund (RDLF)

1981-Present

Provide otherwise unobtainable financing to rural enterprises

Loans: $17.0 million + Clients: 66

Commercial Boat Loans (EDA)

1983-Present

Provide financing for commercial fishermen

Loans: over $2.9 million Clients: 263

Provide Microloans to small Alaskan businesses

Loans: $62,000

Loan Programs

Microloan Program

1993

SBA Microloan Program

2001

Loans $20,000

Grant Programs Howard Rock Foundation

1992-Present

Provide scholarships and leadership programs for Native students

Scholarships: 46 Total: $112,270

Bush Development Grant Fund

1986-Present

Provide funds for new private economic enterprises

Grants: $658,800

1988-1992

Provide tuition and books for needy Rural Alaskans

Approved: 13 Total: $40,000

Rural Tourism Center

1995-2001

Provide technical assistance and training for rural communities and tour operators

Clients: 425+

Alaska Native Tourism Council

1987-1997

Cooperative marketing and technical assistance from rural tour products

Members: 23 Visitors: 150,000+

Bush Development Fund Scholarship Program Tourism Projects

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RELEVANT PROGRAM EXPERIENCE Program Name

Years

Purpose

Achievements

Alaska Village Tours, Inc.

1987-1999

Tourism Training and new tourism project development

Employed: 14 Jobs Created: 50+

Community Tourism Strategy Development Training Program

1988-1989

Community tourism planning, assessment, training, and development in YK Delta

Produced: Community Tourism Plans / Bethel Village Tour Started

Nome Tour Guide Training Program

1989-1990

Tour guide and small business training program

Businesses started: 10

Independent Tour Guide Training Program

1990-1991

Tour guide and small business training for Bering Straits villages

Business started: 14

Kodiak Island Tourism Development Project

1990-1991

Tourism development and planning and job skills training

Trained: 12

Rural Alaska Tourism Assessment & Inventory Project

1990-1991

Evaluated tourism potential of rural communities

Produced assessment and handbook

Examples of Successful Program Implementation for Similar Projects North Foreland Barge Facility, LLC. Situated beside Cook Inlet, the North Foreland Facility is a joint venture among the U.S. Department of Health and Human Services, Office of Community Services, AVI, and the Tyonek Native Corporation. The project, designed to create 77 new jobs for low-income residents, provides barge-landing services for the timber, gravel, and mining industries in Southcentral Alaska. The project has exceeded its original job creation goal by more than 30 additional jobs. This project has permanently benefited low-income residents of the west side of Cook Inlet by helping to create lower transportation costs, improving offloading capabilities and creating local employment opportunities. Project Code Red. The Project Code Red project is similar to the IWP project because its success has hinged on the use of new technology to improve community welfare and create jobs. Additionally, the project has created manufacturing and assembly capacity for Alaska Village Initiatives, giving the management team valuable experience in managing similar processes. With leadership support from U.S. Senator Ted Stevens, AVI worked with the State Fire Marshal’s office to develop plans for greatly improving fire suppression capacity in rural Alaska. The project included developing new tactical assumptions, based on an analysis of the needs from a tribal perspective that considered the unique rural Alaska environment. A combination of existing and new equipment has created a novel firefighting package that is much more appropriate for rural conditions than all systems previously used. Project Code Red delivers new 21st Century fire-suppression technology that is ideally suited to provide fire protection to remote Alaskan villages in nearly all kinds of weather and conditions. The

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Micro-Rural Fire Department can deliver 600 gallons of eco-safe fire fighting foam from 30 gallons of foam water. In 2002 and 2003, 42 rural, predominately native communities have been identified as eligible for funds from a U.S. Department of Agriculture Rural Development grant. The funding covers 75% of costs. Each Native community receives the firehouse and other equipment in the self-storage shipping container, shipping to the community, and training. Other funding sources have permitted planning for additional PCR units. The total number of rural Alaska communities already benefiting from or slated to receive the Micro-Rural Fire Department and participate in PCR is 55. The firehouses and suppression units were assembled and equipped by AVI and subcontractors. These skilled jobs were newly created by Project Code Red. Summary. It is important to note that part of AVI’s role has always been to maximize available resources. Toward that end, AVI makes regular referrals to the Small Business Development Centers, the Alaska Rural Development Organizations (through U.S. Department of Agriculture), the various Housing and Urban Development and U.S. Department of Agriculture programs developed for cities and tribes, and bank and investment programs of the Small Business Administration and private entities. AVI also taps members of associations such as the Chamber of Commerce, Commonwealth North, and the Humanities Forum to obtain specific expertise. AVI must be aware of the various other resources, because it cannot be all things to all people. AVI provides referrals for assistance to city governments and others that do not fall under the AVI membership focus of community-based enterprises. III(b). Staff Skills, Resources, and Responsibilities Project Management and Staffing. AVI has a consistent track record of recruiting staff appropriate for its programs. The project management team for IWP consists of the Project Director, Project Manager, and Finance Director. Project Director – Tom Harris, AVI President/CEO. As Project Director, Mr. Harris has overall responsibility for the operation of this project. He will be the primary point of contact between the AVI Board of Directors and project management. Mr. Harris will also participate by developing relationships with potential project partners and participants. A large part of his role will be in cultivating long-term relationships with communities involved in the IWP project. Additionally, he will participate on the oversight board for IWP, and will review the Operations Manager’s performance in meeting program objectives. Mr. Harris’ experience during 15 years as CEO for AVI and other organizations has provided a sound knowledge of Alaska business trends. His understanding and expertise also provide an understanding of rural obstacles and opportunities. Operations Manager of IWP – Mike Holz, Pacific Log and Lumber Ltd. Project Manager. As Operations Manager, Mr. Holz will manage the project’s manufacturing and production operations. He will be responsible for the management of all employees and vendor relationships. Mr. Holz has over 35 years of experience in this field and has extensive business contacts and industry-specific capabilities. In his role at Pacific Log and Lumber 19

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Ltd., he has participated either as a general contractor or subcontractor on numerous residential and commercial construction jobs throughout Interior Alaska. Additionally, Mr. Holz has a successful track record of product development, market identification, and distribution of timber-related products. Finance Director – Lou Nelson, AVI Chief Financial Officer. As Finance Director, Mr. Nelson will ensure that the financial structure of the project is sound, responsible, and appropriate to the project. This oversight includes internal controls, as well as a reporting mechanism. Mr. Nelson will report to the Project Director on the overall state of the funding. He may participate in staff and board program reviews, and may assist staff in analyzing the feasibility of specific activities. Mr. Nelson and his staff will be responsible for all financial record keeping and financial reporting to OCS regarding this project. Mr. Nelson has more than 40 years of business development and financial administration experience, divided almost equally among private enterprise, government, and private practice as a Certified Public Accountant. Either as an entrepreneur or senior level manager, he has extensive experience developing new ventures or administering existing businesses.

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IV. PROJECT EVALUATION The implementation of the project will be continuously examined for effectiveness and efficiency in meeting project objectives of creating low-income jobs and providing the interventions described in Element 1(b). The IWP work plan also identifies a formal project evaluation that will be accomplished by June 2004. Chuck Akers, Director of the Alaska Rural Development Council (ARDC), will evaluate the IWP project progress. ARDC is a federally funded organization designed to facilitate and coordinate with state and federal agencies together with the private sector to effectively support the community and economic development efforts in rural Alaska. ARDC works to set up collaborative partnerships between groups and key players to help ensure the success of any given development project in rural Alaska, the organization. Mr. Akers has more than 25 years of professional experience, including experience in grants management, rural development, and project management. Mr. Akers also brings significant experience in project evaluation, both in his capacity as a civil servant and non-profit executive. Additionally, he is very familiar with the needs of IWP’s service area, and is originally from rural Alaska. His resume and a letter of support for the project are included in the appendices. Following the initial formal project evaluation, which will occur after the plant has become fully operational, subsequent project evaluations will be conducted semi-annually. The following areas will be addressed: •

How effective have IWP’s activities been at creating jobs for low-income individuals?

•

Have AVI and IWP been successful in obtaining community participation and achieving community empowerment?

•

How are AVI and IWP management dealing with difficulties and overcoming obstacles to development?

•

Are the jobs created of sufficient quality and are they sustainable?

•

Is the program achieving the goal of self-sufficiency for low-income individuals?

In addition, specific feedback and observations will be gathered to identify what project approaches and components are working best and which areas need improvement. In identifying ways to improve the project outcomes, the reasons for inadequacies or problems will be clarified to permit resolution. Data will be collected by the IWP and AVI staff on the nature and pay of the jobs created by the program. The data will be presented in a uniform format to the project evaluator to aid in the decision-making process. Additionally, an internal quarterly review will be performed by AVI staff and reviewed by the Project Director, Tom Harris, with results forwarded to the evaluator. This review will include an analysis of expenditures, revenues, and effectiveness. Project evaluations completed by Mr. Akers of ARDC will be included in the submission of the semiannual report to OCS. 21

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Results of the project will be disseminated in press releases and in AVI’s quarterly newsletter. This information will be prepared semiannually to coincide with project evaluation and reporting.

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V. PUBLIC AND PRIVATE PARTNERSHIPS AND RESOURCES The IWP project will significantly mobilize private resources for the creation of jobs in Interior Alaska. An additional $686,000 in resources will be committed to the project, exceeding the maximum point match requirement by 37.2%. The private contributions are summarized in the table below (previously included in Work Plan section): NON-FEDERAL PROJECT CONTRIBUTIONS Contributor

Amount

Source

Type

Alaska Village Initiatives

$175,000

Wells Fargo Equity Placement

Cash

Alaska Village Initiatives

$100,000

Alaska Village Initiatives

License - In-Kind

Pacific Log and Lumber Ltd.

$160,000

Pacific Log and Lumber Ltd.

Cash

Pacific Log and Lumber Ltd.

$75,000

Pacific Log and Lumber Ltd.

Equipment – In Kind

Pacific Log and Lumber Ltd.

$36,000

Pacific Log and Lumber Ltd.

Equipment – In Kind

Pacific Log and Lumber Ltd.

$140,000

Pacific Log and Lumber Ltd.

License – In Kind

Subtotal

Alaska Village Initiatives

$275,000

Subtotal

Pacific Log and Lumber Ltd.

$411,000

Project Total

$686,000

Cash contributions will include $335,000, equipment contributions will include $111,000, and existing licenses will include $240,000, for a project private contribution total of $686,000. Including the OCS JOLI funds, if awarded, the project will total $1,186,000. A significant contribution to the project will be made by Wells Fargo Bank Alaska, N.A., which will make an Equity Equivalent Placement of $175,000 into the project contingent upon a grant award. This will be structured as a ten-year placement, with interest only payments of 2% quarterly for the entire length. No equity return is required in the first ten years. After the initial ten years, the placement will need to be returned or refinanced with traditional debt or equity. A commitment letter is included in the appendices. An additional partnership has been formed with Tanana Chiefs Conference (TCC) for employment assistance. This partnership will assist greatly in ensuring the project benefits low-income families from the region. This agreement has been previously articulated in the narrative.

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It is also anticipated that further private and local government resources will be mobilized upon successful completion of the initial phases. However, no accounting for these additional resources has been made for the purposes of this grant application.

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VI. BUDGET APPROPRIATENESS AND REASONABLENESS (need to put in some stuff…)

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