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2001-06-22 Economic Strategy Meeting.- ~ o KODIAK _ -CHAMBER June 22, 2001 OF COMMERCE P. O. Box 1485, Kodiak Alaska 99615 (907) 486-5557 Memo to: Lacey Berns, Alaska Marine .Conservation Council Darron Scott, KEA Charlie Davidson, City of Kodiak Anthony Drabek, Natives of Kodiak Carolyn Floyd, City of Kodiak Pamela Foreman, KICVB Murphy Forner, ERA Aviation Tracy Jilge, Kodiak Island Healthcare Foundation Pat Carlson, KIB Linda Freed, City of Kodiak Rick Lindholm, KIHA Matt Moir, APS Tom Panamaroff, Koniag, Inc Jeff Stephan, UFMA Arum Kone, KANA Gabrielle Ledoux, KIB Jeff Derrickson, Kodiak Wireless Ed Randolph, State Farm Insurance Kevin Adkins, Port Lions 454-2420 Jim Nestic, Old Harbor 286-2278 Allan Panamaroff, Larsen Bay 847-2239 Diana Simeonoff, Akhiok 836-2209 Alicia Reft, Karluk 241-2208 Zach Chichenoff, Ouzinkie 680-2223 JUNE CEDS COMMITTEE MEETING FAX: (907) 486-7605 JUN 2 8 2~J0~ t; E _.,w~._.___._---,_., -^. K~DIA~` prE ~,~~,~~~~s;~i-~ QFFivE ~r ~ ~4 ~~ ~~~! ~~ ARK KODIAK ISLAND BOROUGH OFFICE OF THE BOROUGH CLERK COPIED TO: ASSEMBLY.. ~ -MAYOR . v..~ MANAGER .~.-.- ORIGINALS TO: CLERK.... FILE .L.- The next meeting of the Comprehensive Economic Development Strategy Committee will be held at noon, June 28, Kodiak Chamber of Commerce Conference Room (lower level, 100 Marine Way.) Lunch will be provided. Please note the attached proposed agenda. I have been working on the Comprehensive Economic Development Strategy document and have included the sections "Evaluation" and "Goals and Objectives" for your perusal. We will be reviewing this section of the document at the meeting, so please feel free to make comments and suggestions on the material presented. Please let me know if you will be attending the meeting. For those coming in from the outlying committees, the Kodiak Chamber of Commerce will take care of the flight. You should be able to get in and out the same day, but if the weather turns bad, the Chamber will look after hotel accommodations during your stay. Thank you, 2 D7'~ I J Debora King, Economic 1®~ti~a~~~ll~odiak's Future ~~ Agenda Comprehensive Economic Development Strategy Meeting 12 noon, June 28th, 2001 Kodiak Chamber of Commerce Conference Room I. Call meeting to order. II. Approval of minutes from April 19th , 2001 meeting. III. Sub-committee Reports a) Murphy Forner -Transportation b) Jeff Derrickson -Communication IV. Economic Development Specialist Report V. Old Business A. B. VI. New Business A. CEDS document review VII. Board Comments VIII. Set date for next meeting. IX. Adjournment ~~`~ Evaluation The CEDS Committee has identified several assets and liabilities of the area as they pertain to economic development. These are described below as they apply to specific areas of potential economic development: Seafood Processing and Harvesting Assets and Opportunities. Kodiak's strong seafood processing labor force has been identified as one of its biggest assets. Due to the high levels of unemployment in the seafood processing industry during off-season periods, value-added, or secondary, processing of seafood products presents one of Kodiak's biggest opportunities in economic development. Currently, most of the fish product exported from Kodiak is minimally processed (usually only headed and gutted). Value-added seafood processing in Kodiak would provide employment for the existing labor force during otherwise slow periods when large numbers of workers are typically laid off. The implementation of the Individual Fishing Quotas (IFQ's), changed the halibut and black cod fisheries from "derby-style" fisheries in which large volumes of fish are delivered to the shore-based processing plants in very short time periods, to more evenly paced fisheries in which fish product deliveries are spread out over time, giving processing plants more time to add value to the product through secondary processing. Proposed rationalization of the fishing industry in the Gulf of Alaska would ensure coastal communities a steady stream of "fresh" fish over an extended period of time. Small boat fishers would not be disadvantaged due to inclement weather and by-catch would be reduced. Getting fish out in the "fresh" form, rather than fast frozen adds value to the product and may encourage the development of more "custom-processing" facilities. Several opportunities also exist for economic development in the seafood processing industry by achieving total utilization of fish products, so that every part of the fish is used with nothing discarded. Fish oil extraction and fishmeal production, from previously discarded fish parts are only two examples of this. In addition to increased profits and employment, the opportunity to minimize regulatory constraints on the shore- based processing industry will develop as the volume of discharge is reduced. Similarly, achieving total utilization of by-catch species, currently being thrown overboard, presents another opportunity for economic development. Harvesting and processing under-utilized species, such as the arrowtooth flounder (one of the most abundant groundfish species available in the waters harvested by Kodiak's fishing fleet) presents additional opportunities for economic growth and job creation in Kodiak. Kodiak Island is situated in the middle of one of the world's richest fishing grounds. Additionally, there are approximately 800 streams within the Kodiak Management Area (KMA) in which salmon migration or spawning has been documented. Supplemental production of salmon includes two hatcheries located in the KMA. Both hatcheries, Kitoi Bay and Pillar Creek, are operated by the Kodiak Regional Aquaculture Association (KRAA). The combined incubation of these two hatcheries is 263,000,000 eggs. The fish harvesting/production potential for Kodiak is therefore excellent. 3 0~ t3 Kodiak Island Region Comprehensive Economic Development Strategy Page 39 Another asset identified by the economic development committee is the Kodiak State Airport. The airport is centrally located in Southwest Alaska and has year-round access to an ice-free port. The Kodiak State Airport has the opportunity to become a trans- shipment point for fresh fish products. As Kodiak State Airport evolves into a regional hub for the Southwest portion of the state, the opportunity for a reduction in shipping and freight rates can be realized. This will serve to benefit all sectors of the economy. Finally, several opportunities resulting from increased research into fisheries sciences can be realized, such as greater support for the seafood processing sector, increased levels of processing, and subsequently, increased employment in the industry. Increased research into the fisheries encourages greater investment by fisheries-related businesses. This entices more scientists and researchers to use facilities available in Kodiak, like the Fishery Industrial Technology Center and the Kodiak Fisheries Research Facility, as a base for study. Kodiak has become a national fisheries "research hub" with research being conducted in shellfish, groundfish, sustainable fisheries, domestic observer program, marine mammals, fisheries management, sport fishing, and wildlife conservation. Liabilities and Constraints. Several liabilities will have to be overcome for value- added seafood processing to develop to its full potential in Kodiak. First, the traditional distribution patterns of headed and gutted fish product to Puget Sound and Japan will be hard to break. Secondly, a lack of a cold storage facility means there is no place to store fish products until there is time to add value to them. One of the biggest obstacles to having a cold storage facility is the cost of electricity, which is approximately three times the cost of power in Seattle. A feasibility study on the use of waste heat to generate electricity in a stand alone cold storage facility was recently conducted. The recommendation of the study was a centralized storage facility is not feasible, given the facility would not be utilized by the fish processing plants as most have their own cold storage facilities. However, there is a clear need for lower cost refrigeration and information on new electrical generation technologies has been made available to the fish processors. Another liability is the high shipping cost to import processing materials (packaging, breading, etc.), and to export finished seafood products. Open access to the halibut and black cod fisheries ended in 1995 with the implementation of the Individual Fishing Quota (IFQ) system of management. Quotas- shares of catch-are issued only to those who owned or leased vessels that fished for halibut between 1988 and 1990. Implementation of the IFQ system in the Gulf of Alaska could cause changes in wealth, income, and jobs in Kodiak. Fleet consolidation could lead to less fleet spending and fewer jobs. Those vessels which are not profitable may be eliminated through a decapitalization process by which the equipment, quotas and histories will be for sale on the open market. Some fishermen might change where they land their catch from Kodiak to another port, resulting in less work for the processing plants and their employees (and fewer dollars being spent in the local economy). IFQ's could also have a negative impact on the resource by leading to high- grading (the act of discarding all but the highest-quality fish while filling a quota). ~o~~~ Kodiak Island Region Comprehensive Economic Development Strategy Page 40 Visitor Industry Assets and Opportunities. A "visitor" is typically perceived as a pleasure seeker, but for economic development purposes a "visitor" is defined as "a person who comes to spend time with or stay with others or in a place....for business, for social pleasure, for sightseeing, etc." One of the Kodiak visitor industry's biggest assets is the large amount of easily accessible public lands available for recreational use, such as hiking, sightseeing, fishing, and camping. In addition, Kodiak still offers visitors a uniqueness of character that other Alaskan communities are losing as they evolve into amass- market destination. This has been identified as an opportunity for Kodiak to attract visitors as other Alaskan destinations reach saturation. Another asset is the local ownership of tourism-related businesses. Kodiak is also benefiting from the long-term effects of increased media exposure on a national and international level. Film projects such as National Geographies "Island of the Giant Bears," Discovery Channel's features on the US Coast Guard Search and Rescue teams and Kodiak's diverse fishing industry, plus the Food Network's feature on "Cooking in Alaska" all serve to generate interest in Kodiak Island. Travel writers have featured Kodiak in many national and intemational publications. As eco-travel and soft adventure travel become increasingly popular, Kodiak is becoming a sought after travel destination. Infrastructure development to increase the meeting and convention capacity will create additional markets to be tapped. While the visitor industry in Kodiak has great potential for long term growth, it is viewed as the "weak sister" in the local economy. Liabilities and Constraints. From a revenue-producing standpoint, visitor consumption of scenic beauty may not always generate quantifiable income, although expenditures to view this beauty may be considerable. Kodiak's share of the state's visitor market is relatively low, and historic patterns of growth have not kept pace with statewide rates. Because of the high level of local ownership of tourism-related businesses, these businesses tend to be undercapitalized while Kodiak's destination marketing program remains under-funded. Kodiak also suffers from a lack of sufficient tourism-related infrastructure necessary to handle a large influx of visitors, such as dedicated docking for cruise ships and charter boats, motor coaches, banquet facilities, public restrooms, etc. The lack of facilities to accommodate groups greater than 150 persons has deterred the attraction of large meetings and conventions to the community. However, it's this lack of mass-market appeal that is one of Kodiak's strengths in the adventure/eco-travel market. Tourism related businesses are beginning to explore this market in depth. Finally, being anon-road-connected island, Kodiak is more difficult and costly to reach than other visitor destinations within the state. There is the perception by travelers that Kodiak is difficult to access because of poor weather conditions. In fact, 95% of scheduled commercial operations are completed annually. However, the lack of runway lights, navigation aids and poorly configured runways does create difficulties accessing the outlying communities in marginal weather. Kodiak State Airport/Transportation Development Assets and Opportunities. Kodiak State Airport, located on property leased from the U.S. Coast Guard, has three paved runways and a large amount of flat land available for future development. Having a centralized location and year-round access to an ice- ~l3 u Kodiak Island Region Comprehensive Economic Development Strategy Page 41 free port, Kodiak State Airport is perfectly situated to serve as a regional transportation hub for Southwest Alaska. The airport is currently served by two airlines conducting a combined seven flights daily between Kodiak and Anchorage. One air cargo and three container shipping/barge companies currently provide land, sea and air shipping services to Kodiak, making the airport an ideal trans-shipment point for ocean-borne goods to the Bristol Bay region. Liabilities and Constraints. Air transportation to and from Kodiak is often hindered by frequent periods of low cloud ceilings and/or restricted visibility, while terrain conditions limit the number of instrument approaches available to landing aircraft. The terminal buildings located on the airport are privately owned by the airlines using them. With no public terminal buildings available, new would-be air carriers interested in serving Kodiak are faced with the large initial cost of providing their own facilities, thus limiting the number of carriers able to serve the area. Outlying Community Economic Development Assets and Opportunities. The outlying off-road communities are located in close proximity to fish resources, particularly salmon, giving them ample access to fresh product. Likewise, being remote, the communities are also very close to the natural resources that attract many of the island's tourists, providing an opportunity to share in the island's visitor industry. Archaeological sites located near the communities also present the opportunity for "ancestral heritage tourism". One example is the "Dig Afognak" program-visitors live in a working archaeological field camp located on Afognak Island and assist in artifact digs with a professional archaeological team. Opportunities also exist for the communities to benefit from small-scale cottage industry-level production of Native crafts or other goods. Liabilities and Constraints. The outlying communities suffer from a lack of basic infrastructure and support mechanisms. Limited access to certain resources, for example, water for seafood processing, hinder economic development as well. Another obstacle to growth is the limited amount of human resources and job skills available in these communities. Poor weather conditions often reduce the ability of the communities to communicate with other communities and impose heavy restrictions on air and sea transportation linkages to the communities, none of which are road-connected to any other island community. Power costs are very high in all of Kodiak's outlying communities. Land use issues between the Kodiak National Wildlife Refuge and the communities also exist that could impede economic growth. Similarly, prehistoric archaeological sites located near the communities, a potential asset for tourism, may be a potential liability to economic development projects involving construction or other activities/uses inconsistent with the ancestral heritage and/or archaeological value of the site. Finally, under-funding and intertie problems with the tribal councils and city governments have been identified as a potential liability. ~ JF r3 Kodiak Island Region Comprehensive Economic Development Strategy Page 42 Overall Economic Growth and Expansion A significant constraint, not limited to any one category of economic development within the Kodiak Island Borough, is the issue of high land values. Prices for privately owned land within the borough are relatively high due to topographical constraints and the availability of utilities. The Kodiak Island Borough has 4,800,000 acres within its boundaries. Ownership of this upland area is constantly changing with less than 1 % of land being privately owned. In 2001, federally held land was 3,400,000 acres, Native Corporations; 675,000 acres, State; 639,000 acres, local government; 70,000 acres, and private land; 16,000 acres. The high land prices, given the extremely limited amount of privately held land, and development costs, due to the remoteness of the island, limit opportunities for the development of new industries and the expansion of existing ones. . ~ `~ ~~ Kodiak Island Region Comprehensive Economic Development Strategy Page 43 GOALS & OBJECTIVES & IMPLEMENTATION STRATEGY Goal: Achieve stability and diversification in the fish processing industry. Objective: Increase value-added processing in Kodiak. Strategv: Work with private industry to increase value-added seafood processing in Kodiak. Action: Work with processing plant managers to determine the industry's needs to facilitate increased value-added processing in Kodiak. Action: Determine what kinds of value-added processing are viable to Kodiak plants based on fish species delivered, shipping costs, and available equipment and infrastructure. Action: Investigate opportunities to provide value-added processing of seafood harvested outside of the Kodiak region. Objective: Increase the productivity of the fisheries by increasing the harvest of under-utilized species and by maximizing by- product utilization. Strategv: Maximize utilization of the fisheries by increasing by-product and by-catch utilization, and increasing the harvest of under utilized species. Action: Provide support for increasing the research efforts of the University of Alaska Fishery Industrial Technology Center (FITC) and the National Marine Fisheries Service located in the Kodiak Fisheries Research Center. Objective: Increase the productivity of the seafood processing plants. Strategv: Evaluate available options to achieve maximum utilization of electrical power, and to overcome or offset the cost of power in Kodiak. Action: Study opportunities to reduce electrical rates through diversified power supplies. Action: Study opportunities to lower electrical costs through increased conservation strategies. Action: Research alternative sources of power. Goal: Develop Kodiak State Airport as a regional transportation hub. ~ `~ ~~ Kodiak Island Region Comprehensive Economic Development Strategy Page 44 Objective: Encourage new air routes between Kodiak and Bristol Bay and Kodiak and the Aleutian Chain. Strategv: Research and explore opportunities for additional air routes between Kodiak and Aleutian Island communities and Bristol Bay destinations. Action: Survey airlines to determine what effect the provision of public terminal facilities at Kodiak State Airport would have on their ability/willingness to serve Kodiak and other Southwest Alaska communities with direct flights within the region. Action: Work with the air carriers and the Kodiak Island Borough to develop a work plan for transferring building ownership. Strategv: Consolidate passenger services in a single public terminal facility in order to increase public convenience and facilitate the airport's ability to accommodate growth in service. Action: Continue feasibility study to determine if consolidated passenger services can be accommodated in one of the existing terminal buildings and if any renovations will be required, or if construction of a new facility is necessary. Action: Work with the economic development committee, private businesses, and the Kodiak Island Borough to develop a work plan for the consolidation of passenger services into one, appropriately sized building. Objective: Develop Kodiak as atrans-shipment point for ocean-borne goods to Bristol Bay. Strategv: Research and explore opportunities to consolidate goods bound for Bristol Bay communities. Action: Work with private businesses on Kodiak Island and Bristol Bay communities to develop a work plan to develop Kodiak as a potential trans-shipment point. Objective: Facilitate the direct movement of medical personnel between Providence Kodiak Island Medical Center (PKIMC) and other medical facilities in the region. Strategv: Research and explore opportunities for medical personnel to travel between PKIMC and other medical facilities in the region. Action: Work with PKIMC and other medical facilities in Kodiak in their efforts to develop relationships with medical facilities in the region. Objective: Develop facilities for couriers (i.e. U.P.S., Federal Express, etc.) ~ ~~ Kodiak Island Region Comprehensive Economic Development Strategy Page 45 Strateqv: Consolidate courier/freight services in a single public terminal facility in order to increase public convenience and facilitate the airport's ability to accommodate growth in service. Action: Work with private businesses and the Kodiak Island Borough to develop a work plan for the consolidation of courier services into one appropriately sized building. F ~'~ `~ ~ Goal: Transform the Visitor Industry into a significant component of Kodiak Island's economy. Objective: Facilitate product development in Kodiak's visitor industry in order to increase visitor satisfaction and market desirability. Strateqv: Work with private enterprise and government entities to encourage the development of products to accommodate a growing visitor industry. Action: Work with Kodiak Island Convention and Visitors Bureau to develop an on-going market research program. Action: Identify product development opportunities from market research. Action: Develop an inventory of existing products. Objective: Develop a comprehensive market research plan. Strateqv: Develop a process to increase understanding of visitor expectations and buying habits. Action: Conduct exit surveys at local air terminal to determine visitor satisfaction, buying patterns, motivators for decision-making process. Action: Conduct exit surveys at local marine highway terminal to determine visitor satisfaction, buying patterns, motivators for decision-making process. Action: Develop strategy to conduct market research on a tri-annual basis. Objective: Develop a comprehensive marketing plan. Strateqv: To increase visitations by all visitor types. Action: Coordinate marketing efforts with on-going events such as Crab Festival, Comfish, Whalefest and Music Festival. Action: Utilize comprehensive market research to identify visitor buying habits and motivators. Action: Utilize market research to develop strategies for niche marketing programs. Kodiak Island Region Comprehensive Economic Development Strategy Page 46 Objective: Assist in the development of infrastructure for borough-wide visitor industry. Strategy: Work with private enterprise and government entities to encourage development of infrastructure to accommodate a growing visitor industry. Action: Work with Kodiak Island Convention and Visitors Bureau to develop an on-going market research program. Action: Develop an inventory of existing infrastructure. Action: Identify infrastructure requirements from market research. Objective: Assist in the development of a Maritime/Fisheries Museum. Strategv: Provide assistance in the development of a Kodiak Maritime/Fisheries Museum. Action: Assist in identifying possible site locations and possible sources of funding. Objective: Develop amulti-use facility to increase convention/meeting opportunities. Strategv: Develop amulti-use facility. Action: Support private sector development of a meeting facility. Action: Utilize market research to determine meeting and convention needs. Objective: Develop a community planning process specific to Kodiak tourism development. Strategv: Provide assistance in the development of a community planning process. Action: Work with interested parties to develop a stakeholders group to include, but not limited to, government agencies, residents and tourism-related businesses. Action: Assist in organization of community meetings to determine degree and type of tourism development desired. Goal: Diversify the overall economy of Kodiak. Objective: Encourage business investment and foreign commerce in Kodiak by providing businesses with regulatory facilities for conducting international trade activities. Strategv: Coordinate efforts to activate a Foreign Trade Zone (FTZ) in Kodiak ~ on one of the 13pre-approved sites. ~ Kodiak Island Region Comprehensive Economic Development Strategy ~"~ Page 47 ~~ ~ Action: Work with the Department of Economic Development on the production of an FTZ brochure. Action: Facilitate communication between the FTZ consultants and the site owners/managers as necessary. Objective: Support the efforts of the Alaska Aerospace Development Corporation's (AADC) development of the Kodiak Launch Complex (KLC). Strateqv: Encourage the local business community to provide goods and services to the KLC. Action: Serve as a liaison between the KLC and the local business community. Strateqv: Encourage timely and accurate information regarding KLC activities be provided to the general public. Action: Participate on Kodiak Launch Complex Local Advisory Council, which serves as a conduit of information between KLC and the Kodiak community. Objective: Assist in the economic development of the outlying communities of Kodiak Island. Strateqv: Assist in achieving economic goals and objectives for each of the outlying communities on Kodiak Island. Action: Continue working with representatives from Koniag, Inc. village corporations, Kodiak Area Native Association (KANA), village tribal councils, and city governments in planning community-based economic development. Action: Pursue expanded freight and passenger service options to outlying communities. Action: Pursue improved communications access to outlying communities via fiber optic cable, broadband satellite communications and by supporting the petition for waiver for the utilization of schools and libraries Internet point-of-presence in rural remote Alaska villages where no local or toll-free access exists. Action: Continue to work with Koniag, Inc., Kodiak College and KANA to determine training needs and provide business training for residents living in outlying communities. Action: Conduct follow-up to Kodiak Area Funding Summit to assist outlying communities in their efforts to bring identified projects to fruition. ~~ ~2 ~ Kodiak Island Region Comprehensive Economic Development Strategy Page 48 Objective: Encourage and facilitate small business development on Kodiak Island. Strategv: Function as asingle-source repository of regional economic data for use by local businesses and prospective new businesses. Action: Publish an Economic Indicators Report for Kodiak Island. Action: Update the Kodiak Chamber of Commerce/Kodiak Island Convention and Visitors Bureau website to be used as a source of information to attract new businesses and visitors to the area. Action: Update the Kodiak Community Profile for use in marketing Kodiak to persons and businesses interested in relocating to the area. Action: Update the Kodiak Chamber of Commerce multimedia presentation to reflect the current status of the region's business climate in order to attract new businesses to the area. Objective: Encourage and assist in the development of improved communications systems on Kodiak Island. Strategv: Study alternative communications systems on Kodiak Island. Action: Continue to pursue fiber optic connectivity and broadband satellite communications to Kodiak Island via private enterprise and federal/state government departments. Action: Explore provision of improved telecommunications systems to the outlying communities on Kodiak Island. Kodiak Island Region Comprehensive Economic Development Strategy v~y `'~ Page 49