Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966

As the Haines Borough Assembly wades through its budget for the coming year, it will consider a request for $95,000 in funding for a new Haines Economic Development Corporation.

Economic development organizations exist across Southeast Alaskan communities, but they’re structured, funded and utilized in differing ways.

The Haines Borough has intermittently employed economic development directors since the 1 percent tourism tax was expanded in 2004 to include economic development. Money from that fund in recent years also has been spent on items including the harbor’s new boat ramp and fuel dock improvements.

Local bank manager and development corporation board member Kyle Gray presented to the borough’s commerce committee in March on their plans to hire a director.

“The majority of the initial seed funding will go to fulfilling a RFP for staffing and planning,” Gray said. “We’re trying to have a very attractive offer to get a well-qualified, highly talented individual or entity to do the work set out by the HEDC. The rest will go to basic infrastructure needs.”

The Wrangell and Petersburg’s economic development directors are borough employees who also serve as their respective municipal planners.

Wrangell’s development council is a borough committee, whereas Petersburg’s is a private non-profit, similar to the Haines model.

The funding sources for Wrangell and Petersburg are different as well. The Petersburg Borough not only pays its development director a salary but also annually funds the Petersburg Economic Development Council.

The Petersburg Borough draws the funding from a roughly $4 million pot of money remaining after the federal government in 1997 appropriated money based on historic timber receipts across Southeast Alaska. The payouts came after federal timber contracts were canceled and sawmills in the region were shut down.

Petersburg’s assembly provided $95,000 from the fund to the PEDC this fiscal year and $100,000 the previous year. The fund also receives investment income.

The Petersburg assembly appoints three of the seven board members of the Petersburg economic development council and its borough manager, Steve Giesbrecht, also sits on the board.

Giesbrecht said they’ve normally stayed away from large projects, instead funding smaller things such as classes on how to market a small business or devoting resources to creating a Petersburg brand. Giesbrecht said it’s tough to quantify whether or not there’s a return on investment from a borough government standpoint.

“I think the answer is ‘yes’ but it’s one of those returns that’s very hard to quantify,” Giesbrecht said. “Having a brand helps distinguish what Petersburg is all about. Putting dollars and cents to it is almost impossible.”

The Petersburg economic development council in 2006 helped fund a community cold storage. It now owns and operates the facility used by residents, fish processors and direct-to-market fishermen.

Tonka Seafoods of Petersburg used the cold storage, which helped expand its business.

“Tonka Seafooods is a prime example, primarily because they didn’t have to store their seafood on site,” Giesbrecht said. Tonka has grown consistently for the past four or five years and eventually they bought a bigger plant.”

The Wrangell Borough Assembly only funds economic development based on committee recommendations. Currently, only three of the seven seats are filled. The assembly uses money from the same federally appropriated economic recovery funds as Petersburg.

Wrangell received $37 million at the time and has used the money over the years to pay for its sewage treatment plant, a power plant upgrade and the purchase of a downtown mill site.

Wrangell city planner Carol Rushmore said the assembly last year budgeted $15,000 for boatyard painting and advertising, although the project isn’t likely to happen. Previous to last year, the assembly didn’t fund any economic development projects for three years.

“It’s usually not funded,” Rushmore said. “Our economic development committee is a sounding board for use of that money. Occasionally the assembly will say they want “x” done.”

Sitka has a model that most closely aligns with the Haines’ development council proposal.

Sitka helped start up the Sitka Economic Development Association in 1997 from the same federal appropriation Petersburg and Wrangell received. The Sitka municipal government provided $125,000 to hire an economic development director. Since then, the association has found ways to earn revenue, and it relies less on the municipality for funding. From its general fund, the Sitka assembly provided $37,500 this fiscal year and $75,000 the previous year.

No member of the Sitka government sits on the board. SEDA executive director Garry White said the association’s independence from the borough allows it stay above the political thicket.

“We can have some consistency and we have a plan we can work on and can continue to work on regardless of political whims,” White said. “(The assembly) stays involved to make sure we stay responsive to community needs.”

SEDA manages property at Sitka’s old mill site and the borough pays SEDA to negotiate leases and property sales there. SEDA has generated revenues in amounts up to $170,000 in years past from the uses of property and investments.

The City and Borough of Sitka recently approved a SEDA-recommended contract to build a 250-foot, multi-purpose dock in the area. City and Borough of Sitka administrator Mark Gorman described the financial relationship as “a very productive union and partnership over the years.”

In Haines, the pot of federally appropriated dollars was much smaller than other Southeast communities because the borough includes only a small portion of federal forest where commercial logging occurred.

Cash used to create economic development organizations in other towns instead were used to create a revolving loan fund for businesses. The fund is managed by the Juneau Economic Development Council.

Around $300,000 went into the fund and since that time only two loans were issued to Haines businesses, said Juneau development council director of operations Margaret O’Neal.

“We haven’t had a lot of activity,” O’Neal said. “We’ve been trying to do a little more outreach. The idea is the program is for businesses that can’t quite qualify for traditional commercial loans through the bank but still have good management and a decent ability to repay the loan.”

Local bank manager Gray said he’d like to see those funds under the control of the Haines economic development council.

“There’s no two ways about it,” Gray said. “If there’ s a revolving loan fund in Haines and it’s managed in Haines, we’re going to see the highest and best use of those funds.”