Alaska's infatuation with big mega projects continue to distract from the hard work of building a better economy. Maia Nolan Partnow has some thoughts on Sarah Palin"s recent fashion turn in court. AIDEA, Alaska's only true economic development agency has grown arrogant and lazy.
Alaska's infatuation with big mega projects continue to distract from the hard work of building a better economy. Maia Nolan Partnow has some thoughts on Sarah Palin"s recent fashion turn in court. AIDEA, Alaska's only true economic development agency has grown arrogant and lazy.
Show 51
Data and descriptions shared from:
https://www.adn.com/commentary/article/new-alaska-rail-line-peters-out-forest-after-consuming-184-million/2016/02/02/
Introduction
With me as always as…
My bro in the know
Exchange
Tell our listeners about the app you’re working on
Disclaimer
Content
Today on With All Due Respect
…Alaska’s political class
…has long had a fixation
…about big mega projects
…and fantasizing
…about the next boom
….meanwhile the hard work of improving
…Alaska and our economy remains undone
…I’m going to explain how
…Waiting for Godot
…continues to be our
…state motto
In Life
…our podcast fashionista
…Maia Nolan Partnow
…casts her eyes towards New York city
…and has a fashion review on Sarah Palin’s
…recent courtroom style
And in closing comments
…it’s time to blow up AIDEA
…The Alaska Industrial Development Export Authority
…Alaska’s only true
…economic development agency
…no longer serves
…the needs of Alaska’s economy
…and their bizarre addiction
…to losing on big bets
…has cost this state dearly
…in money and progress
…It’s time to blow it up
…and rebuild it
…into something that actually
…works for Alaskans
…instead of outside interests
(Horn honk)
There’s our ride
…so hop in
…and let’s talk some politics
Politics
Alaska’s political leaders
have always seem to be betting
with public money
on the next big thing
and in the process
distracting from the real
work of building Alaska’s economy
In order to understand this in context
…we need a history lesson
History lesson
In December of 1998
a month after I had been elected to
the Alaska State Legislature
I was invited to lunch by
former Gov. Bill Sheffield
who at that time
was President of the Alaska Railroad
As incoming freshman I was
..co-chair of the transportation committee
…so we met to discuss railroad priorities
During the lunch the conversation turned
…to the topic of the proposed Anchorage rail depot
At this point,
…former Alaska U.S. Senator ted Stevens
…had procured $28 million for the construction
…and the railroad
…were undertaking the economic study
Let me repeat
…they got the federal appropriation
…before they did any economic analysis
So we proceeded to have a very
lively debate over the viability
of this project.
Now a little history
…there are a lot of things
…in this world I don’t know
…but one thing I know
…is the Anchorage Airport
…I started working at the airport
…when I was nine years old
…when I started washing cars
…for the family business in
…1974 our office
…was right in the middle
…of what is today the
…off ramp
First
…I asked Sheffied
…how he could be committing
…to a project without seeing
…the project’s economic analysis
he brushed it off
…saying anyone could see the
…future was bright for the project
…cruise ship passengers from Seward
…locals catching the train to avoid parking
…yaddah yaddah yaddah
…Sheffield argued that
…8,000 people work at the airport
…but I reminded him
…that this is a airport
…not a General Motors factory
8,000 don’t all work at the airport
…at the same time
….
…nor do they all work at the airport
…
…some as far as two miles away
…from the terminal
So how do they
get to their place
of work from
the main terminal
once they get off the train?
It never made any sense.
Also
…the entire concept was counterintuitive
…to supporting the tourism economy
Taking cruise ship passengers
directly from the boat to airport.
Taking them away from
spending money
on the road
A few months later the
…projects economic analysis was
…released to the public
…and sure enough
…it was as bad as
…I thought it would be
So
on January 1, 2000
I published Op/Ed
in the Anchorage Daily News
about how the project’s
analysis showed inevitable failure
if it were to be built
For instance
the analysis predicted the train would carry
100,000 local residents per year
to the Anchorage airport within a few years
Let me repeat
…100,000 local residents per year
…would load their luggage on to
…an Alaska Railroad locomotive
…and ride to the airport
But then report stated
that these numbers
were highly unlikely because
there was no infrastructure.
Think about this
…you’d have to drive to the downtown depot
…park
…and then catch a train to the airport
…now just think
…about everything wrong
…with that entire concept
…In my column I predicted the depot
…would be abandoned in just a few years
The Airport rail depot opened in 2003 and
…closed a few years later
…without carrying
…one local resident to the airport
A $28 million dollar waste.
meanwhile at that very same time…
We were being sold on the Alaska Seafood plant
powered with cash from AIDEA.
AIDEA financed the plant in the late 1990s
with nearly $50 million
and once construction was completed
the facility was leased
to Alaska Seafood International.
I saw this deal from two different angles:
I was president of the Sand Lake Community Council
in 1997 they were pitching the idea
I remember the pitch well
Alaska’s location meant
fish could be shipped anywhere.
The average American family
was spending 15 minutes
to prepare dinner
so pre-packaged fish dinners
would be a hit.
and on and on
Then the plant was completed and opened
…just a I got elected to
…represent Sand Lake
…in the Alaska State Legislature
…Every year
…in committee
…we’d hear testimony
…from commerce and AIDEA
…folks
…about how they were
…one fish away from
…making a profit every year
Every year
…the same thing
…we’re almost there
The plant opened in 1999
the business never made money
and within six years AIDEA
had sold the facility in a fire sale
for $25 million and it’s now
a church that pays
no local property taxes
which thus causes private
property owners to pay more.
Alaska mentality is that
– economics don’t matter
Because we’re Alaskans
…we believe that we have
…the ability to force
…the economics into being
There is a long list of
…development fantasies
…that we’ve been indulging
…
…pinning our future economic hopes
…on the next big white elephant
First we start with…
ANWR
…For four decades we’ve been told this mirage in the desert was real
…I remember twenty years ago in the legislature
…we’d say
…“wait until gas hits $2 per gallon…then they’ll want ANWR.
Well gas is at an average
of $3.51 per gallon
and it has no interest
After 40 years of promises
it opened for leasing in 2020
however few showed up but AIDEA
In fact after being told for forty years
that the oil & gas industry would be
beating down the door to develop
not one major oil or gas company bid.
Why?
Because there are too many other
…development opportunities
…major oil companies
…that are
…less risky financially
…and
…won’t piss off their
…shareholders
…lenders
…or customers
ANWR is not going
…to happen in our lifetime
But yet AIDEA
…spent $12 million on leases
Then we have the…
Alaska Natural Gas Pipeline
In 2007 the State of Alaska
through AGIA awarded $500 million
to TransCanada to
make this dream come true
The strategy was going to build a
$40 billion pipeline based on faulty economics
and then force the producers
to pay for the cost of the pipeline
and provide the gas.
At that time a KTUU survey showed
58% of respondents thought it would be successful
From the moment of introduction
for the next three years
many of us argued
it was a fool’s errand
because it ignored
both legal and
fiscal realities
So
…trying to quiet their critics
…I was invited to a meeting
…with Palin’s commissioners
…Tom Irwin, Marty Rutherford
…and then Lt. Governor Sean Parnell
Irwin kept going on about how
…they were going
…sue the oi companies
…and if that didn’t work
…they’d take back oil leases
…and by God we’re
…gonna build
…this pipeline
…and I was like
…dude no you are not
…you don’t have the legal right
…to extort private companies
…to pay for the most expensive
…oil and gas project in U.S. History
…it ain’t gonna happen bro
Finally I looked across the
table at Sean Parnell
…and asked if he was
…buying into this fantasy
…and he just shrugged his shoulders
Five years later AGIA died a quiet
…but expensive death
…ironically
…under Governor Sean Parnell
Today there are other iterations
and other dreams of a natural gas pipeline
Not in our lifetime
Too expensive
Other alternatives to
an 800 mile pipeline through the Arctic
Then of course we had the…
KABATA Knik Arm Bridge And Toll Authority
In 2003, the Alaska Legislature created the Knik Arm Bridge And Toll Authority
(KABATA) to develop a method of construction,
financing, design, operation and maintenance of the bridge.[4]
Ten years later
a legislative audit found that KABATA had overestimated potential revenue from tolls
leading to basically mothball the organization
In ten years…
KABATA burned through $100 million dollars
But losing a $100 million is a deal
…compared to our next
…white elephant
Point McKenzie Rail Extension
The rail spur was supposed to connect
…the little-used Port MacKenzie
…to the main Alaska Railroad line near Houston
…a distance of 32 miles.
Since 2009
…Alaskans have spent $184 million
…on the Point MacKenzie Rail Extension Project
…but it is $120 million short of completion.
The $184 million dollars spent
…has created
…a road to nowhere
…that ends in the
…middle of a forest
…five miles short
…of it’s planned destimation
The truth is
this was a fantasy
of the valley legislative
delegation years ago
…this was not a project
…the railroad asked for
…and in fact had quite
…a few other priorities
…at the time
Recently more pie in the sky
…proposals have resurfaced:
First we start with the…
West Susitna Road
AIDEA the state’s only
true economic development agency
…is considering a
…100 hundred mile road to
…speculative mining developments
The road is projected to cost over
$300 million and so far
over $9 million in public
money has already been invested
Now
you might say Andrew
its more than speculative
there are reportedly discoveries
and I’d say
yes so were there discoveries
at Mustang and AIDEA still lost $70 million
So let’s see what that
…this road might mean
…to Alaska’s economy
Now remember
…a constant theme
…in a resource development state
…like Alaska
…is that tax policy matters.
The more stable the tax rate
…the more companies understand
…their tax exposure
…and can assess the profitablity
…of potential developments
…and take measured risks
Right?
Okay.
According to the State of Alaska:
State mining taxes haven’t been raised since 1955
65 years of stable state taxation
The mining industry pays
$49 million in yearly mine fees
(by reference the insurance premium tax Alaskans pay is $59 million,
while cruise ships and the rental car industry generates $36 million)
Now…some will say
…what about indirect jobs
…what about fuel taxes
…what about local taxes
What about them?
Every industry provides
…those same economic benefits
…but yet most are not subsidized
…with state dollars
…and most haven’t had sixty five years
…of tax stability
Look
…This isn’t an attack on mining
…my resource development bonafides
…are unassailable
…I’ve lost a few friends by
…being a leading advocate
…for oil tax reform eight years ago
…but this makes no damn economic sense
…and mining pays too little as it is
Especially
…if you’re basing your argument on
…this project creating jobs for Alaskans
…In 2020 the state of Alaska reported
…there were 3641 total metal mining jobs in Alaska
In addition the State of Alaska
…also publishes a report every year
…entitled non-resident workers in Alaska.
Now for years we’ve heard
…the complaints about the oil patch
… oil industry 35% non-resident work force
So would it surprise you that
…metal mining has a
…39% non resident workforce
…the state of Alaska
…also reports
…that the average non-resident worker makes 10%
…more than the resident worker in quarterly wages
…so 39.4% of metal mining employees
…are non-residents and make ten percent
…more quarterly wages
Some proponents
…including AIDEA
…point to
…the Red Dog Mine road
…in Northwest Alaska
But Red Dog was different
One good solid company
they had money
they knew they would be responsible
for paying it back
The West Susitna Road
just like the proposed
Amber mining road
would be counting on
the cost of infrastructure
to be repaid by users
who have yet to show up
Once again
…the build it and they will come approach
…an approach that has failed this state
…for decades on everything from
…seafood to wood chips
Next
…we move to Governor Dunleavy’s
proposal to deal with the Port of Alaska
As we all now the Port of Alaska is
Alaskans lifeline
and it’s ability to continue
operating efficiently has been
burdened by long running
structural problems.
It's an old port
…and it costs a lot of money to fix.
Knik Arm Port Authority
Governor Dunleavy
is proposing $175 million to
create a port authority
and they decide how to
divvy up the cash
How does that even work?
Seriously
Could there have possibly
been any less thought
put into this proposal?
The Port of Alaska
…handles 80% of Alaska’s
…shipping containers and vans
…and is in desperate need of repairs
Point McKenzie
…has seen only 14 ships
…in the last 20 years
…the structure has
…been falling apart
…and in fact the port
…never should have
…been built to begin with
So just how
is $175 million
and a joint port authority
going to
change the economics
of Port McKenzie?
It does not.
It’s only going to
divert scarce resources
from the only port
that actually matters
to the economy of Alaska
The fact is the port at Point McKenzie
never should have been built
according to the project’s
own economic analysis
Even before the port was built
…their consulting firm noted
…that it was a risky investment
…and
…even with the rosiest assumptions
…the port would still lose millions every year
But Mat-Su politicians
…believed they could make the economics
…of the port work by
…poaching coal shipments from Seward
…cargo shipments from Anchorage
…and dreamed about exporting
…low cost bulk resources
…like woodchips
…
….which we all know
…is not a market Alaska
…has ever
…been able to compete in
And
…now the governor’s plan
…is to throw good money after bad
…trying to breathe life into a port
…that never should have been built
…instead of prioritizing addressing
…one of the biggest threats
…to Alaska’s supply chain
Ladies and Gentlemen,
But we’re not close,
and the reality is we’ve never been close
Alaska is 63 years old.
We need to grow up.
We need to recognize that
we can no longer live
like a 63 year old
still living in his
parents basement
and still
fantasizing about
becoming an astronaut
Just three years ago Governor Dunleavy
proposed cutting education funding by 25%
and the University of Alaska by 44%
The state was so broke three years ago
…that it couldn’t invest in education
…it cut transportation
…and community support
…all while those cuts
…shifted tens of millions
…on to the backs of local taxpayers
But today
…the state is wasting time and money
…chasing projects that will
…never materialize
…while we completely ignore
…the hard work
…the real work
…of fixing Alaska’s economy
Alaska's infatuation with white elephants
…are a systemic problem
…going back for decades
…but they remain
…a powerful aphrodisiac to politicians
I get it.
What’s sexier?
…
…Hearing that ANWR
…is right around the corner
…and the free lunch will continue
or
…hearing a five year plan to
…strengthen education,
…invest in communities
…and address the outmigration
…that threatens Alaska’s economy.
The dream
…is always sexier than the reality.
Unfortunately
…we live in reality.
And the reality is
…we have an entire
…closet full of ceremonial gold shovels
…and broken promises
….that Alaska spent billions collecting
…that haven’t produced
…a damn thing
…other than lost time and money
For the last twenty years
…the repetition of failed
…public investments
…in politically motivated projects
…has been mind numbing
The airport rail depot - $30 million
The seafood plant - $50 million
KABATA - $100 million
AGIA - $500 million
The Knik Arm Rail Extension - $200 million
And yet over the
…last twenty years
…while we’ve wasted
…money on
…trains that would never arrive
…Fish dinners that would never be served
..and
…bridges that would never be crossed
We’ve lost
…population
…opportunity
…outside investment
…and we are no better
…off with our social infrastructure
It's time to grow up
and realize
the economy Alaska needs
requires being realistic
not continuing to propose
the next big fantasy project.
It's time to realize that
if we’re ever going to reverse
the dangerous outmigration trends,
It’ requires improving education,
community development and addressing
Alaska’s nagging social problems
Fixing Alaska’s economy
is going to be hard damn work
and is not going to be accomplished
by throwing another golden shovel
in the closet.
Life:
Recently,
former Governor Sarah Palin
was the plantiff in a high profile
trial against the New York Times
…and
the podcast’s own fashionista
Maia Nolan Partnow
has some thoughts
on the former governor’s
courtroom fashion
Closing comments:
…It is time to blow AIDEA up
AIDEA is a public corporation of the State of Alaska,
created in 1967 by the Alaska Legislature
The original purpose of the agency was
"in the interests of promoting the health, security, and general welfare
of all the people of the state, and a public purpose, to increase job
opportunities and otherwise to encourage the economic growth of the state”
However
over the last fifty five years
AIDEA has become a
development dinosaur
and no longer serves
the interests of Alaskans
as well as no longer meeting the needs
of Alaska’s changing economy
This is an agency that
spends too much of its time swinging
for mega project homeruns
while consistently striking out
Their addiction to
large controversial projects
that do little to help Alaska’s economy
except line the pockets
of international companies
can no longer be ignored.
This is an agency that has
gotten so arrogant they
actually have an enemies list.
This entire agency needs
…to be gutted
…and refocused
Let me tell
you my personal experiences
at ACDA
that bring me to that conclusion
In 2018 after I first caught
wind that Nordstrom was looking
to pull out of downtown Anchorage
my agency immediately began working on
a pitch to save the store.
At that same time we had been chasing
JC Penney to buy their parking garage
and so we created an idea that we
believed would save Nordstrom.
We proposed tearing down the JCP garage
redesigning a smaller more modern footprint for Nordstrom
and combining the site with a hotel and parking.
Then
…we proposed reimagining the old Nordstrom
…building into a cool food hall
…possibly working with Simon Mall
…to consolidate their food court into
…the new space thus
…giving them the opportunity to
…reimagine their food court
…into something that would draw
…people to the mall
But while we had the capacity
to buy the building
we didn’t have the $2.5 million
to tear it down.
So I went to AIDEA.
Our pitch was simple
…lend us $2.5 million
…for the teardown costs
…thus creating a platform for
…a $60 million project
…and the revitalization
…of downtown Anchorage
They’re response
…that’s not what we do
One year later
…we went back to AIDEA
…with another pitch
The old Cyrano’s Playhouse Theatre
…in downtown Anchorage
…had been for sale for years
…so after doing our due diligence
…we realized what a fabulous opportunity
…this would be to jumpstart re-development
…on fourth avenue
The beauty of the Cyrano’s property was
…that although the commercial space previously
…occupied by the theatre was empty
…
…the building hosted 12 apartments
…whose rents would cover the cost of debt service
…
…so while we were redesigning the commercial space
…for a prospective tenant
…the rents would cover the assumed debt
…so we pitched to AIDEA
…we need to borrow $1 million
…to buy Cyrano’s
we said…
…look we can cover the debt with rents
…this location is a part of downtown
…that desperately needs redevelopment
…and
…we are currently meeting with
…prospective new tenants
…who are excited about the possibilities
AIDEA’s response was
…that’s not what we do
Why not?
AIDEA replied
…Because the building contains housing
…and we don’t lend on housing
But it’s mixed use I argued
…50% is commercial space
…and the pro-forma shows
…that the apartment rents
…will actually pay the debt
…until we bring the commercial
…space on line
I’m sorry they said
…that’s not what we do
No…what AIDEA does
…is ignore the small deals
…that make money and sense
…and instead
…chase mega deals
…where $50 million seafood plant
…turns into a $25 million church
…or a $70 million investment
…in a speculative oil development
…turns into dust.
AIDEA is broken
The entire organization has
become lazy, arrogant
and no longer meets the needs
of Alaska’s changing economy
The management needs to go
…the board needs to go
…and the next governor
…needs to reset that agency
…to better serve the economic
…development needs of Alaska
AIDEA is broken
…and the entire agency
…needs to be blown up
…and rebuilt.
(Closing Music)