Business Intelligence

Business Intelligence

Construction spending nudges up this year; oil, military

A survey of expected construction has estimated that spending in the industry will rise by 10 percent in 2019 over 2018, to a total value of $7.2 billion. Associated General Contractors of Alaska sponsored the study, which is done annually by the University of Alaska Anchorage’s Institute of Social and Economic Re- search. Oil and gas and military-related building will be the fastest-growing parts of the industry, with both expected to grow 13 percent. Oil and gas drilling work is counted as construction in the study. Mining-relat- ed construction, while much smaller than petroleum or military work, is predicted to increase 18 percent.
Overall private sector construction is forecast at 9 percent, while public-sector building is estimated to grow by 7 percent. The study did not include money to be spent in earthquake rebuilding in Southcentral Alaska.

Cruise tourism will show sharp growth
Cruise tourism to Alaska is now expected to grow 16 percent in 2019 over 2018, according to the latest estimates from the Cruise Lines International As- sociation. That translates to 175,000 more cruise visitors arriving in Ketchikan, Juneau, Sitka, Skagway, Seward and Valdez, the main ports of call for cruise ships. The growth is being accommodated mainly by larger ships. Three new vessels in the 2019 schedule will have capacity for 3,000 each; one vessel return- ing has capacity for 4,000.
Juneau, which is on the Southeast cruise ship itinerary, has seen its visitor numbers double over the last decade. On a “heavy ship day” the community may experience about 15,000 visitors; with the larger ves- sels that may grow to 20,000 daily. Juneau has about 35,000 permanent residents.

Anchorage looks at tax holiday for new housing
Anchorage Mayor Ethan Berkowitz is proposing a 12-year property tax reduction for developers working on new or redeveloped multi-unit housing in the city’s downtown. Projects would have to add at least four units to qualify. The tax reduction must also be applied for before construction begins and would not apply until the development is complete and certified for occupancy. New housing is badly needed in Anchorage, particularly in the core downtown area where it would bring new population and energize the downtown, but developers say high land costs there make projects extremely expensive.
There are some downtown projects now under development or proposed including a mixed-use project by nonprofit Cook Inlet Housing Authority and a condominium project on Alaska Railroad Corp. land, both in construction. In the proposal stage is a redevelopment of Anchorage’s downtown transit center into a mix of apartments, retail and a hotel, and another mixed-use project by the nonprofit Anchorage Community Development Authority.

Bethel’s farm now serves outlying villages in Y-K
A small commercial farm operating in Bethel, and also importing organic produce from Oregon, has expanded deliveries of fresh food to small villages in the Yukon-Kuskokwim delta region and will also expand its farming operation in Bethel itself. Family-operated Meyers Farms was shipping 180 boxes of fresh food weekly from Bethel to villages through most of the fall, although shipments slowed in December due to lack of air transport capacity. The farm itself will also expand from 17 acre to 27 acres in 2019. Soils in the Y-K region are highly fertile with enough depth of top soil to be very productive, farmer Tim Meyers said. Local farms could be expanded to meet more of the local food needs, he told us.

AIDEA business loans show a dip, likely due to recession
Business loan participations by the Alaska Industrial Development and Export Authority dipped in 2018 to $71.7 million, down from $108.5 million in the prior year, according to presentations to legislators by the state Department of Commerce and Economic Development, the agency that houses AIDEA. Loan participations are loans to businesses joint-ventured with commercial banks, mostly for real estate development and capital expansion. The reduction is a result of the slowing economy.

More small communities out of compliance on indicators
The number of Alaska communities out of compliance with management “sustainability” indicators ticked up last year, although the number is below noncompliant levels in 2014 and prior years, according to data from the Department of Commerce and Economic Development. The data showed 123 communities out of compliance and 263 in compliance in state Fiscal Year 2018. The out of compliance number was 117 in FY 2017 but was up to 144 in 2014 and 161 in 2009.
The measurements include whether communities have active workers’ compensation policies; whether municipal elections are held on time; whether state and federal financial audits have been completed and filed; whether there are liens filed; whether the community is current on public employee retirement payments; whether the community is current on fuel loans and whether financial documents such as bud- gets and certified financial statements have been completed and filed. Most of the problems are in rural communities where there are limited resources, both financial and human. At the same time, the commerce department’s community assistance program, which can provide help, has been under budget pressures. The picture this paints is that small rural communities are under stress in compliance with legal requirements that are important in securing, among other things, federal and state grants.

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