Legislature(2019 - 2020)Anch LIO Lg Conf Rm
07/01/2020 01:00 PM House LABOR & COMMERCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Ak Cares Grant Program | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
Anchorage, Alaska
July 1, 2020
1:07 p.m.
MEMBERS PRESENT
Representative Ivy Spohnholz, Chair
Representative Louise Stutes (via teleconference)
Representative Sara Hannan (via teleconference)
Representative Andi Story (via teleconference)
Representative Mel Gillis (via teleconference)
Representative Sara Rasmussen (via teleconference)
MEMBERS ABSENT
Representative Zack Fields
OTHER LEGISLATORS PRESENT
Representative Sullivan Leonard (via teleconference)
Representative Dan Ortiz (via teleconference)
Representative Bryce Edgmon (via teleconference)
COMMITTEE CALENDAR
AK CARES GRANT PROGRAM
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
TIM DILLON, Executive Director
Kenai Peninsula Economic Development District
Kenai, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
MANDY HAWES
Get Lost Travel Vans
Anchorage, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
JON BITTNER, Executive Director
Alaska Small Business Development Center
Anchorage, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
BILL POPP, President & CEO
Anchorage Economic Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
SHIRLEY MARQUARDT, Executive Director
Southwest Alaska Municipal Conference
Anchorage, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
SCOTT SWINGLE, Owner
Malemute Saloon
Fairbanks, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
ROBERT VENABLES, Executive Director
Southeast Conference
Juneau, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
TYLER DAVIS, Commercial Loan Officer
First Bank
Ketchikan, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
JASON PALLAS
Commercial Fisherman
Cordova, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
COLLIN DANDO, Certified Public Accountant
C.F. James
Wrangell, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
LARS STANGELAND
United Southeast Alaska Gillnetters Association
Juneau, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
CHELSEA HAISMAN, Executive Director
Cordova District Fishermen United
Cordova, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
PATTI MACKEY, President & CEO
Ketchikan Visitors Bureau
Ketchikan, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
RUBEN DURAN, Borough Manager
Ketchikan Gateway Borough
Ketchikan, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
MIKE HAMAR
Commercial Fisherman
Juneau, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
JULIE DECKER, Executive Director
Alaska Fisheries Development Foundation
Wrangell, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
STEPHANIE BRENNER, Manager
Brenner's Fine Clothing & Gifts
Hoonah, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
CAROL RUSHMORE, Economic Development Director
City and Borough of Wrangell
Wrangell, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
RICHARD YAMATA
Alaska Charter Association
Kenai, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
JIM SHOEMAKER, Operations Manager
Sportsman's Cove Lodge
Ketchikan, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
IRENE KUZMIN
Delta Junction, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
DEBBIE SPEAKMAN, Executive Director
Kenai Peninsula Tourism Marketing Council
Kenai, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
RICHARD HARNEY, Director of Planning & Community Development
Ketchikan Gateway Borough
Ketchikan, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
ANASTASIA KUZMIN
Cordova, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
CATHY RENFELDT, Executive Director
Cordova Chamber of Commerce
Cordova, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
LINDSEY BLOOM, Campaign Strategist
Salmon State
Juneau, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
ALEXANDRA SAMOILOV
Commercial Fisherman
Wasilla, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
ANASTASIA OVCHINNIKOV
Wasilla, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
JAI MAHTANI, Owner
Gold Rush
Ketchikan, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
SUSAN DOHERTY, Executive Director
Southeast Alaska Seiners Association
Ketchikan, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
ASIA VERNON
Keepin' It Reel Charters Unlimited
Dutch Harbor, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
DAVID ADAMS
Sand Point, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
LISA GABRIEL, Director
Kenai Peninsula Fishermen's Association
Kenai, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
CRAIG CARSON
Ketchikan, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
MAKSIM KUZMIN
Homer, Alaska
POSITION STATEMENT: Testified on the AK CARES grant program.
REPRESENTATIVE COLLEEN SULLIVAN-LEONARD
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided comment during the hearing on the
AK CARES grant program.
ACTION NARRATIVE
1:07:40 PM
CHAIR IVY SPOHNHOLZ called the House Labor and Commerce Standing
Committee meeting to order at 1:07 p.m. Representatives Story
(via teleconference), Stutes (via teleconference), Hannan (via
teleconference), Rasmussen (via teleconference), and Spohnholz
were present at the call to order. Representative Gillis (via
teleconference) arrived as the meeting was in progress.
^AK CARES Grant Program
AK CARES Grant Program
1:08:51 PM
CHAIR SPOHNHOLZ announced that the only order of business would
be testimony, both invited and public, on the AK CARES grant
program.
1:09:55 PM
CHAIR SPOHNHOLZ explained that people have been voicing serious
concerns about the limitations of the AK CARES grant program.
She reported that as of June 29, 2020, per Department of
Commerce, Community & Economic Development (DCCED), the program
received 1,947 applications, of which 167 fewer than 1 percent
- have been approved. The 167 approved applications total $6.28
million, which is only 2 percent of available funds. She noted
that if all 1,947 submitted applications were to be approved,
funds would total $84,610,897, or 29 percent of the $290 million
available funds. She said today, members of the community will
be testifying on ways to increase the programs flexibility and
eligibility criteria so that funding is available to a broader
range of businesses and nonprofits.
1:11:42 PM
REPRESENTATIVE RASMUSSEN clarified that 167 approved
applications indicates that approximately 10 percent of the
1,947 submitted applications have been approved.
CHAIR SPOHNHOLZ acknowledged that. She continued to explain
that Credit Union 1 is onboarding additional staff to help
process the AK CARES applications and has amended internal
procedures to accelerate the process. Additionally, Credit
Union 1 created a series of instructional videos and DCCED added
information to its list of frequently asked questions (FAQs) to
assist applicant businesses in submitting complete applications.
1:13:43 PM
TIM DILLON, Executive Director, Kenai Peninsula Economic
Development District, paraphrased from the following written
remarks [original punctuation provided]:
I appreciate being able to speak to you about the
Alaska Cares Act Specifically the small business
relief portion.
I have spent the last several months listening and
assisting small businesses and non-profits across the
Kenai Peninsula. I have learned a lot about what's
happening to these organizations, the fabric of our
economy.
I am here today to lay out 4 points of change that
will fix Alaska CARES
1. Allow commercial fisherman's permits to count as a
business license.
The RPL states that everyone must have a business
license, but commercial fishermen don't have a
business license. (they have a permit).
2. 501-c-6 should be eligible for AK Cares Act funds.
These are our chambers and trade organizations.
3. A small business should be eligible for AK Cares
Act funding even if they received PPP, EIDL or
Municipal Relief.
John Bitner is going to speak to this later, but these
are not federal requirements. They are part of the
RPL.
4. Give DCCED the authority to make minor changes.
In this environment they need to be able to get things
done that are common sense.
Ok, how did I get here? By listening and communicating
with small businesses Boots on the ground. We
currently have a great team of folks leading the way
with Julie Anderson the Commissioner of Commerce and
Alan Weitzner the Interim Executive Director of the
Alaska Industrial Development Export Authority. But
they don't have the tools to get the job done.
Let's look at the numbers. The Governor's goal is to
get money in the hands of small businesses. In fact,
$150 Million in the first 30 days. As of June 30th,
the total dollars disbursed was $6,394,154.25
Hmmm? $143 Million less than the administration and
communities wanted. This is no one's fault. It's just
that the rules don't match the needs.
In fact, if we took the 280 applications that Credit
Union 1 is currently processing from rural communities
and the 996 applications from the metro areas AND add
all of the other funds dispensed to date we would
come up with a grant total of $69,929,165.25
Interesting? So, unless we plan on returning over $200
Million to the federal government, we need to make
these suggested changes NOW.
I returned to Kenai last night from Homer where I
spent time meeting with businesses trying to survive.
No one is getting rich with this money. No one is
being made whole from this money. These are business
owners and non-profits that listened to our elected
officials, did what was recommended, and now because
of how the RPL was written are penalized.
These are your and my neighbors: Farmers, restaurant
owners, fishermen, shop owners, food banks, and the
list goes on.
According to the Center for Economic Development:
? As of June 16th, about 30% of Alaska businesses were
still closed despite the lifting of the mandates. As
compared to the rest of the country, which is at 15.5%
? Consumer spending in Alaska is down 13%. The U.S. is
8.5% nationally.
? KPEDD has done 2 surveys on the Peninsula with over
924 business participating. 24.2% said they were at
risk of closing permanently and 44.1% stated they were
unsure on survival depending on relief.
All incorporated communities on the Kenai Peninsula
are doing their part to salvage their businesses and
non-profits. The City of Kenai had a two-week open
application period. Last Friday they sent out $1.25
Million to 47 non-profits and $655,000 to 109 small
businesses for a total of $1,905,000.
This fix is not difficult please help us retain our
way of life and salvage our economy. I get the fact
that some of the legislators don't want to go to
Juneau because of other issues. But if you care at all
about this great State of Alaska, you will go to
Juneau NOW and pass this proposal because businesses
and nonprofits cannot wait another 30, 60 or 90 days.
I promise it can be done in a day and as you will hear
from some of the other's testifying, we will help you
get it done.
I thank you for your time and I would be happy to
answer any questions.
1:20:47 PM
CHAIR SPOHNHOLZ clarified that a full legislative session cannot
be completed in one day, adding that technically, it must be at
least three business days. Nonetheless, she said it could be
accomplished expeditiously.
1:21:21 PM
MANDY HAWES, Get Lost Travel Vans, paraphrased from the
following written remarks [original punctuation provided]:
Good afternoon. My name is Mandy Hawes and I am
testifying today on behalf Get Lost Travel Vans, a
startup that I own with my husband Darren and one
other couple. I also represent Alyeska Resort, as its
General Manager, and sit on the Visit Anchorage board.
I was born and raised in Kenai and after a brief stint
out of state, my husband and I moved to Girdwood 17
years ago, both working at Alyeska Resort. 4 years
ago, my husband left Alyeska to start our own
business. After exploring many ideas, we introduced
the European style camper van to Alaska for summer
rentals as smaller profile and fuel-efficient RV
alternative. Our first summer, we converted 10 Dodge
Caravans using a local boat builder for the
fabrication. The vans seat belt 5 and sleep 4 adults
with a double bed inside the van and a pop-up tent on
the roof. When you lift the back hatch there is a full
kitchenette, including an electric sink with running
water, a double burner stove, a small refrigerator,
USB ports for charging electronics and a cooking
surface. We even include black out curtains and
mosquito netting to cover open windows- a truly
Alaskan feature. Our rental location is off
International and Cordova, a quick Uber from the
Anchorage airport. We pay vehicle rental tax to both
the state and the municipality.
Our first summer exceeded expectations, primarily from
international and lower 48 visitors. Our second summer
we added 5 additional vehicles for a fleet of 15
vehicles and were sold out most of July and August.
This is our third summer. The summer of Covid-19.
While we had strong pre-bookings prior to March, most
of our bookings have cancelled. After this summer our
business plan included obtaining additional financing
to scale up the model that is now proven. However, at
this point our future is uncertain.
When the federal Cares act legislation was passed in
March, we applied for the EIDL. The PPP program by
definition is based on paychecks, or payroll spend.
Even though this is my husband's primary work, as a
startup, we have not yet paid ourselves from the
business, have not taken draws, rather focusing on
building equity. Therefore, our best option was to
apply for an EIDL loan. Last summer we had one
employee, so we claimed 1 FTE on our application. We
heard nothing back from the SBA for weeks. Meanwhile
there was a storm of cancellations with all our cash
flowing out and none flowing in. On April 24th, we
received a total of $1,000 in our bank account from
the SBA. This was our total grant from the EIDL.
When the Alaska Cares program was released, we were
ineligible. The act of proactively using a federal
program that was available to us back in March has now
precluded us from receiving grants that have
subsequently been released from both the state and the
city. We are still currently ineligible for Alaska
Cares funding.
Fortunately, we made it to early June with enough
cash. On June 9th, we received our $90,000 EIDL loan
at 3.75%, which we have at this time, no choice but to
accept.
This $90,000 is not income to us or grant relief. It
is a debt. It is a debt that will put us out of
business if we use it to pay our operating expenses
like rent and insurance and cover our cash shortfall,
rather than use for investing in assets. While it is a
relief to have a cash cushion, what small businesses
and startups like ours need are grants not loans. My
graduate work is an MBA with a concentration in
finance. It is clear that this loan without an
offsetting asset creates an impossibility for our
business to survive long term. This loan will flip our
debt to equity ratio, is bad balance sheet management
and bad business. We have to pay it back.
The EIDL and the PPP were very different programs. The
state should not lump these programs together. I
understand that there is a revision to move the
threshold to less than $5,000 in total funding.
However, this language is still problematic as we have
now received more than $5,000 in TOTAL FUNDING, $1,000
in the form of a grant, the remainder as a loan.
If the legislature would insert the word GRANT into
that funding phrase, we would be eligible. Please
adjust the language to allow those of us that have not
yet received any meaningful assistance to get help
from our state.
Additionally, at the federal and the state level,
there have been carve outs for specific industries.
Education, health, transportation, fishing, etc. There
has been no carve out for tourism. No funding for the
sector that has the number one unemployment claims and
job losses. Of the roughly 42,000 jobs lost in the
state of Alaska, 15,600 or almost 40% of all jobs lost
were from tourism. Please let data drive your
decisions and create relief programs specific to the
number one affected industry in our state.
Small business, entrepreneurship and tourism in Alaska
are and have been a bright beacon for our state
economy, let's not see that light get snuffed out.
In closing, please adjust the Alaska Cares Act funding
language to allow businesses like Get Lost Travel Vans
to receive state grant relief, not just loans that
create unsustainable futures. Use the $290 million as
it was intended, to help small businesses. Please look
at ways to aid the number one affected industry in our
state that has yet to have meaningful support as an
industry. Thank you for your time and I would be happy
to answer any questions.
1:27:06 PM
JON BITTNER, Executive Director, Alaska Small Business
Development Center, paraphrased from the following written
remarks [original punctuation provided]:
Through the Chair, thank you for the opportunity to
speak today.
We're entering the fourth of fifth month of the
COVID-19 pandemic and things are not looking great.
Although the federal government has deployed 10,756
PPP loans worth $1,233,644,499, 5,514 EIDLs worth
$342,030,900 and 9,376 EIDL grants worth $29,821,000
Alaska's businesses are still hurting and our
workforce is still largely unemployed.
The possible extension of the PPP program is some
comfort, especially since they made the changes to the
eligible expenses that will allow commercial fishing
businesses to claim more of their payroll, the fact is
that the vast majority of businesses that can take
advantage of that program already have and most of
them have spent or are well on their way to spending
the funds.
The easing of the restrictions on business operations
and sheltering in place have provided some help to
businesses, especially those in retail and food
service, but not nearly enough to offset the massive
loss of regular customers and tourists. Additionally,
rising COVID-19 numbers nationally and in state are
adding an additional layer of uncertainty and concern
among business owners and their employees.
To try and understand what assistance and support
Alaska's businesses will need going forward, the AK
SBDC conducted a survey of businesses across the state
from June 18th to June 26th. Out of the 1,076
businesses surveyed we received 221 responses (20.5%).
Most had applied for some form of COVID-19 funding:
• 47 had applied for AK Cares
• 137 for EIDL
• 122 for EIDL Grant
• 131 for PPP
• 21 for local government options
Only 23 had applied for less than $5,000
Of those applications which were approved:
• 4 AK Cares (8.5%)
• 95 EIDL (69%)
• 86 EIDL Grant (70%)
• 110 PPP (84%)
• 10 local government (48%)
In terms of dollar amount:
• 56 received less than $5,000 (including 30 who
received none)
• 131 received more
When asked whether AK Cares should be open to all
businesses and nonprofits regardless of how much
funding they have received:
• 123 Yes
• 38 No
• 60 Unsure
When asked if their business was likely to lay off
staff in the next six months if they didn't receive
additional funding:
• 97 Yes
• 51 No
• 73 Unsure
We received 63 comments from businesses in 20
communities about the AK Cares program all but one of
them supporting opening up eligibility regardless of
other funding received.
• Anchorage: Tying receipt of Alaska CARES money to
prior receipt of PPP funds (or limiting those funds to
$5,000) ignores the fact that many categories of
business expenses were deemed off limits to PPP funds.
I cannot use PPP funds, and get the loan forgiven, for
financing (business and vehicles), insurance,
licenses, and permits. These are the vast majority of
my operational expenses. Any future grant funds need
to be completely open with no restrictions on prior
receipt of federal funding.
• Skagway: We have one industry cruise line. They
arent allowed for at least a year. Our town is rife
with fear as not a single person has any confidence
that we will survive until next year. Without help, I
could easily see an exodus of 60% of the population
here. And if that happens, when the cruise industry
does return, the experience won't be the same, which
will accentuate the death spiral.
• Sitka: We need any sort of forgivable grants
available. We are in a rural area and cannot open
until April 2021. We were forced to lay off our two
full-time employees because we have run out of PPP and
have not been approved for an SBA loan as our
50-year-old business was unverifiable! The AK Cares
funding is not available for us because we received
$24,000 in PPP. We need HELP!
• Ketchikan: If I had known grants would be available,
I wouldn't have gone for the loans... I'm still $20k
short to survive until May 2021 to coincide with
cruise ship season.
• Kenai: The amount we were given based on payroll did
not even cover overhead for one month. The fact that
you can't reapply with the Alaska CARES act is not
helping our local small businesses
• Homer: I have two businesses that will likely close
over the winter and may never reopen if I cannot
refinance or receive additional loans. I do not
qualify for the AK Cares grant because I received the
PPP and EIDL. We have been in business for 17 years
and without additional funds we will likely have a
fire sale or risk bankruptcy. Hopefully more options
will open up for hotels and restaurants. I know other
industries are suffering as well. Please consider more
options in order for small businesses to survive.
â?¢ Cordova: I would qualify for $80,000-$100,000 from
the AK CARES grant program, while I qualified for
$32,000 from PPP. Please let me apply for the CARES
grant and deduct what I received from PPP from my
eligibility. Had I known the amounts offered would
vary so significantly, I would not have applied from
PPP. PPP covered 75% of salaries for 2 months & 2
months of rent, while I am grateful for that, there
are many other expenses that the CARES grant would
cover that PPP did not. I was mandated to close for 6
weeks and have 8 weeks of lost revenue, plus now 4
weeks of partial revenue and increased expenses and
costs of doing business. Please open up the CARES
funding to businesses like mine. Thank you.
• McGrath: In remote Alaskan towns, our utilities make
up a huge portion of our budget. In McGrath,
businesses pay almost $1/kWh for electricity. Heating
oil is over $7/gallon. The water and sewer bills are
incredibly high as well. Due to our low population,
businesses have few employees. This makes it
impossible to use the PPP funds like other non-remote
businesses do. Our utilities are very high, and our
payroll is low. Every business in the Upper Kuskokwim
region of Alaska faces these same issues. Our business
did receive the $10k emergency grant, which was a life
saver after one of the hardest, coldest winters we've
faced in McGrath. 100% of our grant funds went to
utilities.
• Juneau: Although I accepted the EIDL loan I am
holding it in reserves hoping to return it if grants
become available. The last thing I need to more debt,
especially in these times. I am hoping the state opens
up CARES grants to those who have received funding. I
do not need all that SBA's EIDL provided but will need
some funding soon as business is down about 85% due to
the lack of tourism, shut-down, and other COVID related
factors.
• Haines: We received the EIDL but chose not to accept
the entire amount approved. Happy to have it but
scared to add so much debt to our mortgage. The PPP
money is almost gone having paid wages and utilities
before the original two-month deadline. Most has been
paid out before reopening, since Alaska is behind the
curve. Working on forgiveness. Concerned that our debt
will be so high at the end of this, that we won't
survive. Wish there were more grants available or a
second opportunity for PPP money. A sample of our new
state of being: Beer Fest weekend in May this year we
took in $212. Last year we took in $28,000. As hard as
it has been, however, please know that we are very
grateful to the ASBDC for all of your help! (Julie
Nolen has been incredible!)
• Fairbanks: I feel the AK CARES grant would have been
more beneficial to Fairbanks smaller businesses
because it included startup cost. Because of the, one
cannot apply for the AK CARES grant if they have
received PPP which does not included startup cost. The
restaurant businesses have large startup cost after
being forced to close for XX amount of time.
• Anchor Point: We received the EIDL loan and that
really helped with the credit card debt buildup
because of fishery closures and low fish prices for
fisheries that are open. But my crew are still
suffering because of all this, I wish I could apply
for the AK CARES grant just to help my crew.
CHAIR SPOHNHOLZ asked testifiers to email written testimony to
the House Labor and Commerce Committee.
1:34:42 PM
BILL POPP, President & CEO, Anchorage Economic Development
Corporation (AEDC), stated that AEDC was encouraged when the AK
CARES program was converted to a grant program to prevent
applicants from incurring additional debt. Nonetheless, he
argued that the programs restrictive criteria should be
considered. He said Alaska is facing potential economic
destruction if the AK CARES funding is not disbursed to the
states businesses. He expressed his support for making 501(c)6
nonprofit organizations and businesses that received any amount
of PPP/EIDL funding eligible. He also recommended giving DCCED
authority to make minor changes and adjustments to the program.
He urged the committee to consider the businesses that are at
risk of closing if no action is taken. Furthermore, he pointed
out that Alaska is relying on those businesses to get its
citizens back to work. He said the latest data indicates that
42,000 Alaskans are currently on unemployment. Additionally, as
of June 13, 2020, 6,797 Alaskans filed for first-time
unemployment. He urged the legislature to amend the AK CARES
grant program in a narrowly focused [special] session.
1:39:38 PM
SHIRLEY MARQUARDT, Executive Director, Southwest Alaska
Municipal Conference, explained that in early April, many small
businesses in Southwest Alaska applied for and received over
$5,000 in PPP/EIDL funds. Now, three months later, they are in
financial trouble due to a buildup of expenses that could not be
paid for by the PPP or EIDL. She said some businesses have used
their business or personal credit cards to pay bills, and others
have used most or all their savings. She stated that their
situation is dire and still they are being excluded from the AK
CARES grant program. She expressed support for making
commercial fishermen, 501(c)6 nonprofit organizations, and
businesses that received any amount of PPP/EIDL funding
eligible. She also recommended giving DCCED authority to make
minor changes and adjustments to the program. She remarked,
the rules dont fit the needs, and pointed out that Alaska is
behind the curve in terms of disbursing the nearly $300
million in financial relief to the states citizens. She urged
the committee to expeditiously address the situation and make
the AK CARES program a success.
1:43:14 PM
SCOTT SWINGLE, Owner, Malamute Saloon, provided a brief history
of his 20 years of experience in economic and entrepreneurial
development, including five years as director of the Fairbanks
Small Business Development Center and 15 years as senior manager
for the SBA [U.S. Small Business Administration] in Alaska. He
noted that the Malamute Saloon did not qualify for PPP or EIDL,
and despite promptly submitting an application on June 1, 2020,
has not heard back from the AK CARES grant program. He opined
that Credit Union 1 is taking an unacceptable amount of time to
process applications and respond to applicants. He expressed
support for expanding the eligibility criteria; nonetheless, he
indicated that processing the [1,947] previously submitted
applications should be a priority. He emphasized that his
business, the Malamute Saloon, is treading water and while
commending the loan officers for their attention to detail, he
urged them to review applications as quickly as possible.
1:49:23 PM
ROBERT VENABLES, Executive Director, Southeast Conference,
offered his belief that the AK CARES grant program is a good
program. He said he is confident that DCCED will work through
the existing problems with Credit Union 1. He opined that the
funding set aside by the legislature and administration is
sufficient for addressing the needs of eligible businesses
applying for relief; additionally, he said, the funding could
adequately support expanded eligibility criteria. He emphasized
that the need is far greater than what the current program
allows, indicating that expanding the eligibility criteria
requires the legislatures attention and action. He expressed
support for making commercial fishermen, 501(c)6 nonprofit
organizations, and businesses that received any amount of
PPP/EIDL funding eligible. He said the AK CARES program could
help those businesses stay in business longer and help generate
cash flow in Alaskas economy. also recommended giving DCCED
authority to make minor changes and adjustments to the program.
He reported that two-thirds of businesses that responded to a
survey administered by Southeast Conference indicated very
uncertain, moderate risk, or significant risk of permanent
failure. He urged the legislature to expand the AK CARES
programs eligibility criteria.
1:55:57 PM
CHAIR SPOHNHOLZ announced the conclusion of invited testimony
and subsequently opened public testimony.
1:56:04 PM
TYLER DAVIS, Commercial Loan Officer, First Bank, anecdotally
reported that the AK CARES grant program is designed well;
however, it is not meeting the needs of Alaska's businesses. He
calculated that the 167 AK CARES applications that were
processed in one month suggests that the processing rate is 5.5
applications per day for 30 consecutive days. He opined that
the processing time sounds slow, as one individual loan officer
could process up to 10 PPP applications in one day. He
recommended streamlining the process to improve efficiency
because businesses are losing faith and theyre communicating
that to their peers. He pointed out that PPP applications
slowed dramatically until allowing commercial fishermen to
include 1099 [indisc.] on their PPP applications. He added that
fishermen have expressed that the AK CARES program would better
fit their needs; however, they have not seen any progress or
been notified of when funds would be disbursed. He noted that
applicants have acknowledged that loans or grants are a
temporary fix that will not save their businesses as they will
be in critical demand for revenue in two to four months.
Consequently, he opined that funding should not replace work
towards resolving the states revenue challenges. He proposed
considering additional perspectives on how to keep people safe
while returning revenue to the state on a larger scale.
2:01:05 PM
JASON PALLAS, Commercial Fisherman, stated that its crucial to
allow a [Commercial Fisheries Entry Commission (CFEC)] permit to
qualify in place of a business license. He explained that he
was approved for a $6,800 PPP loan, which could only be used
towards specific costs. He pointed out that the fishing
industry is in dire condition due to a shortage of fish in
addition to financial strain from the pandemic. He urged the
legislature to expand the AK CARES programs eligibility
criteria for commercial fishermen and others.
2:03:36 PM
COLLIN DANDO, Certified Public Accountant, C.F. James,
highlighted a lack of transparency regarding [the AK CARES
programs] eligible expenses. He said every program operator
has provided different information for the same question, adding
it would be nice to have a unified list ... so that people get
the same information and that these grants arent being decided
on a per-person basis. He expressed support for making
commercial fishermen, businesses that received any amount of
PPP/EIDL funding, and secondary income source businesses
eligible for the AK CARES grant program.
2:05:53 PM
LARS STANGELAND, United Southeast Alaska Gillnetters
Association, spoke to the eligibility of commercial fishermen
for the AK CARES grant program. He pointed out that he pays
$375 to renew his CFEC permit each year, whereas a business
license in Alaska costs $50. He indicated that precluding
commercial fishermen from the program for a lack of wording
would be unfair, as a CFEC permit is essentially the same as a
business license.
2:07:33 PM
CHELSEA HAISMAN, Executive Director, Cordova District Fishermen
United, stated that many fishermen in Prince William Sound, the
Copper River Flats, and the northern-central Gulf of Alaska are
currently excluded from the AK CARES grant program because
commercial fishing businesses in Alaska operate under a CFEC
permit rather than a typical business license. This
exclusivity, she said, will have a significant impact on
Cordovas local economy and its ability to recover from the
pandemic, as there are 609 commercial fishing permits registered
to Cordova addresses and only 480 regular business licenses.
She indicated that over half of the businesses in Cordova are
currently ineligible for the AK CARES grant program. She urged
the legislature to amend the requirements to allow the use of a
CFEC permit in leu of an Alaska business license, which would
enable funding to reach as many businesses as possible.
2:09:24 PM
PATTI MACKEY, President & CEO, Ketchikan Visitors Bureau,
reported that Ketchikans tourism industry represents over 1,750
jobs and revenue exceeding $260 million in visitor spending.
She remarked that Ketchikans seasonal businesses will have to
endure at least 18 months before earning again. She said a
majority of businesses have remained close because they cannot
afford startup costs amid this environment of uncertainty. She
explained that a survey conducted by Ketchikan Visitors Bureau
indicated that only 27 percent of businesses that responded
could survive until next season. She expressed support for
making the AK CARES program more helpful.
2:13:07 PM
RUBEN DURAN, Borough Manager, Ketchikan Gateway Borough, said
Ketchikan has been significantly impacted by the COVID-19
crisis, adding that the business community is struggling to
survive the collapse of the tourism industry and the economy as
a whole. He said the AK CARES funding offers a lifeline to
businesses; however, the current requirements are exclusive. He
noted that Ketchikans local government has joined together in
coordinating funding to assist local businesses, but those funds
will only keep them afloat for a month or two. He emphasized
that the AK CARES grant program is necessary to keep the
community going. He urged the committee to amend the program
and expand the eligibility criteria.
2:14:41 PM
MIKE HAMAR, Commercial Fisherman, expressed support for making
commercial fishermen eligible for the AK CARES grant program.
He opined that commercial fishing boats are akin to small
businesses and should be eligible to receive funding.
2:16:23 PM
JULIE DECKER, Executive Director, Alaska Fisheries Development
Foundation, expressed support for making commercial fishermen
eligible for the AK CARES grant program. Specifically, she
suggested amending the program to allow commercial fishermen to
use their CFEC permit or a resident crew member license, which
is issued by Alaska Department of Fish & Game (ADF&G). She
noted that many fishermen do not renew their CFEC or crew member
license until just before the fishing season; consequently,
their permits or licenses might not have been in place prior to
the COVID-19 public health disaster emergency declaration. She
urged the legislature to expand eligibility criteria for the AK
CARES grant program.
2:19:11 PM
STEPHANIE BRENNER, Manager, Brenner's Fine Clothing & Gifts,
said she lives in a rural community of 800 people on Chichagof
Island that relies entirely on the cruise industry for income.
She added that her business will not open this year due to the
closure of Icy Strait Point. She noted that she applied for and
received a small amount of PPP funding, which has already run
out. She said Brenners Fine Clothing & Gifts, a 50-year-old
Alaskan business, will not be able to weather this storm without
additional forgivable grants. She urged the legislature to
amend the AK CARES grant program in a special session and make
businesses that received over $5,000 in PPP/EIDL funding
eligible.
2:21:10 PM
CAROL RUSHMORE, Economic Development Director, City and Borough
of Wrangell, expressed support for making commercial fishermen,
501(c)6 nonprofit organizations, and businesses that received
any amount of PPP/EIDL funding eligible for the AK CARES grant
program. She also recommended giving DCCED authority to make
minor changes and adjustments to the program. She noted that
while the program provides a list of eligible expenses, they are
not clear. She added that responses from Credit Union 1 have
been inconsistent. She said businesses have expressed concern
that application reviews lack consistency and vary on a per-
person basis. She also expressed concern that the slow response
time from Credit Union 1 will interfere with the timeliness of
check disbursement.
2:23:27 PM
RICHARD YAMATA, Alaska Charter Association, expressed support
for making 501(c)6 nonprofit organizations and businesses that
received any amount of PPP/EIDL funding eligible for the AK
CARES grant program.
2:24:57 PM
JIM SHOEMAKER, Operations Manager, Sportsman's Cove Lodge,
highlighted the need for equity extraction from existing banks
to allow the AK CARES funding to last until 2021. He recounted
experiencing a "hesitancy" within banks and Alaska Industrial
Development and Export Authority (AIDEA) regarding long-term
equity extraction for the continuance of businesses in Southeast
Alaska. He suggested tapping the Permanent Fund or AIDEA funds
to make additional funding available. He also expressed concern
that there are not enough resources being allocated towards
processing the AK CARES funding. He recommended expanding the
effort to speed up the process.
2:27:52 PM
IRENE KUZMIN said she has been in the commercial fishing
business for 18 years. She expressed support for amending the
AK CARES grant program requirements to allow commercial
fishermen to use their CFEC permit in leu of an Alaska business
license.
2:28:34 PM
DEBBIE SPEAKMAN, Executive Director, Kenai Peninsula Tourism
Marketing Council, stated that the PPP, EIDL, and municipal
funds are not enough for ailing businesses. She voiced concern
that the legislature has not convened a special session to
address the AK CARES grant program. She expressed support for
making commercial fishermen eligible to receive funding and for
lifting constraints on DCCED to allow the department to
administrate the program.
2:30:31 PM
RICHARD HARNEY, Director of Planning & Community Development,
Ketchikan Gateway Borough, emphasized the importance of the AK
CARES grant program for businesses in Ketchikan. He echoed the
comments from previous testifiers.
2:31:20 PM
ANASTASIA KUZMIN noted that she and her husband have been
fishing the Prince William Sound for 25 years. She expressed
support for amending the AK CARES grant program requirements to
allow commercial fishermen to use their CFEC permit in leu of an
Alaska business license and to make businesses that received any
amount of PPP/EIDL funding eligible as well.
2:32:25 PM
CATHY RENFELDT, Executive Director, Cordova Chamber of Commerce,
urged the legislature to reconvene to address the AK CARES grant
program. She expressed support for expanding eligibility
criteria for commercial fishermen, 501(c)6 nonprofit
organizations, businesses that received any amount of SBA
funding, and secondary income source businesses. She noted that
the Cordova Chamber of Commerce is a 501(c)6 organization and
the only entity in the community that is helping connect
businesses with relief funds. She also recommended giving DCCED
authority to make changes and adjustments to the program.
2:35:21 PM
LINDSEY BLOOM, Campaign Strategist, Salmon State, expressed
support for amending the AK CARES grant program requirements to
allow commercial fishermen to use their CFEC permit or
crewmember license in leu of an Alaska business license. She
reported that Salmon State conducted a survey of independent
commercial fishermen and their foremost need was immediate cash
infusion.
2:37:31 PM
ALEXANDRA SAMOILOV, Commercial Fisherman, expressed support for
amending the AK CARES grant program requirements to allow
commercial fishermen to use their CFEC permit in leu of an
Alaska business license.
2:37:58 PM
ANASTASIA OVCHINNIKOV expressed support for amending the AK
CARES grant program requirements to allow commercial fishermen
to use their CFEC permit in leu of an Alaska business license.
2:38:36 PM
JAI MAHTANI, Owner, Gold Rush, stated that Gold Rush received
funding from PPP and EIDL; however, it will not be enough to
sustain the business. He expressed support for expanding the AK
CARES grant program's eligibility criteria for businesses that
received any amount of PPP/EIDL funding. He urged the
legislature to reconvene to amend the AK CARES grant program.
2:40:33 PM
SUSAN DOHERTY, Executive Director, Southeast Alaska Seiners
Association, stated that the Alaska seafood industry is composed
of tens of thousands of independent permit holders who do not
qualify for traditional aid; consequently, a vital sector is
being excluded from COVID-19 relief funds. She noted that the
federal relief packages were recently amended to allow fishermen
and crew five days to apply for PPP funding; however, fleets are
out on the fishing grounds with no time or access to the
internet, which thwarts the opportunity. She expressed support
for amending the AK CARES grant program requirements to allow
commercial fishermen to use their CFEC permit in leu of an
Alaska business license. She also requested granting fishermen
additional time to file to allow them to finish the fishing
season, which ends in October.
2:42:52 PM
ASIA VERNON, Keepin' It Reel Charters Unlimited, expressed
frustration with the city-mandated 14-day quarantine, which
hinders her customer's ability to take a charter. She noted
that she applied for the AK CARES grant program but has not
heard back. She expressed support for expanding the program's
eligibility criteria.
2:44:36 PM
DAVID ADAMS stated that COVID-19 has directly impacted revenue
from the Bed and Breakfast he manages. He reported that
compared to July 1, 2019, business is down 70 percent. He added
that his employer has not been able to pay employees, as he is
too far in debt. He also expressed frustration with the 14-day
quarantine mandate, which has affected his fishing business
because he must house, feed, and quarantine his crew. He said
he was denied from the AK CARES grant program because his 2019
(indisc.) showed a loss.
2:47:22 PM
LISA GABRIEL, Director, Kenai Peninsula Fishermen's Association,
expressed support for making commercial fishermen, 501(c)6
nonprofit organizations, and businesses that received any amount
of PPP/EIDL funding eligible for the AK CARES grant program.
She also recommended giving DCCED authority to make minor
changes and adjustments to the program. She said its time to
get funding out to the small independent business owners in
Alaska and into local communities.
2:48:35 PM
CRAIG CARSON noted that he received PPP and SBA funding;
however, his retail business will remain closed for at least two
more months. He expressed support for making businesses that
received any amount of PPP/EIDL funding eligible for the AK
CARES grant program.
2:49:41 PM
MAKSIM KUZMIN said he was denied for the EIDL because his
business was established last year and therefore, his 2019 taxes
were not available. He expressed support for making commercial
fishermen and new small businesses eligible for the AK CARES
grant program.
2:51:06 PM
CHAIR SPOHNHOLZ closed public testimony.
2:51:22 PM
REPRESENTATIVE STUTES shared that she has been working with
DCCED and the governor's office since mid-May to ensure that a
CFEC permit would qualify as a business license for the AK CARES
grant. She recounted that every week, the department says they
are working diligently to make permit holders eligible for the
second round of funding; however, when changes were announced on
June 17, 2020, the department continued to assure that they were
working on expanding eligibility criteria for CFEC permits. She
noted that CFEC permit holders were eligible for PPP; further,
the RPL defines eligible applicants as "any small business
licensed to do business in the state." She pointed out that
commercial fishermen are statutorily required to hold a CFEC
permit to sell fish in Alaska, not a traditional business
license. Nonetheless, she said she has yet to be provided with
a rational explanation as to why CFEC permit holders are
currently ineligible and promises to fix the issue have not been
materialized. Given this outstanding issue, she requested
another House Labor and Commerce committee hearing with the
commissioner of DCCED and a Credit Union 1 representative in
attendance.
CHAIR SPOHNHOLZ agreed.
2:53:59 PM
REPRESENTATIVE HANNAN agreed with the sentiments expressed by
Representative Stutes and questioned whether issues with the AK
CARES grant program can be addressed without additional
legislation.
CHAIR SPOHNHOLZ shared her understanding that some of the
suggested changes would require legislation while others could
be fixed in regulation; however, she noted that there appears to
be differing opinions. She suggested holding an additional
hearing with DCCED, Department of Law (DOL), and legislative
attorney Megan Wallace to assess a solution.
2:55:27 PM
REPRESENTATIVE STORY expressed support for making 501(c)4
organizations and secondary income source businesses eligible
for the AK CARES grant program. She questioned whether
businesses will be required to report AK CARES grants as 2020
income to the IRS. She also asked if funding could be made
available for investments in health and safety equipment by
businesses like medical or dental offices.
2:58:12 PM
REPRESENTATIVE GILLIS agreed that the AK CARES grant program
should allow commercial fishermen to use their CFEC permit in
leu of an Alaska business license.
2:59:21 PM
REPRESENTATIVE COLLEEN SULLIVAN-LEONARD, Alaska State
Legislature, expressed interest in hearing more from small
business owners about the effect of property taxes as well as
issues with the PPP, EIDL, and AK CARES funding.
3:00:41 PM
REPRESENTATIVE STORY questioned whether expanding eligibility
for the AK CARES grant program could be expedited rather than
using the RPL process.
CHAIR SPOHNHOLZ clarified that the Legislative Budget and Audit
committee doesn't have the authority to broaden the scope of any
program. She added that the program in question was approved by
the entire legislature; therefore, the legislative attorney
believes any structural changes in the program would require
full legislative action.
3:02:13 PM
CHAIR SPOHNHOLZ asked Mr. Bittner whether any sector beyond the
fishing industry and 501(c)6 nonprofit organizations have been
excluded by the program or underrepresented in its recipients.
3:02:41 PM
MR. BITTNER expressed his understanding that those two examples
are the primary exemptions. He said he is not aware of any that
are similar in nature.
3:03:17 PM
CHAIR SPOHNHOLZ said it's clear that expanding eligibility for
the AK CARES program to include commercial fishermen, 501(c)6
nonprofit organizations, and businesses that received any amount
of PPP/EIDL funding is necessary. Also, to grant DCCED the
authority to make minor changes and adjustments to the program.
She stated that another hearing on the AK CARES grant program
would be held to address DCCED, DOL and Credit Union 1.
3:05:05 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
[3:05] p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 07.01.2020 Public Testimony on AK CARES grant program for BASIS.pdf |
HL&C 7/1/2020 1:00:00 PM |
AK CARES |