Legislature(2015 - 2016)BARNES 124

02/12/2015 11:30 AM ECON. DEV., TOURISM, & ARCTIC POLICY

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Audio Topic
11:39:36 AM Start
11:40:05 AM Presentation: Division of Economic Development, Department of Commerce, Community & Economic Development
12:28:15 PM Presentation: Alaska Travel Industry Association
12:50:56 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ - Dept. of Commerce, Community & Economic TELECONFERENCED
Development, Division of Economic Development,
Director Joe Jacobson
+ - Overview: TELECONFERENCED
Alaska Travel Industry Assoc. (ATIA) by Sarah
Leonard, President
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
 HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, TOURISM, AND                                                                
                         ARCTIC POLICY                                                                                        
                       February 12, 2015                                                                                        
                           11:39 a.m.                                                                                           
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bob Herron, Chair                                                                                                
Representative Louise Stutes                                                                                                    
Representative Cathy Tilton                                                                                                     
Representative Dan Ortiz                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Craig Johnson                                                                                                    
Representative Charisse Millett                                                                                                 
Representative Adam Wool                                                                                                        
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION: DIVISION OF ECONOMIC DEVELOPMENT~ DEPARTMENT OF                                                                   
COMMERCE~ COMMUNITY & ECONOMIC DEVELOPMENT                                                                                      
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PRESENTATION: ALASKA TRAVEL INDUSTRY ASSOCIATION                                                                                
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOE JACOBSON, Director                                                                                                          
Division of Economic Development (DED)                                                                                          
Department of Commerce, Community & Economic Development (DCCED)                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a PowerPoint presentation                                                                       
entitled, "Alaska North to Opportunity," and dated 2/12/15.                                                                     
                                                                                                                                
SARAH LEONARD, President and CEO                                                                                                
Alaska Travel Industry Association (ATIA)                                                                                       
Anchorage, Alaska                                                                                                               
POSITION   STATEMENT:     Provided   a   PowerPoint   presentation                                                            
entitled,  "The Alaska  Travel Industry  Association (ATIA),"  and                                                              
dated February, 2015.                                                                                                           
                                                                                                                                
TIM MCDONNELL, Vice-President                                                                                                   
TEMSCO Helicopters, Inc.                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided a  brief historical  perspective on                                                            
the Alaska Travel Industry Association.                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
11:39:36 AM                                                                                                                   
                                                                                                                                
CHAIR BOB  HERRON called the  House Special Committee  on Economic                                                            
Development,  Tourism,  and  Arctic  Policy meeting  to  order  at                                                              
11:39  a.m.    Representatives  Stutes,  Ortiz,  and  Herron  were                                                              
present at  the call to order.   Representative Tilton  arrived as                                                              
the meeting was in progress.                                                                                                    
                                                                                                                                
^PRESENTATION:  DIVISION OF  ECONOMIC  DEVELOPMENT, DEPARTMENT  OF                                                              
COMMERCE, COMMUNITY & ECONOMIC DEVELOPMENT                                                                                      
 PRESENTATION: DIVISION OF ECONOMIC DEVELOPMENT, DEPARTMENT OF                                                              
           COMMERCE, COMMUNITY & ECONOMIC DEVELOPMENT                                                                       
                                                                                                                              
11:40:05 AM                                                                                                                   
                                                                                                                                
CHAIR HERRON announced  that the first order of  business would be                                                              
a  presentation   by   the  Division   of  Economic   Development,                                                              
Department of Commerce, Community & Economic Development.                                                                       
                                                                                                                                
11:40:38 AM                                                                                                                   
                                                                                                                                
JOE JACOBSON,  Director, Division  of Economic Development  (DED),                                                              
Department   of  Commerce,   Community   &  Economic   Development                                                              
(DCCED),  informed  the  committee  economic  development  is  the                                                              
process  of creating  wealth through  investment and  reinvestment                                                              
in  a  community  resulting  in  more  jobs,  higher  incomes,  an                                                              
expanded   tax  base,   a  more   diversified  economy,   business                                                              
improvement,  and  a  better  quality  of  life  (slide  2).    He                                                              
continued to  explain that  economic development  is a  topic that                                                              
extends  into  every decision  and  policy  in terms  of  building                                                              
communities and educating  future leaders.  Within  DED, there are                                                              
three  core   functions:     finance,  development,   and  tourism                                                              
marketing   (slide  3).     Within   the   finance  section,   DED                                                              
administers  and services  11 loan  funds with  a total  principal                                                              
outstanding in  excess of $200 million,  the bulk of which  are in                                                              
commercial fishing  loans; the largest number of loans  are in the                                                              
commercial fishing  sector and the greatest dollar  value is split                                                              
between   commercial  fishing   and   the  fisheries   enhancement                                                              
program.   Also, there are small  business loan funds such  as the                                                              
avionics  program   and  the  charter  fisheries   program.    Mr.                                                              
Jacobson noted  the rural development  initiative fund is  used to                                                              
stimulate  entrepreneurship  and  business  development  in  rural                                                              
Alaska.   He further  explained the  rural development  initiative                                                              
fund  is an  Alaska Industrial  Development  and Export  Authority                                                              
(AIDEA), DCCED, fund  that is administered by DED,  and which is a                                                              
very useful and popular fund.                                                                                                   
                                                                                                                                
CHAIR HERRON asked about the bulk fuel loan program.                                                                            
                                                                                                                                
MR.  JACOBSON responded  that  bulk fuel  loans  are more  closely                                                              
affiliated with  the Division of  Community and Regional  Affairs,                                                              
DCCED.   Mr. Jacobson  continued with  DED's development  overview                                                              
and  listed  some  of its  major  initiatives:    Alaska  Regional                                                              
Development  Organizations   (ARDORs)  reauthorization;   cultural                                                              
tourism;   North  to   Opportunity   branding  message;   unmanned                                                              
aircraft  systems;   Emmonak  Port  environmental   impact  study;                                                              
statewide  business  retention  and  expansion  program;  Made  in                                                              
Alaska (Home);  and seafood byproducts  as related to  the Iceland                                                              
trade mission (slide 5).                                                                                                        
                                                                                                                                
CHAIR HERRON asked for more information on the trade mission.                                                                   
                                                                                                                                
MR.  JACOBSON responded  that ten  private  industry members,  one                                                              
member from the  University of Alaska (UA), and one  member from a                                                              
local  economic  development  agency  were  on the  mission.    In                                                              
further  response to  Chair  Herron, he  said  he was  not on  the                                                              
mission; however,  he opined  a key point  learned on  the mission                                                              
was  that  Alaska  does  not  have   to  be  envious  of  Iceland.                                                              
Although there  is a lot to  be learned from Iceland,  Iceland has                                                              
the   advantage   of   smaller    size,   thus   allowing   better                                                              
collaboration   between  factories   and  plant  managers,   which                                                              
fosters a  cluster development approach.   A state  geographically                                                              
as large as Alaska is at a disadvantage in this regard.                                                                         
                                                                                                                                
CHAIR  HERRON provided  an anecdote  and expressed  his hope  that                                                              
Alaska can strengthen its relationship with Iceland.                                                                            
                                                                                                                                
11:47:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE STUTES  asked whether DED has any  involvement with                                                              
the shellfish industry.                                                                                                         
                                                                                                                                
MR. JACOBSON  replied that  DED works  with shellfish  farmers and                                                              
hatcheries  such  as  OceansAlaska.   The  division  completed  an                                                              
operational  audit of  the OceansAlaska  hatchery  and found  that                                                              
the existing hatchery,  with a nominal investment,  could increase                                                              
productivity    dramatically     through    basic    improvements.                                                              
Subsequently,  OceansAlaska  developed  a  new business  plan  and                                                              
received a loan  to continue its operations.  He  said he believed                                                              
mariculture enterprises  need to be self-sustaining,  and now that                                                              
OceansAlaska   has  a  viable   business   plan,  it  may   exceed                                                              
expectations based upon geoduck and oyster demand.                                                                              
                                                                                                                                
REPRESENTATIVE STUTES  expressed her understanding  that shellfish                                                              
farmers  have difficulty  obtaining  sufficient  seed for  growing                                                              
geoducks or oysters  in order to maintain their farms.   She asked                                                              
whether DED  is in  contact with "anybody  interested in  going in                                                              
that direction."                                                                                                                
                                                                                                                                
MR. JACOBSON  replied that  OceansAlaska's  mission is to  provide                                                              
seed to  geoduck and oyster  farmers in  Alaska.  The  hatchery is                                                              
non-profit, similar  to Douglas Island Pink &  Chum, Inc. (DIPAC),                                                              
and  supporting its  operations  would provide  jobs in  Ketchikan                                                              
and the needed seed for shellfish farmers across the state.                                                                     
                                                                                                                                
11:50:45 AM                                                                                                                   
                                                                                                                                
MR.  JACOBSON, in  response to  Chair  Herron, said  prior to  his                                                              
position  at  DED, he  was  the  international director  with  the                                                              
Alaska  Seafood   Marketing  Institute   (ASMI).     Mr.  Jacobson                                                              
continued  listing   his  division's  major   initiatives,  adding                                                              
minerals promotion  and trends, and opportunities  in the maritime                                                              
industrial  services   sector  (slide  5).    To   report  on  the                                                              
foregoing initiatives  in more  detail, he  returned to  the first                                                              
initiative,  the ARDOR  program,  and informed  the committee  the                                                              
program  was reauthorized  by House  Bill 71  [passed in the  28th                                                              
Alaska  State Legislature].   After  reauthorization, grants  were                                                              
issued to  participants, although  two organizations  were removed                                                              
from the  program:  Interior  Rivers and Lower Kuskokwim  Economic                                                              
Development Council.   A new  representative for that  region, the                                                              
Association  of  Village  Council  Presidents  (AVCP)  became  the                                                              
newest  ARDOR.   Also,  DED is  working  with  ARDORs to  increase                                                              
accountability   and   performance   measures,   and   to   ensure                                                              
demonstrable  results from their  tasks.  Turning  to the  Made in                                                              
Alaska (Home)  initiative, Mr. Jacobson  said a home was  built in                                                              
Anchorage  by a  contractor working  closely with  DED to  feature                                                              
Alaska-made    cabinets,   countertops,    and   other    locally-                                                              
manufactured  products  (slide  12).     Concurrently,  DED  began                                                              
working  with  the  Cold  Climate   Housing  and  Research  Center                                                              
(CCHRC) and  AVCP to study integrated  truss design homes  for the                                                              
Lower Kuskokwim area.   Again, the goal is to help  AVCP develop a                                                              
business  plan for  a truss plant  and sawmill  to provide  lumber                                                              
for local housing needs.                                                                                                        
                                                                                                                                
11:55:25 AM                                                                                                                   
                                                                                                                                
MR.  JACOBSON   directed  attention  to  the   Northwest  Cultural                                                              
Tourism and Native  Arts initiative, which is tasked  to stimulate                                                              
tourism  in rural  Alaska using  cultural  aspects as  a base  for                                                              
tourism.  Last  summer DED hosted a familiarization  tour for tour                                                              
operators, visiting  Kotzebue, Nome, White Mountain,  Council, and                                                              
Savoonga.   The next  step is  for DED  to work  in the region  to                                                              
bolster  its  capabilities and  capacities  in  order  to offer  a                                                              
broader  and  more   consistent  experience  for   both  the  tour                                                              
operators and  the communities  in the region  (slide 7).   Alaska                                                              
North to  Opportunity brochures  were developed to  promote Alaska                                                              
as a good place  for business opportunities.   The brochures focus                                                              
on Alaska's  general business  climate, opportunities  in unmanned                                                              
aircraft systems,  and natural  resources (slide  8).   A separate                                                              
initiative that  was focused on Alaska's unmanned  aircraft system                                                              
industry  development came  from a  request for  support from  the                                                              
Fairbanks  North Star  Borough  ARDOR.   Along  with UA  Fairbanks                                                              
(UAF), DED attended  the Association for Unmanned  Vehicle Systems                                                              
International  trade show  in Orlando.   Mr.  Jacobson said  DED's                                                              
presence  at the trade  show led  to negotiations  with a  company                                                              
that is  a leader in delivering  aviation training  solutions, and                                                              
which  has evaluated  potential  facility sites  in Alaska  (slide                                                              
9).                                                                                                                             
                                                                                                                                
11:59:16 AM                                                                                                                   
                                                                                                                                
CHAIR  HERRON   acknowledged  the  work  done   by  Representative                                                              
Shelley Hughes in this regard.                                                                                                  
                                                                                                                                
MR.  JACOBSON referred  to a  document provided  in the  committee                                                              
packet entitled,  "Unmanned Aircraft Systems  Economic Development                                                              
Strategy for Alaska,"  which was an overview of  past and proposed                                                              
efforts on this  topic.  He cautioned that although  Alaska has an                                                              
early lead  because of  its air  space and  destination as  a test                                                              
site, other states  are aggressive competitors for  this industry,                                                              
and are offering  research and development tax credits.   The next                                                              
initiative  discussed   was  the  Iceland  Trade   Mission,  which                                                              
originated from  Senate Bill 71  [passed in the 28th  Alaska State                                                              
Legislature].   Senate Bill  71 extended  the value-added  seafood                                                              
salmon  processing  tax  credit,   expanded  the  tax  credits  to                                                              
include  herring,  and affected  can  size manufacturing  and  by-                                                              
products.   The trade  mission to Iceland  was facilitated  by DED                                                              
with delegation  members participating at  their own expense.   It                                                              
was  learned  that  Alaska's  companies  are  "pretty  technically                                                              
advanced," in  fish processing.   Mr. Jacobson directed  attention                                                              
to  DED's  statewide Business  Retention  and  Expansion  Program,                                                              
noting that  DED hosts workshops  and provides software  solutions                                                              
to  a variety  of  communities across  the  state.   The  software                                                              
allows  economic development  organizations  to reach  out to  the                                                              
local  business  community.   Workshops  have  been  arranged  for                                                              
Soldotna,   Juneau,   Ketchikan,    Haines,   Kodiak,   Fairbanks,                                                              
Anchorage, Palmer, and Homer (slide 11).                                                                                        
                                                                                                                                
12:01:58 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  ORTIZ surmised  the  workshops  were in  locations                                                              
throughout the state.                                                                                                           
                                                                                                                                
MR.  JACOBSON  said  correct.  Workshops   would  be  carried  out                                                              
through the rest  of the year.  He added that most  of the funding                                                              
for  this initiative  was provided  through a  federal grant;  DED                                                              
has made  in-kind contributions  of  staff time.   In response  to                                                              
Chair Herron,  he said he was unsure  of the time and  location of                                                              
the next workshop.                                                                                                              
                                                                                                                                
REPRESENTATIVE STUTES asked for a schedule of the workshops.                                                                    
                                                                                                                                
MR. JACOBSON  displayed a  slide of DED's  trade booth  (slide 13.                                                              
In  the  venue  of minerals  promotion,  DED  has  been  attending                                                              
conferences  in Canada.    At the  trade  show  in Vancouver,  the                                                              
trade  booth showcased  12 different  exploration and  development                                                              
companies,  along   with  representatives   from  AIDEA   and  the                                                              
Department  of Natural Resources  (DNR).   Alaska is an  extremely                                                              
pro-mining  jurisdiction,  and   he  stressed  the  importance  of                                                              
discrediting  "the perception that  you can't  get a project  done                                                              
here,  when in actuality  that's  not the case,"  as evidenced  by                                                              
the success  of mining in the  state.  The division  also produced                                                              
the Alaska  Minerals Industry Report  (slide 13).  The  Trends and                                                              
Opportunities  in the  Alaska Maritime  Industrial Support  Sector                                                              
initiative commissioned  a report  that defined the  entire Alaska                                                              
fleet.    Every   community  was  represented  and   every  vessel                                                              
operating in  Alaska was specifically  identified.   Findings from                                                              
the report informed  Alaska's future roles in shipbuilding  and in                                                              
maximizing the value of its existing fleet (slide 14).                                                                          
                                                                                                                                
12:07:02 PM                                                                                                                   
                                                                                                                                
MR.  JACOBSON  stated  that the  Arctic  Shipping  initiative  was                                                              
being conducted  by Dr.  Lawson Brigham  and would be  distributed                                                              
to the  committee upon  completion (slide 15).   Turning  to DED's                                                              
tourism marketing  program, he noted that DED  worked very closely                                                              
with  the  tourism  private  sector   before  the  Alaska  Tourism                                                              
Marketing  Board (ATMB) was  established;  programs have  now been                                                              
transferred to  ATMB (slide 16).   Highlights of the  program are:                                                              
generation  of  almost  800,000   consumer  information  requests;                                                              
return on  investment is  over $100;  continued relationship  with                                                              
Icelandair; worked  on additional air routes; worked  closely with                                                              
Canadian  governments to  promote  road travel;  public  relations                                                              
work  that yielded  $44  million  in advertising  equivalent;  and                                                              
1,700,000  site  visits  to  TravelAlaska.com  (slide  17).    The                                                              
marketing  program   is  focused   on  generating  awareness   and                                                              
translating  awareness   into  visits  by  generating   new  high-                                                              
potential    prospects    in   North    America,    and    raising                                                              
awareness/interest   among   North    America   consumers.      He                                                              
characterized  the  program as  one  of conversion  and  awareness                                                              
through  various approaches,  also  supported  by travel  planners                                                              
and  other tactics  (slide 18).    The primary  target market  for                                                              
Alaska visitors  remains  45-65 years of  age, affluent,  married,                                                              
college-educated,   frequent  travelers,  and   previous  visitors                                                              
(slide  19).   Generating requests  for travel  information is  by                                                              
online  advertising,   magazine  advertising,  direct   mail,  and                                                              
television  (slide 20).   Almost 500,000  state vacation  planners                                                              
are  sent  out   and  are  very  effective,  with   a  10  percent                                                              
conversion  rate in  the first  year  and a  5 percent  conversion                                                              
rate  for   years  two,  three,   and  four  (slide  21).     Also                                                              
distributed  by mail  is the  "It's within  your reach"  brochure,                                                              
which is designed  to pique interest and provide  encouragement to                                                              
travel (slide 22).                                                                                                              
                                                                                                                                
12:12:12 PM                                                                                                                   
                                                                                                                                
MR. JACOBSON  explained costs for  the "North to  Alaska" brochure                                                              
are split  with Canadian partners  and the brochure works  well to                                                              
encourage  a driving  vacation  through  western  Canada and  into                                                              
Alaska  (slide  23).  Television   advertising  runs  on  national                                                              
broadcast  television,   and  TravelAlaska.com  is   a  tremendous                                                              
resource  translated into  multiple  languages: German,  Japanese,                                                              
Korean, Spanish,  and Chinese (slides  24-26).  The web  site is a                                                              
cost-effective  approach to key  markets as no  money is  spent on                                                              
advertising overseas.                                                                                                           
                                                                                                                                
CHAIR HERRON asked for most effective method of advertising.                                                                    
                                                                                                                                
MR. JACOBSON advised  television advertising creates  a tremendous                                                              
amount of  awareness, especially  for travel.   Also, the  role of                                                              
public  relations   and  articles   that  are  not   "selling"  is                                                              
important to the younger target audience.                                                                                       
                                                                                                                                
CHAIR HERRON asked about reality shows.                                                                                         
                                                                                                                                
MR.  JACOBSON offered  that  some  are considered  bad  publicity;                                                              
however, they  keep the state before  the public.  He  said he did                                                              
not have  "good statistics  on measuring  that."   The new  Alaska                                                              
Highway  travel web  site promotes  road travel;  in fact,  he was                                                              
optimistic  that road travel  may increase  this year  because gas                                                              
prices  have   gone  down  (slide   27).    Returning   to  public                                                              
relations,  he said  DED hosts the  Alaska Media  Road Show  which                                                              
brings together  40 Alaskans representing different  companies and                                                              
regions to  present to  travel journalists.   This year  the theme                                                              
was cultural  tourism, and the  event featured organizations  from                                                              
across the  state (slide 28).   From the  media road  show, travel                                                              
stories  are generated  and  published in  magazines  such as  the                                                              
Alaska   Airlines  Magazine,   promoting   tourism  and   business                                                              
development (slide 29).                                                                                                         
                                                                                                                                
12:17:47 PM                                                                                                                   
                                                                                                                                
MR.  JACOBSON recalled  the  "Today" show  filmed  in Juneau  last                                                              
year,  highlighted by  a tremendous  display of  support from  the                                                              
community.     The   department  provided   support,  ideas,   and                                                              
coordination  to the  production,  but there  was  no direct  cost                                                              
(slide  30).     He  continued  to  other  events   in  which  DED                                                              
participates  around  the world:    travel  trade events  and  co-                                                              
promotion with Icelandair  (slides 31-33).  Mr.  Jacobson returned                                                              
to collaboration  with the  private sector,  noting ATMB  held its                                                              
inaugural  meeting 1/5/15-1/6/15.    Representative Hughes  serves                                                              
as the  House designee on  the board, and  members are  invited to                                                              
attend (slide 34).                                                                                                              
                                                                                                                                
REPRESENTATIVE  ORTIZ has  heard concerns  from shellfish  farmers                                                              
about the  impact of state  regulation on the shellfish  industry.                                                              
He asked  where farmers  should be directed  for answers  to their                                                              
questions.                                                                                                                      
                                                                                                                                
MR. JACOBSON  suggested that they  contact him.  Depending  on the                                                              
concern, questions  may be  directed to DNR  or the  Department of                                                              
Environmental   Conservation   (DEC).     He   acknowledged   that                                                              
permitting  in Alaska  can  be tedious,  but  is less  challenging                                                              
than  in many  other jurisdictions.   He  cautioned that  upcoming                                                              
budget  cuts need  to be  tempered  by their  possible effects  on                                                              
quick responses from  government to some of the  challenges of the                                                              
industry, such as product testing.                                                                                              
                                                                                                                                
12:22:39 PM                                                                                                                   
                                                                                                                                
CHAIR  HERRON  referenced  an earlier  request  to  Representative                                                              
Tilton,  chair  of  the  House   Community  and  Regional  Affairs                                                              
Standing  Committee,  to assume  the  task of  recommendation  1D,                                                              
[promote  entrepreneurship  and  enterprise  development]  of  the                                                              
Alaska  Arctic   Policy  Commission  Implementation   Plan  issued                                                              
1/30/15.  He asked Mr. Jacobson to comment.                                                                                     
                                                                                                                                
MR.   JACOBSON  replied   that   improving  entrepreneurship   and                                                              
business  development  in  any  region  of  Alaska  has  to  be  a                                                              
holistic  approach, ranging  from basic services  to education  to                                                              
successful small  businesses.  His division has  been working with                                                              
the  Cold Climate  Housing Research  Center on  a more  community-                                                              
driven approach  to community development  to address issues  in a                                                              
concerted approach,  and thereby  have community involvement  from                                                              
the  beginning.     The   ARDORs  program   does  not   have  full                                                              
representation  across  the  state,  particularly  in  the  Arctic                                                              
region,  and  increasing  access   to  funds  such  as  the  Rural                                                              
Development Initiative  Fund, DED,  DCCED, should be  explored, as                                                              
access to capital  for small business is very  important; in fact,                                                              
the fund  is often expended  to its maximum  limit.   In addition,                                                              
cultural  and rural  tourism present  opportunities,  as does  the                                                              
technology   of  unmanned   aircraft   in   application  at   Fort                                                              
Wainwright.  Studies  have shown that available  career paths keep                                                              
young people engaged in their communities.                                                                                      
                                                                                                                                
12:26:12 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE TILTON expressed interest in further discussion.                                                                 
                                                                                                                                
12:26:26 PM                                                                                                                   
                                                                                                                                
The committee took an at ease from 12:26 p.m. to 12:28 p.m.                                                                     
                                                                                                                                
^PRESENTATION: ALASKA TRAVEL INDUSTRY ASSOCIATION                                                                               
        PRESENTATION: ALASKA TRAVEL INDUSTRY ASSOCIATION                                                                    
                                                                                                                              
12:28:15 PM                                                                                                                   
                                                                                                                                
CHAIR HERRON  announced that the  next order of business  would be                                                              
a presentation by the Alaska Travel Industry Association (ATIA).                                                                
                                                                                                                                
12:28:24 PM                                                                                                                   
                                                                                                                                
SARAH  LEONARD,   President  and   CEO,  Alaska  Travel   Industry                                                              
Association (ATIA),  provided a PowerPoint  presentation entitled,                                                              
"The  Alaska  Travel  Industry   Association  (ATIA),"  and  dated                                                              
February,  2015.   She informed  the committee  the Alaska  Travel                                                              
Industry  Association (ATIA)  is  the state's  leading  statewide,                                                              
nonprofit,  membership  organization   for  the  travel  industry.                                                              
With  over  600 members,  ATIA  advocates  for a  healthy  tourism                                                              
industry   and  helps   promote   Alaska  as   a  premier   travel                                                              
destination.   The membership is  diverse and includes  businesses                                                              
across  the state  from  bed and  breakfast  owners, tour  guides,                                                              
small and  large cruise ship  companies, and community  convention                                                              
and   visitor  bureaus   (slide   3).  Members   provide   quality                                                              
experiences in  national and state parks  (slide 2).  Most  of the                                                              
members are  small or  medium business; in  fact, 73  percent have                                                              
less than 20  employees (slide 3).  Member services  include those                                                              
of   a   traditional    membership-based   trade    and   industry                                                              
association;  for example,  ATIA  hosts the  largest gathering  of                                                              
tourism  professionals  during  its annual  convention  and  trade                                                              
show.   This year  the event  will be  in Juneau  10/5/15-10/8/15,                                                              
and  will feature  a  cultural arts  and  heritage tourism  summit                                                              
(slide 4).   One  of ATIA's goals  is to  increase the  quality of                                                              
the   tourism    industry   through    education   and    training                                                              
opportunities, thus  ATIA has enhanced  its web site  by providing                                                              
access  and  information  on  tourism  training  and  professional                                                              
development opportunities (slide 5).                                                                                            
                                                                                                                                
12:31:11 PM                                                                                                                   
                                                                                                                                
CHAIR HERRON  acknowledged the presence  of the Kenai  High School                                                              
basketball team and his grandson Keith Ivy.                                                                                     
                                                                                                                                
MS.   LEONARD  pointed   out   ATIA  supports   tourism   industry                                                              
scholarships   for  Alaska   students   through  its   foundation.                                                              
Scholarships have  been distributed to over 150  students and this                                                              
year $20,000  in scholarships will  be recommended.   Scholarships                                                              
are supported  by individual and  business donations,  and through                                                              
the  Pick.Click.Give  - charitable  contributions  program  (slide                                                              
5).                                                                                                                             
                                                                                                                                
REPRESENTATIVE  ORTIZ said  one of his  constituents was  pictured                                                              
on slide 6.                                                                                                                     
                                                                                                                                
MS. LEONARD  stated  the photo  on slide  6 was of  a student  who                                                              
received  the Kris  Geldaker  Memorial  scholarship.   In  further                                                              
response to  Representative Ortiz,  she said the  scholarships are                                                              
for  continuing   education  and  for  high  school   students  to                                                              
interest them in pursuing careers in the travel industry.                                                                       
                                                                                                                                
MS.  LEONARD continued  to explain  that ATIA  acts as  a link  to                                                              
marketing    for    members   through    co-operative    marketing                                                              
opportunities  available  to  businesses  and  other  services  at                                                              
trade shows.   As  a long-time  partner with  the state,  the ATIA                                                              
team is  expert at  marketing tourism  and supporting  its members                                                              
and   the   industry  with   education   and   global   networking                                                              
opportunities.   The organization has  been operating for  over 30                                                              
years,  and is  flexible in  the  way it  implements services  and                                                              
programs for  the benefit of its  members (slide 7).   The results                                                              
are that Alaska's  visitor industry is an economic  engine for the                                                              
state, and after  reinvestment in tourism marketing  by the state,                                                              
Alaska   attracted  almost   two  million   visitors  last   year.                                                              
Visitors helped  generate over $100  million in state  revenue and                                                              
$78 million in municipal  revenue through taxes and  fees.  One in                                                              
eleven Alaska jobs  are within the visitor industry,  and visitors                                                              
spent  $1.8 billion  in  the state.    Further,  $1.24 billion  in                                                              
labor income was created by tourism (slide 8).                                                                                  
                                                                                                                                
12:36:07 PM                                                                                                                   
                                                                                                                                
MS.   LEONARD  concluded   that  with   reinvestment  in   tourism                                                              
marketing, tourism  works for  Alaska (slide  9).  In  2013, there                                                              
was an  almost 7 percent increase  in summer visitation,  and with                                                              
winter  visitation  there  was  a  total  of  almost  two  million                                                              
visitors.    A  2  percent  drop  in  2014  was  attributed  to  a                                                              
reduction in  cruise capacity; however,  the prediction is  for an                                                              
increase  in  2015  (slide  10).    One  million  summer  visitors                                                              
traveled by  cruise ship, 38  percent came  by air, and  4 percent                                                              
drove  the  highway  or traveled  on  the  Alaska  Marine  Highway                                                              
System (slide  11).   Over 80  percent of  visitors came  from the                                                              
Lower 48, 10  percent were international visitors  - not including                                                              
Canada -  and 7 percent were  from Canada.  Primary  international                                                              
markets  are the United  Kingdom  and Australia  (slide 12).   Ms.                                                              
Leonard  noted that  increasing interest  in the  Arctic from  all                                                              
markets is  an opportunity for  businesses and communities  in the                                                              
Arctic  region.     Overall,  Southeast,  Southcentral,   and  the                                                              
Interior  attracted  the  highest number  of  visitors,  Southwest                                                              
received  4 percent,  and  the Far  North  received  2 percent  of                                                              
visitations.    Even  small  increases in  tourism  have  a  major                                                              
impact  on  the  Far  North;  for  example,  in  2012-2013,  total                                                              
visitor  spending was  $30  million, 300  jobs  were created,  and                                                              
there was a labor  impact of $12 million (slide 13).   She advised                                                              
that ATIA  is the voice for  small and large businesses  at policy                                                              
discussions  regarding reinvesting  in  tourism  marketing.   Last                                                              
year  ATIA worked  to pass  Senate Bill  194 [passed  in the  28th                                                              
Alaska  State  Legislature]  which   created  the  Alaska  Tourism                                                              
Marketing Board  (ATMB) in order  to have government  and industry                                                              
execute a tourism  marketing plan for Alaska.   The board consists                                                              
of   18  industry   representatives  recommended   by  ATIA,   and                                                              
representatives  from  the  Department of  Commerce,  Community  &                                                              
Economic Development (DCCED), and the legislature.                                                                              
                                                                                                                                
12:39:54 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE STUTES asked for the sources of ATIA's funding.                                                                  
                                                                                                                                
MS. LEONARD  responded that ATIA's  funding is through  membership                                                              
dues, its annual  convention, and its state contract  to implement                                                              
a marketing plan.   In further response to  Representative Stutes,                                                              
she advised  that ATIA  is a  nonprofit association  and is  self-                                                              
sustaining.                                                                                                                     
                                                                                                                                
CHAIR HERRON  recalled that  tourism marketing  is always  a high-                                                              
profile item.                                                                                                                   
                                                                                                                                
MS.  LEONARD returned  attention to  ATMB, noting  that the  board                                                              
reviewed  applications and  recommended  qualified candidates  and                                                              
programs (slide  15).  Program  recommendations from ATIA  to ATMB                                                              
were  illustrated (slide  16).   She  stressed  the importance  of                                                              
having  professional  industry  insight  in  a  tourism  marketing                                                              
plan.   Additional issues  addressed by  ATIA include  public land                                                              
issues,  arts   and  cultural  resources,   permitting  processes,                                                              
economic  development, and  the  growing interest  in the  Arctic.                                                              
In fact,  the legislature's interest  in the growth of  tourism in                                                              
the Arctic  region is  welcome and timely.   The tourism  industry                                                              
seeks  involvement  when the  state  and federal  governments  are                                                              
discussing  policy  affecting  Alaska's Arctic,  and  through  the                                                              
Arctic  Council.    The  tourism  industry  wants  to  be  on  the                                                              
forefront  of  issues   in  the  region  such   as  the  available                                                              
community  resources,   access,  infrastructure,   safety  issues,                                                              
communications, monitoring,  investment costs, and  whether Arctic                                                              
communities  are  ready  for,  or  want,  increased  activity  and                                                              
visitation  (slide  17).    Ms.  Leonard  advised  ATIA  would  be                                                              
addressing  the  aforementioned  issues  and other  topics  at  an                                                              
Arctic Tourism Panel  to be held on 10/5/15 during  its convention                                                              
in Juneau.   Members  of the  legislature are  invited to  attend.                                                              
She concluded, expressing  her belief that tourism  is a renewable                                                              
resource,  and ATIA  members  work to  market  Alaska to  visitors                                                              
thus are  proud of the economic  and quality of life  benefits the                                                              
tourism industry brings to Alaska.                                                                                              
                                                                                                                                
12:44:06 PM                                                                                                                   
                                                                                                                                
CHAIR HERRON  asked whether Craig  Fleener, the governor's  Arctic                                                              
policy advisor,  asked her  to be a member  of host  committee for                                                              
the Arctic Council.                                                                                                             
                                                                                                                                
MS. LEONARD said no.                                                                                                            
                                                                                                                                
CHAIR HERRON stated  that the committee would contact  Mr. Fleener                                                              
in writing on this matter.                                                                                                      
                                                                                                                                
REPRESENTATIVE  ORTIZ directed  attention to  slide 13, and  noted                                                              
the low  percentage of visitations  for the  Far North.   He asked                                                              
whether there has been any growth in tourism in this region.                                                                    
                                                                                                                                
MS.  LEONARD said  the  percentage for  this  region has  remained                                                              
stable for many  years, but she has heard anecdotal  evidence from                                                              
Arctic   tourism  operators   that   more   visitors  are   making                                                              
reservations  for the  upcoming summer.   In  further response  to                                                              
Representative  Ortiz,  she said  ATIA  and  its partners  have  a                                                              
focus on  promoting winter  tourism activities;  in fact,  members                                                              
seek to grow winter tourism.                                                                                                    
                                                                                                                                
12:46:51 PM                                                                                                                   
                                                                                                                                
TIM   MCDONNELL,   Vice-President,   TEMSCO   Helicopters,   Inc.,                                                              
provided  a  brief  history  of   his  experience  in  the  travel                                                              
industry.    He  said  tourism   in  Alaska  has  made  incredible                                                              
progress over  the last 45  years, but "we're  only at the  tip of                                                              
the  iceberg of  where  this thing  can go."    The Alaska  Travel                                                              
Industry   Association   is  a   young,  but   very   progressive,                                                              
organization of which he is proud.                                                                                              
                                                                                                                                
REPRESENTATIVE ORTIZ  asked whether the ideas of  the Alaska brand                                                              
and Alaska's image are "holding up."                                                                                            
                                                                                                                                
MR.  MCDONNELL   said  that   Alaska  always  attracts   interest;                                                              
however,   the   travel   industry   is   very   complicated   and                                                              
competitive, and marketing efforts are extremely important.                                                                     
                                                                                                                                
CHAIR HERRON  asked Ms. Leonard  to work  with Rob Earl  and craft                                                              
relevant correspondence to Mr. Fleener.                                                                                         
                                                                                                                                
12:50:56 PM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Economic Development, Tourism, and Arctic                                                                  
Policy meeting was adjourned at 12:50 p.m.                                                                                      

Document Name Date/Time Subjects
EDA - ATIA Overview 2.12.15.pdf HEDA 2/12/2015 11:30:00 AM
EDA - DCCED Overview 2.12.15.pdf HEDA 2/12/2015 11:30:00 AM