Legislature(2013 - 2014)BARNES 124

02/11/2014 11:15 AM House ECON. DEV., TRADE & TOURISM


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11:16:54 AM Start
11:17:14 AM Overview: Division of Economic Development, Department of Commerce, Community & Economic Development
12:20:15 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
- Overview & New Programs
                    ALASKA STATE LEGISLATURE                                                                                  
  HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT, TRADE, AND                                                                 
                            TOURISM                                                                                           
                       February 11, 2014                                                                                        
                           11:16 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Shelley Hughes, Chair                                                                                            
Representative Pete Higgins                                                                                                     
Representative Harriet Drummond                                                                                                 
Representative Geran Tarr                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Lynn Gattis                                                                                                      
Representative Bob Herron                                                                                                       
Representative Craig Johnson                                                                                                    
Representative Kurt Olson                                                                                                       
Representative Lance Pruitt                                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW: DIVISION OF ECONOMIC DEVELOPMENT~ DEPARTMENT OF                                                                       
COMMERCE~ COMMUNITY & ECONOMIC DEVELOPMENT                                                                                      
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
ROBERTA GRAHAM, Assistant Commissioner                                                                                          
Office of the Commissioner                                                                                                      
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided an overview of the Division of                                                                  
Economic Development, program updates, future plans, and                                                                        
Alaska's general economic health.                                                                                               
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
11:16:54 AM                                                                                                                   
                                                                                                                                
CHAIR  SHELLEY  HUGHES  called the  House  Special  Committee  on                                                             
Economic  Development, Trade,  and  Tourism meeting  to order  at                                                               
11:16 a.m.   Representatives Higgins  and Hughes were  present at                                                               
the call to order.   Representatives Drummond and Tarr arrived as                                                               
the meeting was in progress.                                                                                                    
                                                                                                                                
^Overview:  Division  of   Economic  Development,  Department  of                                                               
Commerce, Community & Economic Development                                                                                      
   Overview: Division of Economic Development, Department of                                                                
           Commerce, Community & Economic Development                                                                       
                                                                                                                              
11:17:14 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES announced  that the only order of  business would be                                                               
an overview  of the Division of  Economic Development, Department                                                               
of Commerce, Community & Economic  Development (DCCED) to provide                                                               
program   information  regarding   updates,  future   plans,  and                                                               
Alaska's general economic health.                                                                                               
                                                                                                                                
11:18:56 AM                                                                                                                   
                                                                                                                                
ROBERTA   GRAHAM,   Assistant   Commissioner,   Office   of   the                                                               
Commissioner,  Department  of   Commerce,  Community  &  Economic                                                               
Development, informed  the committee  that she would  address the                                                               
following  topics:   what  DCCED  is  doing  to create  a  better                                                               
economy  in  Alaska;  DCCED's  role  in  the  Arctic  and  Arctic                                                               
development  specifically; how  DCCED  collaborates with  others,                                                               
other  departments, and  within  the department  itself; and  how                                                               
DCCED  is looking  toward  the future  to  diversify the  economy                                                               
beyond oil and  gas.  Ms. Graham then emphasized  that DCCED, and                                                               
the Division  of Economic Development in  particular, are focused                                                               
on  a  strong  Alaska.    The department's  theme  is  "North  to                                                               
Opportunity," which focuses on  opportunity including growing the                                                               
state's  economy   and  jobs,  unlocking  the   state's  resource                                                               
potential, promoting  that the  state is  open for  business, and                                                               
building strength and resilience for future generations.                                                                        
                                                                                                                                
11:20:55 AM                                                                                                                   
                                                                                                                                
MS.  GRAHAM  clarified  that economic  growth  needs  sustainable                                                               
energy and  reducing the  cost of energy  through oil  tax reform                                                               
through the  development of the  new gasline  project, resolution                                                               
of the Point Thomson litigation,  and establishment of benchmarks                                                               
for   the  producers.     Through   DCCED,  the   Alaska  Gasline                                                               
Development Corporation (AGDC) is  reviewing the smaller pipeline                                                               
development  as well.   Ms.  Graham  emphasized that  sustainable                                                               
energy and a reduction  in the cost of energy is  a big focus for                                                               
DCCED, as are strong communities,  which are necessary for viable                                                               
economic   development.      Strong  communities   include   good                                                               
infrastructure,  strong   local  government,  utilities,   and  a                                                               
general  way   of  life   that  produces   economic  opportunity.                                                               
Consumer protection, through regulation  and enforcement, is also                                                               
a major focus of DCCED as it ensures a stable business climate.                                                                 
                                                                                                                                
11:22:27 AM                                                                                                                   
                                                                                                                                
MS.  GRAHAM, regarding  what DCCED  is doing  to create  a better                                                               
Alaska economy,  highlighted the department's  marketing efforts,                                                               
focus on  infrastructure, efforts to  reduce the cost  of energy,                                                               
research, and assistance  with businesses.  In  terms of creating                                                               
new markets for  the state's goods and  services, she highlighted                                                               
the  department's key  marketing programs  for tourism,  seafood,                                                               
and  minerals.   She  then pointed  out  that [department  staff]                                                               
attend  trade  shows  to  develop   future  contacts,  meet  with                                                               
businesses to  resolve problems,  and review  new [opportunities]                                                               
such  as new  air  carriers coming  to Alaska.    In fact,  DCCED                                                               
courted Iceland Air to open up  a new air route.  The department,                                                               
she related,  has also  accelerated the  development of  rare and                                                               
strategic  minerals.     She  then  directed   attention  to  two                                                               
brochures  that   highlight  the   overall  mineral   and  mining                                                               
activities that  are occurring  in Alaska.   At the  beginning of                                                               
March,  the  department  along  with  a  number  of  other  state                                                               
partners, mining  companies in  Alaska, Native  corporations, and                                                               
others, will  attend the Prospectors &  Developers Association of                                                               
Canada meeting  in Toronto, Canada.   This is one of  the largest                                                               
mining conferences in the world,  she noted.  During the meeting,                                                               
DCCED  will  host  an Alaska  opportunity  room  to  specifically                                                               
address what  Alaska offers, the  future investment  potential in                                                               
Alaska mining,  and how  to diversify  existing resources  in the                                                               
companies that  are currently  invested in  the state.   Although                                                               
the aforementioned  is a major  effort, DCCED is also  focused on                                                               
increasing  development and  marketing  of  forest products,  the                                                               
film  program, upgrading  trade show  booths and  collateral, and                                                               
enhancing the  promotion of "Made in  Alaska" (MIA).  One  of the                                                               
ways in which the department is  promoting MIA is through the MIA                                                               
home incentive.   The MIA home program, which DCCED  did with the                                                               
Department of Natural Resources (DNR),  is evolving and this year                                                               
work  is occurring  to make  the MIA  house with  as many  Alaska                                                               
resourced  products   as  possible.    The   ultimate  goal,  she                                                               
emphasized, is to have the  [Alaska resourced] products in retail                                                               
establishments  and   conduct  seminars  in  the   home  as  it's                                                               
constructed.   The hope is  for construction of the  house, which                                                               
is located in Anchorage, to begin  in June and to be completed by                                                               
August.                                                                                                                         
                                                                                                                                
11:27:33 AM                                                                                                                   
                                                                                                                                
MS.  GRAHAM  then  turned  to  the  matter  of  growing  Alaska's                                                               
businesses  and  attracting new  industries.    She informed  the                                                               
committee  that  DCCED  is creating  more  emphasis  on  cultural                                                               
tourism.   In fact, DCCED is  doing a pilot project  in Northwest                                                               
Alaska where interest is being  sought from businesses, including                                                               
Native  artists, and  local communities.   The  department, while                                                               
on  the  road  and  attending  trade  shows,  is  also  promoting                                                               
agricultural  industries.    There   is  also  more  emphasis  on                                                               
creating a film community in terms  of feature films.  Ms. Graham                                                               
said  that  one  must  discuss providing  access  to  capital  in                                                               
growing  Alaska's economy.    Within DCCED  and  the Division  of                                                               
Economic  Development   (DED),  access  to  capital   is  through                                                               
financing  loan programs,  of  which  there are  11.   The  Rural                                                               
Development   Initiative  Fund,   the  Small   Business  Economic                                                               
Development  Revolving  Loan  Fund, and  the  [Alaska  Microloan]                                                               
program cater to small business  development.  The aforementioned                                                               
are robust  in lending  and  creating - or retaining  - jobs that                                                               
might not  otherwise be  in place.   "We're dedicated  to finding                                                               
ways to help  small businesses obtain the capital  that they need                                                               
to grow  and expand ...,"  she related.   Over the course  of the                                                               
life  of the  Rural  Development Initiative  Fund  and the  Small                                                               
Business  Economic Development  Revolving  Loan  Fund, they  have                                                               
created or  saved/retained 1,200 small  business jobs.   She then                                                               
highlighted the  Skagway ore terminal  project, a  larger project                                                               
through the  Alaska Industrial  Development and  Export Authority                                                               
(AIDEA), which has created numerous  jobs and will continue to do                                                               
so as the project expands.                                                                                                      
                                                                                                                                
11:31:00 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE DRUMMOND,  as a former Anchorage  Assembly member,                                                               
informed  the committee  that the  Municipality of  Anchorage was                                                               
granted about  $13 million in  the 49th State Angel  Fund monies.                                                               
Those funds  are loans, not  grants, and thus will  ultimately be                                                               
repaid.   This was the first  time such funding had  been awarded                                                               
to  a municipality  as it  has normally  been awarded  to states.                                                               
She  recalled that  at the  time  the Anchorage  Assembly had  to                                                               
approve the appropriation, it was  told the state wasn't prepared                                                               
to  manage these  funds and  thus the  municipality was  selected                                                               
instead.  She inquired as to  why the state was unable to provide                                                               
management of the 49th State Angel Funds.                                                                                       
                                                                                                                                
MS. GRAHAM recalled  that the opportunity to house  that fund did                                                               
come to DCCED first,  but there was a timing issue.   In order to                                                               
receive the 49th  State Angel Funds there was a  need to increase                                                               
the authority to do so.  However,  there was only a set amount of                                                               
time,  perhaps 60-90  days, to  initiate  the fund.   The  letter                                                               
arrived in  the late summer/early  fall and with  the legislature                                                               
not  meeting  again  until  the winter,  DCCED  didn't  have  the                                                               
flexibility  to  receive the  funds.    Therefore, the  work  the                                                               
department had  put into  creating that  opportunity went  to the                                                               
city  and DCCED  did what  it  could to  make the  municipality's                                                               
application seamless.                                                                                                           
                                                                                                                                
REPRESENTATIVE DRUMMOND asked  if the 49th State  Angel Funds are                                                               
for statewide use or only  for businesses and startups within the                                                               
Municipality of Anchorage.                                                                                                      
                                                                                                                                
MS. GRAHAM offered  that the 49th State Angel  Fund has addressed                                                               
that by  investing the  preponderance of  the initial  funding in                                                               
other  funds.   To  that  end,  the  49th  State Angel  Fund  has                                                               
dedicated at  least half  of the  funds, through  the application                                                               
and review processes,  to other venture funds  that then consider                                                               
other investment opportunities.                                                                                                 
                                                                                                                                
REPRESENTATIVE  DRUMMOND  recalled  reading   that  a  couple  of                                                               
million of  the 49th  State Angel  Funds have  been given  out in                                                               
seed  money and  another couple  of  million have  been given  to                                                               
another organization.                                                                                                           
                                                                                                                                
11:35:27 AM                                                                                                                   
                                                                                                                                
MS.  GRAHAM,   [returning  to  the  issue   of  growing  Alaska's                                                               
businesses  and attracting  new industries],  told the  committee                                                               
that  DCCED  has worked  to  grow  export markets  through  trade                                                               
missions  to Iceland,  China, and  German-speaking  Europe.   The                                                               
trade  missions  engage  industries  in  countries  that  have  a                                                               
relationship with  Alaska and  the work that  is done  in Alaska.                                                               
Therefore, they  could include the  seafood, tourism,  and energy                                                               
industries.  Although a lot of  ongoing work is occurring in that                                                               
arena,  [DCCED] is  looking  toward new  markets  in seafood  and                                                               
energy  in  Asian  countries.    Ms.  Graham  then  informed  the                                                               
committee of  a recent  agreement with  the Government  of Yukon,                                                               
Canada, to develop  mutual economic needs.  The scope  of work is                                                               
being developed through  the Alaska Energy Authority  (AEA).  Ms.                                                               
Graham explained that DCCED works  closely with private industry,                                                               
regional and local economic development  organizations as it goes                                                               
about its  work with the  universities, local  governments, trade                                                               
associations,  and  other  state agencies.    The  aforementioned                                                               
partners are important as DCCED implements its business plan.                                                                   
                                                                                                                                
11:37:40 AM                                                                                                                   
                                                                                                                                
MS. GRAHAM  then addressed the role  of DCCED in terms  of Arctic                                                               
development.   Arctic  development,  she opined,  is of  critical                                                               
importance for the  state as well as the nation.   The department                                                               
is working with  other state partners on issues such  as the deep                                                               
water Arctic  port and providing input  into the administration's                                                               
position  on  Arctic-related issues.    She  said that  DCCED  is                                                               
conducting a  study regarding the  potential of  Arctic shipping,                                                               
impact on safe and reliable  shipping, new sources of energy, the                                                               
creation  of jobs  in the  future,  and ways  to encourage  trade                                                               
between nations.   She explained that the scope of  work is being                                                               
handled through  the University of  Alaska Fairbanks (UAF)  as it                                                               
has the intellectual capital to work  on this.  In developing the                                                               
work, there have been discussions  with Arctic shippers and those                                                               
that insure them.   A transshipment hub, which  is different than                                                               
a deep water port, is  where [goods] going to different locations                                                               
are  loaded and  offloaded.   Currently,  transshipment hubs  are                                                               
being explored  for Unalaska  and Adak.   The department  is also                                                               
reviewing  how it  courts  and works  with  businesses in  Arctic                                                               
countries,  such   as  Iceland  and  Finland,   who  are  already                                                               
interested  in investing  in Alaska.    In fact,  last week  [the                                                               
department] heard from Iceland regarding opportunities.                                                                         
                                                                                                                                
11:39:56 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES  inquired as to when  the study began and  will end.                                                               
She also  inquired as  to how  the study  compares with  the U.S.                                                               
Army Corps of  Engineers' study and dovetails  with other efforts                                                               
such  as  the  DNR's  request for  proposals  (RFPs)  in  January                                                               
regarding the land needed for port development.                                                                                 
                                                                                                                                
MS. GRAHAM characterized DCCED's work  with issues related to the                                                               
Arctic as  collaborative, and  noted that  she served  as DCCED's                                                               
representative on the deep water  port study.  Although the study                                                               
has been very  collaborative in terms of input,  it's the purview                                                               
of  the   U.S.  Corps   of  Engineers   and  the   Department  of                                                               
Transportation &  Public Facilities (DOT&PF) to  bring that study                                                               
to  fruition.   The  administration also  has  an Arctic  working                                                               
group for those involved with  Arctic issues, which might include                                                               
the Department  of Military &  Veterans' Affairs  (DMVA), DOT&PF,                                                               
the Department  of Environmental Conservation (DEC),  and others.                                                               
The study  began in  November with a  work shop  in collaboration                                                               
with the Norwegian government regarding  the new maritime Arctic,                                                               
specifically considering  the Northern  Sea Route.   There  was a                                                               
day-and-a-half  symposium  during  which   a  number  of  sources                                                               
provided  information on  economic  development  beyond the  deep                                                               
water  port.   The  Counsel General  of  the Norwegian  Consulate                                                               
informed  attendees  about  what  Norway is  doing  in  terms  of                                                               
offshore development,  telecommunications, and a number  of other                                                               
areas.  A  draft report is anticipated at the  end of this fiscal                                                               
year, June or July, with a final report anticipated in the fall.                                                                
                                                                                                                                
11:42:37 AM                                                                                                                   
                                                                                                                                
MS.  GRAHAM, in  response to  Representative Drummond,  explained                                                               
that  ships  transiting  the Northern  Sea  Route  carrying  some                                                               
energy product would offload at a  port such as Adak, and take on                                                               
additional cargo to take to its  home port, which could be Norway                                                               
or Finland.  The cargo would  then be distributed via the ship to                                                               
the destinations to  which it was intended.   A transshipment hub                                                               
is where cargo  is offloaded and loaded.  In  further response to                                                               
Representative  Drummond,  Ms.  Graham confirmed  that  Adak  and                                                               
Unalaska are  under consideration  as locations because  they are                                                               
strategic  locations and  have other  capabilities/elements, such                                                               
as  a workforce  and security.    Although there  could be  other                                                               
locations,  Adak  and  Unalaska  are   the  two  that  have  been                                                               
identified.                                                                                                                     
                                                                                                                                
11:44:34 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE HIGGINS surmised then  that shippers don't want to                                                               
navigate the  full route  but rather want  to travel  halfway and                                                               
turn around where they can offload and load cargo.                                                                              
                                                                                                                                
MS.  GRAHAM stated  her  agreement  with Representative  Higgins'                                                               
understanding,  and added  her  understanding that  predominantly                                                               
smaller ships would be used.                                                                                                    
                                                                                                                                
11:45:33 AM                                                                                                                   
                                                                                                                                
MS.  GRAHAM then  turned  to how  DCCED  collaborates with  other                                                               
departments.     She   underscored  that   DCCED  is   all  about                                                               
collaboration, which she  opined DCCED does well and  often.  The                                                               
department participates in at  least three subcabinets, including                                                               
the  Rural Subcabinet,  the Economic  Development Working  Group,                                                               
and the Natural Resources Subcabinet.   With the exception of the                                                               
time   during  the   legislative   session,  the   aforementioned                                                               
subcabinets meet at  least quarterly and sometimes  monthly.  The                                                               
department, she  noted, is also  part of the Food  Policy Working                                                               
Group, and works  with other departments regarding  how to better                                                               
market and extend the state's  agricultural resources through the                                                               
state's  existing  infrastructure  and departments,  as  well  as                                                               
outside of  Alaska.   The department  is involved  with disaster-                                                               
related issues through departments  that oversee those particular                                                               
issues.  The department is  also involved with the Arctic Working                                                               
Group and is a marketing  partner, although many departments have                                                               
their own  marketing entity within  that department.   When DCCED                                                               
assumed  responsibility  for  tourism marketing,  it  decided  to                                                               
identify  and convene  all marketing  groups  within the  various                                                               
departments.   The  department meets  with  the marketing  groups                                                               
regularly to  discuss topics in  which there is  mutual interest.                                                               
Every effort is  made to include marketing  partners in [DCCED's]                                                               
collateral.  For instance, the  state's vacation planner includes                                                               
pages devoted to "Alaska Grown",  state parks, and other entities                                                               
within  the state.    The  aforementioned is  an  effort to  help                                                               
market what the state has to offer.                                                                                             
                                                                                                                                
11:48:19 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES recalled  mention of cultural tourism,  and asked if                                                               
there is a  separate marketing program for that.   She also asked                                                               
how DCCED came to invest in cultural tourism.                                                                                   
                                                                                                                                
MS. GRAHAM explained  that cultural tourism has been  part of the                                                               
tourism marketing program  for a number years, but  has ebbed and                                                               
flowed as businesses  or communities have wanted  to be involved.                                                               
She highlighted  that cultural  tourism ranks in  the top  10 top                                                               
attractions  of  visitors  per the  Alaska  visitors'  statistics                                                               
program.                                                                                                                        
                                                                                                                                
11:50:31 AM                                                                                                                   
                                                                                                                                
CHAIR  HUGHES   related  the  following  question   submitted  by                                                               
Representative Reinbold:                                                                                                        
                                                                                                                                
     Since fiscal  year '11,  the department's  received $16                                                                    
     million-plus   a  year   in  tourism   marketing  funds                                                                    
     directly  instead  of  contracting with  the  qualified                                                                    
     trade association.   What has the  department done with                                                                    
     the  $64 million  during this  time and  what does  the                                                                    
     department plan to do with  the $16 million proposed in                                                                    
     the governor's budget this year?                                                                                           
                                                                                                                                
MS. GRAHAM  answered that since  fiscal year 2012 (FY  12), which                                                               
was the  year DCCED  assumed the  tourism marketing  program, the                                                               
immediate need  was to  assume the  five domestic  contracts that                                                               
are partners  and help implement  the tourism  marketing program.                                                               
They include advertising  research, fulfillment contracts, public                                                               
relations,  and the  web  contractor.   She  reported that  since                                                               
2012,  tourism has  increased.   In  fact,  a yet-to-be  released                                                               
report specifies  that the  amount of  summer visitors  to Alaska                                                               
was 7 percent higher in 2013 than  in 2012.  There have also been                                                               
additional  cruise  ships coming  to  Alaska,  which she  largely                                                               
attributed  to  Governor Parnell's  work  to  decrease taxes  and                                                               
increase marketing several  years ago.  The  marketing budget did                                                               
increase  to $16  million and  the  industry contributes  another                                                               
$2.7 [million].  She highlighted  the entrance of Iceland Air and                                                               
Virgin America as [the result]  of hard work to increase tourism.                                                               
Ms.  Graham  opined  that  DCCED's marketing  is  far  and  wide,                                                               
global, and there is increased  tourism from various parts of the                                                               
world.                                                                                                                          
                                                                                                                                
11:53:15 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES  inquired as to  how the $2.7 million  is collected.                                                               
Chair  Hughes acknowledged  the increase  in tourists,  but asked                                                               
whether the state is getting  more [tourism marketing] per dollar                                                               
than if those functions were contracted out.                                                                                    
                                                                                                                                
MS. GRAHAM explained that the  tourism expenditure is established                                                               
annually  in  consultation  with  the tourism  industry,  and  is                                                               
spread  across the  various efforts  while fulfilling  the travel                                                               
planner.  Certainly,  more funds are being leveraged  in terms of                                                               
web   advertising  as   more  visitors   come  from   web  sites.                                                               
Furthermore,  there  have  been  more  requests  for  the  travel                                                               
planner.    Ms. Graham  explained  that  every year  the  tourism                                                               
marketing program  establishes a goal  in terms of the  number of                                                               
inquiries it hopes to receive  from advertising and other sources                                                               
for the  travel planner.   Over the past  few years, the  goal of                                                               
around 650,000  inquiries has been  routinely surpassed  by about                                                               
100,000 inquiries.   Therefore,  she surmised that  more visitors                                                               
are being reached regarding traveling  to Alaska.  The conversion                                                               
study will be  underway soon and will actually  document how many                                                               
visitors  who  made inquiries  actually  converted  to visit  the                                                               
state.    The study  will  also  specify  from which  sources  of                                                               
advertising or  expenditures the visitors converted.   In further                                                               
response to Chair Hughes, Ms.  Graham informed the committee that                                                               
the  tourism  industry  is  engaged   almost  daily.    In  fact,                                                               
quarterly meetings  are held in  order that the  tourism industry                                                               
advise and consult  with DCCED on the  tourism marketing programs                                                               
that DCCED directs  and implements.  She opined  that the process                                                               
is collaborative and is going quite well.                                                                                       
                                                                                                                                
CHAIR  HUGHES  expressed the  desire  to  hear from  the  tourism                                                               
industry.   She  then opined  that she  prefers that  the private                                                               
sector  take  care  of  certain  things.    Therefore,  when  the                                                               
government takes  on a task, she  said she hopes a  good value is                                                               
received for the dollar spent.                                                                                                  
                                                                                                                                
11:57:59 AM                                                                                                                   
                                                                                                                                
CHAIR HUGHES  asked how DCCED  would define  economic development                                                               
as part of  its mission.  She then inquired  as to the indicators                                                               
DCCED is looking for in  terms of measuring success and achieving                                                               
economic development.                                                                                                           
                                                                                                                                
MS.  GRAHAM  specified  that economic  development  is  typically                                                               
defined  as   strategies  and  efforts   that  create   jobs  and                                                               
opportunities for  businesses, entrepreneurs, and  those striving                                                               
for better.  This type  of economic development is different than                                                               
community development,  which focuses more on  infrastructure and                                                               
programs  that  help communities  build  a  strong base  for  the                                                               
future.   Measuring  economic development  is difficult  since it                                                               
can be  measured in  many different ways,  including in  terms of                                                               
the  number   of  loans  awarded,  jobs   [created  and  filled],                                                               
businesses helped through technical  programs, and businesses and                                                               
private  sector entities  involved in  DCCED's marketing  effort.                                                               
She related that when DCCED staff  attends an event at which they                                                               
might meet with  key travel journalists, they take  any number of                                                               
tourism  partners who  might want  to join;  that group  seems to                                                               
grow every year.                                                                                                                
                                                                                                                                
12:00:38 PM                                                                                                                   
                                                                                                                                
MS. GRAHAM,  in response  to Chair  Hughes, confirmed  that DCCED                                                               
does track the number of  calls received, the business assistance                                                               
delivered, and  the number of  jobs resulting from  the financing                                                               
program.   She said she would  be happy to provide  those numbers                                                               
to the committee.                                                                                                               
                                                                                                                                
12:01:36 PM                                                                                                                   
                                                                                                                                
CHAIR  HUGHES inquired  as to  whether  the Economic  Development                                                               
Working  Group   is  the  same   organization  as   the  Economic                                                               
Development Advisory Council.                                                                                                   
                                                                                                                                
MS. GRAHAM  replied no,  adding that  they are  different bodies.                                                               
The  Economic  Development   Advisory  Council  is  predominantly                                                               
industry and  business members who  meet with  the commissioner's                                                               
office  on  an  irregular  basis during  which  concerns  of  the                                                               
industry are  heard.  The Economic  Development Subcabinet, which                                                               
she referred to  as a working group earlier,  consists of cabinet                                                               
members  at the  commissioner and  deputy commissioner  level who                                                               
come  together  to  discuss  economic  development  issues.    In                                                               
further response to  Chair Hughes, Ms. Graham  confirmed that the                                                               
Economic   Development   Subcabinet  doesn't   [include   private                                                               
industry]   but   rather   consists  of   commissioners,   deputy                                                               
commissioners, AEA, AIDEA, and the University of Alaska.                                                                        
                                                                                                                                
CHAIR  HUGHES inquired  as to  whether  the Economic  Development                                                               
Advisory  Council  listens  to  industry  concerns  in  terms  of                                                               
barriers  specific to  increased  economic  development, or  just                                                               
general  barriers.    She  further inquired  as  to  whether  the                                                               
council   makes  recommendations   for  long-term   planning  and                                                               
strategies for DCCED.                                                                                                           
                                                                                                                                
MS.  GRAHAM  confirmed  that the  Economic  Development  Advisory                                                               
Council  listens to  industry in  terms of  general barriers  and                                                               
barriers specific to increased economic  development.  She added,                                                               
however,  that any  topic  of  concern is  also  discussed.   For                                                               
instance, the last time the  council met the topics of discussion                                                               
surrounded permitting,  roads to resources, the  Alaska Workforce                                                               
Investment  Board,   and  other   issues  related   to  workforce                                                               
development.    Hearing  the   issues/concerns  of  the  industry                                                               
provides a  good barometer of how  to address them.   The intent,                                                               
she explained,  is to have  input without asking  the legislature                                                               
to develop a plan.                                                                                                              
                                                                                                                                
12:05:17 PM                                                                                                                   
                                                                                                                                
CHAIR HUGHES, recalling  testimony that DCCED has  an annual work                                                               
plan, asked if  DCCED has a long-term plan.   She opined that the                                                               
Economic  Development  Advisory  Council   seems  to  be  a  good                                                               
organization to develop a long-term plan for DCCED.                                                                             
                                                                                                                                
MS.  GRAHAM related  her understanding  that the  governor's plan                                                               
for long-term economic  planning has been one in  which it's left                                                               
to the private sector to engage with [the department].                                                                          
                                                                                                                                
CHAIR HUGHES interjected that  the [Economic Development Advisory                                                               
Council] is  [the appropriate group]  and provides  the opportune                                                               
time to  provide input.   The state will have  a role as  so much                                                               
hinges on infrastructure,  affordable energy, and communications.                                                               
She  expressed surprise  that the  Economic Development  Advisory                                                               
Council has not been used for that purpose.                                                                                     
                                                                                                                                
MS.  GRAHAM clarified  that the  department engages  the Economic                                                               
Development Advisory Council on a  number of issues and takes its                                                               
advice and  input to  develop any number  of concepts  and ideas,                                                               
but  to date  the council  hasn't  been engaged  in developing  a                                                               
long-term plan.   The [Division  of Economic Development]  has an                                                               
annual work  plan, which is based  on statutory responsibilities,                                                               
research   projects,  collateral,   innovative  thinking   around                                                               
marketing,  business  assistance  programs,  and  aspects  on  an                                                               
annual basis.                                                                                                                   
                                                                                                                                
CHAIR HUGHES  acknowledged that the  work plan would  address the                                                               
obligatory and  statutory matters.   However, she opined  that it                                                               
seems inappropriate  that it's a  reactive situation in  terms of                                                               
present  situations, but  rather there  should be  some proactive                                                               
planning for the future.   Therefore, Chair Hughes encouraged the                                                               
department  to  make use  of  the  Economic Development  Advisory                                                               
Council  and consider  obtaining its  input on  a regular  basis,                                                               
particularly in terms of the Arctic.                                                                                            
                                                                                                                                
MS.  GRAHAM  noted  her  agreement with  Chair  Hughes  that  the                                                               
Economic Development Advisory Council  is an incredibly important                                                               
group of advisors to DCCED.   The department tries not to tax the                                                               
council, although its advice and perspective are always sound.                                                                  
                                                                                                                                
12:09:54 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE DRUMMOND returned to  the tourism marketing effort                                                               
of DCCED  and asked what  prospective visitors seek [in  terms of                                                               
marketing materials].                                                                                                           
                                                                                                                                
MS. GRAHAM  informed the  committee that  the visitor's  guide is                                                               
produced  online,  is downloadable,  and  is  mobile.   She  then                                                               
reviewed the process for requesting  the visitor's guide.  First,                                                               
a visitor receives a smaller  version of the vacation planner and                                                               
then  follow up  occurs  and those  very  interested in  visiting                                                               
Alaska then  receive the full  book, or  are directed to  the web                                                               
site.   The large,  glossy visitor's guide  only goes  to serious                                                               
inquiries that  are potential conversions.   In  further response                                                               
to  Representative Drummond,  Ms. Graham  informed the  committee                                                               
that the visitor's  guide without the fulfillment  portion is not                                                               
that expensive  to print, at  a cost of  $1.14 to produce.   With                                                               
the fulfillment  portion, the cost  is slightly more  than $1.14.                                                               
The guide is bulk mailed in  batches and the book and the mailing                                                               
totals under  $2.  There  is a  contractor based in  Portland and                                                               
the  visitor's  guide is  designed  by  the advertising  firm  of                                                               
Bradley Reid + Associates.                                                                                                      
                                                                                                                                
12:14:51 PM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  HIGGINS, referring  to a  brochure on  the timber                                                               
industry, pointed  out that it  specifies 200 million  board feet                                                               
are  put out  for sale  annually.   He offered  his understanding                                                               
that 49.5 million  board feet are from state  land, 56.13 million                                                               
board feet are  from federal land, and  approximately 110 million                                                               
board feet  from private land.   With the understanding  that the                                                               
private land  is Alaska Native land,  he inquired as to  how many                                                               
board  feet  are  being  sold   now.    He  related  his  further                                                               
understanding that the federal government  owns 95 percent of the                                                               
lands  of which  80 percent  is the  Tongass National  Forest and                                                               
inquired  as to  how [DCCED]  approaches  that land  in terms  of                                                               
selling timber.                                                                                                                 
                                                                                                                                
MS. GRAHAM  agreed that is  an issue  not easily answered.   [The                                                               
department] is  considering [selling  timber] through  any number                                                               
of sources, including  future markets for secondary  growth.  She                                                               
related  her   understanding  that  part  of   the  outreach  and                                                               
availability  of timber  to  market  has to  do  with the  supply                                                               
rather than  the demand.   She related her  further understanding                                                               
that  [timber] marketing  is  occurring  through conferences  and                                                               
trade shows  while being mindful of  the supply on hand.   Beyond                                                               
that,  Ms.  Graham  offered  to obtain  and  provide  answers  to                                                               
questions.                                                                                                                      
                                                                                                                                
12:17:19 PM                                                                                                                   
                                                                                                                                
CHAIR HUGHES then turned to  the legislature's consideration of a                                                               
liquefied natural gas (LNG) project  and inquired as to what that                                                               
would mean  in terms  of the cost  of energy in  the state.   She                                                               
inquired as to whether the department  has engaged in any work or                                                               
planning as  to what  the aforementioned would  mean in  terms of                                                               
workforce  needs,   value-added  processing   possibilities,  and                                                               
necessary departmental changes.                                                                                                 
                                                                                                                                
MS.  GRAHAM responded  that  DCCED is  working  closely with  the                                                               
Alaska  Workforce   Investment  Board,  Department  of   Labor  &                                                               
Workforce  Development,  in  terms   of  workforce  training  and                                                               
development.                                                                                                                    
                                                                                                                                
CHAIR  HUGHES   commented  that   [to  take  advantage   of]  the                                                               
opportunity  for value-added  processing  with affordable  energy                                                               
will  require more  than  workforce  infrastructure and  includes                                                               
transportation infrastructure  and other  needs.   Therefore, she                                                               
opined that there should be  [meeting] and planning [for the long                                                               
term].                                                                                                                          
                                                                                                                                
12:20:15 PM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Special Committee on Economic Development, Trade, and Tourism                                                                   
meeting was adjourned at 12:20 p.m.                                                                                             

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