Legislature(2019 - 2020)BELTZ 105 (TSBldg)
02/06/2020 03:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
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| Overview: Alaska Development Team by the Department of Commerce, Community and Economic Development (dcced) | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
February 6, 2020
3:30 p.m.
MEMBERS PRESENT
Senator Click Bishop, Chair
Senator Peter Micciche, Vice Chair
Senator Mike Shower
Senator Elvi Gray-Jackson
MEMBERS ABSENT
Senator Lyman Hoffman
COMMITTEE CALENDAR
OVERVIEW: ALASKA DEVELOPMENT TEAM BY THE DEPARTMENT OF COMMERCE~
COMMUNITY AND ECONOMIC DEVELOPMENT (DCCED)
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JOHN SPRINGSTEEN, Deputy Commissioner
Department of Commerce, Community and Economic Development
Anchorage, Alaska
POSITION STATEMENT: Delivered a PowerPoint on the Alaska
Development Team.
ACTION NARRATIVE
3:30:00 PM
CHAIR CLICK BISHOP called the Senate Community and Regional
Affairs Standing Committee meeting to order at 3:30 p.m. Present
at the call to order were Senators Micciche, Gray-Jackson, and
Chair Bishop. Senator Shower arrived as the meeting was in
progress.
^Overview: Alaska Development Team by the Department of
Commerce, Community and Economic Development (DCCED)
Overview: Alaska Development Team by the Department of Commerce,
Community and Economic Development (DCCED)
3:30:42 PM
CHAIR BISHOP announced the only business before the committee
would be an overview of the Alaska Development Team by the
Department of Commerce, Community, and Economic Development. He
noted that the committee requested this presentation.
3:31:52 PM
JOHN SPRINGSTEEN, Deputy Commissioner, Department of Commerce,
Community and Economic Development, Juneau, Alaska, briefly
touched on his prior work history related to economic
development, noting that he previously served in several
positions at the Alaska Industrial Development and Export
Authority (AIDEA), including several years as the executive
director. He has traveled throughout Alaska to speak with
communities to talk about their challenges. He brings his
experience to this development team's effort to drive economic
engines in the state.
3:33:16 PM
MR. SPRINGSTEEN began a PowerPoint, by discussing slide 2, Why
establish an "Alaska Development Team?" He said this
administration has recognized the need to be forward thinking
about how to approach business, so the goal is to find ways to
make advancements in all areas to support the things that need
to be supported, and allow the things that are doing well to
progress. The team would like to grow existing Alaskan
businesses, find opportunities for new growth, and provide a
good environment to improve Alaska's economy.
3:34:16 PM
MR. SPRINGSTEEN turned to slide 3 that lists the Alaska CEDS
Committee (2016/2017) composed of a crosscut of business,
industry, and government leaders.
3:34:58 PM
MR. SPRINGSTEEN reviewed slide 4 that describes the Alaska
Development Team (AKDT). It read as follows:
Mission
To promote growth of existing Alaskan businesses,
encourage new businesses to invest in Alaska, and help
create an economic environment that is favorable for
business development.
Vision
To enable a flourishing private sector economy that
brings job opportunities to the state and increases
prosperity and self-sufficiency for Alaskan families.
Fundamental Question
What can Alaska do today, with what we have in our
regions and communities, to grow and attract commerce,
industry, and investment?
3:35:53 PM
CHAIR BISHOP asked if the department had identified key drivers,
such as a matrix or guiding principles for Alaska.
MR. SPRINGSTEEN replied the presentation will touch on those
issues and he can elaborate later, if necessary.
3:36:26 PM
SENATOR GRAY-JACKSON asked about new businesses and
entrepreneurs in Alaska.
MR. SPRINGSTEEN replied it is important to let businesses know
what resources currently exist. The Alaska Small Business
Development Center has a good footprint. He said joint
discussions with the USDA Rural Development, the federal Small
Business Administration, along with the Department of Commerce,
Community and Economic Development (DCCED) and the Division of
Community and Regional Affairs all recognize that Alaska has
great resources that need to be better utilized.
3:37:03 PM
SENATOR SHOWER joined the meeting.
3:37:13 PM
MR. SPRINGSTEEN said the administration is fully supportive of
entrepreneurs and small businesses and seeks to help them use
the available tools.
3:37:29 PM
SENATOR GRAY-JACKSON asked if he was familiar with the
Municipality of Anchorage's Angel [Investment] Fund.
MR. SPRINGSTEEN answered yes. In addition to the Angel
Investment Fund, he knows several of the individual angel
capital providers, which are the firms that do work on behalf of
the fund.
3:38:14 PM
MR. SPRINGSTEEN turned to slides 5-7, and explained that the FY
2020 budget included three positions: a division director,
partially funded by the Division of Economic Development and the
Division of Investments, a development manager, and a business
development officer. The latter two positions were created in
the Division of Economic Development.
CHAIR BISHOP asked if the positions were filled.
MR. SPRINGSTEEN said yes. He turned to slide 6 that depicts a
staff organization chart. He said the prior administration did a
lot of grants administration work and compliance with statutory
and regulatory reporting. This Alaska Development Team (AKDT) is
composed of people with private sector backgrounds. He
identified the team: Matthew Fagnani serves as Director of the
Division of Economic Development, Keith Comstock serves as
Development Manager, and Anne Marie Russell and a development
associate will provide research for the team. He said positions
for a business development officer or development manager and
one development associate are vacant.
CHAIR BISHOP asked whether any lateral position transfers had
occurred.
MR. SPRINGSTEEN answered yes; Mr. Fagnani transitioned from the
Director of the Division of Economic Development to the senior
development executive position. The new hires are Jeffrey Hunter
and Anne Marie Russell.
3:41:40 PM
MR. SPRINGSTEEN turned to slide 7, AKDT Governance and
Participation. He said it is the governor-led initiative that
Alaska is open for business. In addition to the previously
mentioned positions, the development team includes the DCCED
Commissioner, Department of Revenue Deputy Commissioner Greg
Samorajski who is under contract to AIDEA, and the governor's
office.
CHAIR BISHOP asked if Clark Penney serves as the contractor
[shown on the organization chart] under AIDEA.
MR. SPRINGSTEEN answered yes.
3:42:36 PM
MR. SPRINGSTEEN paraphrased the following description of what
AKDT does:
We work with Alaskan businesses, governmental
entities, economic development organizations, industry
groups, and chambers of commerce to identify and
facilitate ways to make doing business in Alaska
easier.
How are we doing this?
• Promoting the advantages of doing business in
Alaska to prospective investors
• Serving as a facilitator to connect interested
parties and move investment ready commercial and
industrial projects forward
• Interacting with economic development
organizations, industry groups, and business
owners and participating in trade events to share
information and ideas for promoting business
growth
• Identifying barriers to business development in
Alaska and developing approaches to resolve
impediments
MR. SPRINGSTEEN provided an example of promoting the advantages
of doing business in Alaska to prospective investors. He related
that Mr. Samorajski has introduced global providers of capital,
investment banks, and private equity funds that have come to the
state to some large promising infrastructure projects for public
and private investment with the Alaska Railroad and ports within
Alaska.
He said the contractor, Mr. Penney, has worked with the Ted
Stevens Anchorage International Airport and the Fairbanks
International Airport on enhancing air cargo capabilities,
securing cold storage, and attracting investments for these
types of opportunities. Some of the team has worked with the
regional development organizations and the Denali Commission to
determine growth of new sectors and growth of existing economic
engines for the state. He stated that Mr. Fagnani has worked
with the mariculture sector to try to remove impediments, such
as providing agency staff to process leases and renewals at the
Department of Natural Resources (DNR).
3:45:39 PM
CHAIR BISHOP asked whether DNR has adequate resources in its
permitting section. He recalled the legislature passed a bill
last year to help induce and grow the shellfish and kelp
industries. He said DNR returns $28 for every $1 of general
funds invested so he wants to be sure the department has the
resources.
MR. SPRINGSTEEN said yes; DNR was able to dedicate resources to
facilitate this activity. Another example of identifying
barriers to Alaska was having someone in the right place at the
right time when the state worked with the Denali Commission to
update its broadband study. Having Keith Comstock in place to
provide comments allowed the next wave of satellite standards to
be included and eligible for federal funding. It does not
provide the entire solution, but it helps the parts of rural
Alaska that lack fiber and microwave or feeder system access.
3:47:28 PM
MR. SPRINGSTEEN said slide 9 illustrates that a 2008 Scott
Goldsmith article outlining what drives Alaska's economy is
still relevant today. Petroleum, federal tax dollars, and
everything else represent the three-legged-stool of Alaska's
economy. The focus of this article was bringing new money into
Alaska to provide the economic engine to drive the economy.
3:48:25 PM
MR. SPRINGSTEEN explained that slide 10 depicts a chart that
describes ways to help the Alaska Economy by growing the state's
existing economic engines, encouraging new growth sectors, and
creating a favorable environment for the induced sectors. The
first column identifies the existing economic engines as oil &
gas, mining, seafood, tourism, Alaska Native Corporation
businesses, international air cargo, manufacturing and export,
investment management, and federal tax dollars.
He highlighted a business in Palmer that Alaska manufactures
naval deck cleaners in Palmer for aircraft carriers globally and
the vibrant export market for peonies, which command a high
price point. He said the idea is to find more opportunities like
these.
3:49:29 PM
SENATOR SHOWER stated that the market for peonies is expanding
and his district has most of the peony flower farms in the
state. It is an economic driver that fits a niche nicely because
Alaskan peonies bloom when they are not blooming in other parts
of the world. He also noted that hemp production is expanding
rapidly and flour is produced in the Delta Junction area and
becoming available for export.
3:50:41 PM
CHAIR BISHOP said there was a question last year as to whether
the flowers could even be exported so it is important to fund
the Division of Agriculture and ensure the inspectors are
available.
SENATOR SHOWER replied the flowers cannot be exported without
the agriculture program in place to do the inspections, but he
has assurances from the Division of Agriculture that the
inspections will happen. He said the division is looking for
ways to become self-funding, but the state must have a glide
path so that businesses do not suffer in the meantime. He
estimated the value of the industry in the tens of millions of
dollars.
3:52:17 PM
MR. SPRINGSTEEN said one of the roles of the team is to act as
an additional voice to the administration for business and
industry that have an express need. Turning to investment
management, he explained that aside from the Alaska Permanent
Fund and its goal to maximize returns for all Alaskans, the
state has investment managers who manage global portfolios and
bring some new money into the economy.
He said federal tax dollars is an existing economic engine that
benefits all Alaskans. These include infrastructure funds
provided through the U.S. Department of Transportation and
health care funding. He said the Alaska Native Claims Settlement
Act, Section 8(a) government contracting work, also benefits
Alaskans. Also, the U.S. Department of Defense (DoD) is bringing
the F-35 Squadrons to Eielson Air Force Base. Alaska's military
bases are economic engines in Alaska, including the U.S. Coast
Guard that is securing the Arctic which includes Alaska's
coastal waters.
MR. SPRINGSTEEN turned to the second column that lists new
growth sectors to encourage, starting with product exports. He
said there is an ongoing discussion about mariculture since it
has a large and competitive global market. With agriculture, the
focus is on looking for products with a high price point that
help solve logistical costs. He noted that Alaska exports
glacier water that has been marketed with the aurora from the
Northern Lights. The state is looking for new opportunities for
timber. He said there is a lot of interest at the federal level
for critical minerals. An executive order relates to critical
minerals and the need for self-reliance to support defense
needs. He related that high power magnets in iPhones and
androids contain rare earth elements, including neodymium,
praseodymium, and dysprosium. Graphite prospects in Northwest
Alaska have markets since the mineral is used in Tesla
automobiles and most modes of transportation.
3:55:46 PM
SENATOR SHOWER remarked that the Joint Armed Services Committee
(JASC) recently discussed that 96 percent of the rare earth
metals are owned and controlled by China. He emphasized that
Alaska has an opportunity to explore for rare-earth metals.
CHAIR BISHOP commented that Alaska is 50 years behind knowing
what it has in terms of resources in mineral exploration.
3:57:08 PM
SENATOR SHOWER recalled the JASC testimony was that the Wilson
Institute said that just five percent of Alaska's Northwest
coast is mapped and explored. He described that as shocking.
3:57:42 PM
CHAIR BISHOP asked what outreach has been done in mariculture.
MR. SPRINGSTEEN replied senior development executive Mr. Fagnani
has been working with the Mariculture Task Force to remove
barriers and silos; it is a driving point of the administration.
CHAIR BISHOP described the development team as DCCED's brain
trust on steroids that will take things to the next step.
MR. SPRINGSTEEN related that the development team comes with
decades of private sector experience. Their focus is on
understanding how to accomplish deals, not spending time looking
backward or being theoretical. One of the goals is to create
recognizable value that citizens can see, such as investment of
new capital in new sectors or to grow existing sectors.
MR. SPRINGSTEEN continued to discuss ways to Encourage New
Growth Sectors, turning to Service Enhancement, Additional
Tourism Destinations. He said Iceland has built a budding
tourism industry, providing itineraries for people to spend
three days in Iceland before moving on to other destinations. He
suggested that Alaska might be able to develop a similar model
in addition to building on the success of Hoonah Totem
Corporation in Hoonah. The community has embraced tourism as its
economic engine, working with the cruise lines. Also, enhancing
airport capabilities will have a higher value for global
logistics service providers. In terms of Export
Services/Knowledge, Alaska is close to the point of hosting
secure data centers, dropping the fiber line that was Matanuska
Telecom Association, a land line that goes through Canada helps
with redundancy issues that prevented Alaska from being part of
the market to have secure back up storage data centers in the
state. The team is working with the university system to
determine what can be commercialized, such as Artic research and
development or attracting additional research dollars. The
department encourages people to offer ideas to the Alaska
Development Team.
4:02:43 PM
MR. SPRINGSTEEN turned to the third column, Create Favorable
Environment for Induced Sectors. He reviewed the logistics and
supply chain, construction, and professional services, all of
which happen in conjunction with other purposes, such as
construction of a hospital or dock. The development team would
like to separate the economic engines that Mr. Goldsmith talks
about from those things the state takes and supports in the
Alaska economy to get the work done.
4:03:27 PM
SENATOR SHOWER remarked that when people discuss manufacturing
in Alaska, it is usually in the context of obstacles due to
Alaska's remote location. However, manufacturing happens in Asia
and is shipped to the Lower 48 and Alaska is halfway between
Asia and destinations in the Lower 48 so he would argue that
Alaska is poised to manufacture goods. What is needed is a base
of qualified people building factories for manufacturing. Also,
some people would like to manufacture firearms or refine
Alaska's oil in the state instead of shipping it to out-of-state
refineries. Alaska should be employing Alaskans to refine its
oil. He said these things represent opportunities and Alaska is
missing out.
4:05:13 PM
CHAIR BISHOP asked if the Alaska Development team has identified
the top three barriers that keep Alaska from growing its
economy.
MR. SPRINGSTEEN said he appreciated Senator Shower's comments,
but it is context dependent as to whether the challenges are due
to workforce, transportation, or cost of energy. He said he
tends to start with the market and purchase price and look back
at the impediments, which makes sense for the peony market. He
pointed out that refineries in Fairbanks were shut down, and the
state began to import refined fuels from the Lower 48. He said
he would be happy to continue the conversation on that issue
offline.
4:06:35 PM
CHAIR BISHOP said he learned last spring that Iceland not only
has tourism, but it also refines and smelts aluminum from South
America. He said the only way that can happen is if energy is
cheap. "That's the number one starter. If you've got cheap
energy, the business will come."
SENATOR SHOWER commented that if Alaska had its own refineries
it would have cheap energy.
CHAIR BISHOP replied he advocates for hydroelectric.
MR. SPRINGSTEEN said he was jealous of Iceland's geothermal
resources.
CHAIR BISHOP added, "And hydro."
4:07:50 PM
MR. SPRINGSTEEN said he was grateful for the arrangement that
allows large-scale hydro projects in Alaska.
MR. SPRINGSYTEEN reviewed slide 11, Who is Focused Where? He
restated the assignments for team members Mr. Fagnani, Mr.
Comstock, and Mr. Samorajski.
4:08:55 PM
MR. SPRINGSTEEN reviewed slide 12, Highlights of Recent AKDT
Activities, which read as follows:
AKDT and Mining
• Making it easier to do business
• Alaska mining, U.S. Critical Minerals, and
eligibility for "high priority infrastructure project"
designation to streamline permitting.
AKDT and Mariculture
• Interacting with industry to promote business
growth
• Alaska Mariculture Task Force, Alaskan grown
shellfish & seaweed, overcoming statutory and
regulatory hurdles, and consultation with the seafood
industry.
AKDT and Broadband
• Identifying barriers and resolving impediments
• Alaska broadband, sensible standards for
satellite performance, and OneWeb collaboration with
Pacific Dataport to improve rural connectivity
MR. SPRINGSTEEN stated that he and Mr. Penney have been working
together to make it easier to do business mining for U.S.
critical minerals in Alaska. He pointed out that the mining
industry was added to eligibility for the Fix America Surface
Transportation Act.
4:10:31 PM
SENATOR MICCICHE said the administration favors cutting funding
for experts in some of these fields, so that generalists may be
successful in some of these areas, but that does not work. He
asked how to work together with some of the people who have
experience in these fields. He said he is an advocate of the
private sector operating without a lot of government
intervention. He reviewed DCCED's budget submission for this
year and wondered how much is redundant and how much expertise
is being set aside that knows the markets. He asked what the
development team thinks will be successful when Alaskans have
been "banging their heads against the wall" for decades in some
of these markets. He acknowledged the difficulty to be
competitive due to labor, natural resources, and permitting
issues. He asked why the other departments are not doing this
with their funding and how does he see that the development team
will improve those processes.
MR. SPRINGSTEEN answered that the development team did not
necessarily have expertise in each of these sectors and was not
trying to replace that expertise. He said the big drivers of the
development team will be to bring experienced operators and
smart money to the issue. He said these people have the
knowledge to vet and evaluate a deal and if something is brought
to the table that does not make sense, the department will
repurpose its efforts to move forward with other initiatives.
4:12:56 PM
SENATOR MICCICHE noted that some of the funding has been shifted
from subject management experts in tourism and Alaska Seafood
Marketing Institute (ASMI) to a generalist group. He said he
knows some of the team and they are very bright generalists.
However, he wonders why the department does not continue with
the subject matter experts since they have been remarkably
effective for decades. He suggested the administration could
supplement these subject matter experts with a smaller
development team, which could market the talents of both sets of
experts.
MR. SPRINGSTEEN said if the expertise has not resulted in growth
or advancement in the industry, it points to another factor,
such as experienced operators and smart money to invest in these
types of businesses. He said the budget request would take the
sunsetting avionics fund and direct it to a pilot project for
the next three years for this development team effort. It will
move it from a government only activity to something that is
integral but independent of the political process.
4:14:54 PM
SENATOR MICCICHE suggested that the reason it is difficult to be
competitive in Alaska is the same reason everything is more
expensive. The cost of everything, the distance, the weather,
and the cost of labor make it hard to compete but Alaska has
succeeded in some areas. While he is supportive of this concept,
he predicted that it would take very detailed and out-of-the-box
thinking to crack some of these codes.
4:16:26 PM
SENATOR SHOWER asked if the administration had identified
anything in particular or if it was bureaucracy and regulations
that make it difficult for Alaska to be responsive and nimble in
the business environment.
MR. SPRINGSTEEN said part of the feedback from the Conference of
Economic Development Strategy was a need for statewide
coordination. The Alaska Development Team is this
administration's effort to do so, but to do it differently than
in the past. He reiterated that past effort was focused on
grants administration and not growing Alaska's economic engines
and creating new ones.
4:18:44 PM
MR. SPRINGSTEEN continued reading the highlights on slide 12,
related to AKDT and Broadband:
AKDT and Broadband
• Identifying barriers and resolving impediments
• Alaska broadband, sensible standards for satellite
performance, and OneWeb collaboration with Pacific Dataport
to improve rural connectivity.
He said that AKDT has helped put those groups in touch with
private equity and global investment banks to help move the
project forward.
4:19:36 PM
MR. SPRINGSTEEN said the next few slides show some recognition
that the team has received for its work. He highlighted their
successes. The team helped get mining included as an eligible
sector under the federal Fix America Surface Transportation Act
(Fast-41). This effort was prompted by the governor who
nominated Graphite One Inc.'s Graphite Creek deposit in Western
Alaska as a high-priority infrastructure project. The AKDT's
support facilitated meetings with Graphite One and UCorp, the
rare earth development prospect in Southeast Alaska, and getting
mining included as an eligible sector. He said he personally
found it to be a huge win.
4:20:15 PM
MR. SPRINGSTEEN reviewed slide 14, AKDT and Mariculture. He
explained that the Anchorage Daily News article by Julie Decker
acknowledged AKDT's involvement in providing state support to
grow a $100 million mariculture industry.
4:20:40 PM
MR. SPRINGSTEEN reviewed slides 15-16, AKDT and Alaska
Broadband, consisting of a table of performance measures that
will define success by 2024.
A Blueprint for Alaska's Broadband Future
Advice prompts inclusion of satellite standard for
Alaska Broadband (critical for rural access and
federal funding eligibility)
One line emphasized the satellite standard on the chart:
Latency (satellite, covering Alaska) NGSO: 100
milliseconds, GEO: 670 milliseconds.
CHAIR BISHOP asked him to describe AKDT's working relationship
with the Denali Commission.
MR. SPRINGSTEEN answered that the relationship is great.
4:21:32 PM
MR. SPRINGSTEEN briefly touched on slide 16, AKDT and Alaska
Broadband. He said AKDT has been making introductions to
different capital groups.
4:21:58 PM
MR. SPRINGSTEEN reviewed slide 17, Other AKDT Initiatives, which
read as follows:
• Expanding gaming opportunities in Alaska
• Attracting investors for cold storage and secure
storage facilities for international air cargo
• Capitalizing on University of Alaska research and
development capabilities
• Providing long-term supplies of timber to global
markets
• Exploring potential for multi-user infrastructure
funded primarily by and for industry (similar to
Delong Mountain Transportation System)
• Pursing public-private partnerships for tourism
opportunities
• Ongoing work with Alaska Regional Development
Organizations (ARDORs), Alaska Municipal League
members, industry groups, and chambers of
commerce on driving local and regional economic
engines
MR. SPRINGSTEEN provided more detail on AKDT's efforts, stating
that Deputy Commissioner of Revenue Samorajski has been working
on the governor-announced state lottery. Clark Penney has worked
with the airport manager, and Jim Szczesniak worked to bring in
investors for cold storage and secure storage facilities for
international air cargo. Development Executive Keith Comstock
and senior development executive Matthew Fagnani were working on
capitalizing the University of Alaska research and development
capabilities. Mr. Penney and Mr. Clark are working with the
forest industry to revitalize the timber industry for Alaska.
MR. SPRINGSTEEN said the road and port model that serves the Red
Dog Mine illustrate the importance of access to resources. He
stated that AIDEA has custody of the Ambler Access Project that
seeks permits to access the project from the Dalton Highway.
AKDT would like to create access for resource development and
have long-term assessment arrangements in order to raise funds
for construction costs. Mr. Comstock is working on public-
private partnerships for tourism opportunities similar to
Iceland's approach and adding new tourism destinations. AKDT
will work with the ARDORS and AML to discuss economic engines
and potential projects.
CHAIR BISHOP asked him to identify the biggest barrier to
tourism.
MR. SPRINGSTEEN replied it varies depending on the region. In
certain areas it is the lack of reliable infrastructure to get
to the destination. He said the National Park Service's plan has
been to ensure access going forward. Part of this discussion
relates to public-private partnership (PPP), working with the
different companies that are active and identifying areas for
investment to grow their tourism experiences. Alyeska Resort is
moving forward with a plan for a Nordic spa [using
hydrotheraphy] to help expand their experiences for cruise
lines, but also to attract locals.
4:26:41 PM
SENATOR MICCICHE wondered if expanded focus groups could find
out the reasons that organizations in the Lower 48 are not
coming to Alaska. He related his own experience coming to Alaska
and loving it. On the flip side, he said he has hired workers
who brought their families here but soon left because Alaska is
not for everyone.
He said Mr. Springsteen pointed out that businesses choose to
base their companies in Delaware. He said 60 percent of the
Fortune 500 companies are incorporated in Delaware because of
their tax laws and stability, and Alaska does not have any of
those things going for it.
SENATOR MICCICHE expressed frustration that the state has
perhaps undermined people who have been remarkably successful in
growing tourism. It is the one industry that has fired on all
cylinders during the recession, and the same thing with Alaska
Seafood Marketing Institute (ASMI). He pointed out that Iceland
is in the middle of two heavily populated coasts. It is a
country that is not in the middle of nowhere, while Alaska is
only a strategic location for air cargo. He said he is not
discouraged by new ideas, but he is trying to figure out how
AKDT can be the most valuable in determining the reasons that
some are not doing business in Alaska.
MR. SPRINGSTEEN responded that he hoped to have the conversation
on how Alaska can play to its strengths and move forward.
4:29:36 PM
SENATOR SHOWER said London used to be the center of banking but
now it is Hong Kong. He surmised that even though Hong Kong has
nothing over London, it enticed people with tax breaks, free
buildings and whatever it took.
He said Alaska should look at those types of things in an effort
to be nimble and flexible. Even though not everything will
stick, Alaska should not limit itself. He asked if a railroad
system that connects the Alaska Railroad to the Lower 48 would
provide business opportunities.
MR. SPRINGSTEEN said infrastructure should be purpose-built,
right-sized, and sustainable through a source of revenue that
will support it. If the revenue source is exporting Alberta oil
sands through Alaska to Asian markets with a long-term contract
with a credible buyer, then there are no reasons against it.
SENATOR MICCICHE highlighted issues Alaska has had as a rapidly
growing economy due to oil and gas production. The state created
departments for jobs, but in the 1990s it began overregulating
natural resource development, so the state has suffered from a
downward spiral. The state became undercapitalized, so it began
to overtax companies. He asked if AKDT will evaluate which
regulatory obstacles need to be eliminated. He said he was not
talking about the basic safety and environmental protections,
but the eight layers of them. He suggested that it would be a
valuable exercise.
SENATOR MICCICHE said he has worked in the private sector oil
and gas and fishing industries for 35 years. He has worked in
two countries and the Lower 48, and somehow those regions have
avoided those problems.
4:34:42 PM
MR. SPRINGSTEEN replied Assistant Commissioner Amy Demboski has
been working on regulatory review and reform to streamline
regulations to promote a business-friendly environment in the
state.
4:35:21 PM
MR. SPRINGSTEEN continued the presentation with slide 18, From
AKDT to a "Partnership Model." He explained that many states use
some form of private or public-private partnership (PPP). AKDT's
early effort has been to stand up the organization. Its near-
term goals are to create recognizable value and transition to an
integral but independent entity. This concept has been very
successful in other states and is an acknowledgement that
facilitation and coordination for economic development is a
necessity for all states across the country. Many states use
some form of public-private entity for statewide economic
development, he said. It keeps the focus on a group of people,
industry, and government leaders driving forward on economic
engines for their states.
MR. SPRINGSTEEN highlighted several models AKDT is reviewing
such as the Delaware prosperity partnership and the Missouri
partnership, but noted that the team is still early in its
evaluation. He characterized it as being in a research phase
working towards a partnership model.
4:36:46 PM
MR. SPRINGSTEEN reviewed slide 19, Working to a Partnership
Model:
• Performing research on economic engine development
models
• Participating in best practices working group e.g. the
State Economic Development Executives (SEDE) Network
• Ongoing interviews with other state economic
development executives
4:37:22 PM
CHAIR BISHOP referenced slide 18 and asked, if AKDT's approach
is not working by the end of this administration, whether he
would be the first to say that the state needs to shelve it and
stand the team down. He remarked that this approach will speak
for itself if there is merit and the legislature can see the
tangible results.
MR. SPRINGSTEEN said part of the idea is to have some "end caps"
on AKDT. The department is repurposing the state's [Alaska
Capstone Avionics Revolving Loan Fund] over three years for this
pilot project. If this effort does not produce results, it is
not likely the legislature would be very receptive to future
funding.
4:38:34 PM
SENATOR MICCICHE asked what tangible metrics or deliverables he
could provide the legislature to measure and determine AKDT's
success. He said he has been in the legislature long enough to
see people celebrate successes while moving backwards. He asked
if he could provide realistic goals going forward.
MR. SPRINGSTEEN replied others are assessing what the team is
doing and would like to see results for the investment.
4:39:44 PM
CHAIR BISHOP opined that it is not affordable energy that will
bring business to the state. It is cheap energy.
4:40:10 PM
There being no further business to come before the committee,
Chair Bishop adjourned the Senate Community and Regional Affairs
Standing Committee meeting at 4:40 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Alaska Development Team Presentation.pdf |
SCRA 2/6/2020 3:30:00 PM |
Alaska Development Team |