News article: City to subsidize contractors
Similarities between the Convention Center proposal & the Alaska Seafood fiasco
By Joe Douglas
The current push to gain voter approval of the new civic and convention center recalls a similar effort to build Alaska Seafood International (ASI) in the 1990’s. That project, funded by state money and private investors from Taiwan, was scrapped in 2003 after operating on and off for four years, hounded by lack of sales and skittish investors.
The result of an eight-year effort by developers, ASI was touted as a big job producer. It was forecast to provide 450 jobs at full production. Subsequent employment never exceeded 150, and only for a short period of time. At the grand opening in 1999, founder and chairman Howard Benedict said they had “2 years of work” in the pipeline. Within months, the plant was closed due to lack of business.
The total invested in ASI was $125 million, including at least $50 million in state money used to construct the building. The only people who made any real money on the deal were the contractors who built the physical plant.
Similarities Abound
Anchorage voters are now being asked to approve Proposition 2, which will: authorize the city to raise the hotel room tax an additional 4%; lower the threshold for voter approval from 60% to 50% plus one vote; forbid the use of property taxes to pay for the new civic center; and give the go-ahead for construction of the new facility.
Among the rosy projections being promised by Anchorage Economic Development Corporation (AEDC), which is leading the campaign with ‘Anchorage Civic and Convention Center Yes!’ (ACCCY), is $133 million in additional revenue within five years, and 1,900 permanent jobs. According to Anchorage Convention and Visitors Bureau reports, Anchorage is currently turning away millions of dollars in convention business due to lack of space.
That may be true, but what is known is that AEDC, a non-profit membership organization of over 170 Anchorage businesses that pay between $500 and
$20,000 per year to belong, also had a hand in the ASI fiasco. Listed on the AEDC Accomplishments-2000 on the AEDC website is this entry:
-- Alaska Seafood International—As early as 1996-97, the AEDC assisted Alaska Seafood International (ASI) in securing financing and permits. The AEDC assisted ASI with tax incentives through the State and Municipality. ASI held its grand opening and tour of facilities on July 27, 1999. Investments total $125 million, and the company anticipates employing 450 at full production. AEDC continued to work with ASI in 2001 to assist the company in its initial years in Anchorage. --
AEDC didn’t mention that it conducted two studies in 1990 and 1992, both of which failed to find support for a seafood cold storage warehouse in Anchorage.
At least two AEDC member companies profited on the construction of the ASI plant--RIM Architects did the design work, and Roger Hickel Contracting got a $2.4 million contract to provide 1,415 tons of steel components for the project.
Familiar Faces
In addition to AEDC, there are several other key players who had a hand in the ASI transaction. Bob Poe, AEDC President and CEO, was executive director of the Alaska Industrial Development and Export Authority (AIDEA) from 2000-2002 and helped keep ASI afloat. AIDEA had provided $50 million to ASI in 1998 to build the factory.
David Ramseur, currently chief of staff for Mayor Mark Begich, was chief of staff for Governor Tony Knowles during the period when ASI was requesting additional funds. He sent an email to AIDEA in August 2002 authorizing additional money at a time it was apparent that the company could not survive.
The $500,000 Vote
When ASI was trying to get funding, the big hurdle was convincing a majority of the 5-member board of AIDEA that the business plan had merit. This time around, the big hurdle is getting Anchorage voters to agree to the proposal.
ACCCY is getting big contributions from businesses and unions that stand to benefit from the construction of the civic center. Developers JL Properties and Venture Development Group each gave $15,000. They stand to make $3-6 million if the project is approved, and if it fails they will be paid $60,000 by the city to cover their costs.
According to reports in the Anchorage Daily News, ACCCY polls show that 50% of voters are in favor of the new facility. That means that ACCCY is spending $450,000 to convince that one Anchorage voter in excess of 50% that the new convention center is a ‘no-brainer.’
Anchorage voters need to know all the facts before coming to that conclusion.
Contact Joe Douglas at