Unique Financial Arrangements Fund Natural Resource Enterprises: Regional corporations, local, state organizations help fisheries stay afloat.

• Author: Barbour, Tracy
• Position: FINANCIAL SERVICES

Financing for natural resource industries is being manifested in distinctive ways as Alaskans capitalize on various arrangements to fund their commercial activities.

Community Development Quota (CDQ) organizations and commercial fishing operations are forming joint ventures. CDQs are also providing financing for fishing permit leases and purchases; vessel purchases and upgrades; and refrigeration systems and ice. Traditional financial institutions and the state of Alaska offer loans to support commercial fishing operations. And Alaska Native Regional Corporations are allocating timberland to a lucrative carbon credit program. Here is a look at how some of these financial endeavors are playing out around the state.

Bristol Bay Economic Development Corporation

As one of six western Alaska CDQ organizations, Bristol Bay Economic Development Corporation (BBEDC) participates in a program that allocates a percentage of all Bering Sea and Aleutian Islands quotas for ground-fish, halibut, and crab. The CDQ program was established to provide economically-disadvantaged coastal communities the opportunity to create capital to develop stable local economies based on the fishing industry. These remote communities--encompassing sixty-five villages and 27,000-plus residents--participate in the CDQ Program through nonprofit corporations that manage and administer their CDQ allocations, investments, and economic development projects. As a not-for-profit CDQ organization, BBEDC uses its Bering Sea partner investments and groundfish and crab allocations to foster economic development activities and employment opportunities in its region, which includes seventeen communities in the Bristol Bay and Lake and Peninsula boroughs, as well as the Dillingham Census Area.

"We are extremely proud of what we do for our residents," says Norm Van Vactor, CEO of BBEDC. "I can't imagine what the landscape would look like if it wasn't for our organization doing what we are doing."

BBEDC offers more than thirty programs to benefit residents of the region, including financial assistance for leasing a limited entry permit to fish Bristol Bay. Eligible individuals who want to lease a permit--which costs $16,000 to $20,000--can receive a grant for about half of that amount. "The only restriction is that you have to be a resident of the region and must be actively participating in the fishery," Van Vactor says.

BBEDC sees permit leasing assistance as a pathway toward encouraging its residents to ultimately move toward permit ownership. After ensuring the individual has satisfied the prerequisite state requirements and has sufficient credit history, BBEDC can provide a significant grant toward the down payment on a loan for the permit. The down payment could be substantial, given that it costs approximately $150,000 to purchase a permit.

In addition, BBEDC offers financing to help commercial fishermen acquire and upgrade vessels. It provides financial coaching and helps with the down payment as well as guarantees the loan. As part of the financing process, the borrower must complete a business planning exercise that's typically facilitated by the Alaska Business Development Center. "This helps them have a realistic idea of what would be a reasonable amount to pay for a vessel," says Paul Peyton, BBEDC's seafood industry investment officer.

BBEDC also helps individuals buy and maintain refrigeration systems or ice. This is particularly important because Bristol Bay is one of the last major fisheries in Alaska where a significant portion of the...