Conceding it amounted to a bit of a gamble, the Kenai Peninsula Borough Assembly agreed last week to spend $75,000 to learn if building an industrial park in Nikiski would benefit the economy of the peninsula.
The study could show an industrial park isn't warranted, assembly members admitted, but it might demonstrate that construction of such a park would prove a boon to new businesses large and small.
Assembly members and borough administrators said they've been approached by various business owners over the past year who indicated interest in relocating to the Kenai Peninsula, specifically the Nikiski area, because it has oil and gas development and dock facilities. One such inquiry came from an equipment salvage company seeking a location at which to refurbish, auction and ship salvaged heavy equipment from the North Slope, said Kenai assembly member Bill Popp. Still other inquiries regarding relocation came from smaller firms, he said.
Meanwhile, an existing company, Alaska Petroleum Contractors, wants to expand its Nikiski facility, a move that in and of itself might well attract new support businesses to the peninsula, Popp said. Alaska Petroleum Contractors has a dock.
The proposal for a feasibility study arose first as a request from the North Peninsula Community Council that a study be included on the borough's legislative request list. The council sought $50,000 from the state for the study. The request was culled from the borough's Juneau-bound wish list, however, when the assembly moved to fund the study itself.
In a November memo to the full assembly, Popp, along with assembly colleagues Gary Superman, of Nikiski, and Tim Navarre, of Kenai, said the potential benefits of an industrial park could include new private-sector jobs, new businesses and diversification of the economy.
Assembly member Paul Fischer, of Kasilof, cast the only vote against the measure, expressing reservations about the expenditure. He called it premature. Nikiski currently has empty office and warehouse space, including some in what he said was an existing private industrial park. Those spaces, he said, ought to be filled before a new park is built. He warned against the borough helping new businesses locate at the expense of existing Nikiski firms.
"I'm guessing that these people (interested in relocating) would like it if they could get into buildings subsidized by the government and pay very little rent," he said.
Popp responded that while Nikiski has its share of empty buildings, many built in the 1960s and 1970s, there is nothing with the true footprint of a large industrial park. He said he was not aware of an industrial park with large amounts of empty space.
In its list of legislative requests presented to the assembly, the North Peninsula Community Council said it is looking for ways to support the five large industrial complexes between Mile 19 and 24 of the Kenai Spur Highway.
"Many businesses support the industrial facilities, but only a few are located in the immediate area," the council said. "Businesses that provide services from outside the community or don't exist could be established near the industrial community. A feasibility study for an industrial park is necessary to identify the need and logistics for new business development."
Popp said the borough should take an active roll in promoting business in the north peninsula.
"It's our biggest tax base," he said.
Funding a feasibility study, however, does not mean the borough will go on to pay to construct an industrial park.
"There is zero requirement to move forward on a park," he said.
Should a feasibility study show an industrial park would fly, potential fund sources for its development include the federal Economic Development Administration and the U.S. Department of Agriculture. The borough could be involved in land acquisition, Popp said, but he called that "an outside possibility."
The borough has $3.4 million in a land bank account, where proceeds of land sales are deposited, that might provide funding. Other ideas for borough government assistance could include such things as tax credits, but the borough's ability to do that is limited, Popp said. In rare instances, the borough could become a pass-through conduit for state or federal bonds. The borough would not issue bonds backing the full faith and credit of the borough, he said.
A properly conducted feasibility study could show where an industrial park should be located and whether existing facilities, such as docks, might be incorporated into a new development, Popp said. It might demonstrate whether the peninsula needs a public dock or improvements to roads and airfields. It should show what kinds of new businesses are likely to be attracted and what they could mean to the overall economy of the borough, he said.
Popp also said the borough's aim is to attract businesses that would be compatible with existing business, not competitive.
Navarre said Wednesday he hopes the study will reveal ways to entice businesses to the borough, and not necessarily just oil- and gas-related firms. The borough needs to position itself to be attractive to the world market, he said.
"We are trying to attract business and be a player for the larger opportunities," he said.
Bob Poe, director of the Alaska Industrial Development and Export Authority, pegged the cost of a feasibility study at between $75,000 and $100,000, Navarre, Popp and Superman said.
A request for proposals should be ready to present to potential bidders on a feasibility study contract by the end of the month, according to Jeff Sinz, borough finance director.
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