Promote economic development opportunities.
- Business Financing
- Inter-Agency Services
- Financial Management
|Mission Results||Core Services|
|A: Result - Economic opportunities for Alaskans are optimized.|
Target #2: Management of loan portfolios for other agencies.
Repayments Received From Loan Portfolios Serviced for Other Agencies (in thousands)
Analysis of results and challenges: DED provides loan servicing for two other state agencies: Alaska Industrial Development and Export Authority (AIDEA) and the Division of Community and Regional Affairs (DCRA). DED manages the Small Business Economic Development and Rural Development Initiative revolving loan funds on behalf of AIDEA, and the Bulk Fuel revolving loan fund on behalf of DCRA. DED's combined lending, collections, and accounting functions create efficiencies for the State of Alaska's administration of these programs. The fluctuations in the monetary utilization of the funds is indicative of the fluctuations in fuel prices, private sector interest rates and general economic conditions.
Target #3: Return of capital to the state through effective financial management of loan funds.
Analysis of results and challenges: Maintaining low delinquency rates on the loan funds administered by DED results in higher rates of return to the loan funds and the general fund. Commercial lending in a volatile industry like commercial fishing is challenging but maintaining prudent lending practices developed over time and carried out by experienced and knowledgeable staff has maintained lower than average delinquency rates. The 2021 rise in fund delinquency is attributed to erratic regional salmon returns and the COVID-19 pandemic's effect on the seafood market driven by restaurant closures and low domestic consumption. This caused cash flow difficulties for harvesters in the short term that was solved through loan forbearance and restructuring.
|A1: Core Service - Business Financing|
Target #1: Provide financing to Alaskan private nonprofit aquaculture corporations to produce $65 million in hatchery-reared salmon to Alaskan commercial fisheries annually.
Total Value of Hatchery-Reared Salmon to Statewide Commercial Fisheries (in millions)
Analysis of results and challenges: Salmon hatcheries provide a significant financial contribution to Alaska common property fisheries. The Division of Economic Development (DED) provides the salmon aquaculture industry in Alaska with a source of low-cost capital through the Fisheries Enhancement Revolving Loan Fund (FERLF). This capital is specifically tailored by statute to meet the needs to this unique industry and is not available in the private sector. Measuring the amount of money generated annually as a result of salmon harvested by commercial fishermen and raised by FERLF participants is a good indicator of the program's effectiveness. The most recent information available from the Alaska Department of Fish and Game for calendar year 2020 indicates the ex-vessel value of hatchery reared salmon is $69 million. The level of industry volatility is evident in the chart and exacerbated by the COVID-19 pandemic.
Target #2: Through direct business lending, create or maintain jobs for Alaskans that meet or exceed the rolling five-year average.
Jobs Created or Maintained Through Commercial Fishing Revolving Loans
Analysis of results and challenges: Maintaining local ownership of fisheries resources and the jobs associated with those resources is critically important to Alaska's economy. Lending activity results in the creation of new jobs and the continuation of existing jobs for Alaska residents. These loans provide a necessary source of capital to the commercial fishing industry that help to maintain employment levels that are critical to Alaska's future and economy, particularly in rural areas of the state where commercial fishing is often the only viable economic activity.
|A2: Core Service - Inter-Agency Services|
Target #1: Generate $5.5 million or more annually in new loans.
Principal Outstanding from All Loan Portfolios (in thousands)
Analysis of results and challenges: Loan fund balances continue to remain strong over time, particularly in the Commercial Fishing Revolving Loan Fund and the Fisheries Enhancement Revolving Loan Fund. Entry of young Alaskans into commercial fisheries, diversification, and hatchery expansion are linked to this growth. However, the commercial fishing industry remains volatile and DED continues to strike a balance between supporting a strong resident fleet and protecting the State's investment. Recent loan growth has been impeded by the COVID-19 pandemic.
|A3: Core Service - Financial Management|
Target #1: Generate $6.5 million annually in new earned revenue that may be utilized to fund government operations.
Commercial Fishing Revolving Loan Applications
Analysis of results and challenges: The Division of Economic Development (DED) Commercial Fishing Revolving Loan Fund has consistently shown stability in applications. This includes new applications, as well as assumptions, extensions and other modifications. These numbers are influenced by the success of fishing returns, as poor returns can drive up the need for extensions and modifications. Recent loan demand has been affected by recent volatility from unusual run timing, unexpectedly weak runs, and fishing restrictions to allow escapement goals or treaty terms to be met.
Current as of November 19, 2021