Performance Details

Department of Commerce, Community, & Economic Development - Investments

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Mission

Promote economic development opportunities.

Core Services

• Business Financing
• Inter-Agency Services
• Financial Management

Mission Results

Core Services

A: Economic opportunities for Alaskans are optimized.  Details > TARGET #1: Economic development through direct state lending in industries and areas that are not adequately serviced by the private sector. TARGET #2: Management of loan portfolios for other agencies. TARGET #3: Return of capital to the state through effective financial management of loan funds.

A1: Business Financing  Details > TARGET #1: Provide financing to Alaskan private nonprofit aquaculture corporations to produce $65 million in hatchery-reared salmon to Alaskan commercial fisheries annually. TARGET #2: Through direct business lending, create or maintain jobs for Alaskans that meet or exceed the rolling five-year average. A2: Inter-Agency Services  Details > TARGET #1: Generate $5.5 million or more annually in new loans. A3: Financial Management  Details > TARGET #1: Generate $6.5 million annually in new earned revenue that may be utilized to fund government operations.

Performance Detail

Target #1: Economic development through direct state lending in industries and areas that are not adequately serviced by the private sector. Methodology: Information is obtained from the Commercial Fisheries Entry Commission website under "Permits and Permit Holders" based on total active resident and nonresident permits. Percentage of Limited Entry Permits Held by Alaskan Residents Year % Owned Target 2020 77% 78% 2019 77% 78% 2018 77% 78% 2017 77% 78% 2016 77% 78% 2015 77% 78% 2014 77% 78% 2013 77% 78% 2012 77% 78% 2011 77% 78% 2010 77% 78% Analysis of results and challenges: The Commercial Fishing Revolving Loan Fund provides long term, low interest loans to commercial fishing harvesters to help promote and maintain Alaskan ownership and strong resident fisheries. The overall resident ownership of limited entry permits is one of the ways to measure program success. Resident ownership is particularly important in rural areas where economic opportunities are limited. The absolute number of both resident and nonresident permittees has declined in the past few years, but the proportion of resident to nonresident permittees has remained stable.

Target #2: Management of loan portfolios for other agencies. Methodology: Division loan officers enter information from the borrowers\' loan application directly into the Division of Economic Development (DED) "LOANS" computer database. These statistics are tracked and monitored on a monthly basis as a part of DED's performance measures. Repayments Received From Loan Portfolios Serviced for Other Agencies (in thousands) Fiscal Year Principle Interest FY 2021 $11,586.80 $447.5 FY 2020 $14,974.3 $506.5 FY 2019 $14,572.8 $502.6 FY 2018 $13,989.8 $597.5 FY 2017 $12,611.7 $618.4 FY 2016 $15,501.4 $680.2 FY 2015 $18,414.4 $815.5 FY 2014 $18,254.8 $762.2 FY 2013 $11,945.3 $553.8 FY 2012 $4,833.1 $415.0 FY 2011 $3,734.2 $442.0 FY 2010 $3,919.2 $468.6 FY 2009 $5,059.3 $482.7 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. Methodology: Combined rate of foreclosures and delinquencies calculated by fiscal year for the Commercial Fishery Revolving loan fund, compared to the Federal reserve published total delinquency rates. 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.

Target #1: Provide financing to Alaskan private nonprofit aquaculture corporations to produce $65 million in hatchery-reared salmon to Alaskan commercial fisheries annually. Methodology: Data is from the Alaska Department of Fish & Game/Division of Commercial Fisheries/Alaska Salmon Enhancement Program Annual Report. Total Value of Hatchery-Reared Salmon to Statewide Commercial Fisheries (in millions) Year Dollars Target 2020 $69.0 $70.0 2019 $118.0 $70.0 2018 $176.0 $70.0 2017 $162.0 $70.0 2016 $85.0 $70.0 2015 $125.0 $70.0 2014 $113.0 $70.0 2013 $182.0 $70.0 2012 $149.0 $65.0 2011 $109.0 $60.0 2010 $168.0 $55.0 2009 $61.9 $50.0 2008 $109.8 $45.0 2007 $64.6 $40.0 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. Methodology: Division loan officers enter information from the borrowers\' loan application directly into the Alaska Division of Economic Development (DED) "LOANS" database. These statistics are tracked and monitored on a monthly basis as a part of DED\'s performance measures. Reported jobs and average adjusted in FY2016 after a review of reporting methods used. Jobs Created or Maintained Through Commercial Fishing Revolving Loans Fiscal Year # of Jobs Five-Year Average FY 2021 695 582 FY 2020 401 518 FY 2019 512 543 FY 2018 539 563 FY 2017 763 536 FY 2016 377 475 FY 2015 523 475 FY 2014 614 475 FY 2013 403 475 FY 2012 459 475 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.

Target #1: Generate $5.5 million or more annually in new loans. Methodology: Division loan officers enter information from the loan applications directly into the Division of Economic Development (DED) "LOANS" computer database. These statistics are tracked and monitored on a monthly basis as a part of DED's Performance Measures. Principal Outstanding from All Loan Portfolios (in thousands) Fiscal Year Dollars FY 2021 $168,609.0 FY 2020 $176,497.20 FY 2019 $173,981.2 FY 2018 $171,608.4 FY 2017 $173,372.7 FY 2016 $171,072.2 FY 2015 $176,576.9 FY 2014 $172,189.8 FY 2013 $165,422.8 FY 2012 $153,683.2 FY 2011 $151,525.4 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.

Target #1: Generate $6.5 million annually in new earned revenue that may be utilized to fund government operations. Methodology: Loan receivable balances are taken from the LOANS! loan management software used by DED. Commercial Fishing Revolving Loan Applications Fiscal Year Loan Applications Target FY 2021 491 600 FY 2020 371 600 FY 2019 500 600 FY 2018 473 600 FY 2017 587 600 FY 2016 625 600 FY 2015 600 600 FY 2014 650 600 FY 2013 553 600 FY 2012 534 600 FY 2011 664 600 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