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DIPAC celebrates repayment of $42 million loan to state

Posted: April 2, 2013 - 8:01pm  |  Updated: April 3, 2013 - 12:03am
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Juneau salmon hatchery Douglas Island Pink & Chum recently made its last loan payment to the state of Alaska, marking an end to 33 years of debt acquired in starting and operating the facility.

Since 1987, DIPAC has repaid a total of $23 million in loans, plus $19 million in interest to the state, for a combined total of more than $42 million, according to DIPAC Executive Director Eric Prestegard.
“We’re very proud of the fact that we have made a very good contribution (in producing fish), but at the same time (we have) been able to pay back that sort of what was considered for many years to be a monstrous debt that was probably gonna sit over our heads into eternity,” Prestegard said.

Pointing to a graph that indicates DIPAC drastically increased the amount of money paid back from 2009 to 2011, Prestegard says the hatchery actually paid it off “pretty quickly.”

“It kind of all of a sudden, everything hit,” he said. “We got some really good returns, the price of salmon finally recovered and went up to some levels that definitely generated some quick income.”

DIPAC board members, employees and supporters celebrated the achievement with an event at the Ladd Macaulay Visitor Center late Saturday afternoon. A symbolic check made out to the state of Alaska’s Division of Commerce, Community, and Economic Development for $42,521,000 stood in the room on full display.

Like other private non-profit hatcheries in the state, DIPAC got its start by borrowing a substantial sum of money from the Salmon Enhancement Loan Fund, which was created by the Legislature in the early 1970s, Prestegard said.

“Back in the early ‘70s, there were very low salmon returns to the state of Alaska, so the state of Alaska reacted, and they put an effort towards rehabilitation and enhancement of the salmon stocks,” Prestegard said.

It was a two-pronged approach, he explained, with half of the money going toward creating a division (which has since dissolved) within the Division of Fish and Game that built hatcheries. The other prong went toward legislation making it easier for the private sector to build and operate fisheries.

“So in other words, the users could then sort of help themselves,” Prestegard said, adding that normally, fisheries enhancement is conducted by federal, state and tribal entities. “It was actually some pretty innovative legislation that I think has been looked at since then by a number of places around the world. I know that Norway’s been here and they really like the model. Washington, Oregon.”

Prestegard says the loan fund gave DIPAC a six-year grace period wherein they did not have to pay interest, allowing them to get off the ground.

“The idea was that you could borrow either operational or capital monies from the loan fund, and there would be no interest for the first six years, allowing you to get started because obviously you can’t really do anything until the salmon come back,” he said. “And kind of on average, it’s a four-year life cycle. You invest all this money and you don’t see anything for the first four years until they start coming back, so they gave you a six-year grace period, and then they started interest.”

DIPAC was founded by Macaulay in 1976 and under the loan fund, it has evolved from a “mom and pop” hatchery at Kowee Creek to being a “major player in Alaska’s salmon enhancement industry,” Sandy Williams, the president of the DIPAC board of directors, said in a statement.

The Macaulay Salmon Hatchery facility on Channel Drive, one of the five largest salmon hatcheries in the state, was built in 1989 and can hold up to 300 million eggs, according to its website.

Its hatcheries have produced more than $105 million in ex-vessel value of salmon for commercial fisheries, Prestegard said.

“We’re here to make sure that hopefully everybody’s catching these fish,” Prestegard said. “That’s the goal. That’s the goal of the whole industry, not just us, but the enhancement industry in general, and I think the vision that the Legislature had back in ‘73, ‘74 has really panned out, and that’s why we’re kind of having this celebration. We’re so kind of happy that these guys had these great ideas back 40 years ago and they’re paying off now. It’s worked, and to be able to pay the state back the money they gave us, plus $19 million in interest, that’s really substantial.”

Contact reporter Emily Russo Miller at 523-2263 or at emily.miller@juneauempire.com.

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