Goldbelt debates plans for future of corporation

Posted: Sunday, February 10, 2008

After plans to build a dock for the Kensington Mine were foiled, Goldbelt is brainstorming about what to do with its property at Cascade Point.

Its ideas have included running an ecotourism business out of Cascade Point, almost 40 miles northwest of downtown, according to Goldbelt officials.

"We're still in that stage of 'what if,'" Chief Financial Officer Victor Scarano said.

Goldbelt, Juneau's urban Alaska Native corporation, brought in about $90 million in revenue last year, with the biggest chunk of that - $75 million - coming from federal contracts. Another $15 million came from tourism, including the Mount Roberts Tramway and the downtown Juneau Goldbelt Hotel, according to Scarano.

The company had planned to build the Cascade Point dock to ferry workers to and from the Kensington Mine site. But its permit for that was invalidated with the mine's tailings plan permit by the 9th U.S. Circuit Court of Appeals, in a lawsuit brought by environmental groups.

Coeur has appealed that court's decision. If the U.S. Supreme Court decides in favor of Coeur, the mine company could return to its former plan, including using the dock at Cascade Point.

In the meantime, the Goldbelt senior management is in a holding pattern, looking for short- or medium-term opportunities there, said Goldbelt President Gary Droubay.

"The land just sitting there idle doesn't do anything for us," Droubay said.

Goldbelt is considering barging sand and gravel from a new pit outside Cascade Point, which may have several million tons of rock. Subsurface rights belong to Sealaska Corp. A contractor that would transport and sell the gravel would pay Goldbelt $1 per ton to access it across Goldbelt's land.

Goldbelt is preparing a new permit application, to the U.S. Army Corps of Engineers, to land barges there for the sand and gravel project, Scarano said.

The company also still plans to keep working with Coeur Alaska. Right now it is providing a skeleton crew of security people for the mine. The company is discussing driving buses and perhaps ferrying boats to carry miners to and from the work site, said Bob Martin, vice president of operations.

But the negotiations now don't have the development potential that Goldbelt would have using its own land, Droubay said.

Last year, the company made $3.5 million to $4 million after taxes, from the roughly $90 million in revenues, Scarano said.

For the future the company is developing its three prongs: land, tourism and federal contracting.

Since Goldbelt's inception under the 1971 Alaska Native Claims Settlement Act, the company has been one of the largest landowners in Juneau. It owns 33,000 acres of land at Hobart Bay, about 80 miles south of Juneau; 1,700 acres in West Douglas, including much of the waterfront; and about 1,400 acres at Cascade Point.

The land is an undervalued part of the company, according to the chief financial officer.

"On the balance sheet, you don't really see the land. But it's worth hundreds of millions of dollars," Scarano said.

Downtown, Goldbelt has considered expanding the Goldbelt Hotel. The hotel has been a moneymaker for the company, but more rooms might be more expensive to build than they end up being worth, Droubay said. This would be particularly true if the capital were to move, he said.

Across the street, the company's Seadrome building also could be expanded. Goldbelt has drawings for both expansions, but has made no immediate plans to move ahead.

Goldbelt would like to see a golf course, which now has some permits, built on west Douglas Island. With the golf course, the corporation's adjacent land would be worth more to develop. A harbor, hotels, commercial land leasing and an industrial park are all possibilities. But first the city must decide how it will guide development in west Douglas, in a new comprehensive plan.

For its land at Hobart Bay, Goldbelt has prepared drawings for a cruise ship dock similar to that created by Huna Totem, Huna's village Native corporation.

"We're focused on wilderness and Native culture, instead of the jewelry shop thing," Droubay said. He described a dock where visitors could come to meet local artisans, talk with them, learn about traditions and buy their goods.

Goldbelt also sees an opportunity for mooring the largest cruise ships in Hobart Bay, where the corporation has considerable land and there are no residents to complain about big ships in view.

The company's officers said the cruise ship market is not ready and a recent $50 head tax on cruise ship passengers has made Alaska less attractive.

The companies have "delayed their decision about investing in Alaska," Droubay said.

The largest part of Goldbelt's business happens far from Alaska. Under federal law, certain Alaska Native majority-owned businesses, known in government parlance as Alaska Native 8(a) companies, can get sole-source contracts of any size with the federal government without participating in a competitive bidding process.

"We can make a procurement officer's life very simple," Droubay said. "But we have to convince them that we can do the job."

On the East Coast, among other contracts, a Goldbelt subsidiary provides role players for Middle Eastern war simulations. Rocket scientists, in another subsidiary, run mission operations for NASA research.

To get these contracts, Goldbelt developed business partnerships with people or companies who had technical expertise and could use the advantage in getting contracts under the provision for Native-owned 8(a) businesses. These businesses are at least 51 percent owned by Natives or Native corporations, but do not have to be Native-run. Native 8(a) businesses are a subset with special rules of all 8(a) or disadvantaged minority small businesses, according to Small Business Administration rules.

The subsidiaries that are formed under these rules don't get their advantage forever. Each year, they have to do a greater percentage of business without the sole-source advantage. After nine years, they graduate from the program.

Last year the breaks for Native-owned 8(a) businesses came under fire and the Government Accountability Office investigated. Goldbelt came out unscathed but is conscious of negative perceptions about these subsidiaries.

The contracting has been extremely good to the company. Goldbelt has formed seven such contracts so far: one in 1999, three in 2002, and one each from 2004 to 2006. In 2000, its gross revenues from such contracts were $41,000. By 2003, the number was $5 million. Last year the subsidiaries did $80 million in business, according to Scarano.

But competition has gotten tougher in the last three years from other Native-owned businesses, Droubay said.

And Goldbelt is looking for ways it can grow. Droubay and Scarano have been talking, they said, about providing security at U.S. embassies abroad.

• Contact reporter Kate Golden at kate.golden@juneauempire.com.





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