Pelican, Alaska: A company town without a company

City of 100 must decide whether to separate from Kake Tribal Corp.

Posted: Sunday, October 03, 2004

The tiny town of Pelican is at a loss, with big decisions in its near future.

The former company town suddenly finds itself without a company and with thousands of dollars in unpaid taxes to collect. Its fish processing plant, formerly a going concern, is nearly gone. Its population is plummeting.

Pelican now must decide whether it will remain a first-class city and maintain control over its school budget, if it will purchase the local public utility and whether to try to separate from Kake Tribal Corp., the owner of the near-defunct seafood plant Pelican Seafoods.

About 70 miles west of Juneau on Chichagof Island, Pelican faced a major economic blow this year when its top employer, Pelican Seafoods, a holding of Kake Tribal, laid off as many as 15 employees, keeping only a few for its downscaled operation.

Many are wondering if the plant will operate at full capacity anytime soon.

With the loss of jobs and revenue, the town's roughly 100 residents must make some big decisions about whether it wants to return to being a bustling fishing town or become a quiet retirement community. Many of the people in Pelican live on fixed incomes, but others rely on the money and jobs the plant provided, according to interim City Administrator John Percel.

There's also the issue concerning tens of thousands of dollars that Kake Tribal owes in sales and property taxes.

Percel said the city also must decide whether to remain a first-class city and whether to continue its relationship with Kake Tribal Corp. He said Pelican's population has dropped by more than half in the last decade.

"People have lost jobs here and it hurts," he said, adding that many people fear it will be difficult to remain in the community if the plant doesn't resume its normal level of operation or if it closes completely. "They're trying to get the fish processing plant back in full operation, whether it's owned by Kake Tribal Corp. or somebody else."

Depending on who you ask, Kake Tribal laid off four to 15 Pelican Seafoods employees when the plant announced it would operate at a lower capacity in February.

Duff Mitchell, chief operating officer for Kake Tribal, said he hopes to operate Pelican Seafoods at full capacity next summer, but he's not sure if it's possible. Mitchell said the plant sold several hundred tons of ice to commercial fishermen this year and iced about 400,000 pounds of fish bound for Sitka and processing. In 2002, Pelican Seafoods processed about 2 million to 3 million pounds of fish. During its heyday in the early 1990s, the plant processed 5 million to 6 million pounds of fish a year, Mitchell said.

Former Pelican Mayor Kathie Wasserman, who resigned in June for a job in Juneau, said the city should break away from Kake Tribal if possible. The plant was purchased by the Native corporation in 1997. Prior to that, it was owned by a Japanese company, Wasserman said.

"I would be behind anybody that can successfully run Pelican Seafoods," she said. "The management at Kake Tribal has not had a good track record."

Wasserman said Kake Tribal owes Pelican about $100,000 in back taxes. Mitchell, Percel and acting Mayor Patty Phillips would not confirm the amount of the debt, but Mitchell acknowledged that the corporation does owe the city back taxes.

Phillips hung up the phone when asked how much Kake Tribal owes.

Kake Tribal owns the public utility powering the seafood plant and Pelican. Though some in town have recommended buying the utility, Mitchell told Pelican officials in March that the corporation does not intend to split the utility from the seafood plant.

"I realize that some shortsighted thoughts think that the Pelican Seafoods plant can survive if it is separated from the utility," Mitchell said in a letter to Wasserman on March 31, just one month after the plant closed. "However, rest assured that this is the conversation of fools, since without the cheap hydropower the utility provides, the plant would have closed a decade ago."

He said that without cheap power, the plant could close "forever," adding that the business model for Pelican Seafoods relies on cheap power and fuel.

Wasserman said Mitchell is worried that if the city purchases the utility, it will increase energy rates, making it unaffordable to operate the seafood plant.

"But we live there too," she said. "What good would that do us?"

Mitchell said recently that Kake Tribal is considering selling the plant to the city.

"If a viable company owned the utility, I would say it's not in Pelican's interest to own it," Wasserman said.

Percel said $52,500 of the city's $478,000 operating budget goes to pay the costs of running the Pelican School District, which has 10 students. He said a decrease in population also brings a decrease in revenue because of the tax money it takes to run the school system.

He said some would rather change to a second-class city and combine with Chatham School District, which includes students in the cities of Angoon, Gustavus and Tenakee Springs.

Wasserman said the cost of running the school will become a greater burden on the residents of Pelican if the city remains as it is. She said four of six mills in the city's property tax are used to pay for the school.

"If there is no large business in town to pay the property tax, then the city still has to pay for the school," she said.

• Timothy Inklebarger can be reached at timothy.inklebarger@juneauempire.com.



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