Sativa Quinn Writing Sample

Economic Development Project – Page 1

INTRODUCTION

a) Kotzebue and the Northwest Arctic Borough

Kotzebue is in dire need of more housing and more jobs. The catch is, now we
have the opportunity for people to get good home loans through our HUD
programs, but the population has been growing steadily and there hasn’t been
a new house built in Kotzebue in the last 3 years. A good interest rate isn’t
going to do any good if there’s no new houses to buy and no jobs to help our
people pay back those loans. - Walter Porter, Director, Tupiq Services, Inc., a
housing services subsidiary of Kotzebue IRA

The Kotzebue IRA represents the Native people of Kotzebue, Alaska, a small city of
almost 3,000 people, 75% of whom are Alaska Native. The vast majority of Kotzebue’s
Native population are Inupiat Eskimos, and are direct descendants of the people who
have resided in the region since time immemorial.

The Northwest Arctic Borough

Kotzebue serves as a hub community for
ten outlying villages which are closely
linked to the city by cultural, familial and
economic ties: Ambler, Buckland, Deering,
Kiana, Kivalina, Kobuk, Noatak, Noorvik,
Selawik and Shungnak. These eleven
communities are represented collectively
by the Northwest Arctic Borough at the
state level, and their Native populations are
represented collectively by the Northwest
Arctic Native Association, a for-profit
corporation commonly known as NANA. All of these communities are primarily Inupiat
and they are united by their strong commitment to the Inupiat language, culture and
values. Subsistence activities such as hunting, fishing and berry picking are important in
all of these communities, and traditional dance is performed and enjoyed by young and
old alike in every village.

As of 1990, the Northwest Arctic Borough had both the highest percentage of Alaska
Natives in the population of any region in the state, at 85.2 percent, and one of the highest
unemployment rates of any region in the state, at 20.3 percent. Employment
opportunities in the region have improved somewhat over the past 10 years due to the
opening of the Red Dog Mine, the world’s largest zinc mine. However today, the
Northwest Arctic Borough still has an average annual unemployment rate of 16.1 percent,
more than twice Alaska's annual average of 7.9 percent.1 This does not count the high
proportion of discouraged workers who no longer apply for jobs.

1
“A Profile: The Northwest Arctic Borough” in Alaska Economic Trends, January 1999. Alaska
Department of Labor.
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In Kotzebue, 12.7 percent of the population lives at or below the poverty level, and
poverty levels in the outlying villages range as high as 30 percent. As of January, 2000,
317 individuals in Kotzebue were receiving some form of public assistance according to
the Alaska Department of Health and Social Services.

In recent years, as economic conditions have gradually improved and more tribal
members have completed higher education degrees, the people of the region have begun
to focus on achieving greater self-determination in all areas of social and economic
development. As part of this effort, the Kotzebue IRA applied for and received funding
through the Department of Housing and Urban Development’s new Native American
Housing and Self-Determination Act (NAHASDA) to address Kotzebue’s housing
shortage. These funds were used to improve sub-standard housing and to plan activities
that would address the tribe’s existing and future housing needs. The concept for the
Nunavik Manufacturing Plant grew out of this process.

b)The Nunavik Manufacturing Plant: Overview of Benefits

The plant will use Expanded Polystyrene Foam (EPS) to produce insulation products for
civil, residential and commercial use. Examples of the various applications for this
product include building homes with Structural Insulated Panels (SIP) composed of EPS
sandwiched between layers of wood; using the insulation in renovation and
weatherization projects on existing homes; and using the insulation to protect roadways,
airstrips and utility pipes from weather conditions and permafrost. All of these
applications have already been used in the Kotzebue area on various development
projects over the past few years. EPS products have proved to be a great success in terms
of standing up to arctic conditions, producing structures that look the same as any other
on the outside, but are more resistant to both wind and moisture than stick-built buildings.
Developers in the area say they would use EPS and SIP products more frequently if not
for the high cost of “shipping air” by paying the freight costs for bringing the lightweight
but bulky foam panels to Kotzebue by barge or plane.

The plant will help to address unemployment in Kotzebue and the surrounding region in
three ways:

• In Kotzebue, Nunavik will create 13 new permanent jobs during the first year of
operations, with more new jobs anticipated in future years.
• Kotzebue IRA will provide paid training in the use of EPS and SIP products for
construction to Alaska Natives in Kotzebue as well as to Natives from any other
villages of the Northwest Arctic Borough where Nunavik products are being used.
Numerous large-scale construction projects are planned throughout the region
over the next 10 years, so Nunavik will be a source of both local materials and
local labor, creating several seasonal jobs each year and helping to keep more of
the money spent on housing and infrastructure in the region.
• Nunavik will make it possible for the Kotzebue IRA to create more middle
income and low income housing in Kotzebue. This housing will make it possible
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for Inupiat from the villages who wish to find employment reasonably close to
home to take some of the available jobs in Kotzebue.

In addition, Nunavik will help residents of the region stretch their incomes further by
minimizing some of the factors which give the Northwest Arctic Borough an
exceptionally high cost of living, such as:

• Shipping: Shipping costs greatly increase the cost of a new home in the arctic.
In the case of stick-built homes, all materials must be imported since Kotzebue
has no trees. In the case of existing EPS structures, builders had to pay for
“shipping air” because the polystyrene was expanded before it was sent to
Kotzebue. By importing condensed polystyrene beads and expanding them in
Kotzebue, the plant will reduce shipping costs, and ultimately, reduce the costs of
a new home by as much as 20 percent.
• Fuel: Most homes in the region rely on oil for heating, which currently costs
$3.00/gallon. EPS homes are more fuel efficient than stick-built homes by a
minimum of 15 percent, and using EPS to weatherize existing homes can improve
their fuel efficiency by as much as 50 percent, saving families as much as
$200/month.
• Outside labor: Working on stick-built homes typically requires years of training
as an apprentice. The training process to participate in SIP construction projects
will take 3 weeks and will be available in Kotzebue. This means that the ultimate
cost to the home-buyer will not include the costs of transporting workers from
elsewhere. Training costs for local workers will be supported through grant funds
or contributions by local organizations.
• Rental rates: The housing shortage has led to exorbitantly high rental rates in
Kotzebue. The creation of more new housing will also bring rental costs down
over time, reducing one of the largest areas of expense for lower-income
residents.

By linking the creation of employment and the creation of housing, Nunavik will literally
make room for economic development in Kotzebue to occur. Nunavik will serve as one
of the few rural Alaska development projects designed to supply local needs and keep
local dollars in circulation, rather than seeking to sell natural resources to national or
international markets. Nunavik’s own employees will be among its earliest clients and
will also serve as some of its best advertising.

Kotzebue IRA will accomplish these goals through a public-private partnership, relying
on local organizations as partners in order to keep the profits within the Northwest Arctic
Borough. So far, Kikiktagruk Inupiat Corporation (KIC), which represents the Native
people of Kotzebue as shareholders, has made a $750,000 contribution and will share in
profits from the plant. KIRA is also negotiating with NANA, the for-profit regional
corporation representing the Native population of all eleven communities, to be a partner
in the project through a contribution of cash or in-kind. NANA is currently completing a
due diligence process prior to investing in Nunavik, but has indicated an interest in
investing as a 25 percent equity partner (See Letters of Support – Appendix 8).
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c) Expanded Polystyrene (EPS) and Structural Insulated Panels (SIP)

The Nunavik Manufacturing Plant is part of Kotzebue IRA's overall plan for establishing
greater self-determination in the process of constructing and rehabilitating homes for the
Native population of Kotzebue. KIRA wants to help solve the current housing shortage
and overcrowded conditions through the production of better, faster, cheaper housing,
allowing families to buy or rent a home that is suited to arctic conditions. In addition, the
plant is expected to create local employment opportunities and to be a revenue source for
the tribe.

It is estimated that 60 percent of the Plant's overall revenue will come from the sale of
EPS Board Insulation for civil and mechanical applications. This type of insulation is
already in use throughout the region to protect roads, utility pipes and runways from the
impact of permafrost. Projects of this nature are undertaken every year throughout the
arctic regions of Alaska, creating a steady market for EPS Board in varying densities.

The other 40 percent of the Plant's revenue will come from the
sale of Structural Insulated Panels (SIPs) for residential and
commercial structures. As shown, SIPs consist of EPS Board
"sandwiched" between two pieces of exterior-grade plywood
known as Oriented Strand Board (OSB). Houses built with
SIPs are faster and easier to put together, allowing workers to
be "weathered in" by the second day of construction, an
important consideration for extending the building season in
arctic regions. The homes are better insulated, sturdier, and
more resistant to drafts and moisture than stick-built
construction. A house built with SIP panels saves the
homeowner over 15 percent on the heating costs they would
pay for a comparable stick-built unit.

SIP construction is also environmentally sound both because it conserves energy and
because it requires less wood than a stick-built home, and the OSB sandwich on the
outside of SIPs can be made from recycled wood or young scrub trees. In the arctic,
where timber is not locally available, this also contributes to a substantial cost-reduction
on building materials.

The Plant will import polystyrene beads and use an environmentally safe steam heating
process to cause the beads to expand and bond within a mold built to sizes that are
typically needed by the local market.