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Kenai
Peninsula Borough |
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Executive
Summary |
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As
the Kenai Peninsula Borough (KPB) celebrates it’s 40th
anniversary of incorporation, it celebrates diversity of its economy
as well.
As the most diverse economy in Alaska, the KPB economic system
gains strength from its diversity as each industry follows a different
trend of expansion and contraction.
Currently, the KPB economy is rebounding as the tourism outlook
for 2004 indicates continued growth, the fishing industry is seeing
strength in numbers, quality and political support and oil & gas
industry participants continue to explore and develop within the KPB.
Additionally, a natural gas pipeline spur to the area appears
to be a possibility.
First
quarter sales experienced minimal contraction as gross sales declined
1.0% from $353,263,535 during first quarter 2003 to $349,780,363
during 2004, a $3,483,172 decline.
Taxable sales were down 0.1% to $136,103,679 from $136,224,576,
a $120,897 decrease.
A small decline can be overcome as late returns are received
and processed.
When the KPB was incorporated forty years ago, industry sector
sales were not tracked because there was no sales tax and no
requirement for reporting sales.
The KPB sales tax was first enacted on April 20, 1965 with a
three percent tax rate and $500 cap on taxable sales, which is still
in effect. Construction
activity appears strong as permit values for the period increased
220.4% to $16,839,973 with permitting of the new Seward Middle School,
which has an assessed value of $7,500,000.
Volume decreased 13.0% from 46 permits a year ago to 40 for
first quarter 2004.
Building permits were not required anywhere in the KPB until
1986, twenty-two years after incorporation.
During that year Homer, Kenai, Seldovia and Soldotna each began
to require permits.
Two years later, Seward also began processing permits.
The KPB has not passed an ordinance requiring building permits. The
labor force is near all time highs, as both January and March provided
the second highest count in history and February had the third highest
count.
In each case, 1997 provided the peak labor force.
Unemployment counts are down for each of the first three
months, well down from the highs of 1997, and employment is at all
time highs for each of the first three months of 2004.
With employment at all time highs, even with the larger labor
force, both unemployment and the unemployment rate are down.
The record high January unemployment rate was 22.3% during 1992
and 20.5% during 1997, making the 2004 January rate of 15.1%
unemployment quite attractive.
Today’s labor force, 21,793, is nearly nine times the total
population of the KPB when it was incorporated (2,633) forty years
ago. Arctic
Winter Games staff continues preparation for this major event, which
the Kenai Peninsula Borough will host during 2006. Financial
donations and commitments for financial and in-kind donations are
ahead of goals set by the bid committee as enthusiasm builds for the
event. The
Kenai Wild brand is expanding as it enters its third year of operation,
building demand for the high quality value-added sockeye salmon.
Forty years ago, the Upper Cook Inlet salmon harvest was expected
to be near 1,000,000 fish.
Currently, fishermen anticipate harvests near 2,000,000.
The
KPB commercial fish harvest includes sockeye, coho, Chinook, and pink
salmon plus halibut, cod and shellfish.
The
oil & gas industry continued to generate mixed signals for the
quarter.
Unocal announced additional lay-offs as a result of shutting in
the Baker platform.
However, both Unocal and Marathon Oil have announced tentative
plans for increased exploration, production and development spending
budgets in 2004 focused mainly in the Ninilchik and Anchor Point areas.
The Kenai Kachemak Pipeline continues to ramp up natural gas
transmission volumes, with a proposed 14-mile extension of the KKPL line
by Unocal to be built in 2004.
New natural gas exploration drilling by Pelican Hill was nearing
start-up on the west side of Cook Inlet south of Tyonek.
The industry's focus continues to be natural gas exploration and
reworking of existing fields.
Value-added companies that include Agrium and ConocoPhillips are
the main drivers for new natural gas exploration along with the home
heating provider, Enstar Natural Gas. Forty
years ago the Chevron refinery, the first in Alaska, was two years into
development and arrival of the first Cook Inlet platform was still a
year away. |
SALESFirst
quarter 2004 gross sales of $349,780,363 were 1.0% less than the
$353,263,535 in sales occurring during 2003, a difference of $3,483,172.
Taxable sales decreased 0.1% from $136,224,576 during 2003 to
$136,103,679 during the most recent quarter, with five of ten sectors
experiencing sales declines. The decrease in taxable sales for the
quarter is $120,897. Quarterly
Sales
Gross
by Industry. Gross
sales were impacted by a $16.3 million decline in construction sales and
a $12.6 million decline in sale of manufactured goods, drops of 37.8%
and 32.6%, respectively. Although these are the only industries
reporting declines, gains in other industries were not large enough to
overcome the slow down as total sales were 1.0% below those of first
quarter 2003. Mining sales increased $17.4 million or 90.3% to
$36,648,976 while wholesale goods increased 13.2% or $4.7 million to
$40,649,900 in sales. Agriculture, Forestry and Fishing (AFF)
sales of $2,322,320 were 15.0% greater than one year ago, increasing
$302,381. Finance, Insurance and Real Estate (FIRE) sales gained
3.4% or $392,473, with a total of $12,090,774 in gross sales.
Transportation, Communication and Public Utilities (TCPU) sales expanded
2.0% to $39,025,846. The two largest sectors, retail and service,
each increased sales 1.1% to $124,081,004 and $42,230,284, respectively.
Retail sales accounted for 35.5% of gross sales while services
represented 12.1%. Government sales increased 10.9% but the
$13,663 in sales is not of consequence in the $350 million total
picture. Taxable
by Industry.
Taxable
sales marked a 0.1% drop from one year ago, a difference of $120,897.
Gains came as AFF sales increased 14.3% to $872,433. Construction
sales increased 5.0% to sales of $2,153,484. Manufacturing and
retail sales gained 1.8% and 1.3%, respectively as manufacturing sales
reached $1,464,092 and retail, easily the largest sector, reached
$80,732,059. Government sales increased 10.4% to $13,598, an
inconsequential amount. Quarterly
mining sales declined 15.1% to $1,047,502 while FIRE sales dropped 10.1%
to $4,771,457. Wholesale goods declined 3.8% to $4,827,416.
TCPU sales were 1.9% below a year ago with sales of $21,273,612 while
service sales of $18,948,026 were 0.3% less than a year ago. Gross
by Area.
Seldovia
gross sales increased 64.9% for the quarter as sales reached $1,395,716,
driven by strong construction sales. Soldotna sales of $68,464,403
marked a 6.6% gain. Sales in the other four areas declined from
sales levels reached one year ago as construction sales declined 40.1%. Homer
businesses saw sales decline 9.6% to $45,926,583. Both Kenai and
Seward had 2.1% decreases as Kenai area sales totaled $60,778,452 and
Seward sales reached $20,492,610. Sales in the unincorporated area
of the KPB decreased 1.1% to $152,722,599. Taxable
by Area.
While
Seldovia gross sales marked the greatest percentage gain, its taxable
sales had the greatest decrease, 6.6%, with sales of $559,687.
Kenai also experienced a decline, 5.6%, with sales of $29,386,510 as
Home Depot opened and has begun to establish itself in the economy.
Sales in Homer decreased 0.6% to $22,316,137. Finally, sales in
the unincorporated areas of the KPB were down 1.8% to total $37,637,833.
Soldotna
and Seward had increases in taxable sales with Seward sales gaining 1.4%
to total $9,419,088 and Soldotna sales increasing 6.8% to total
$36,784,424. Annual
Sales
KPB
2003 annual gross sales of $1,918,030,619 were 2.2% above those of 2002
as seven sectors had improved sales and three had declining sales.
Except for minimal government sales, and the small AFF
sector, which increased 31.4%, all gains and declines were in single
digits. Each of the five cities reported annual increases.
Total 2002 sales of $1,876,434,612 were 4.6% less than 2001 sales of
$1,966,591,037. These, in turn, were 19.6% greater than 2000 sales
of $1,644,495,161. Taxable
sales increased 1.1% from 2002 to 2003 with sales of $732,141,065,
following a 5.7% increase from 2000 to the 2001 level of $705,255,160
and 2.6% from 2001 to 2002 when sales totaled $723,827,580. Four
cities increased taxable sales from 2002 to 2003. Gross
by Industry. The
AFF sector had the largest percentage gain, 31.4%, with sales of
$22,009,310; the construction sector gained 9.7% with sales of
$250,563,945; and FIRE increased sales 5.6% to reach $57,966,229.
The large retail sector gained 4.2%, or $25,986,357, to total
$649,544,523. Sale of wholesale goods increased 3.2% to
$194,212,922 while sales in the service sector rose 0.6% to
$278,944,346. The inconsequential $41,980 in government sales
marked an 85.9% increase. TCPU
sales of $158,748,261 marked an 8.1% decrease while mining sales
decreased 6.1% to $106,561,739. Manufacturing sales declined 0.8%
from 2002 with sales dropping from $201,047,383 in 2002 to $199,437,364
during 2003. Taxable
by Industry.
AFF
sales rose 12.3% while sale of wholesale goods increased 11.3% with
sales of $5,010,961 and $24,139,455, respectively. Construction
sales rose 5.4% to $11,263,152 while retail sales increased 2.3% to
$427,778,523 and service sector sales gained 0.3%, or $364,364, to
$145,392,805. Government’s 85.9% sales gain is inconsequential
at $41,980. Taxable
sales in the mining sector decreased 16.5% to $4,885,262. FIRE
sales were down 5.6% to $22,717,932 while manufacturing sales were down
4.0% to $9,235,045. TCPU sales of $81,675,980 decreased 2.9%. Gross
by Area.
Seldovia
gross sales expanded 50.6%, reaching $7,254,806 for the year, showing
strength in the construction sector. Seward, with $156,914,971 in
sales, marked a 10.3% gain. Homer sales increased 3.9% while
Soldotna sales increased 3.6% to reach $272,902,574 and $337,671,172,
respectively. Kenai increased taxable sales 1.3% to $282,762,757.
KPB’s
unincorporated area is the only region to see a decline in gross sales
for 2003, declining 0.1% to $860,524,339, a decrease equivalent to
$1,259,503 in sales. Taxable
by Area.
Homer
sales increased 8.6% to $131,330,830 while Soldotna sales gained 7.7% to
total $190,604,834. Seldovia sales of $3,376,190 marked a 3.2%
increase while Seward sales increased 1.0% with $76,381,438 in reported
sales. Kenai taxable sales were down 11.2% for the year, dropping to $121,401,782 as Big KMart announced it would be going out of business on the Kenai Peninsula and all of Alaska. Sales in the KPB unincorporated area decreased 0.6% to $209,045,991.
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CONSTRUCTION PERMITTINGQuarterly Permitting
Forty
construction permits were issued in KPB cities during first quarter
2004, 13.0% fewer than first quarter 2003 when 46 permits were issued.
Total permit value was $16,839,943, up 220.4% from the same period of
2002 when values totaled $5,255,313. Data in this section does not
include construction activity outside incorporated cities of
Homer, Kenai, Seldovia, Seward and Soldotna because the KPB does not
require building permits. Seldovia information is now current so
data is included in all charts and tables. By
Area, Value.
Seward
permitting provided 46.0% of quarterly value, issuing permits totaling
$7,741,600 as a new middle school, with an assessed value of $7,500,000,
was permitted. Soldotna’s total permit value of $5,072,323 was
30.1% of the borough-wide total. Homer issued $3,714,020 in permit
value and Kenai’s $312,000 added 22.1% and 1.9% of the total,
respectively. Seldovia did not issue any building permits during
the first quarter of 2004. By
Area, Volume.
Of
the 40 first quarter construction permits issued, Homer issued 16, or
40.0%. Seward and Soldotna each issued 10 while Kenai finished the
quarter having issued 4 permits. By
Type, Value.
New
commercial permit values provided 77.4% of value with $13,030,026 in
assessed value permitting during first quarter 2004. New
residential permits added 20.4% of the total with $3,436,797 in value.
Residential alteration/addition permit values of $261,520 provided 1.6%
of the total. Commercial alteration permits issued during the
quarter had a total value of $111,600. By
Type, Volume.
There
was strength in new construction as eighteen new residential permits
were issued and ten were issued for new commercial projects. Nine
permits were issued for commercial alteration/addition and three for
residential alteration/addition projects. Annual
Construction - Year 2003
Construction
permits are required by KPB cities, but not by the KPB, resulting in
incomplete construction activity data, but indicating area trends.
Permit values during 2003 totaled $43,606,177, a 5.8% decrease from 2002
but the fourth highest total value on record, behind 2002, 2001 and 1995
when Seward’s SeaLife center was permitted bringing the total permit
value to $61,510,032, the highest on record. There
were 336 permits issued during 2003, 4.3% fewer than the 351 issued
during 2002, but second highest on record. Kenai issued the
greatest number of permits and has done so in all but four years since
1986 when permitting was first recorded. By
Area, Value.
Homer
permitting provided 35.1% of KPB annual value; issuing permits totaling
$15,326,815, a 52.5% increase over 2002. Kenai’s $10,441,800
total value added 23.9% to the KPB total but marked a 37.8% decrease
from 2002. Seward permit values increased 0.9% for the year to
$7,982,765, providing 18.3% of the total. Soldotna permit values
dropped 28.8% to $7,952,297, providing 18.2% of the KPB total.
Seldovia’s $1,902,500 value provided the remaining 4.4%. By
Area, Volume. During
2003 Kenai issued 114 of the 336 permits, providing 33.9% of the KPB
total. Homer issued 86 permits while Soldotna issued 74 permits,
25.7% and 22.0%, respectively. Seward issued 50 permits, 14.9% of
the total and Seldovia’s 11 permits added 3.6% of the volume.
Homer and Seldovia increased permit volume over 2002 with Homer issuing
28.4% more permits than one year ago and Seldovia’s count increased by
50.0%. Those areas with declining permit activity include Seward,
down 21.9%, Soldotna was down 18.7% and Kenai issued 5.8% less than one
year ago. By
Type, Value. New
projects provided 72.4% of permit activity with commercial and
residential permits providing 36.3% and 36.1% of the total,
respectively. New commercial values of $15,820,201 were slightly
greater than new residential permit values, which totaled $15,729,888.
Commercial alteration/addition permit values totaled $9,775,309 or 22.4%
of the total. Finally, residential alteration/addition permits
added $2,280,779 for 5.2% of the KPB total. New residential permit
values were 9.6% above 2002 while commercial alteration/addition values
were up 25.0%. New commercial values declined 27.4% and
residential alteration/addition total value was down 1.1%. By Type, Volume. Commercial alteration/addition annual activity for 2003 increased 9.1% as 96 permits were issued, setting a new record high. New residential activity shows 104 permits were issued for the second year in a row, and resulting in a three-way tie with 1994 for highest volume in a year. Ninety-four residential alteration/addition permits were issued, 19.0% less than 2002. New commercial activity decreased 2.3% to 42 permits.
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EMPLOYMENT
KPB’s
January 2004 labor force was 21,684 persons, increasing to 22,018
potential employees during February and 21,793 during March. The
March labor force was 296 greater than one year ago. There
were 3,264 persons listed as unemployed in the KPB during January 2004.
That number decreased to 3,243 by February and continued downward to
2,793 during March. The March 2004 unemployed total was 107 less
than March 2003. KPB’s
January 2004 employment rate was 15.1%, one percent less than January
2003. By February, the rate had dropped to 14.7% and continued
down to 12.8% during March. The March 2003 rate was 13.5%. Employment during January 2004 rose to 18,420 from 17,922 a year earlier, climbed to 18,775 during February and on up to 19,000 during March. This compares with 18,187 during February 2003 and 18,597 during March 2003.
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POPULATION
Population
estimates for 2003 show the Kenai Peninsula population at 51,220
persons, a 0.1% gain for the year. Homer grew by 3.6% to 4,893
while Kachemak City gained 12.9% to a total of 473 persons.
Soldotna also increased, gaining 2.9% to 4,059 residents. Kenai
decreased 0.6% to 7,125 and Seldovia lost 2.6%, down to 300 persons.
Seward’s population is down 2.2% to 2,733. Alaska’s
population, estimated at 648,818 for 2003, also marked a 0.1% increase
for the year. |
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