CALISTA CORP.

Hard times are familiar to this Native corporation, but there is hope for a brighter future.

For Calista Corp., the path to self-sufficiency has been a bumpy ride, strewn with the debris of good intentions gone bad, failed business ventures and poor relations with shareholders. And the journey's not over yet, although the beleaguered Bethel-based corporation may finally be headed for smoother trails.

Under the landmark 1971 Alaska Native Claims Settlement Act, nearly $1 billion arid 44 million acres of land was divided between 12 land-based, for-profit regional corporations to settle aboriginal land claims and speed the construction of the trans-Alaska oil pipeline.

Calista's share was $80.1 million and a land entitlement of 6.5 million acres, making it the second-largest of the regional corporations. It encompasses a roadless, 56-square-mile region of the Yukon-Kuskokwim Delta, which is home to some of the strongest traditional cultures in the state. Fifty-six villages dot the region, of which 46 are incorporated into individual ANCSA village corporations.

Calista's 13,300 shareholders are mostly Southwestern Yupik Eskimos, most of whom still speak their traditional languages and live a subsistence lifestyle.

In Yupik, the name Calista breaks down to "Cali" which means work and "ista" which means someone or something which does. The Yupik language doesn't have a word for "corporation."

Through 1990, Calista had real losses of nearly $117 million, after sale of its net operating losses brought in about $18 million, according to a 1991 study by Steve Colt, an economist with the Institute of Social and Economic Research at the University of Alaska Anchorage.

Calista was barely treading water. More bad news awaited. Its biggest venture in the 1980s was to build a 15-story, $45 million hotel, the Anchorage Sheraton. Calista reasoned the hotel would provide an income for the corporation and jobs for shareholders. Neither happened and Calista narrowly averted foreclosure when the federal Bureau of Indian Affairs, which had guaranteed part of the loan, settled the debt.

"It left them with essentially zero," says Colt.

Calista acknowledges its shortfalls. A report the corporation issued in 1989, "The Calista Region: A Gentle People, A Harsh Life," says Calista "has made an attempt to operate businesses in the region such as fuel delivery, construction, fish processing.... All these ventures failed."

Though sparsely populated, the region has known deposits of gold, silver, North America's largest platinum placer deposit and mercury, and is thought to hold oil and gas reserves.

It is also one of the poorest regions in the state. The Wade-Hampton Census area averages $13,029 annual income, less than half the statewide average of $28,629, according to Neal Fried, an economist with the Alaska Department of Labor.

"It's a reflection of what you could call village Alaska," he says. The Wade-Hampton region reflects the reality of much of rural Alaska, where jobs are scarce and most income comes from government payments such as welfare, Social Security and the Alaska Permanent Fund, Fried says. In the past 30 years, Calista shareholders have received dividends only twice, for a total of about $50 per 100 shares.

Calista entered the 1990s stagnant, with "no ability to do anything," Colt says. The corporation approached Congress with a proposal for a land exchange, but the legislation stalled. Meanwhile, Calista went about its business as well as it could, acquiring a majority stake in a chain of rural newspapers in Bethel, Dillingham, Dutch Harbor, Barrow, Cordova, Valdez and Seward, as well as the Alaska Bush Shopper under the Ilikista Ventures Inc. umbrella. Alaska Newspapers, a branch of Ilikista Ventures, also operates Camai Printing, a commercial printing operation in Anchorage.

Calista also took a strong advocacy role on behalf of shareholders in their fight to maintain their subsistence way of life, resulting in victories against federal incursions such as the Migratory Bird Treaty Act, the Marine Mammal Protection Act and the Endangered Species Act. Calista also has been a strong proponent for equitable education funding and the construction of schools in rural areas.

The latter issue is one that Calista President and CEO Matthew Nicolai has taken to heart.

In 1994, Matthew Nicolai took over Calista's helm. Nicolai grew up in a onebedroom home in Kwethluk, which he shared with his parents, two sisters and three brothers. The home had no electricity or running water. Family and cultural traditions were an important part of his upbringing.

But when it came time to further his education, Nicolai was sent to a BIA-operated boarding school at Chemawa, in Salem, Ore. He has been an avid proponent of equitable education funding in Alaska between rural and urban school systems.

Nicolai's goal is to preserve the subsistence and cultural values of shareholders as well as improving health, sanitation and economic opportunities in the villages.

In a speech to shareholders in June, Nicolai pointed out that the boards of directors of most Native regional corporations are active, meaning they are involved in management and day-to-day operations. Calista's board of directors is passive, and directs policy by motion and resolution. A series of meetings in 1994-'95 resulted in the creation of a five-year strategic plan, which so far has meant profitability for the corporation.

In 1996, Calista joined a cooperative venture with 18 other ANCSA corporations, including several village corporations, to purchase products and fuel in bulk and lower retail costs for residents. WAVE Wholesale filed for Chapter 11 bankruptcy in 2000. Nine village corporations, who participated in the Western Alaska Village Enterprises partnership, are now in financial straits.

A plan to improve housing in the villages backfired this year when shareholders held a vote to recall the entire Calista board after Native groups in Western Alaska accused it of competing with the region's Native nonprofits for federal funds. The recall failed.

A sign that events may finally go Calista's way came in 1998, when the nearly decade-long pursuit of a federal land swap came to fruition. Under the deal, Congress agreed to pay the struggling corporation more than $39 million for 218,000 acres of wetlands, valued by federal appraisers as being worth $5 million. The lands were added to the Yukon Delta National Wildlife Refuge. The legislation was sponsored by U.S. Rep. Don Young, who said it was to help Calista become self-sufficient.

"This is really their big cash infusion," says IS ER's Colt. "It will be very interesting to see what they do with it."

In 2000, Calista grew to $62 million in total assets, most of which came from the land sale. Revenues increased to $13.6 million in 2000, up 24.8 percent from 1999 revenues of $10.9 million. Calista reported a net income of $874,000.

Banking on the future, Calista set up the Akilista Fund, a savings account in which 10 percent of 7(i) revenues and net profits from operations are deposited annually. The Akilista Fund will be used as an investment portfolio and to help fund scholarships and eventually shareholder dividends and for other programs.

Other subsidiaries are staying busy. Its real estate and property management subsidiary, Tunista Properties Inc., built post offices in Nanapitchuk, Chefornak, Kotlik and Nulato, with a 75 percent Native hire rate. Tunista will lease the properties to the U.S. Postal Service.

Calista also set up a scholarship fund in 1994 that, in conjunction with training programs, has invested $500,000 to shareholders and descendants.

Calista may have another ace up its sleeve: resource development. One corner of its land may hold enough gold to overshadow Fort Knox. Recent exploration has shown the Donlin Creek prospect on the upper Kuskokwim River about 300 miles west of Anchorage holds about 13 million ounces of gold. That's more than Fort Knox near Fairbanks and the Pogo prospect near Delta Junction combined.

The remoteness of the deposit and low mineral prices are hampering development, although NovaGold Resources Inc. and Placer Dome have worked on the project, spending more than $13 million in five years.

For Calista, finding a pot of gold would be a change of luck, indeed.