Fairbanks sees near record construction season: commercial and government work fuel economy.

Contractors and construction workers in the Fairbanks area hustled through the summer of 2005 on a myriad of new projects--so many that supplies and labor became tight in the Interior's booming building industry.

Those impacts hit both large and small projects, including construction of a new downtown Fairbanks building for the MAC Federal Credit Union.

"We had a couple of hold-ups when a subcontractor backed out, and it took a little time to try to get another," said Raelynn Holland, executive vice president of the credit union, which is building an 8,000-square-foot, two-story building at 10th and Cushman streets. "Not only the cost, but the availability of steel and labor ... it was a huge advantage for us to start very far ahead of time."

In late September, crews working on the $3 million new credit union building were finishing up enclosing the steel structure, allowing interior work to continue through the fall months. Holland expects completion prior to the end of 2005.

"Like everyone else, we're trying to get it closed in ahead of the weather. Everyone is scrambling to do so," Holland said.

To Busy for Data

While contractors are rushing to button up projects for the fall and winter seasons of Interior work, local officials are working to compile construction statistics for 2005. This year is shaping up to be the second-largest year for new construction in Fairbanks, according to Steve Shuttleworth, Fairbanks city building officer.

"We don't have time to do the data ... last year was $141 million and I think we will follow that up as the second largest," Shuttleworth said.

Past yearly averages for new construction in Fairbanks typically range from $42 million to $45 million, he said, although recent years have topped that average. Construction values in 2003 tallied about $70 million. Within the last 25 years, the largest annual value in new construction work in the city occurred in 1985, which was $80 million.

Of the $141 million in new construction initiated in 2004, roughly 80 percent came from the private sector, somewhat unusual for Fairbanks. Historically, government and public-sector spending has accounted for the majority of new construction in the city, Shuttleworth said.

Commercial Gains Ground

A majority of the new construction work within the city boundaries, roughly 75 percent to 80 percent, is commercial development, Shuttleworth added. "At this point, there is very little residential property left in the city," he said.

Building and zoning permit valuations tabulated by the Fairbanks North Star Borough, which includes projects within and outside of the city limits, also indicate that 2005 is shaping up to be a busy construction year.

For the first half of 2005, permit valuations totaled $101.8 million, less than the first half of 2004, according to the summer issue of the Fairbanks Community Research Quarterly. But the partial values documented in 2005 are more than the entire year's worth of building and zoning permit valuations reported in 2000, 2001 and 2003.

Military Projects Prosperous

Those borough statistics are not all inclusive. Zoning permits are not required for construction in general-use-zoned portions of the borough, and the numbers also do not include construction work on the area's military installations, where some of the largest projects are being completed.

Those military projects range from housing developments to Stryker Brigade facilities to construction of a new 500,000-plus-square-foot military hospital on Fort Wainwright. That $178 million project is scheduled to be complete early in 2006, according to Bert Bell, president of GHEMM Co., the Fairbanks-based contractor overseeing the project.

"We've been at almost record levels up here," Bell said. "There is a tremendous amount of work for the military, which is, by far, the biggest spender."

The increase in military spending in the Interior can be attributed to development of a Stryker brigade in the U.S. Army Alaska, with most of those quick-response soldiers based at Fort Wainwright in Fairbanks. A number of Army housing projects, linked with that change in troop designation and its resulting increase in soldiers in Alaska, contribute to the military construction budget increase, according to Greg Smith, chief of the military program and project management branch for the U.S. Army Corps of Engineers in Alaska.

Neeser Construction, based in Anchorage, is working on several Stryker-related construction projects at Fort Wainwright this year, employing up to 90 people at a time, according to project superintendent Bill Williams. One project consists of building 30 houses, each with about 2,500 square feet of living space, to be used for non-commissioned officer housing.

"They're real nice units--very well built with a nice design ... as far as military housing goes, they're right at the top. I would be happy to live in them," Williams said.

The two-story homes are part of a new subdivision being built on Fort Wainwright, part of the post's efforts to expand and accommodate the new Stryker brigade.

In addition, Neeser is working on three other construction contracts at Fort Wainwright, part of the firm's first work in the Fairbanks area, Williams said.

Those military construction contracts include construction of a 100,000-plus-square-foot palletprocessing building, part of the Stryker brigade's infrastructure, allowing rapid deployment of the specialized equipment.

Neeser also is working to construct a headquarters building and also a large barracks project at Fort Wainwright. The four contracts total more than $50 million in work for Neeser at the Interior Alaska military post, Williams said.

Retail Projects

Other areas hosting new construction activity include the south industrial part of Fairbanks and the rapidly developing commercial area in the northeast portion of the city, according to Shuttleworth.

Large-scale projects include a retail development being built on Bentley Trust land located just west of the recently opened Lowe's store. Those development plans call for construction of a 26,000-square-foot Barnes and Noble bookstore, a 45,000-square-foot Alaska Sportsman's Warehouse, an 18,000-square-foot Old Navy, a 15,000-square-foot Petco, and two more unnamed shops, Shuttleworth said.

Construction started last spring under ESI Inc. of Bozeman, Mont., as the general contractor. ESI recently completed the new Fred Meyer store on the east side of Fairbanks, which opened in late February.

Additionally, a four-story, 55,000-square-foot office building is being built this year on land just east of the Bentley Trust development, located between Seekins Ford Lincoln Mercury dealership and the Jehovah's Witnesses Kingdom Hall on the Old Steese Highway. Shuttleworth said the building will be called the Fairbanks Financial Center, which is being built by Alaska USA Federal Credit Union.

A sports bar and a branch of the locally owned Mt. McKinley Bank also is planned for that northeast retail area, as well as a multi-story building that will house the Advanced Pain Center.

"The phone is going nonstop, with a bunch of developers calling in with questions," Shuttleworth said. "A half dozen more substantial projects are going in, but they don't want to tell us until the last minute."

Refinery Contract on Hold

Given all this activity, it could have been even more busy for the Fairbanks area construction industry. The area's largest project, a planned $250 million expansion at the Flint Hills refinery in North Pole, went to final bidding, but a contract was not awarded earlier in 200,5.

The project was planned to build a refinery unit capable of producing low-sulfur diesel and gasoline fuels from the North Slope crude oil it currently processes, in order to meet new criteria required by the Environmental Protection Agency. Those fuel standards are scheduled to become effective for diesel fuel in mid-2006 and for gasoline in early 2007.

Jeff Cook, director of external affairs at Flint Hills Resources Alaska, a subsidiary of the Wichita, Kan.-based Koch Industries, said in late September that the company was not ready to announce any plans for the project, but that Flint Hills "will have low sulfur fuels available by the implementation dates."

Cook declined to say how Flint Hills will provide the low-sulfur fuels, as it promised in its crude oil purchase contract with the State of Alaska, negotiated during its purchase of the North Pole refinery and other assets of Williams Alaska in 2004.

GVEA Terminates Project Temporarrily

Also in North Pole, a major construction project that began in mid-2004 came to a grinding halt over contract disputes during the fall of 2005. Golden Valley Electric Association had hired general contractor H.C. Price under an EPC (engineering, procurement and construction) contract to construct a $75 million gas-fired power plant, capable of producing 60 megawatts of power.

By fall, the overall project was approximately 66 percent complete, with a May 2006 completion schedule, according to a Sept. 12 statement issued by David Matthews, vice president and Alaska area manager for H.C. Price.

"GVEA elected to terminate the contract with HCP in response to HCP submitting a change order request to GVEA. The change order request sought adjustments necessary to reflect the allocation of risks and costs of the project between the parties in accordance with the terms of the EPC contract," the statement said.

The termination is disputed and will be adjudicated, Matthews' statement said. Meanwhile, the two entities worked cooperatively to transfer obligations and responsibilities for project completion back to GVEA.

GVEA is seeking another general contractor to take over the project, according to Kate Lamal, vice president of power supply, while crews working under GVEA continue to enclose the steel structure.

"There's interest out there, a lot of interest," she said, in late September. "We are making progress on a daily basis."

Completion of the power plant is now expected mid-summer to early fall of 2006, she said. "Price guaranteed us April 17 and now we're looking at sometime during the summer months, so it's not as problematic as it could be," she said.

GVEA has been working on the North Pole power generation addition since 2000, when a power requirement study projected a need for additional generating capacity in 2005. A construction bid for a gas-fired plant went out in the fall of 2002, but the scope was too broad, Lamal said. The company hired NANA/Colt Engineering to further define risks and take away some of the uncertainties of the construction project, hoping to get better cost estimates, she said.