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Kenai Peninsula.

The Kenai Peninsula's economy is perhaps the most diverse of any regional economy in the state. Commercial fishing and fish processing, tourism, government, transportation, oil and gas production and refining, and, to some extent, timber, all play an important role.

And should there be any doubt about such diversification -- after talking to state economists and local planning officials -- all one has to do is talk to Aleja Devito, research specialist with the Kenai Peninsula Borough Economic Development District (EDD). "We have our plate full down here," Devito says from her Kenai office. "There's never a dull moment. ... Nothing ever happens twice."

A two-page list of EDD's major accomplishments during the last four years includes helping secure nearly $10 million in federal economic development funds for local public works projects; preparing and distributing several detailed statistical reports; organizing and overseeing the work of task forces on small business, shellfish, timber and health care; and giving birth to the Kenai Peninsula Tourism Marketing Council. In early 1992, EDD hired a small-business-development specialist to work with local entrepreneurs in starting and expanding small businesses.

And what about future projects? Devito takes a deep breath and ticks off a list that includes wide-ranging efforts in a variety of industries. Perhaps the most ambitious is an effort to determine the viability of a locally managed health care plan for all borough residents. Information is being collected by a health care task force, and experts from Washington, D.C., and Hawaii have met with borough officials. The idea of a borough-managed plan emerged after EDD found that skyrocketing insurance costs were a major barrier to those wishing to start or expand small businesses.

Other district projects include working with a private consultant to determine the feasibility of expanded shellfish farming in Kachemak Bay, working with existing groups to open a Career and Business Innovation Center and overseeing the work of a task force charged with finding commercial uses for acres and acres of beetle-killed timber along the peninsula.

The task force, established in late 1991, is seeking value-added applications for the timber, such as furniture, log homes and saunas. Opinions on the usefulness of timber killed by spruce bark beetle infestations conflict, but the naturally dried wood has proven ideal for building, says Devito. Since 1970, the beetles have killed trees on an estimated 70,000 acres, or 35 percent of the Kenai Peninsula's forested land.

And finally there's exploring the feasibility of catching and exporting sand fish to Japan. The small, eight-inch groundfish is a cultural mainstay in Japan, with consumers currently paying up to $30 for a pound, says Devito.

Supplies from Korea are dwindling and the Japanese are eager to find additional sources. A species of the fish grows in waters along the Kenai Peninsula, but no one currently fishes specifically for sand fish and nothing is known about its growth cycle or habits. Still, Devito hopes someone is able to collect enough local sand fish to send a test sample to Japan. If so, yet another fishing-related industry may be spawned along the peninsula.


Pacific Eskimos and, later, a branch of Athabascan Indians known as the Kenai Dena'inas were the earliest inhabitants of the peninsula. The Kenai Dena'inas were an adaptable people who established a thriving maritime culture. Many of their settlements were scattered throughout the central peninsula, and they often gathered at the mouth of the Kenai River to trade with other neighboring groups.

Early English explorers, including Nathaniel Portlock, George Dixon and George Vancouver, followed, with Russian explorers arriving and setting up permanent settlements in the late 1700s. Their contributions and influence are still noticeable today in the onion-shaped domes of area churches and in the names they attached to rivers, lakes and settlements.

Kenai, the peninsula's oldest and largest community and the second oldest permanent settlement in Alaska, was founded in 1791 by Russian priests. Russians also established settlements at Seldovia and Ninilchik in the early 1800s.

Perhaps the area's most diverse community historically, Seldovia over the years has attracted Eskimos, Aleuts, Indians, Russians, Scandinavians and Germans. After the United States purchased Alaska from the Russians in 1867, Kenai grew to include fishermen, miners, trappers and homesteaders.

The small, twin communities of Hope and Sunrise, situated on Turnagain Arm on the peninsula's northern shore, were founded as mining towns in the 1890s. Seward, on the peninsula's eastern shore, was founded in 1903 as the tidewater terminus of what would later become the Alaska Railroad. For many years this town on Resurrection Bay served as the state's primary port city, thanks to its natural, ice-free harbor.

The communities of Sterling and Soldotna, Kenai's sister city, were settled by homesteaders after World War II.

Homer, at the southern tip of the peninsula, was the site of coal exploration in the late 1890s, but then sputtered in and out of existence until becoming more firmly established in the 1920s.

More recently, large reserves of oil were found in 1957 off the peninsula in Cook Inlet, turning the central peninsula into an oil supply center and spawning an economic and population boom. Kenai's population in 1950 was just 321. Thirty years later, it had grown by 4,000. The area's significance as an oil-producing location was dwarfed by the discovery of North Slope crude, although several offshore oil rigs still work the inlet.


The Kenai Peninsula is attached to the rest of Southcentral Alaska by a narrow, mountainous neck of land that takes shape just south of Portage along Turnagain Arm. The Kenai, as it's commonly referred to, is bounded on the east by Prince William Sound and the Gulf of Alaska, on the west by Cook Inlet and on the south by Kennedy Entrance, a corridor of water connecting Cook Inlet and the gulf.

All told, the peninsula encompasses 9,050 square miles, making it larger than Rhode Island, Connecticut and Delaware combined. The Kenai Peninsula Borough, which includes Cook Inlet and extends to land on the other side, contains 25,600 square miles.

The peninsula's landscape is diverse, with the jagged Kenai Mountains running north and south down the middle of the land mass. The Chigmit Mountains lie to the west across Cook Inlet. Bays, fjords and countless lakes add to the peninsula's diversity, as do rolling hills, the massive Harding ice field and three major rivers -- the Swanson, Moose and famed Kenai.

The 1964 earthquake had a devastating effect on Seward and virtually wiped out the small community of Portage.

Those interested in geographic trivia take note: Kenai Lake is 24 miles long; the Homer Spit is 4.5 miles long; and Kachemak Bay, known for the richness and diversity of its marine life, is 8 miles wide and 40 miles long.


The peninsula enjoys characteristics of both maritime and transition climate zones, with relatively mild temperatures and moderate precipitation. Along the central peninsula near Kenai and Soldotna, the last spring freeze is usually around May 30, with the first fall freeze taking hold the end of August.

Conditions in Kenai include:

* Average summer temperature range is 42 degrees to 62 degrees F.

* Average winter temperature range is 4 degrees to 43 degrees F.

* Extreme temperatures are -48 degrees and 89 degrees F.

* Average annual precipitation is 20 inches (includes 69 inches of snow).

Conditions in Seward include:

* Average summer temperature range is 44 degrees to 63 degrees F.

* Average winter temperature range is 18 degrees to 46 degrees F.

* Extreme temperatures are -20 degrees and 88 degrees F.

* Average annual precipitation is 67 inches (includes 81 inches of snow).

Conditions in Homer include:

* Average summer temperature range is 42 degrees to 59 degrees F.

* Average winter temperature range is 17 degrees to 42 degrees F.

* Extreme temperatures are -15 degrees and 81 degrees F.

* Average annual precipitation is 28 inches (includes 101 inches of snow).


As mentioned earlier, the peninsula's economy is perhaps more diverse than that of any other region of the state, including Southeast. In the March 1990 issue of Alaska Economic Trends, Neil Fried, an economist with the state Department of Labor, wrote: "The peninsula's underlying economic strength consists of three elements: diversification, 'value-added' production and exports. No other area in the state enjoys such an assortment of basic industries which drive the economy." The assortment includes oil and gas production, hydrocarbon-based manufacturing, fishing, tourism and other service-related industries, transportation, government and timber.

According to 1990 data compiled by the state labor department, state and local governments provide jobs to 23 percent of the peninsula's labor force, with the service and retail trade industries providing 19.7 percent and 15.8 percent of the jobs, respectively. Manufacturing provides nearly 14 percent of the jobs.

The data do not include figures for self-employment, which encompasses commercial fishing. Accurate figures on the number of peninsula residents involved in commercial fishing are not available, but in 1990, the ex-vessel (wholesale) value of all commercial landings at the port of Kenai earned it a spot among the country's top 10 ports.

In addition to an overall reliance on fishing and tourism, the peninsula's activities reflect the economic strengths of individual communities. After services and trade, oil, fishing and government drive the economies of Kenai and Soldotna, while Nikiski (also sometimes referred to as North Kenai) is a heavily industrialized area that includes refineries, a natural gas liquification plant and a chemical plant that produces urea and ammonia for use in fertilizer.

Seward's economy is perhaps the most diverse. It includes health, education and marine-research facilities; a 35-acre, $83 million marine industrial center; the state's only maximum-security prison; and an increasing number of tourism-related businesses, thanks in large part to the 1980 establishment of Kenai Fjords National Park. Fishing, coal and, somewhat sporadically, timber also help fuel Seward's economy.

Homer's economy, as well as that of neighboring Seldovia, is heavily dependent on fishing, tourism and revenues from the work of local artists and crafts people.

A recent injection of federal funds for highway construction will mean added jobs throughout the peninsula for up to five years, helping offset the decline in construction jobs after completion of the Bradley Lake hydroelectric project near Homer.

Land within borough boundaries but across Cook Inlet contains rich, untapped coal deposits, says Dick Troeger, borough planning director. Borough officials hope economic conditions and permission to mine on state mental health trust lands will TABULAR DATA OMITTED someday make mining of the Beluga coal fields feasible, adding yet another dimension to the borough's economic makeup.

The economies of area villages, including English Bay, Port Graham and Tyonek, rely on fishing, seasonal work and other subsistence activities.

The region's 1991 labor force included 19,338 individuals with an unemployment rate of 12.7 percent. The statewide unemployment rate for 1991 was 8.5 percent.


Geography dictates that the peninsula's four primary communities -- Kenai, Soldotna, Seward and Homer -- each serve as commercial centers to residents in their areas. Kenai, the peninsula's largest community, serves as a major supply point for the Middle Ground Shoals oilfield offshore in Cook Inlet. Its history as a trading center dates to its earliest days as a trading center for the Kenai Dena'ina and later for Russian explorers. Kenai today is home to health, education and other service centers, as well as retail outlets that include a new, expanded Carrs grocery store.

Soldotna, the seat of borough government, benefits from its location along the Sterling Highway and Kenai Spur Road and offers an array of shops and services, many of them catering to tourists.

To the east, Seward is home to health and education facilities, including a state vocational training center and a large nursing home, as well as to shops, services and recreational outlets, many of them appealing to tourists.

Homer, serving residents of the southern peninsula, also has health and education facilities, including a regional hospital and a branch of Kenai Peninsula College. In recent years, a new post office and mall have been built. New shops spring up along Homer Spit every year, virtually all of them catering to browsers and visiting anglers. Homer also is home to several artists and crafts people who sell their products throughout the state.


During the first half of the 1980s, the Kenai Peninsula Borough was the second-fastest-growing borough (county) in the nation. Between 1980 and 1990, the population increased by 61 percent, from 25,282 to nearly 41,000. Ninety-nine percent of borough residents live on the peninsula proper with the rest living in scattered settlements across Cook Inlet to the west.

More than 25 percent of the borough's residents live in the sister cities of Kenai and Soldotna. Other heavily populated areas include the cities of Homer and Seward and the unincorporated communities of Sterling, Nikiski and Ridgeway.

More than 90 percent of borough residents are Caucasian, with less than 1 percent, or about 200 people, counted as African-American. Cook Inlet Region Inc. is the area's regional Native corporation, with Cook Inlet Tribal Council serving as the regional Native non-profit organization.

The following 1990 census figures give a snapshot of the Kenai Peninsula Borough's demographics:

* Population: 40,802 (1980: 25,282)

* Median age: 31 years

* Proportion of population under age 18: 33 percent

* Eskimos, Aleuts and American Indians account for 7 percent of the population.

* Median value of a home: $85,100

* Per capita income: $19,543 (1989)


A variety of lifestyles can be found on the Kenai Peninsula, where a small-town, relaxed atmosphere dominates. Some lifestyles, like those of North Slope workers who commute between homes on the peninsula and oilfields in the Arctic, are dictated by career choice. Others, like those of Russian Old Believers living in scattered communities along the peninsula, are dictated by tradition and religious beliefs.

At one time the peninsula had a reputation of being one of the most politically conservative areas of the state; however, those familiar with local politics now describe the political atmosphere as "reasonably progressive." Perhaps most progressive is the city of Homer, which has declared itself a nuclear-free zone and has long been known for its tolerance of divergent beliefs and lifestyles.

Old Believers have settled the communities of Nikolaevsk and Kachemak Selo, while Halibut Cove is a quiet haven to artists, fishermen and those with tourist-oriented businesses. Outdoor activities, including fishing, clamming, beachcombing, boating, hiking, hunting, skiing, snowmachining and wildlife viewing are popular pastimes of peninsula residents.


Unlike many parts of the state, the Kenai Peninsula has an extensive road system that connects not only peninsula cities with each other, but also connects them with Anchorage, the state's largest city and primary commercial center.

The scenic and heavily traveled Seward Highway runs 127 miles, linking Anchorage with the port city of Seward. Some 90 miles south of Anchorage, that road meets the Sterling Highway, which angles across the peninsula to Cooper Landing, Kenai, Soldotna and, at the end of the road, Homer.

This two-lane, paved, though often bumpy, highway connected Anchorage with the peninsula's southern tip beginning in the 1950s. The Sterling Highway is heavily traveled during the summer.

Kenai Spur Road connects Soldotna and Kenai with industrial and recreational areas to the northwest. The state-operated Alaska Marine Highway System provides ferry service connecting Seward and Homer with Kodiak and communities in Prince William Sound. The Alaska Railroad provides cargo service and seasonal passenger service between Anchorage and Seward. A privately owned bus company offers year-round service between Anchorage and Seward, Kenai and Homer.

Located in communities throughout the peninsula are major deep-water ports and small-boat harbors, many of them specially equipped and privately owned for industrial use. Demand for public docking is high, as evidenced by an eight-year wait for a slip at Seward's small-boat harbor. Barges, oceangoing freighters and trucking lines haul goods to and from the peninsula.

Daily passenger and cargo service is available from airports in Seward, Homer, Kenai and Soldotna. The peninsula also is home to several privately owned airstrips, many of them used for industrial purposes.

In addition to receiving newspapers from Anchorage, peninsula readers are served by newspapers published in Homer, Kenai and Seward. The Alaska Blue Book lists 11 radio stations, including one public station, broadcasting from the peninsula, as well as one community television station in Kenai.


Owing largely to proximity to Anchorage, an extensive road system and world-class fishing, the Kenai Peninsula is the favored playground of those living in and visiting South-central Alaska. A study done in 1989 for the Kenai Peninsula Tourism Marketing Council estimated that the peninsula annually hosts nearly a million visitors who help generate an estimated $96.5 million in revenues. A 1983 publication on the area described the coastline between Kenai and Homer as the "most intensively used outdoor recreation area in the state."

Although best known for its fishing, the peninsula also offers a variety of other activities, including back-country skiing and snowmachining, hiking, gold panning, hunting, wildlife viewing, berry picking, boating, beachcombing, clamming and shopping.

Camping is available all along the peninsula and at sites and cabins in the 5.8 million-acre Chugach National Forest. Hikers following the Resurrection Trail find themselves visiting the former gold mining town of Hope, a tiny community with excellent sport fishing opportunities.

But then, excellent sport-fishing opportunities abound on the peninsula. The Kenai, Russian, Ninilchik and Moose rivers, as well as Deep Creek and Kachemak Bay, draw fishermen from around the world, and a string of inland lakes provides excellent canoeing.

Seward's Resurrection Bay draws boaters, fishermen and sightseers. Its Fourth of July Mount Marathon foot-race is the town's largest annual event. Other annual events along the peninsula include Seward's Polar Bear Jump-off in January, Soldotna Progress Days in July, the Kenai Peninsula State Fair each August in Ninilchik and Thanksgiving fireworks in Kenai.

Among popular Kenai Peninsula Borough sights are onion-domed Russian Orthodox churches in Kenai, Ninilchik and Seldovia; the McNeil River State Game Sanctuary across Cook Inlet, where visitors from around the world watch grizzly bears up close; and Kenai Fjords National Park, which abounds with wildlife and calving glaciers. The Pratt Museum in Homer is a well-known attraction, and the Homer spit draws thousands of visitors and cannery workers each summer.

Those looking for a quiet respite should consider visiting Halibut Cove or Seldovia, both of which are off the beaten path (and the road system), yet offer comfortable accommodations. Thirteen state parks and five marine parks also are located on the peninsula or offshore.


Following is a list of the incorporated cities and villages along the Kenai Peninsula, their forms of government and tax rates:

* Kenai Peninsula Borough: Second-class borough; mayor/assembly government; 2 percent sales tax

* Homer: First-class city; mayor/council government and city manager; 3.5 percent sales tax

* Kachemak: Second-class city; mayor/council government

* Kenai: Home-rule city; mayor/council government and city manager; 3 percent sales tax

* Seldovia: First-class city; mayor/council government and city manager; 3 percent sales tax

* Seward: Home-rule city; mayor/council government and city manager; 5 percent sales tax

* Soldotna: First-class city; mayor/council government and city manager; 3 percent sales tax


The Kenai Peninsula Borough includes 10 million acres, with federal and state governments owning or managing 60 percent and 25 percent of the land, respectively. Federal holdings include three national parks, two national wildlife refuges and one national forest.

Native village and regional corporations hold another 11 percent of the land, private landowners claim another 3 percent, and the borough and various municipalities combined hold less than 2 percent of the land. Land for development is available throughout the peninsula.
COPYRIGHT 1992 Alaska Business Publishing Company, Inc.
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Title Annotation:Know Alaska
Author:Hill, Robin Mackey
Publication:Alaska Business Monthly
Date:Jul 1, 1992
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