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St. Paul's passage.

St. Paul's Passage

Some who studied the history and people of St. Paul Island concluded that there was no hope for a future there. They recommended relocating inhabitants of the far-flung island that lies 300 miles north of the Aleutians and more thanV300 miles west of Alaska's mainland. But others was an opportunity, offered by the area's seafood resources, to create a new economic base to support the community after the forced closure of its fur seal industry.

Proponents of St. Paul's new destiny won, and a plan was launched to create a commercial fishing service center. On August 4, a celebration marks the official opening of the island's new port.

Literally casting their fate upon the waters, the people of St. Paul know this juncture will determine whether the hardship of their devastated economy has been averted or just delayed. Says John R. Merculief, mayor and public works director of St. Paul, "Our future depends on the fishing industry. It depends on how successful our harbor is and how we set up the infrastructure to attract vessels."

According to Vern McCorkle, city manager of St. Paul since 1983, the marine facilities represent $53.5 million in federal, state and local investment. "There's opportunity here for business, "he says. For every dollar of public spending, already there's been $1.25 in private investment, he adds.

Almost 600 people - more than 90 percent Aleut - live on the 44-square-mile island in the midst of the productive Bering Sea. "St. Paul is a community with incredible potential," says Jim Sanders, manager of the Alaska Department of Community and Regional Affairs' South Central Regional Office. "But there are problems in any transition. The community now is at a point when the transition is actually happening, and change is painful for any of us."

The federally controlled fur seal industry dominated the island's economy from 1867 to 1983, when further harvests of the northern fur seal were banned. Private companies under contract obtained and processed the pelts until the National Marine Fisheries Service took over managements of the industry and the people in 1910. Declared residents of a protected federal reservation in 1869, the Pribilof Islanders were made wards of the government.

One of the darkest moments in a history of domination by Russian traders and U.S. interests was the Aleuts' World War II internment from June 1942 to May 1944 at Funter Bay in Southeast Alaska. Although by the 1983 withdrawal of the federal government, a city government had taken responsibility for road maintenance and police and fire protection, new and costly duties were thrust on the city administration. Among them: maintenance of private homes and public buildings and construction of power, water and sewage facilities to replace aging systems and to prepare for demands of industrial development.

In 1983 amendments to the Fur Seal Act of 1966, separate trusts were established to enable the Pribilof Islands' municipal governments - St. Paul and St. George - to assume services previously provided by the National Marine Fisheries Service. Jay Gage, trustee for the St. Paul Island Trust and former president of Peter Pan Seafoods, explains the trust was originally conceived as a five-year stopgap until harbor facilities could be built.

The failure of a partially constructed breakwater in a November 1984 storm required a new design and delayed completion of harbor facilities. Twice, to tide the community over, Congress appropriated additional adding for the St. Paul trust, adding $3.3 million to the original $12 million fund.

Those monies are expected to be depleted by the end of this year, and other grant funds also have been exhausted. "Now the only thing that can keep the people alive is the sea, and so it becomes the focal point of the economy," says Gage.

Feasibility of the new harbor was studied by the U.S. Army Corps of Engineers, which concluded it was viable. Due to the Pribilof Islands' location in the waters of the eastern Bering shelf, regarded as the richest fisheries area in the Northern Hemisphere, fishing vessels calling there can reduce transit time and lower the cost per pound of fish landed. Since that early '80s study, growth in the number of Bering Sea fishing vessels pursuant the area's bottomfish resources has far outstripped predictions.

Tony Smith, former commissioner of the Alaska Department of Commerce and Economic Development and a lawyer who has represented various St. Paul entities, says, "St. Paul is an aircraft carrier in the middle of the richest fishery in the world. While Dutch Harbor is 22 hours from the (bottomfish) resource, St. Paul is at the resource."

Gary Daily, the state's senior port director with more than 15 years of experience, most recently spent three years in Dutch Harbor. Enticed by the challenge of St. Paul's port startup, he joined the city for a six-month stint expected to end in early August. Daily helped to train four Aleuts to manage port operations.

"Inch for inch, St. Paul already is as active as Kodiak or Dutch Harbor," he says. "It enjoys the advantage of being the only gas station in the Bering Sea.

Two breakwaters, the larger of which is said to be the Western Hemisphere's tallest, protect the almost 10-acre inner harbor. Another 600 feet of dock that will connect existing 100-and 200-foot docks and that must be completed by the city to satisfy the agreement with the Corps of Engineers ins unfinished.

The village Native corporation, Tanadgusix Corp. (TDX), which owns most of the land on St. Paul Island, has dredged an area fronting its property and plans to adds mooring facilities.

Although St. Paul's new port is too small for motherships and large processors, it can accommodate smaller catcher-processors and fishing vessels. "The big floating processors 250 feet or over can't get in easily without tug assistance, so they send in launches for provisions," says Daily. "Often 20 processors andV30-40 catcher vessels are anchored off St. Paul like a flotilla." In addition to provisions, vessels take on fresh water, refuel, replace gear and change crews.

St. Paul is a miniature port," says McCorkle. "It would fit inside a couple of football fields, but it's go t its niche." In addition to serving the Bering Sea fleet, the island already has one shore-sided processor, and a second complex is expected to given operation early next year, he says.

Last year, the formerly Japanese and American owned Pribilof Island Processors, now publicly owned, spent $20 million converting and equipping a seal hide processing plant. Initially handling crab, the firm as of mid-July in 1990 had processed 6 million pounds of crab, 6 million pounds of cod and 200,00 pounds of halibut, according the Brett Wagner, plant manager. Processing operations employed about 120 people. Future plans call for adding roe, salmon and hearing processing for year-round operation.

As Paul Seafoods Inc., launched by the original owners of PIP, is rebuilding what its developers say will be the world's largest dedicated surimi plant from a former oil exploration staging facility. A second St. Paul Seafoods plant will produce fish meal. When fully automated - likely to take two years - processing lines are expected to operate 10 months a year and employ 60 persons.

McCorkle points out the pollock, the primary component in surimi, deteriorates quickly after harvest, and sophisticated Oriental consumers prefer product made from extremely fresh fish. "St. Paul is in the middle of the fishing grounds. Vessels can catch pollock a couple miles out and have the harvest to the processor in two hours," he says.

Jeff June, partner in Seattle-based marine consulting firm, Natural Resources Consultants, agrees that St. Paul's location is ideal for handling pollock and for serving catcher-processors and joint venture fishing vessels. He adds that restrictions on fisheries due to by-catch and quota allocations in other areas could generate more business for St. Paul.

"To date, not as much fishing - other than for pollock and crab - has been done in that part of the Bering because of the lack of shore-side facilities," June says. "But as the things get limited in other areas, there will be a lot of exploration done between St. Paul and St. Matthew (to the north). Fisherman will be forced to look at those fisheries more seriously."

The overall health of the Bering Sea is critically linked to the success of the new port. St. Paul's residents fear that depletion of the Bering Sea's resources might create the irony of having replaced one failing species with another.

"We need to be concerned about the viability of the fishery resources in the Bering Sea," says Larry Merculieff, commissioner of Commerce and Economic Development an a native of the Pribilof island. "There's a single ecosystem in the Bering Sea and when one species is affected, a domino effect results. Pollock is part of that food web."

Another important issue, which is being addressed by many Aleutian communities as well, is preserving a share of the Bering's resources for local harvest. According to Ron Philemonoff, chief executive officer and chairman of TDX, the corporation is lobbying Congress and the North Pacific Fishery Management Council for a guaranteed allocation. "We're asking Congress to set aside an allocation for the Pribilofs for up to 10 percent of the resource to follow through on the mandate that we create new economic development not dependent on fur seals," he says.

Among other concerns affecting the community's development as a fishing port and marine service center are coping with garbage and pollution from international vessels and minimizing the impact of transient labor.

Icing in the harbor, which this year trapped and damaged the vessel Alaskan Monarch, is another concern, "You hate to see a ship get hurt in the ice, but that's the Bering Sea," says Daily. Consultant June advises the port will have to minimize ice impact by providing information to vessels or perhaps by reconfiguring the breakwater during future expansion to affect current flows.

The docks already have sustained some severe damage from visiting vessels. Daily explains that the Bering traffic has grown bigger that originally envisioned by designers, creating problems with underdesign. "That's all part of developing a new port. It will require more capital outlay to build the right kind of moorings," he adds.

The waters of the Bering can be treacherous, and the Pribilof Islands have been called "boat eaters." Eight vessels have grounded on St. Paul in the last five years. Members of the fishing industry remember angrily that the village corporation demanded payment to allow a firm to cross its land to salvage cargo from a grounded vessel. Anchorage attorney Smith says, "Those activities hurt St. Paul as a place to do business."

Natural Resource Consultants' June notes, "There's a general feeling about small Alaskan Communities, particularly from operators of larger boats, that if North Americans can put it to you, they will." But he notes that fishermen he's talked to say they've been treated well at St. Paul's port, that service is timely and reasonable. He adds that they say St. Paul is preferred when equidistant from the Pribilof island and Dutch Harbor, where vessels often must wait three days for service.

St. Paul's biggest concern is assuring sufficient income to replace government support. Its trust and grant funds depleted, its sees a looming crisis in funding the provision of city services as well as port maintenance and completion.

In 1984, the city's budget jumped from $500,000 to $6.2 million, with employment soaring from 10 to 60 persons as federal employees joined the payroll, according to Phyllis Swetzof, city clerk. She adds thatV37 jobs have been slashed through attrition and layoffs since last year in anticipation of a financial crunch. McCorkle reports that although government trust funds are disappearing, revenues from power and fuel sales and theV3 percent sales tax rose $3 million over the past year.

City officials would like to tax the fishing industry, as do many other Alaskan communities. But there's internal disagreement over where government power should be placed; TDX and the Aleut Community of St. Paul - the tribal council created under the Indian Reorganization Act of 1934 - have joined in opposition to the city's plan. When the federal government pulled out, its properties were divided amongst these three entities.

One state expert involved with St. Paul's community planning observes, "St. Paul is still operating with a company-town mentality. The feds owned and ran everything and made all the decisions. Now the village corporation sees itself as being the same thing, being that company."

Mayor Merculief says there's a great deal of misunderstanding about taxation in the community. "We're just getting into the taxation business. The main reason people are frightened about the world `taxes' is that the economy is so basic. They're afraid of being taxed when they don't have enough income."

Recognizing that disagreements were stalling development, City Manager McCorkle suggested the city, tribal council and village corporation consult with the Department of Community and Regional Affairs to help resolve differences. In an April meeting facilitated by DCRA's Commissioner David Hoffman and Commerce and Economic Development's Merculieff, representatives met in Juneau. According to DCRA's Sanders, they agreed to meet monthly and created the St. Paul Development Council to work together toward solutions.

TDX's Philemonoff says, "There's been some bad press saying Native corporations have closed down development, that we want equity and are hogging development. That's not true, we are open to business and want to maintain a viable community."

In addition to obtaining the two processors as tenants, he points out the corporation has created other jobs in St. Paul. It bought three tractor-trailer rigs to provide longshoring and stevedoring services through a subsidiary, St. Paul Seafoods Ltd. Another spinoff of fishing industry services is a crab pot hauling and storage business.

Philemonoff lists these possibilities further near-term expansion: provision of warehousing and cold storage; participation in a joint venture with Delta Western to develop a tank farm to provide fuel to the marine industry; and construction of additional hotel accommodations for crew changes and tourists.

Last year TDX spent $300,000 on three tour buses and hotel renovations. St. Paul Island's tourism draw is its abundance of flora and fauna - 87 species of Alpine flowers, 213 species of birds and other wildlife. Several years ago tourism peaked at 1,500 visitors, but numbers have dwindled since the bankruptcy of TDX's tour operator, Exploration Cruises, two years ago. Only 500 visitors came to St. Paul last year, according to Philemonoff.

Tourists have found the St. Paul Aleuts amicable and helpful. "We're proud of our island, and we like to be thought of as friendly and outgoing," says Swetzof.

Economic development experts agree the community also has the elements necessary to foster entrepreneurship. Charlotte Kirkwood of Federal Way, Wash., who has worked as a planner for the city of St. Paul, says small businesses are sprouting. She explains the private sector is increasingly filling roles - such as plumbing and home, furnace and auto repair - filled first by the federal government, then by the city.

"The labor force is really unique," she explains. Because the people were employed by the federal government, their employment skills are very high. They've been able to be trained in small business and management and picked up quickly. The work force was maximized during the port construction. There was a high level of employment not always available in Bush Alaska."

Years of anxiety about the completion of the port, competition for political and Native cultural power, setbacks and scurrying for funding have taken their toll. Says the city's Merculief. "I feel like we've been in a state of transition since 1983 and the government phase-out. It's been uphill all the way. But I see a great improvement in St. Paul. People are coming out, getting more involved and showing more concern for the island."

McCorkle says the islanders will prove wrong those who said there was no future in St. Paul. "I think we're going to win for two reasons: the iron will of the Aleuts and the lucky strategic location of St. Paul in the Bering Sea."

PHOTO : Closer to many of the Bering Sea fisheries, the Port of St. Paul saves vessel transit time, reducing the per pound cost of fish landed.
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Title Annotation:new port opens on St. Paul Island; includes related article on Larry Merculieff
Author:Griffin, Judith Fuerst
Publication:Alaska Business Monthly
Date:Aug 1, 1990
Previous Article:New businesses cater to Unalaska's unquenched appetites.
Next Article:Seeking black gold.

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