A series of recent reports shed light on the specific economic failures of Alaska Industrial Development and Export Authority, or AIDEA. The reports show that Alaska would be $10 billion richer today if the money put into AIDEA was put into the Permanent Fund or other accounts.
Gregg Erickson, owner and principal of Erickson and Associates, an economic consulting firm and one author of the reports, says the benefits of AIDEA have been far less than the public and State legislature has been led to believe.
Milt Barker, co-author of the reports, and owner of MB Barker LLC, an economic consulting firm, says that for the first years AIDEA existed, it had no funding and supported projects by issuing revenue bonds. The projects would then pay off the bonds.
That changed in 1981 when AIDEA received more than $100 million from the State to help finance the Red Dog mine project. Barker says that AIDEA’s own economic feasibility study showed that the project would have moved forward without State subsidy.
“It was world class, one of the biggest zinc deposits on Earth, and didn’t need State financing to go forward.”
Barker says AIDEA eventually put that money back into loan programs for commercial real estate and other development projects.
This enabled AIDEA to hold 1.4 billion dollars to do things that aren’t very effective at creating jobs and enriches real estate investors who often aren’t operating at the facilities. The borrowers are getting below market interest rates on their loans and earning money from their tenants as well.
“It’s not really doing anything for the businesses operating there whose jobs AIDEA is taking credit for.”
Of the large loans AIDEA approved from 2008 to 2023, only about 200 of the claimed 3,200 jobs were actually created due to AIDEA funding.
Barker says that AIDEA lost over 300 million dollars on projects like Healy Clean Coal, Alaska International Seafoods, and Mustang Oil Development. More than 600 million of AIDEA’s 1.4 billion dollars is cash. Erickson says AIDEA claims to be using it to promote economic development.
Now that the first 15 miles of the West Susitna Access project has been included in the State’s Transportation Improvement Plan, or STIP, Erickson says the organization might be aiming to pave the way for the new mining project. AIDEA has not made clear what its intentions are for the mining road or if it will connect to the State’s road at all.
ADIEA also has not clarified if the West Susitna Access Road will be open to the public. Erickson says the project would heavily subsidize mining and Native corporations with public funding for a transportation system that may be financeable without State funding.
“Much more likely is a road that may never produce significant economic benefits and the mining companies that are at the other end of those roads that have been purported to be of great potential have never promised to develop those mines. So you could very well have a West Susitna Road with no mining activity at the other end.”
The Mat-Su Borough Assembly supported the West Susitna Access Road in its legislative priorities, though it was unclear whether they supported the State’s 15 miles or the AIDEA project to the mines. Borough Director of Public Affairs Stefan Hinman says they intended to support the State’s project. However, the language approved also clearly states their support for resource extraction activities, which is not part of the State’s road proposal.
AIDEA is a publicly-funded organization. However, Erickson says they spend a lot of money on lobbying. He also notes that they appear to be free from the constraints of laws that protect the public. AIDEA does not have to abide by the Freedom of Information Act or other typical structures governing a publicly-funded organization.
