March 10, 2016 Fairbanks North Star Borough Comprehensive Economic Development Strategy Prepared by: Applied Development Economics, Inc. 255 Ygnacio Valley Road, #200, Walnut Creek, CA 94596 925.934.8712 99 Pacific Street, #200 J, Monterey, CA 93940 831.324.4896 www.adeusa.com TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................................ 1 Economic Assessment ........................................................................................................ 1 Goals and Objectives ......................................................................................................... 4 VISION ............................................................................................................................ 4 Performance Measures ....................................................................................................... 6 1. INTRODUCTION ................................................................................................... 8 CEDS Update Development Process ..................................................................................... 9 2. BACKGROUND AND ANALYSIS OF FNSB ECONOMY................................................. 10 Introduction ....................................................................................................................10 Location and Climate ........................................................................................................10 Population Trends and Characteristics .................................................................................12 Housing Trends ................................................................................................................25 Physical Infrastructure Profile ............................................................................................35 Institutional Infrastructure ................................................................................................55 Economic Infrastructure ....................................................................................................62 3. INDUSTRY CLUSTERS ......................................................................................... 81 Introduction ....................................................................................................................81 Industry Clusters Based on Quadrant Analysis .....................................................................81 Confirming Industry Clusters Via Shift-Share Analysis ...........................................................86 4. FACTORS AFFECTING ECONOMIC PERFORMANCE ................................................... 92 Main Factors that relate to economic performance: ...............................................................92 Other Factors that relate to economic performance: .............................................................93 5. STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS ANALYSIS ................... 96 Strengths: .......................................................................................................................96 Weaknesses: ...................................................................................................................96 Opportunities: .................................................................................................................97 Threats: ..........................................................................................................................98 6. RESILIENCE THROUGH ECONOMIC DIVERSIFICATION AND EMERGENCY MANAGEMENT PLANNING ....................................................................................................... 100 Resilience Through Economic Diversification ...................................................................... 100 Applied Development Economics, Inc. Resilience Through Emergency Management Planning ......................................................... 102 7. GOALS AND OBJECTIVES .................................................................................. 104 VISION ......................................................................................................................... 104 8. STRATEGIC PROJECTS ...................................................................................... 108 ENERGY ........................................................................................................................ 108 MILITARY ...................................................................................................................... 109 MILITARY/INDUSTRY CLUSTER DEVELOPMENT .................................................................. 109 TOURISM ...................................................................................................................... 110 MINING......................................................................................................................... 111 AGRICULTURE ............................................................................................................... 111 INSTITUTIONAL/NON-PROFIT SECTOR .............................................................................. 112 PHYSICAL INFRASTRUCTURE ........................................................................................... 112 9. PERFORMANCE MEASURES ................................................................................ 113 APPENDIX A: DATA TABLES ..................................................................................... 114 Applied Development Economics, Inc. EXECUTIVE SUMMARY The Fairbanks North Star Borough (FNSB) is in the final process of becoming an Economic Development District (EDD) under designation by the US Economic Development Administration (EDA). This document (when adopted) provides the Comprehensive Economic Development Strategy (CEDS) for FNSB and identifies key economic trends, economic goals and objectives and strategic projects and action steps designed to achieve the Borough’s economic development goals. The prior CEDS for FNSB was adopted in 2010 and the current CEDS incorporates information from the prior CEDS where still current and appropriate. The first section of the CEDS provides a detailed description of FNSB’s physical, social and economic trends and infrastructure. ECONOMIC ASSESSMENT LOCATION AND CLIMATE The FNSB is located in the center of Interior Alaska. Two cities reside within the FNSB, Fairbanks and North Pole, as well as a number of unincorporated communities. The FNSB is Alaska’s second most populated borough and residents commonly refer to it as the “Golden Heart of Alaska.” Due to its central location, the FNSB is the transportation, trade and service center for the vast Interior and Northern regions of Alaska. The FNSB is the northern terminus of the Alaska Railroad with southern access to the ports of Seward, Anchorage, and Nenana. The FNSB experiences seasonal temperature extremes similar to those of other communities in Interior Alaska, buffered to some extent by the Alaska Range to the south and the Brooks Range to the north. The typical temperatures during the winter months range from 4.8 º F in December, 1.1º F in January, and 10.0º F in February. During summer, temperatures have typically ranged from 71.6º F in June, 72.7º F in July, and 65.9º F in August. DEMOGRAPHIC AND LABOR FORCE TRENDS AND CHARACTERISTICS As of 2014, FNSB had a population of 99,357 and is the second largest borough behind the Municipality of Anchorage. The FNSB is slightly larger than the Matanuska-Susitna Borough, which has 97,882 people. Population in the Borough was growing faster than state population until 2010, but then has grown at a slower rate since the recovery from the recession and began to drop from 2013 to 2014. In a matter that caught the attention of local residents, policymakers, and media, the FNSB population declined by 1,450 persons between 2013 and 2014, going from 100,807 to 99,357.1 Despite the slower population growth recent state projections indicate FNSB should expect to grow faster than the state over the next ten years. 1Morrow, Weston, “Fairbanks population continues to shrink” (Fairbanks Daily News-Miner), March 30, 2015 (http://bit.ly/1PQIEO0) Applied Development Economics | Page 1 . FNSB has a higher proportion of younger and prime working age population than Alaska as a whole, perhaps in part due to the military and University of Alaska Fairbanks’ presence in the Borough. The FNSB population has a relatively high educational attainment, with 32.8 percent earning a Bachelor’s Degree or above compared to 28 percent for Alaska as a whole. The presence of the University of Alaska Fairbanks (UAF) is a major educational asset in the region. FNSB has a lower unemployment rate than the state, due in part to the military and university presence, but chronic underemployment in the private sector also leads to lower per capita incomes and higher rates of poverty than the state as a whole. PHYSICAL INFRASTRUCTURE . FNSB serves as a transportation hub for Central Alaska with significant air, rail and road facilities. Airline passenger transportation to Fairbanks dipped during the recession. It has since recovered but has been growing more slowly recently, similar to the population trend. Air cargo dropped significantly and has not recovered since 2008. Passenger volumes on the Alaska Railroad to FNSB have also not recovered to 2008 levels. In addition, the conversion of the North Pole refinery from