1. State of the Sitka Economy, 2008 Prepared for:Sitka Economic Development Association Prepared by:McDowell Group, Inc.March 25, 2008

2. Presentation Contents • State of the Sitka Economy • Southeast Regional Economy • Visitor Industry Indicators • Seafood Industry Profile • Development Issues and Opportunities

3. I. State of the Sitka Economy

4. Sitka’s Balanced EconomyEmployment by Sector, 2006 Source: ADOLWD

5. Sitka Population1997-2007 Source: ADOLWD

6. Sitka Employment1997-2006 Source: ADOLWD

7. Sitka Payroll1997-2006 ($ Millions) Source: ADOLWD

8. Sitka Gross Business Sales1997-2007 ($ Millions) Source: City of Sitka

9. Sitka Construction ActivityNumber of New Dwelling Units 1997-2007 Source: City of Sitka

10. Number of Lots Absorbed2000-2007 Source: City of Sitka

11. Sitka School EnrollmentSchool years 2002-2008 Source: Sitka School District (OASIS Report)

12. 2006 Average Monthly Wages AlaskaSitka • Government $3,679 $3,335 • Construction $4,864 $3,990 • Service-Providing $2,937 $2,483 • Financial $3,742 $3,146 • Professional & Business $3,864 $2,109 • Education & Health $3,087 $3,428 • Leisure & Hospitality $1,508 $1,310 Source: AKDOLWD

13. Recent Changes • Sheldon Jackson College closed • Loss of 109 jobs • SEARHC cutbacks • Loss of 40 jobs in Sitka, 60 region-wide • U.S Forest Service cutbacks • Loss of 5 jobs by 2010 • Last year 6 employees resigned and will not be replaced • Opening of Silver Bay Seafoods • 170 seasonal jobs created • 10 full-time, year-round staff • Sitka Community Hospital purchased Moore Clinic • Increases in ferry port calls for 2008

14. Sitka Economic IndicatorOverview • Diverse economy (5 sectors with 10% or more of Sitka’s total employment) • Population declined 4% (349 residents) from 2006 to 2007 • Employment declined by 9 jobs from 2005 to 2006 • A greater decline is expected to be reflected in the 2007 figures • Payroll up $3 million • Gross business sales continued to grow in 2007 • Construction activity is down • School enrollment declined 5% (74 students) • Employment opportunities in Sitka have declined recently. • Good paying jobs in education, federal government, and healthcare have been lost.

15. II. Southeast Regional Economy

16. Regional Population Trends2006-2007 Source: ADOLWD

17. Southeast Alaska Population Trends2005-2007 Source: ADOLWD

18. Southeast Employment 2007 • Employment increased by 50 jobs • Changes in: • Leisure and Hospitality +200 jobs • Service Providing +150 jobs • Retail Trade +50 jobs • Local Government +50 jobs • Seafood Processing -50 jobs • Education and Health services -50 jobs • Goods Producing -100 jobs • State Government -100 jobs Source: ADOLWD –Current Employment Statistics Program (CES)

19. Southeast Summary • Regional population down 1.5% (1,077 residents) • Employment up by 50 jobs • Highest growth in the leisure & hospitality and service providing sectors • Largest decline in the goods producing and state government sectors

20. III. Visitor Industry Indicators

21. Alaska Full-Year Visitor Volume, May 2006-April 2007By Transportation Market Total Visitors: 1,881,000 Source: Alaska Visitor Statistics Program (AVSP), McDowell Group, Inc.

22. Full Year Visitor VolumeMay 2006 – April 2007 Source: AVSP, McDowell Group, Inc.

23. Southeast Cruise Passenger Volume1997-2007

24. Sitka Cruise Ship Visitors1997-2007

25. Deplaning Passengers, Sitka Airport*1997-2007 Source: Bureau of Transportation Statistics* includes residents and non-residents

26. Disembarking Ferry Passengers*1997-2007 Source: AMHS* includes residents and non-residents

27. Sitka Passenger Volume, 2007

28. Sitka Hotel Bed Tax Receipts1997-2007 Source: City of Sitka

29. Visitor Traffic Summary • Alaska visitor volume 1,881,000 • 51% visit by cruise ship • 44% visit by air • 5% visit by highway/ferry • Southeast cruise passenger volume continued to grow • Over 1 million visitors in 2007 • Sitka visitor volume declined • Cruise visitors down 12.4% • Deplaning air passengers down 1.4% • Disembarking ferry passengers up 8.4%

30. IV. Seafood Industry Profile

31. Major SE Fisheries2007 Ex-vessel Value

32. SE Regional Ex-Vessel Values2002-2006 Source: COAR

33. Southeast Land-based Seafood (Production, 2006) Source: COAR

34. Sitka Land-based Processor (Production, 2006) Source: COAR

35. SE Ex-Vessel Prices Per Pound2005-2007 20052006 2007 King $2.53 $3.37 $3.06 Sockeye $1.05 $1.09 $0.89 Coho $0.95 $1.41 $1.09 Pink $0.12 $0.12 $0.19 Chum $0.30 $0.35 $0.35 Halibut $3.11 $3.80 $4.41 Sablefish $2.30 $2.55 $2.75 Source: ADF&G/NOAA

36. Sitka Fishermen Statistics 2006 • 736 permits fished • 455 fishermen • Landed 28.4 million pounds • Ex-vessel value of $37.6 million Source: CFEC

37. Sitka Fishermen Ex-Vessel Earnings 2002-2006 Source: CFEC

38. Sitka Seafood in 2007 • Sitka ranks as the 6th largest port in the U.S. based on value and 19th based on volume • Chum salmon harvest volume down • Pink salmon harvest volume up • Herring harvest volume up in 2007, and a record quota has been set for the 2008 harvest • King salmon harvests down in 2007 • Coho harvests down in 2007 • Processing capacity in Sitka has increased

39. Seafood Summary • Salmon accounted for 52% of the SE total ex-vessel value • Halibut and sablefish accounted for 34% of the region’s total ex-vessel value • Salmon ex-vessel prices down for all species except pink salmon • Halibut and sablefish ex-vessel price increase continued

40. V. Sitka Development Issues and Opportunities

41. Development Issues • Major community development issues are: • Control: What do we have control over in regard to development? • Choice: What do we choose to support or discourage? • Current Sitka Players: Most economic development is done by those already here • Assessment: • Ask the experts to identify opportunities and barriers • Surveys and focused discussion groups

42. Development Opportunities • Seafood Industry • Marine Services • Tourism • Government (in all its forms) • Real Estate

43. State of the Sitka Economy, 2008 Prepared for:Sitka Economic Development Association Prepared by:McDowell Group, Inc.March 25, 2008