Native communities in Alaska's Aleutian Islands used tax-exempt financing to construct a new Anchorage office building that will both provide them with a modern headquarters and represent their culture in the state's commercial center and largest city.
The $17.85 million deal, issued by the Aleutians East Borough as a conduit for the Aleutians Pribilof Islands Association Inc., is The Bond Buyer's winner in the small-issuer category for the Far West in the 2006 Deal of the Year awards.
The association is a consortium of 13 Aleut tribes in the remote Aleutians, negotiating federal and state compacts, grants, and contracts on their behalf.
The 501(c)(3) nonprofit was created in 1976 through the merger of two predecessor organizations. The funds it secures are used to provide health, educational, social, and public safety services to the tribes, which have more than 7,000 residents in Aleutian villages.
The organization's mission requires a presence in Anchorage.
It's new home in the city will replace the association's current headquarters, which was financed through a bank mortgage.
The use of tax-exempt bonds instead of a mortgage allowed the association to attain its goal of incorporating a cultural center into the new headquarters, according to Jennifer Lerch, director for western region public finance at ACA Financial Guaranty Corp., which insured the bonds.
Banks were only willing to lend the association enough money to build office space alone, she said.
"What they really had designed and hoped and wished for was not only an office building but also a cultural center," Lerch said. "That is what this financing really did - it enabled the loan to go from about $12 million to $18 million, its final size. The difference is the cultural center."
The deal priced in June, and the association broke ground for the headquarters building Aug. 30. Seattle-Northwest Securities Corp. was the underwriter. Foster Pepper PLLC was bond counsel.
The building is expected to open in late 2007.
The design of the structure itself is meant to reflect both the Aleutian landscape and Aleut culture, including a two-story lobby area with a glass atrium and a wood structure recalling traditional Aleut semi-subterranean housing forms.
It will provide a venue to preserve artifacts of the Aleut tribes and serve as a common gathering place for Aleut celebrations and special events in Anchorage.
"They have no place to preserve or maintain any culture, whether it be language or artifacts or pictures," Lerch said. When the new center opens, it will have room to store and exhibit cultural artifacts currently warehoused by the Smithsonian Institution, she said, and it will also have recording facilities that will help efforts to save the Aleuts' Unangam Tunuu language and preserve oral histories of the Aleut people.
Federal grants are the corporation's primary source of funds. "That is what ultimately supports their credit," Lerch said.
Though Lerch has worked on many Native American debt transactions, she said the deal team still faced a steep learning curve on the Aleutians East deal because the legal relationship between Alaskan native peoples and the federal government is very different.
"It was really a handful," she said.
While federal-tribal relationships in the lower 48 states are typically based on 19th century treaties, in Alaska they are governed by the Alaska Native Claims Settlement Act, which Congress passed in 1971. Instead of creating reservations, it gave native Alaskans shares in 13 for-profit corporations and also gave those corporations title to land around the state.
The Aleut people, who experienced the same dislocations and struggles many other native peoples faced after contact with European settlers and traders, also suffered greatly in World War II.
The Japanese invaded and occupied the outermost Aleutian Islands early in the war. Residents there were transported to Japan as prisoners of war, while inhabitants of the other islands scarcely fared better in American hands - they were transported to southeast Alaska by the federal government and suffered in disease-plagued internment camps.
After the war, the U.S. government used one Aleutian island, Amchitka, as a test site for three massive underground nuclear bomb tests between 1965 and 1971.
