2016
ANNUAL REPORT
FA IRNE S S , G RO W T H AND HOPE
TA B L E O F C O N T E N T S
Table of Contents Table of Contents
2
Mission Statement
3
A Message of Fairness, Growth, and Hope
4
Board of Directors
5
Coastal at a Glance in 2016
6
Community Benefits 7 Programs 8
2
Employment 10
Youth Employment
11
Advocacy
12
15
Community Service Centers
The Bering Sea
16
Committee Meetings
18
Financial Disclosures
19
Balance Sheet
22
Income Statement
23
General & Administrative Expenses
24
Commemorating our Success
25
Message from the Chairman
26
C O A S TA L V I L L A G E S RE G I O N F U N D
M I S S I O N S TAT E M E N T
Strategic Intent (Vision) Continuous focus on balancing growth in commercial fishing and sustainable development of Coastal Villages Region Fund communities.
Scammon Bay Hooper Bay
Chevak
Newtok
Strategic Mission Provide the means for development of our communities by creating sensible, tangible, and long-term opportunities that generate HOPE for all people who want to FISH and WORK.
Mekoryuk
Tununak Toksook Bay Nightmute Chefornak Kipnuk
Oscarville Napaskiak
Tuntutuliak Eek Kongiganak
Kwigillingok
Core Values • • • • • • •
Napakiak
Quinhagak
Effective Strategic Leadership Trust, Integrity, and Teamwork Respect for and Understanding of all PEOPLE Active Community Participation Respect for and Understanding of the Land, Sea, and Resources Growth and Sustainability through Maximum Return on Capital Industrious People + Job Opportunities = Self Determination
Goodnews Bay Platinum
Core Competencies • Balance the needs, wants, and expectations of all-now and seven generations from now • Understand risks/rewards, develop a plan of action, support it, and execute on it • Deliver efficient and equitable economic benefits to our communities • Develop and deploy successful business models and adapt as needed for future use • Support bold thinking and continuous innovation • Deliver disciplined, purposeful, and sensible initiatives to sustain and stimulate new economic growth in our region
Member Communities Scammon Bay
Hooper Bay
Chevak
Newtok
Tununak
Mekoryuk
Toksook Bay
Nightmute
Chefornak
Kipnuk
Kwigillingok
Kongiganak
Tuntutuliak
Napakiak
Napaskiak
Oscarville
Eek
Quinhagak
Goodnews Bay
Platinum
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A M E S S A G E O F FA I RN E S S , G R O W T H , A N D H O P E
A Message of Fairness, Growth, and Hope My name is Stephen Maxie. I am the son of
other CDQ groups, but it is not greedy to
Stephen Maxie. I live in Napaskiak, Alaska,
want fair treatment for the residents of our
and I know the never ending changes that
communities. I have seen positive changes in
my father witnessed. Change is inevitable
DC, and I am optimistic that right will prevail.
and adapting to it is the only way to survive.
But we must insist that the Alaska Delegation treat our residents fairly, or we must find
I was elected by the Napaskiak residents
elected officials who will. That is my reality.
to serve as their authorized representative
STEPHEN MAXIE, JR.
on the CVRF Board of Directors. My fellow
CVRF is not perfect, nor is any other
CVRF BOARD SECRETARY NAPASKIAK
Directors elected me to serve as Secretary on
organization, agency, or person on this
the Board. I am also the Chairman of Coastal
earth. As the company continues to grow,
Villages Seafoods (CVS), the wholly owned
it experiences growing pains. I am glad for
THE ONLY WAY WE CAN WIN IS TO COME TOGETHER AS A PEOPLE UNITED BY UNDERSTANDING, PEACE, TRUST, AND LOVE.�
subsidiary that has operated the salmon and
the growing pains because they mean that
halibut programs in our region. Both of these
CVRF is growing. I do not support status quo;
roles are difficult but rewarding. I am amazed
I demand growth of the organization. My
at what I have learned and how my views have
reality is that the region residents, the staff
changed since being elected to the Board.
at CVRF and the Board members must all pull together to get the work done. We are
I always liked it when I saw a CVS tender
fighting for our economic equality, and the
with over 100 boats waiting to offload outside
only way we can win is to come together as
my village, but I have come to realize that
a people united by understanding, peace,
Coastal Villages is here to benefit all region
trust, and love--love for each other and love
residents in all 20 of our communities
for our future. CVRF can be a key player in
and that the tender boat did not do that.
the future of our region, but only if we work
During my short three and a half years of
spreads fast and can be crippling to the
service on the CVRF Board, I have learned
growth of the organization. If CVRF does not
together on the basis of trust and love. Fear
many things and seen many changes. The
grow, all our residents will suffer. The fiscal
most important lesson is that when making
crisis that the State of Alaska faces means
decisions we have to consider not just the
that this work is even more important.
needs of our individual communities or our most vocal residents, but the needs of all 20
I will work to lead the charge to move
communities and all 9,290 residents. This
onward to a place of respect and fairness
is also the most important commitment: we
that I know each resident deserves, from
have pledged to treat all of our communities
Scammon Bay down to Platinum and for
and residents fairly and equally.
all CDQ regions. I will fight on in DC and anywhere else in the battle for fairness.
STEPHEN MAXIE, JR.
CVRF BOARD SECRETARY NAPASKIAK
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C O A S TA L V I L L A G E S RE G I O N F U N D
We have to fight for the whole CVRF region.
When we achieve economic equality
I have been to Washington, DC beaucoup
resulting from the Just Fix CDQ initiative, I
times to fight against the discrimination
will be able to enjoy a sense of pride that
and inequality our communities suffer. It
can be shared by all of our region residents
hurts me deeply to see the unfair delivery
from every one of our 20 communities.
of benefits from CDQ, and I am strongly
And I won’t stop there: I will work to fight
motivated to work to fix this injustice: for
on for the CVRF region. I will lead the
me, for you, for our children, and for their
charge to make my father and his memory
children. Our company has been called
proud. People united in understanding,
greedy because we speak up for our people
peace, trust, and love will prevail. They
to get as much benefits as the people in
will prevail for fairness and growth!
BOARD OF DIRECTORS
Community Elections Coastal Villages Region Fund’ Board of Directors is comprised of democratically elected representatives from each of our 20 member communities. Every two years, one third of the Board members are up for democratic election in their respective communities. CVRF is excited to welcome Roderick Phillip, Phillip Kusayuk, and Edward Kinegak, to the Board! All Coastal Villages Board members must be permanently domiciled residents of the communities they are representing. Elections are run under a standardized democratic process designed to give fair voice to all residents of each community.
2016 Board of Directors RICHARD JUNG
EVAN S. EVAN
STEPHEN MAXIE, JR.
PAUL TULIK
CHAIRMAN NAPAKIAK
VICE CHAIRMAN GOODNEWS BAY
SECRETARY NAPASKIAK
TREASURER NIGHTMUTE
2016-2021
2016-2021
2014-2019
2016-2021
JOHN SAMUEL
GABRIEL OLICK
WALTER BROWN
EXECUTIVE COMMITTEE PLATINUM
EXECUTIVE COMMITTEE TUNTUTULIAK
EXECUTIVE COMMITTEE EEK
2014-2019
2014-2019
2012-2017
2016-2021
JEREMY TULUK
ERIC OLSON, SR.
GEORGE CHUCKWUK
RODERICK PHILLIP
CHEVAK
HOOPER BAY
KIPNUK
KONGIGANAK
2016-2021
2012-2017
2012-2017
2016-2017
ROLAND LEWIS
VACANT
JOHN ANDY
FRANK BEREZKIN, SR.
KWIGILLINGOK
MEKORYUK
NEWTOK
OSCARVILLE
2014-2019
2012-2017
VACANT
PHILLIP KUSAYUK
TOKSOOK BAY
TUNUNAK
2014-2019
DARREN CLEVELAND
LARSON HUNTER
QUINHAGAK
SCAMMON BAY
2014-2019
2016-2021
EDWARD KINEGAK CHEFORNAK
2016-2019
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C O A S TA L AT A G L A N C E I N 2 016
Coastal Villages Region Fund 20 Communities | 20 Board Members | 180+ Staff
Coastal Alaska Premier Seafoods Bering Sea Operations
Community Benefits 20 Communities
9 Employees | 6 Wholly Owned Vessels
9,290 Residents
126 million pounds of seafood caught
Coastal Villages Pollock (CVP) 135 Crew Members 1 Catcher/Processor 98 million pounds caught in 2016
Coastal Villages Crab (CVC) 16 Crew Members | 2 Crab Vessels
42 Crew Members | 3 Vessels
3 million pounds caught in 2016
25 million pounds caught in 2016
Coastal Villages Region Fund board of directors and staff
6
Coastal Villages Longline (CVL)
C O A S TA L V I L L A G E S RE G I O N F U N D
Programs & Projects Benefits to 9,290 Residents $359 million spent between 1997-2016
COMMUNITY BENEFITS
THROUGHOUT THE YEARS
1971 Alaska’s Senator Ted Stevens proposes 200-mile Exclusive Economic Zone (EEZ).
CVRF’s Residency Requirements Ensure That the Benefits of CDQ Remain Intact for the Residents of Our 20 Member Villages The CVRF region continues to grow. However, the economy in our region struggles to provide opportunity for our residents due to a lack of steady employment opportunities. CVRF works Community Benefits Team in 2016 hard every day to create real jobs and opportunities for our residents. Our goal is to create jobs with real and thoughtfulness for each other, we will expectations that promote real achievements grow stronger together. We will build a future and to provide our residents with the for our region that will bring opportunity to all educational and training opportunities they residents. need to pursue the careers they want. As a part of this mission, we continue to pursue and invest in economic development as well as educational opportunities for our youth that will create both jobs and the skilled workforce needed to fill them. We want to help our residents prepare to fill highpaying jobs in our region’s schools, clinics, stores, and construction sites, as well as our fishing fleet. The benefits provided by Coastal Villages Region Fund – totaling over $15 million in 2016 alone and $359 million since 1997 – are having a dramatic impact within our region. The more our region grows, the more important it is that we focus on working together, united, no matter who we are or which village we come from. We must work together: we are one community, not twenty - the Coastal Villages community. Through unity, teamwork, mutual respect,
Yearly Residency Verification Is Important!
There are over 9,290 people who reside in CVRF’s 20 villages and who therefore are eligible to participate in our programs. Since 2013, we have used a uniform standard for verification of residency that is based on the Alaska PFD eligibility requirements. Residency verification is now a necessary component of the application process for participation in CVRF programs like scholarships, internships, People Propel®, the Elder and Heating Oil programs, and other CVRF activities. For more information visit: WORKFISHHOPE.COASTALVILLAGES.ORG/
1976 Magnuson-Stevens Act (MSA) is enacted by Congress, creating 200-Mile EEZ.
1977–1986 The foreign fishing fleet off Alaska gives way to U.S. vessels, primarily owned by non-Alaska interests.
1989 Senator Stevens introduces the first CDQ bill (S. 1900) in Congress.
1990 The Pollock inshore/offshore battle reaches a boiling point.
1991 Pollock CDQ (7.5%) approved as part of the Inshore/Offshore Agreement, which allocated the other 92.5% of the Bering Sea Pollock fishery among Seattle and foreign interests.
1992 The CDQ program is established. Coastal Villages Fishing Cooperative (CVFC) is formed as a for-profit corporation to represent the CVRF region. The first CDQ pollock are harvested. With approval from the State of Alaska, CVFC and Golden Age Fisheries form Imarpiqamiut Partnership (IP) to buy the catcher/ processor Brown’s Point. Ownership is 50-50 but CVFC profit share is 35% during first 4 years.
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PROGRAMS
Cuineq participants in the bridge silmulator at AVTEC
The Benefits Provided by Coastal Villages Region Fund are Having a Dramatic Impact Within Our Region Internships
Scholarships
Every year CVRF gives college students the opportunity to gain valuable work experience through our internship program. In 2016, fourteen community-based and six Anchorage-based interns earned over $100,000 while working at CSCs and at the Anchorage office. CVRF looks forward to continuing to enhance this program to further benefit the youth of our region.
The Louis Bunyan Memorial Scholarship Program provides funds for our residents to attend universities and trade schools in the pursuit of higher education. Our support for educational achievement helps ensure that our residents will continue to play an important role in our business. We hope to continue developing a skilled work force that can be hired in our communities, and our corporate office and take leadership roles in our Bering Sea fleet. In 2016, CVRF awarded more than $390,000 in scholarships - 64 in the Spring and 76 in the Fall.
The fourteen community-based interns worked at CVRF’s CSCs and helped with the company operations and the Youth to Work Program. The six interns in Anchorage worked in various departments gaining valuable work experience and lived on their own in Anchorage. In order to qualify for the internship program, a resident must be currently enrolled in college/vocational school. Hiring interns within their respective communities helps our residents find work at home in between the spring and fall semesters of college.
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C O A S TA L V I L L A G E S RE G I O N F U N D
The deadline to submit applications for the fall semester (August – December) is in early June, and the spring semester (January – July) deadline is in early December. Residents who are in college or vocational school or plan on attending one or the other are strongly encouraged to apply for this program.
Training The training assistance program provides tuition assistance to residents who are attending training programs that can last anywhere from a few days to twelve weeks. Sixteen residents were awarded $8,037 in 2016 for training opportunities. Residents who are seeking short-term training opportunities to advance their knowledge or certifications are encouraged to apply.
Pollock Provides® Heating Oil and Elder Programs During 2016, 663 elders benefitted from the Elder Program. With a total budget of $325,000, this program was enhanced to provide higher value to our elders. Elders who participated were given the opportunity to select from a choice of an Arctic Bay Parka, a meat package from Costco, or 60 gallons of heating oil in two 30-gallon drums.
PROGRAMS The Heating Oil Program, which also had a $325,000 budget, assisted 2,157 households with the high cost of heating oil. CVRF staff worked with local governing bodies to identify all heads of households and worked with heating oil vendors directly for the distribution of this benefit.
Designated Fund The CDQ Designated Fund serves as an economic resource for CVRF communities by helping to fund community development projects. In 2016, communities drew from a $1.5 million fund made available by the Board of Directors in 2015. CVRF invests in a wide range of projects, and continues to help community organizations identify ways to contribute to economic development.
Tax Assistance CVRF provided funding to the Alaska Business Development Center to facilitate free tax assistance services in our member communities. This program helps residents navigate the complexities of filing their taxes and helps them get their tax refunds. In 2016, 2,177 returns were completed, leading to more than $3.1 million in tax refunds. Since 2006, this program has helped region residents get almost $27 million in tax refunds.
People Propel® The People Propel® Program was created in 2012 and has grown to be one of Coastal Villages’ most popular programs. CVRF paid a large percentage of the purchase price of equipment, helping residents purchase boats, outboards, ATVs, snowmachines, toyo stoves, and more. In 2016, energy efficient appliances and renewable energy options were added to the program. 451 applications were approved and CVRF provided almost $1.5 million in support, which helped residents purchase over $3.7 million in equipment. Since the program’s inception, People Propel® has assisted almost 1,300 participants with the purchase of over $14 million worth of equipment.
Youth Leadership CVRF contributed over $87,000 in funding for youth leadership programming implemented by local organizations. CVRF supports opportunities for youth groups to engage in activities that promote a positive and healthy lifestyle. Projects during 2016 included cultural gatherings, NYO participant support, and community cleanups.
Ciuneq
THROUGHOUT THE YEARS
CVFC contributes its CDQ pollock to IP for credit of about $4 million (about $38 per metric ton). C/P Brown’s Point is valued at $15 million and IP assumes $11 million of debt in the deal.
1993 - 1994 CVFC pollock CDQ continues to earn only $38 per metric ton.
1995 Multi-species CDQ established; halibut and sablesh IFQ created. CVFC pollock CDQ is reduced by 7.4% due to poor financial performance.
1996 The CDQ Program is officially added to the MSA, which requires CDQ in all Bering Sea fisheries, including crab. Harold Sparck’s contribution is memorialized in the title of the CDQ program. A consultant is hired by the State of Alaska to review the financial status of CVFC’s IP and C/P Brown’s Point investment. The community of Akutan in the APICDA region is added to the CDQ program.
1997
In 2016, we partnered with the Alaska Humanities Forum to develop a new program called Ciuneq. This program is designed to support a holistic pathway to higher education and careers, building on our existing youth development programs, including Youth to Work, internships, and scholarships.
The State of Alaska finds that CVFC is not receiving fair value for its quota and will not meet its 1996-1998 Community Development Plan milestones and goals.
Ciuneq is available to all 9th grade students in CVRF communities. Selection is based on a formal application process and the youth’s academic performance during their 8th grade school year. In 2016, 39 students from all but one of our 20 communities came to Anchorage to participate.
The State of Alaska recommends terminating CVFC’s CDQ allocation unless the partners and key creditors dissolve the IP.
We look forward to expanding this program to include 10th graders in 2017.
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EMPLOYMENT
Employment in the CVRF Region CVRF has many work opportunities available through our multiple inregion offices, as well as our crab boats, longline vessels, and catcher/ processor vessel. These are true Alaskan jobs that we continuously aim to fill with our residents. CVRF paid over $4.1 million to 842 residents in 2016. Of these employees, 698 were from the Youth to Work program.
Resident Employees by Company COMPANY
EMPLOYEES
CAPS
9
$292,462
55
$1,553,227
776
$2,241,134
2
$23,000
842
$4,109,823
CVE CVRF CVS Grand Total
WAGES
Mechanic Welder team delivering meat packages during the Elder Program
Resident Employees by Community (Includes Youth to Work Employees) COMMUNITY
Youth to Work Employees by Community
EMPLOYEES
WAGES
Chefornak
57
$272,560
Chevak
91
$281,900
Eek
33
$227,683
Goodnews Bay
11
$123,498
Hooper Bay
91
$272,646
Kipnuk
67
$336,203
Kongiganak
40
$219,525
Kwigillingok
33
$270,785
Mekoryuk
15
$136,979
Napakiak
40
$172,427
Napaskiak
34
$133,433
Newtok
42
$176,868
Nightmute
23
$129,006
Oscarville
13
$67,171
Platinum
1
$11,000
Quinhagak
61
$198,121
Scammon Bay
46
$382,572
Toksook Bay
53
$325,306
Tuntutuliak
57
$176,750
Tununak
34
$195,390
842
$4,109,823
Grand Total
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C O A S TA L V I L L A G E S RE G I O N F U N D
COMMUNITY
EMPLOYEES
WAGES
Chefornak
47
$32,249
Chevak
83
$63,209
Eek
22
$17,333
6
$5,065
Hooper Bay
84
$60,660
Kipnuk
57
$42,341
Kongiganak
32
$22,384
Kwigillingok
25
$17,206
Mekoryuk
12
$6,888
Napakiak
33
$25,842
Napaskiak
29
$21,453
Newtok
33
$26,324
Nightmute
17
$11,473
Goodnews Bay
Oscarville
9
$6,398
Quinhagak
52
$39,315
Scammon Bay
35
$27,726
Toksook Bay
44
$30,620
Tuntutuliak
51
$39,956
Tununak Grand Total
27
$20,675
698
$517,117
YOUTH EMPLOYMENT
Youth to Work Prepares Our Youth for Competetive Jobs in Our Communities The Youth to Work program has grown tremendously since it first started in 2007, and in 2016 we set a new record for number of youth employed! The program is aimed at providing youth between the ages of 14 and 19 with real world work experience and the opportunity to learn how to support themselves while building self-esteem and self-respect. • • • • •
698 youth participated in CVRF’s 2016 Youth to Work Program, with the youth participants earning more than $517,000. Each youth worker is required to log their work hours and tasks and report to their supervisors daily. Participants worked at local businesses such as grocery stores and local governing bodies. Youth learned traditional skills with direction and help from local instructors. The youth celebrated the completion of the summer program with a picnic party and t-shirts were given out to all of our youth and business participants.
WE HOPE TO CONTINUE FILLING HIGHPAYING JOBS IN OUR COMMUNITIES WITH OUR RESIDENTS.” RICHARD JUNG
CVRF BOARD CHAIRMAN NAPAKIAK
THROUGHOUT THE YEARS
1998 Crab CDQ fishing begins. CVFC pollock CDQ is reduced by an additional 12% due to continuing poor financial performance. Coastal Villages Region Fund (CVRF), a non-profit organization, acquires our region’s CDQ allocations from CVFC; the State of Alaska rescinds proposal to terminate the allocation after CVFC is dissolved. CVRF grants $1,398,468 to CVFC to bring affairs with IP to a conclusion. The American Fisheries Act (AFA) is enacted, increasing the pollock CDQ allocation to 10% while awarding the other 90% of the Bering Sea pollock fishery to primarily non-Alaskan interests. AFA also creates CDQ Loan Program to allow CDQ groups to buy pollock quota. CVRF chooses Tyson Seafoods Group and Westward Seafoods as harvesting partners for the 1999-2000 pollock CDQ allocation period.
1999 The National Academy of Sciences (NAS) completes a review of the CDQ program and issues supportive recommendations. State of Alaska/National Marine Fisheries Service add eight villages to the CDQ program: Napakiak, Napaskiak, and Oscarville in the CVRF region, Ekwok, Levelock, and Portage Creek in the BBEDC region, and Grayling and Mountain VIllage in the YDFDA region.
2000 CVRF pollock CDQ is increased by 9.1% in recognition of governance and financial improvements.
Youth to Work employees in Newtok display their projects
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ADVOCACY
The board of directors in Washington D.C. in 2016
Coastal Villages Region Fund Is Committed to Fixing CDQ Allocations So That Our Growing Region Recieves Its Fair Share of CDQ Benefits Since its inception in 1991, the Western Alaska Community Development Quota (CDQ) program has delivered remarkable benefits to the 65 Bering Sea coastal communities that would not otherwise participate in the abundant federal fisheries – and associated economic activity – off their shores. Today, the six CDQ groups control more than a billion dollars of assets (quota, vessels, processors, support companies, etc.) and have delivered more than a billion dollars in benefits to the CDQ region. However, CDQ’s growth has exposed a fundamental flaw in the program’s design: the distribution of benefits has become dramatically biased in favor of a few small villages at the expense of most of the communities and people served
by the program, and every year the problem only gets worse. All 26,000 residents who live in the 65 communities that participate in the CDQ program deserve to be treated equally. However, as it stands right now, the 9,290 residents of the Coastal Villages region recieve a much smaller proportion than some other CDQ residents. Unfair resource allocations established in the early days of the program remain locked in place while population in the larger and less advantaged groups’ regions continues to grow. For the continued success of the program, Congress should restore fairness and remove perceptions of political influence by instituting a formula-based system.
Contact your representative to support fair and equitable CDQ allocations! SENATOR LISA MURKOWSKI Washington, DC Office 522 Hart Senate Office Building Washington, DC 20510 Phone: (202) 224-6665 Fax: (202) 224-5301
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C O A S TA L V I L L A G E S RE G I O N F U N D
SENATOR DAN SULLIVAN Washington, DC Office 702 Hart Senate Office Building Washington, DC 20510 Phone: (202) 224-3004 Fax: (202) 224-6501
REPRESENTATIVE DON YOUNG Washington, DC Office 2314 Rayburn House Office Building Washington, DC 20515 Phone: (202) 225-5765 Fax: (202) 225-0425
ADVOCACY
THROUGHOUT THE YEARS Morgen Crow becomes the second executive director since the inception of CVRF and the CDQ program.
Cumulative Benefits Delivery Per Person BASED ON 2007 - 2015 ANNUAL REPORT DATA
Cumulative Benefit Delivery Per Person
CVRF replaces Tyson Seafoods with new partners: American Seafoods and Highland Light.
Based on 2007 ‐ 2015 Annual Report Data $900,000
The AFA’s U.S. ownership requirements open the door for Coastal to purchase 20% of American Seafoods.
$845,107
$800,000
Coastal purchases an additional 2% of American Seafoods.
2001
$700,000
At a U.S. House Fisheries Subcommittee CDQ hearing, the NAS testifies in favor of population-based CDQ allocations. $600,000 $559,585
2002 $500,000
The Council recommends changes to the CDQ Program based on its review of the NAS CDQ study, the CDQ Committee report, CDQ legislation proposed by Representative Don Young, proposed State regulations, and public comments. Little of the Council’s motion is ever implemented.
$400,000
Coastal increases its ownership in American Seafoods from approximately 22% to 39%.
$300,000
$200,000
With state approval, Coastal leases its CDQ pollock to American Seafoods for $325 per metric ton.
$100,000
Coastal enters a partnership with BBEDC, CBSFA, YDFDA, and U.S. Seafoods for multi-species CDQ harvesting.
$83,792 $31,337
$23,193
2005
$19,380
$0 APICDA
BBEDC
CBSFA
CVRF
NSEDC
YDFDA
“EVEN IF THE AMOUNT OF SPENDING ON BENEFITS BY CVRF LOOKS SMALL, WE ACTUALLY SPEND MORE MONEY THAN ANY OTHER GROUP. BECAUSE WE HAVE SUCH A LARGE CDQ GROUP WITH OVER 9,000 PEOPLE, THE MONEY PER PERSON IS MUCH LOWER.” RICHARD JUNG
CVRF BOARD CHAIRMAN NAPAKIAK
The crab CDQ increases from 7.5% to 10% as the other 90% of the Bering Sea crab fisheries are awarded as IFQs and IPQs. The Rasmuson CDQ Blue Ribbon Committee report is delivered to Alaska’s Governor, recommending signicant changes and improvements to the CDQ program, including greater autonomy for CDQ groups and a settlement of allocation disputes. The CDQ Loan Program is expanded by the U.S. Congress from $25 million to $200 million in loan authority.
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ADVOCACY
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C O A S TA L V I L L A G E S RE G I O N F U N D
THROUGHOUT THE YEARS
COMMUNITY SERVICE CENTERS
Community Service Centers
2006
CVRF has staffed Community Service Centers (CSC) in 19 of our 20 CVRF communities. These buildings are open to the public for services such as: meeting room rental, shop space rental, mechanic/welding services, internet access, and acquiring information on CVRF’s many programs. The staffing of and operational costs of the CSC’s are made possible by the earnings in the Bering Sea. Local residents are encouraged to visit their CSC to seek and learn more about what CVRF has to offer. Staff are available to assist residents with residency verification applications, job searches, and applications for CVRF programs and benefits. The normal operating hours of the CSC buildings are between Monday-Friday from 8:00 AM to 5:00 PM.
Community Service Center Staff Each of our staff members plays a vital role in delivering the many benefits and services that are provided each year. CVRF has both full-time and part-time Community Service Representative and Mechanic/Welder positions that are available year-round for our residents. To learn more about the jobs available at our CSCs please visit: http://www.coastalvillages.org/careers/job-listings
CVRF Shop Services Our team of full-time and on-call Mechanic/Welders are highly skilled and are able to provide much needed repairs to four-wheelers, snowmachines, boats, and outboard motors. From time to time they also take on custom projects for residents in the community.
Community Service Centers Chefornak CSC: (907) 867-8303
Napaskiak Helen Sarah Kaganak CSC: (907) 737-7016
Chevak Joe Paniyak Memorial CSC: (907) 858-7566
Newtok CSC: (907) 237-2310
Eek Steven ‘Angivran’ White CSC: (907) 536-5301
Nightmute Paul Tulik CSC: (907) 647-6252
Goodnews Bay CSC: (907) 967-8338
Oscarville CSC: (907) 737-7358
Hooper Bay CSC: (907) 758-4330
Quinhagak Wassilie Bavilla CSC: (907) 556-8301
Kipnuk Tim Samson CSC: (907) 896-5080
Scammon Bay Maryann Sundown CSC: (907) 558-5300
Kongiganak CSC: (907) 557-5300
Toksook Bay CSC: (907) 427-7300
Kwigillingok CSC: (907) 588-8250
Tuntutuliak CSC: (907) 256-2200
Mekoryuk CSC: (907) 827-8138
Tununak CSC: (907) 652-6250
Congress enacts major changes to the CDQ program based on the Rasmuson Blue Ribbon Report, making many improvments but locking in the imbalanced CDQ allocations. The new CDQ panel required by MSA changes meets in Anchorage and agreement is reached to form it as a non-profit corporation with the legal name, “Western Alaska Community Development Association” (WACDA). . Coastal purchases significant crab harvesting and processing rights as well as the crab vessels Arctic Sea, North Sea, and Bering Sea.
2009 Coastal takes over management of its 100% owned crab fleet, moving management from Seattle to Alaska.
2010 Coastal redeems its stock in American Seafoods in exchange for pollock fishing rights, the pollock catcher/processor Northern Hawk, pacific cod fishing rights, and 3 cod freezer/longliners: the Lilli Ann, Deep Pacific, and North Cape.
2011 Coastal joins NSEDC in acquiring in-shore pollock quota and eight vessels from Ward’s Cove/ the Brindle Family. Coastal is the first CDQ group since the CDQ program began in 1992 to catch its pollock, crab, and cod CDQ allocations aboard vessels that we own and operate ourselves.
2012 The CDQ program celebrates its 20th anniversary. At the celebration, CVRF asks the other CDQ groups to help make the program better by adjusting the CDQ allocations.
Napakiak Fritz Willie Memorial CSC: (907) 589-2300 ANNUAL REP ORT 2 016
15
THE BERING SE A
The cod Longliner Lilli Ann in Dutch Harbor
Coastal Villages’ Investment in the Bering Sea Provides the Money Needed to Provide Benefits to Our Region The Bering Sea produces the money needed to provide our residents and communities with programs like Youth to Work, People Propel, and the Heating Oil and Elder Programs. CVRF is not a grant or donation funded organization. We earn our own money for our communities through the hard work of our fishing fleet employees and crew who operate our vessels in the Bering Sea. When our company started in the 1990’s, like other CDQ groups we leased our CDQ quota to other fishing companies. We used the money earned through those leases to invest in our ability to participate directly in the fishery and pay for in-region programs in our communities. In 2006, we acquired our own crab boats and quota, and in 2010 we acquired our own pollock and cod fishing boats and quota. These additional quotas supplement what we already have through the CDQ program. We have now successfully operated our fleet for over five years and continue to invest in it to generate income for our 20 member communities. In 2016, we purchased a new fishing vessel, the Flicka, that will replace our longliner the Deep Pacific, which has provided us with many years of hard work.
THE BERING SEA FISHING OPERATIONS EARN THE MONEY NEEDED TO PROVIDE OUR RESIDENTS WITH PROGRAMS LIKE YOUTH TO WORK AND PEOPLE PROPEL.”
RICHARD JUNG
CVRF BOARD CHAIRMAN NAPAKIAK
16
C O A S TA L V I L L A G E S RE G I O N F U N D
Over the last year, Coastal Alaska Premier Seafoods, or CAPS, focused on providing a wide variety of work opportunities for the people of both our region and our state, and continuously strived to maximize the longterm cash flow available to fund programs and economic development projects designed to benefit the people of our region. It is very important to realize that without profitable fishing in the Bering Sea we would not be able to provide our programs for our residents. The staff and the crew work hard to make sure Bering Sea fishing is profitable for the benefit of our member communities – thank you staff and crew!
THROUGHOUT THE YEARS
THE BERING SE A
Since 2014, Our Bering Sea Fleet Has Operated Under a Single Platform – Coastal Alaska Premier Seafoods (CAPS) CAPS was created with the vision of building a world-class seafood harvesting, processing, and marketing company focused on the fishery resources of Alaska and the Bering Sea and owned by and operated for the benefit of Alaska residents within the Coastal Villages region. CAPS houses three primary fishing operations: pollock, crab, and cod. While pollock generates most of Coastal’s income, all three play a vital role in the organization.
Coastal Alaska Premier Seafoods’ Bering Sea Fleet NORTHERN HAWK
LILLI ANN
Species: Pollock Home port: Chevak Length 341 ft Breadth: 52 ft Crew size: 129
Species: Cod Home port: Scammon Bay Length 141 ft Breadth: 31 ft Crew size: 21
ARCTIC SEA
FLICKA
Species: Crab Home port: Seattle Length: 135 ft Breadth: 46 ft Crew size: 9
Species: Cod Home port: Newtok Length 140 ft Breadth: 34 ft Crew size: 21
NORTH SEA
DEEP PACIFIC
Species: Crab Home port: Seattle Length: 126 ft Breadth: 30 ft Crew size: 8
Species: Cod Home port: Seattle Length 130 ft Breadth: 30 ft Crew size: 21
During a trip to Washington DC, the Alaska Delegation members say they will work on fixing the CDQ allocations. The first CDQ decennial review reports are reviewed by the State. No changes to the CDQ allocations are made through this process.
2013 The Alaska Delegation members begin to back pedal on fixing the CDQ allocations because it is “too hard” and they want all the groups to agree to a change, even those that will have to give up some CDQ.
2014 Coastal Villages consolidates all Bering Sea operations under Coastal Alaska Premier Seafoods. This entity now houses pollock, cod, and crab fishing operations.
2015 Senator Lisa Murkowski says she would like to help make the distribution of CDQ benefits more balanced.
2016 Coastal Villages purchases the F/V Flicka to replace the aging F/V Deep Pacific. Extensive conversion work begins to convert the boat from a trawler to a factory longliner. CVRF celebrates five years of successful Bering Sea operations and inducts eight leaders into the CVRF Hall of Fame. CVRF has delivered over $359 million in benefits to our community residents through our many programs and projects!
2017 The six CDQ groups, the Alaska Delegation members, and Lt. Governor Mallot attend the CDQ Roundtable meeting to discuss ways to improve the program, including fixing the imbalanced distribution of CDQ benefits.
ANNUAL REP ORT 2 016
17
C0MMITTEE MEETINGS
2016 Committee Meetings COMMITTEE
MEETING DATES
Executive Committee
3/22/2016
Richard Jung, Evan Evan, George Chuckwuk, Darren Cleveland, Gabriel Olick, John Samuel, Paul Tulik (alternate)
6/1/2016
Richard Jung, Evan Evan, John Samuel, Larson Hunter (alternate), Paul Tulik (alternate), Stephen Maxie, Jr. (guest)
8/1011/2016
Richard Jung, Evan Evan, Stephen Maxie, Jr., Paul Tulik, Gabriel Olick, John Samuel, Walter Brown
7/13/2016
Richard Jung, Evan Evan, Stephen Maxie, Jr., Paul Tulik, Gabriel Olick, John Samuel, Walter Brown
10/18/2016
Richard Jung, Evan Evan, Stephen Maxie, Jr., Paul Tulik, Gabriel Olick, John Samuel, Walter Brown
11/9/2016
Richard Jung, Evan Evan, Stephen Maxie, Jr., Paul Tulik, Gabriel Olick, John Samuel, Walter Brown
CAPS
12/6/2016
Richard Jung, Paul Tulik
CVC
12/6/2016
Darren Cleveland, Roland Lewis, George Chuckwuk
CVE
12/6/2016
Gabriel Olick, Roland Lewis, Richard Jung (alternate)
CVL
12/6/2016
John Andy, Walter Brown, Richard Jung (alternate)
CVP
12/6/2016
Paul Tulik, Larson Hunter, George Chuckwuk, Richard Jung
CVS
5/3/2016
Stephen Maxie, Jr.
12/6/2016
Stephen Maxie, Jr., Jeremy Tuluk, Robert Pitka
4/11/2016
Richard Jung, Evan Evan, John Samuel
5/13/2016
Richard Jung, Evan Evan, John Samuel
5/17/2016
Richard Jung, Evan Evan, John Samuel
6/14/2016
Richard Jung, Evan Evan, John Samuel
7/5/2016
Richard Jung, Evan Evan, John Samuel
12/8/2016
Richard Jung, Evan Evan, John Samuel
5/31/2016
Richard Jung, Evan Evan, John Samuel, Stephen Maxie, Jr., Larson Hunter (guest), Paul Tulik (guest)
6/1/2016
Richard Jung, Evan Evan, John Samuel, Stephen Maxie, Jr., Larson Hunter (guest), Paul Tulik (guest)
6/15/2016
Richard Jung, Evan Evan John Samuel, Stephen Maxie, Jr., Paul Tulik (guest)
11/9/2016
Richard Jung, Gabriel Olick, Walter Brown
Disciplinary Committee
Policy & Compensation Committee
People Propel Ad Hoc 18
MEMBERS
C O A S TA L V I L L A G E S RE G I O N F U N D
FINANCIAL DISCLOSURES
Professional Fees CONSULTING
LEGAL
Strategies 360
$231,754
NMTC Transaction Work
Snow & Company
$152,813
Paylocity
$123,463
General Legal TOTAL Legal
Sockeye Business Solutions
$103,863
Sound Marine & Industrial Services
$100,553
SpecTec
$90,589
Employee Benefit Management Services
$75,000
Industrial Resources
$42,498 $198,425 $240,923
ACCOUNTING Tax Preparation & Strategies
$60,115
$48,846
Benefit Plan Audit
$23,500
Steven A. Rieger
$43,381
Seven Stars Industries
$41,860
Audit Services TOTAL Accounting
$161,918 $245,533
Waveland
$41,250
Sea State
$38,948
Resolve Marine Group
$36,165
John Hancock
$27,437
Other Consulting TOTAL Consulting
$338,725 $1,494,647
TOTAL PROFESSIONAL FEES
LOBBYING Federal & State Lobbying TOTAL Lobbying
$219,096 $219,096
$2,200,199
Auditor KPMG, LLP, performed the audit and prepared the audit report on the financial statements upon which the financial information presented in this annual report is based.
Compensation to Key CVRF Personnel The CVRF Board of Directors continues to set aggressive goals and objectives for CVRF and therefore seeks to hire, retain, and motivate the highest caliber employees at every level of operation. In 2016, the top ten highest paid personnel earned the following wages: Executive Director Morgen Crow - $500,000, Arctic Sea Skipper Owen Kvinge - $363,503, North Sea Skipper Robert Thelen - $302,518, Director of Business Development Angie Pinsonneault - $302,000, Bering Sea Operations General Manager Michael Coleman - $294,000, Northern Hawk Fish Master Harold Longvanes - $254,024, Northern Hawk Skipper James Egaas - $232,542, Deputy Director Nicholas Souza - $221,000, Northern Hawk Chief Engineer Thomas Hinderman - $217,711, Northern Hawk Factory Manager Terje Gjerde – $210,831. In addition to base compensation, the Executive Director receives an annual $10,000 life insurance benefit. The Board follows Rebuttable Presumption of Reasonableness guidelines in determining the compensation for its Executive Director and top executives, a process which includes comparisons with compensation levels at other similar companies. In 2016, the following bonuses were paid to key CVRF staff: Executive Director Morgen Crow - $300,000, Director of Business Development Angie Pinsonneault - $90,000, Bering Sea Operations General Manager Mike Coleman - $45,867, and Coastal Villages Deputy Director Nick Souza - $55,929.
ANNUAL REP ORT 2 016
19
FINANCIAL DISCLOSURES
Board Compensation Policy and Fees CVRF Board members receive a daily stipend during meetings and an additional monthly stipend for the CVRF-related work that occurs between CVRF meetings. The CVRF board compensation policy was adopted in June of 2004 after consultation by CVRF with independent experts, and the policy stipulates that any changes must be approved by an independent body. The policy was updated in January 2011 and was approved by the independent authorized body comprised of an independent member of each community. The CVRF board compensation policy is in full compliance with Rebuttable Presumption of Reasonableness guidelines. During 2016, CVRF paid its board members a total of $602,152 in salaries, stipends and benefits.
Related Party Transactions CVRF goes above and beyond the required related party disclosures, by reporting employees and Board members who have sold fish to the company. We also report material employment and business relationships, as are seen below. CVRF would like to specifically mention that none of our employees or Board members have a financial relationship with any partners who lease or harvest our quotas.
RELATED PARTY TRANSACTIONS Board Member
Related Party
Relationship
Job Title
Amount
Larson Hunter
George Smith
Father-in-law
M/W Manager
$99,163
Paul Tulik
Xavier Tulik
Brother
CSR
$54,613
Eric Olson
Cheryl Smart
Daughter
CSR
$47,780
Jeremy Tuluk
Jeremy Tuluk
Self
On-Call M/W
$14,250
John Samuel
John Samuel
Self
Plant Watchman
$11,000
Legal Proceedings Involving Directors CVRF was not engaged in any litigation with any of its directors during 2016.
Professional Fees In 2016, Coastal Villages paid the following fees for professional services: (1) $240,923 in legal fees; (2) $1,494,647 in consulting fees; (3) $245,533 in accounting fees; and (4) $219,096 in lobbying fees. Please see the table on page 19 for further detail.
Auditor Relationship CVRF has not had any disagreements with our auditor in any year, including in 2015 and 2016. CVRF received non-audit services from our auditor (KPMG): we paid KPMG $60,115 for tax services.
Committees The CVRF Bylaws create a CVRF Executive Committee consisting of seven members: the CVRF President, Vice President, Secretary, Treasurer, and three at-large CVRF Board members. The CVRF Executive Committee is authorized by the Bylaws to exercise all authority of the full CVRF Board in managing CVRF, except for the election of CVRF officers and Executive Committee members. The CVRF Bylaws also authorize the President, with approval of a majority of the CVRF Board, to appoint other CVRF committees with such functions, powers, and duties as determined by the President and CVRF Board. Using this authority, CVRF has established a Policy/Compensation Committee to make recommendations to the Board on CVRF policies, including policies related to investments, employee compensation, in-region fisheries, donations, artwork, board travel, and participant eligibility. CVRF has additionally established a Finance Committee to advise the Board on budgeting and financial matters. In 2016, CVRF formed a Disciplinary Committee to make recommendations to the Board on a myriad of topics related to Board member dynamics. For the subsidiaries CVS, CVP, CVC, CVL, CVE, and CAPS, CVRF has established subsidiary boards. 20
C O A S TA L V I L L A G E S RE G I O N F U N D
FINANCIAL DISCLOSURES
Additional Compensation Disclosures CVRF fully discloses the compensation of its top personnel in each annual report to its residents. The federal CDQ statute specifically requires each CDQ group to disclose the “compensation levels of the top 5 highest paid personnel” (16 U.S.C. §1855(i)(1)(F)(ii)). Until 2012, there was also a CDQ rule requiring the disclosure of the “total amount…received by each such individual.” CVRF believes that its residents have a fundamental right to more information than what is currently required by the statute and that providing full and fair disclosure is the best way to ensure strong self-governance, the key to the long-term success of any enterprise. We believe that this approach is in the best interest of our communities, the CDQ program as a whole, and our industry over the long term. In the spirit of full disclosure, CVRF has always disclosed the total amount paid to our top 5 personnel, whether they are office staff or crew members. Starting with the 2012 annual report, we expanded our disclosure to include our top 10 personnel and payments made to staff and to Board members. We are additionally disclosing the top 10 “office only” staff. The CVRF Board of Directors is pleased with the financial results that the top personnel in our company have helped deliver to our villages. CVRF will maintain its commitment to hiring and retaining the best personnel available to bring the vision of our Board members to life and create exceptional returns for our stakeholders and the residents of the CVRF communities for generations to come.
COMPENSATION OF KEY OFFICE EMPLOYEES Name
Title
Base Salary
Bonus
Morgen Crow
Excutive Director
$500,000
$300,000
Angie Pinsonneault
Director of Business Development
$302,000
$90,000
Mike Coleman
Bering Sea Operations General Manager
$294,000
$45,867
Nick Souza
Deputy Director
$221,000
$55,929
Eric Deakin
IT Manager
$190,000
$31,156
Bob Marquez
Sales and Services Manager
$171,000
$29,112
Fariba Strandberg
Controller
$175,000
$10,476
Lorena Rosenberger
Logistics Manager
$139,006
$21,169
Daniel Mainor
Human Resources Manager
$132,000
$10,476
Lenore Beaver
Executive Coordinator
$112,500
$29,206
ANNUAL REP ORT 2 016
21
Consolidated Statement of Financial Position Page 17 (of 2015 annual report)
BALANCE SHEET
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Balance Sheet)
Consolidated Statements of Financial Position Assets
2016
2015
46,873,047
41,027,455
7,548,776 179,879 5,376,478 2,818,837 239,001
6,185,089 447,972 7,730,131 3,187,897 239,001
Total current assets
63,036,018
58,817,545
Restricted cash Interest receivable, excluding current portion Notes receivable, excluding current portion Assets held for sale Property, plant, vessels, and equipment, net Investments in fishing rights Investments in unconsolidated fishing affiliate
699,590 — 1,051,857 454,955 81,889,185 121,405,130 4,709,727
749,590 3,251,114 19,344,115 — 81,043,475 121,405,130 4,483,259
273,246,462
289,094,228
Current assets: Cash and cash equivalents Trade accounts receivable, less allowance for doubtful accounts of $305,984 and $294,695 in 2016 and 2015, respectively Notes receivable, current portion, net Inventory Prepaid expenses Deposits
$
Total assets
$
Liabilities and Net Assets Current liabilities: Accounts payable and accrued expenses Accrued payroll liabilities Notes payable, current portion Deferred revenue Security deposits
$
Total current liabilities
3,593,255 1,901,185 1,744,621 — 49,826
5,783,526 1,265,717 277,904 13,197 29,926
7,288,887
7,370,270
Notes payable, excluding current portion
—
Total liabilities Net assets: Unrestricted net assets Temporarily restricted net assets Total net assets Total liabilities and net assets
$
24,632,877
7,288,887
32,003,147
265,826,575 131,000
256,957,081 134,000
265,957,575
257,091,081
273,246,462
289,094,228
See notes to consolidated financial statements
See notes to consolidated financial statements.
Distribution of Assets
Owned Fishing Quotas (Excludes CDQ Quotas)
Check total Net assets check Investment in fishing affiliates 2%
Other 1%
Investment in fishing rights 44%
Cash & investments 17%
Crab 31% Pollock 41%
Inventory 2% Notes receivable 1%
CVRF has acquired a diverse array of assets that are used to generate income
C O A S TA L V I L L A G E S RE G I O N F U N D
CVRF leveraged our CDQ to — additional fishing purchase — in the pollock, crab, quotas and cod fisheries.
Receivables 3%
Property, plant, & equipment, net 30%
22
— —
Pacific Cod 41% These quotas generate money used for projects and programs
CONSOLIDATED STATEMENT OF ACTIVITIES (Income Statement)
I N C O M E S TAT E M E N T
Consolidated Statements of Activities Bering Sea Fishing Operations Seafood sales
$ 82,429,165
2016
2015
Programs and Projects, General and Administrative
Total
Programs and Bering Sea Projects, Fishing General and Operations Administrative
Total
1,129,559
83,558,724
85,653,258
4,023,649
89,676,907
29,780,942 —
— 1,610,824
29,780,942 1,610,824
33,077,668 —
— 4,185,273
33,077,668 4,185,273
Total cost of sales
29,780,942
1,610,824
31,391,766
33,077,668
4,185,273
37,262,941
Gross profit (loss)
52,648,223
(481,265)
52,166,958
52,575,590
(161,624)
52,413,966
Cost of sales: Bering Sea operations Inshore and nearshore operations
Other revenues, gains, losses, and other support: Lease and profit share income Interest income Community service centers Rent Landing tax contribution (temporarily restricted) Loss on impairment of vessels Gain on disposal of assets Other
1,865,636 15,660 — — — — — (428,719)
1,948,029 1,869,189 524,684 327,678 — — 109,268 461,381
3,813,665 1,884,849 524,684 327,678 — — 109,268 32,662
2,467,331 338 — — 4,000 (4,229,865) — 183,259
2,206,558 1,784,808 446,719 334,374 — (239,737) — 355,851
1,452,577
5,240,229
6,692,806
(1,574,937)
4,888,573
3,313,636
83,881,742
6,369,788
90,251,530
84,078,321
8,912,222
92,990,543
— 27,091,613 930,342 —
13,741,374 112,099 9,672,450 846,860
13,741,374 27,203,712 10,602,792 846,860
— 29,863,714 1,333,792 —
17,817,290 113,091 10,104,977 760,271
17,817,290 29,976,805 11,438,769 760,271
Total indirect expenses
28,021,955
24,372,783
52,394,738
31,197,506
28,795,629
59,993,135
Total expenses
57,802,897
25,983,607
83,786,504
64,275,174
32,980,902
97,256,076
Change in net assets before equity in income of fishing affiliates
26,078,845
(19,613,819)
(24,068,680)
(4,265,533)
Total other revenues, gains, losses, and other support Total revenues, gains, losses, and other support Indirect expenses: Programs and projects Other operating expenses General and administrative Rental and occupancy
Equity in income of unconsolidated fishing affiliate
2,401,468
Change in net assets
28,480,313
— (19,613,819)
Net assets at beginning of the year Net assets at end of the year
$
Adjusted EBITDA
$ 35,971,434
(19,508,168)
6,465,026
19,803,147
2,401,468
2,674,973
8,866,494
22,478,120
— (24,068,680)
4,673,889 1,785,146 446,719 334,374 4,000 (4,469,602) — 539,110
2,674,973 (1,590,560)
257,091,081
258,681,641
265,957,575
257,091,081
16,463,266
35,384,307
(23,180,668)
12,203,639
See notes to consolidated financial statements.
Cummulative Community Benefits 2016
400,000
In Thousands
EBITDA 350,000 Add back gain (loss) on impairment of vessels CVRF has pumped an average of $28 million Cash300,000 flow generated by operations into its communities each year since 2006!
(15,660) 7,506,781 35,971,434
(1,869,189) (1,884,849) 392,279 392,279 1,582,561January 9,089,342 1997 through (19,508,168) 16,463,266
35,971,434 35,971,434
(19,508,168) 16,463,266 31,154,442 (23,420,400) - $1,200,000 4,229,865 239,737 CVRFhas hasearned earned$1.2 over $1.2 in billion in years its(23,180,663) 20of (19,508,168) 16,463,266CVRF 35,384,307 billion our 20 $1,000,000 years ofOur operation. average annual operation. average Our annual revenue jumped considerablly whenconsiderably we became an operator revenue jumped when we instead of a rent taker. $800,000 became an operator instead of a rent taker
250,000
200,000 Total program expense, including COGS Total Bering Sea operations expense, including COGS 150,000 Total other operations expense Total G&A expense 100,000 Total tax expense Total 50,000 expenses
G&A ratio
-
56,872,555 930,342 57,802,897
(338) 8,676,660 December 2016 31,154,442
Cummulative Revenues $1,400,000
In Thousands
Deduct interest income Add back interest expense Add back tax expense Add back depreciation expense January EBITDA 1997 through December
15,352,198 15,352,198 $600,000 56,872,555 958,959 958,959 $400,000 9,672,450 10,602,792 $200,000 25,983,607 83,786,504 $0
12.65%
62,941,382 1,333,792 64,275,174
(1,784,808) 428,606 2,004,482 (23,420,400)
22,002,563 873,362 10,104,977 32,980,902
(1,785,146) 428,606 10,681,142 7,734,042 7,734,042 4,469,602 12,203,644
22,002,563 62,941,382 873,362 11,438,769 97,256,076 11.76%
ANNUAL REP ORT 2 016
23
G E N E R A L A N D A D M I N I S T R AT I V E E X P E N S E S
Cash Generating Revenues
GENERAL AND ADMINISTRATIVE EXPENSES DECEMBER 31, 2016
Seafood Sales 93% 92.70%
Quota and Quotalease Lease andprofit Profit Share Income share income 4% 4.23% Other 3% 3.07%
Total Expenses Bering Sea Operations 68% 67.88% Other Operations 1% 1.14%
G&A 13% 12.65%
Programs & Projects 18% 18.32%
Cost of Benefits 4-SITE 3%
CSC Operations 38%
Outreach 6% Fisheries Support 2%
People PropelÂŽ 10%
Youth Programs 7%
Heating Oil 2%
Social Investments 1% Inshore & Nearshore 23%
Community Designated Fund 7%
Elder Program 1%
Ratio of G&A Expenses to Total Expenses 120.00% 100.00% 80.00% 60.00%
CVRF maintains a low administrative cost ratio.
40.00%
20.00% 0.00%
24
C O A S TA L V I L L A G E S RE G I O N F U N D
Advertising Bad Debt Expense Bank & Finance Charges Contract Labor Computer & Software Expense Depreciation Expense Donations & Contributions Drug Screening & Preemployment Expense Dues, Permits, Taxes & Licenses Employee Benefits Employee Education Assistance Freight Fuel Insurance Interest Expense Internet Fees Meals & Food Expenses Miscellaneous Expenses Payroll Penalties Per Diem Printing & Production Costs Professional Fees & Services Rental Expenses Repairs & Maintenance Supplies Training Transportation & Parking Travel Expenses Utilities Total G&A Expenses
8,307 (31,191) 59,715 26,000 169,497 178,744 3,750 618 28,253 304,060 9,290 13,323 1,362 876,402 363,739 87,247 83,111 (2,183) 6,249,839 24,985 105,940 14,626 1,289,641 10,345 26,001 99,651 26,536 33,530 541,354 300 $10,602,792
C O M M E M O R AT I N G O U R S U C C E S S
Commemorating Five Years of Successful Bering Sea Fishing Operations
On September 21, 2016 CVRF hosted a gathering at our Seattle base of operations to commemorate five years of successful Bering Sea fishing. People from all over the CVRF region were invited to attend, as well as representatives from other Y-K Delta entities. The day’s events included a celebration of the unity and collective action that is leading our region toward economic independence, tours of our pollock factory-trawler the Northern Hawk, and the induction of eight people into the CVRF Hall of Fame. Many remarkable people have worked for CVRF throughout our 18-year history: people whose honesty and hard work have added to the fiber of our organization and whose selfless contributions have uplifted people all across our region. Coastal Villages honored eight of these leaders by inducting them into the CVRF Hall of Fame: Edgar Hoelscher, George Smith, Oscar Evon, Paul Tulik, Mike Coleman, Harald Longvanes, Richard Jung, and Stephen Maxie, Jr.
ANNUAL REP ORT 2 016
25
MESSAGE FROM THE CHAIRMAN
The CDQ Program Is Broken and Must Be Fixed! Looking back on the co-message that our executive director Morgen Crow and I submitted to you last year, I want to share my view about CVRF and what it can do to help us weather these challenging times. As CVRF cycles through the normal highs and lows of our business, I am reassured that the “fruits of organizational maturity” are carrying our organization, and that they have and will continue to help the region. Yet as we wrote in last year’s message, CVRF is not invincible. Our company’s continued success is a delicate balance, and we must continue to unite for the good of our company and our region. We must fight for our economic equality - no one else will. Because of the way the CDQ program is structured, our region is not getting its fair share of CDQ resources and benefits. The families in our communities need our programs more than ever and we need Congress to address this inequity. We can bring more resources to CVRF, and through CVRF to our region, if we can achieve our fair share of CDQ benefits. It is with this in mind that Stephen and I write our messages for this year’s annual report and that I share the speech I gave to Senators Murkowski and Sullivan and Congressman Young during the CDQ roundtable on April 20, 2017. I know it looks long, but it is a quick read and I feel very passionately about it. I think you will, too.
RICHARD JUNG CVRF BOARD CHAIRMAN NAPAKIAK
WE CAN BRING MORE RESOURCES TO CVRF, AND THROUGH CVRF TO OUR REGION, IF WE CAN ACHIEVE OUR FAIR SHARE OF CDQ BENEFITS.” RICHARD JUNG
CVRF BOARD CHAIRMAN NAPAKIAK
Senators, Congressman. My name is Richard Jung. I represent the 312 people of Napakiak. With me today is my colleague Stephen Maxie. Mr. Maxie represents the 478 people of Napaskiak. Both of our communities are members of Coastal Villages Region Fund. We are proud to be here with our executive director Morgen Crow and our D.C. representative Dave Russell. Like you, Mr. Maxie and I were elected. Our fellow community members went to the polling place and exercised their right to vote. We come before you today as elected representatives of our communities. Our fellow directors also voted to make us leaders and representatives of Coastal Villages Region Fund. We are proud of what Coastal Villages has accomplished. As the CDQ Program intends, we have used our quota to obtain and operate our own fleet of vessels, Alaskanizing the Bering Sea fishery. We truly appreciate your willingness to be here today and shine light on the unfair treatment that our communities have been receiving. Some portray fixing the distribution of CDQ benefits as a touchy subject. To me and my community, it is the right thing to do. I know that my elected Congressional Delegation will help us because it is the only justifiable course and the only right thing to do. When the CDQ program began 25 years ago, the Secretary of Commerce and the State of Alaska gave the people of the CVRF communities a share of CDQ benefits roughly in proportion with our population. Allocations to other groups were less balanced. Ten years later, the groups were becoming players in the Bering Sea and were refining their benefits delivery. We debated the State’s role in setting allocations, and Congressman Young
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C O A S TA L V I L L A G E S RE G I O N F U N D
MESSAGE FROM THE CHAIRMAN
sided with us. His bill in 2001 would have removed the State from the allocation process and let us make our own decisions. If we couldn’t agree, the Secretary of Commerce would have set the allocations pursuant to a rulemaking process. While Congressman Young’s bill did not become law, it became the basis for the 2006 Coast Guard Act amendments, which improved the program. Unfortunately, Congress punted on the allocation issue in 2006. It locked in a system based on status quo and failed to adjust for the maturing of the program and substantial changes in demographics. Ten years into the changes enacted in 2006, the groups collectively have over a billion dollars in assets. We have ownership stakes in almost every major Bering Sea fishing company and deliver tens of millions of dollars in benefits every year to our communities. We are even starting to outpace our regional corporations. APICDA and Central Bering Sea together have more assets than the Aleut Corporation, even though together they serve under 800 people. It’s not right for the benefits of the CDQ program to be concentrated in the hands of so few people - Mr. Maxie and I have more people than that living in just our two communities. The allocation decision made in 2006 has created a massive imbalance, one so big it can no longer be ignored or explained away. Norton Sound and Coastal Villages have two-thirds of the CDQ population and we are growing. We also have the lowest incomes, the highest poverty, and the highest unemployment. APICDA and Central Bering Sea, together, have less than 3% of the CDQ population and are shrinking. They have the highest incomes and the lowest poverty and unemployment. Today, CDQ shamefully takes care of the few at the expense of the many. CDQ needs a fair and equitable allocation formula. Every other federal program that delivers annual benefits to communities uses a population-based formula. TPA, NAHASDA, even Indian Reservation Roads – Congress insisted that these programs deliver benefits fairly and equitably. CDQ should be no different. It’s time to take politics out of the distribution of a public resource. It’s time to treat us and the more than 9,200 people of Chefornak, Chevak, Eek, Goodnews Bay, Hooper Bay, Kipnuk, Kongiganak, Kwigillingok, Mekoryuk, Napakiak, Napaskiak, Newtok, Nightmute, Oscarville, Platinum, Quinhagak, Scammon Bay, Toksook Bay, Tuntutuliak, and Tununak fairly. We are encouraged by your willingness to be here today, and confident that improvements to the CDQ program are not a threat to it. But we are here to tell you that we will not give up. We will not be silenced. We demand fair and equal treatment. Thank you. The roundtable was organized by Senator Lisa Murkowski as a forum for all six CDQ groups to come together to share their ideas for improving the CDQ program. We talked about how best to deliver benefits to our regions and discussed several legislative proposals. Unfortunately, the groups which receive more than their fair share of CDQ benefits did not support our proposal for a population-based formula. Fairness to all means less for them, and our message was very difficult for some of them to hear. However, at least one other group expressed frustration with the current allocation scheme, and I am hopeful they will join us in advocating for a fair and equitable distribution of CDQ resources and benefits. I encourage you to read the article that ran in the Juneau Empire on April 20 - you can find it on page 14 in the Advocacy section. Morgen, Stephen, and I know that both this article and my speech ruffled some feathers at the roundtable. But our region has been suffering for too long because of the unfair CDQ allocations, and it is high time for the CDQ program to help all residents in all of the CDQ communities in a fair and balanced, real, and sustainable way. I pledge that our region will remain united and strong in the quest for fair and equitable CDQ benefits. Richard Jung Napakiak, Alaska CVRF Board Chairman
ANNUAL REP ORT 2 016
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A TIME FOR FAIRNESS AND GROWTH CVRF can be a key player in the future of our region, but only if we work together on the basis of trust and love. Fear spreads fast and can be crippling to the growth of the organization. If CVRF does not grow, all our residents will suffer. The fiscal crisis that the State of Alaska faces means that this work is even more important.� STEPHEN MAXIE, JR.
CVRF BOARD SECRETARY NAPASKIAK
711 H St. #200 Anchorage, AK 99501