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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 Benefits7 Programs 8

2

Employment10

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

Profile for Coastal Villages Region Fund

2016 Annual Report  

2016 Annual Report  

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