  Responses By David G. HangerAbout David G. Hanger
If elected Borough Mayor, what role would you take to address improving the relationship between the Borough and the School district?
This is a tough question, which I have not in any sense been trying to avoid. I have been talking to various people to try to get a better handle on various perceptions of this concern. The School Board establishes policy and sets the budget for the school district. The Borough Assembly authorizes or approves the funding for the School District's budget, as presented by the Board. There is no provision for a line-item veto. Technically, one entity sets policy and the budget; the other entity approves the actual funding. There is supposed to be a separation of powers, thus the question becomes is the Assembly attempting to exceed its authority or even usurp the authority of the School Board by negotiating directly with the School Board? Clearly, it's a fairly heavy hammer to be the final authority for funding; and such a position can result in manipulation. Limited funding combined with increased costs is creating a condition of greater acrimony, or at least its potential. An endless back-and-forth of unfunded School Board budgets between the Assembly and the School Board does not sound progressive to me, so some means must be established to rationally resolve differences. Whether or not a committee of members of both Boards to resolve differences is technically legal is something I am not certain about at this time. To the extent it is allowable by law the Mayor acting as intermediary, at least to the extent of clarifying concerns, differences, and points of view, may positively contribute to a smoother resolution of these issues; but I do not necessarily see this as a panacea for all problems that might occur.
Question #2 For Mayoral Candidates: Published Tuesday - September 10, 2002 - 7:00 pm Do you think the voters should eliminate term limits for the Borough Mayor? If so, what would be the benefits to the community?
No; nor for any other local
elected position. To remain vital turnover, I think, is an essential
ingredient of a representative political system.
Question # 3 For Mayoral Candidates: Published Tuesday - September 10, 2002 - 7:00 pm Should the Borough Mayor be paid more for his service? If so, what amount would you consider appropriate.
Sounds nice, but that certainly is not my reason for running. I consider this particular issue moot at this time anyway; budget constraints just will not permit it.
Question # 4 For Mayoral Candidates: Published Tuesday - September 10, 2002 - 7:00 pm What do you believe is the primary job responsibility of the Mayor?
There are actually two essential elements to the job. The technical elements include chairing Assembly meetings and attending to the many ceremonial & civic aspects of the job. The mayor's power is basically limited to the veto and to voting to break a tie. With a diverse Assembly the mayor's veto power has the potential to be a powerful tool, if exercised. Were the Assembly not diverse the mayor's veto power would be essentially meaningless. In some ways the second element of the position is more important, for I believe the mayor's job is to be the chief lobbyist for the community (which is not to say for a moment the mayor should replace professional lobbyists). Otherwise, the mayor's position is to focus requisite concern and energy on those issues the collective wisdom of the community endorses.
Question # 5 For Mayoral Candidates: Published Sunday - September 15, 2002 - 1:30 pm If elected Mayor of the Ketchikan Gateway Borough, will you be in Ketchikan most of the time and be able to attend meetings as scheduled and be available to the public?
Of course.
Question # 6 For Mayoral Candidates: Published Sunday - September 15, 2002 - 1:30 pm Is remaining a resident of Ketchikan in your future plans?
I don't own any business anywhere else.
Question # 7 For All Candidates: Published Wednesday - September 18, 2002 - 7:40 pm During the interviews of the school board candidates on KRBD, the issue of violence in our schools was brought up as a reason that some parents are seeking alternatives to education other than public schools. I'm concerned about the level of abuse that seems to occur in the schools and wonder what thoughts the school board and borough candidates have about adopting a policy of zero tolerance in our schools for any form of abuse including verbal as well as physical and sexual.
I would assume, and I certainly hope, that school administration already has policies for physical & sexual abuse. They certainly did when I went to school. Over the years I have heard of a few unusual instances, but I have not been told of any major problems. Sexual abuse is illegal, and penalties are righteously severe. Physical abuse is already a more complicated subject. Bullying should never be tolerated, nor should any form of gangsterism. A punch in the nose over a girlfriend, a ruckus during a sporting event, or a squaring off over a supposed point of honor or whatever; none of these do I expect adults to tolerate upon observation for a moment, but context indicates a lesser form of discipline than expulsion. So what do you mean by zero tolerance? Verbal abuse is a much more complicated subject encompassing an array of social and psychological considerations, as well as a minefield of laws. Clearly, ethnic and/or sexual slurs should never be tolerated because they are always intended to hurt, and they do ("fighting words," is what the law calls them). I have no reason not to believe that school administration rules and regulations address these concerns, and I am confident, unless otherwise notified, that the professional staff of our school system deals with these matters in a prompt and effective manner.
Question # 8 For Mayoral & Assembly Candidates: Published Thursday - September 19, 2002 - 2:30 pm The Gateway Forest Products bankruptcy has dominated front page news over the years, and has consumed tens of millions of dollars of Borough money. How do the candidates feel about the past decisions and future consequences of this issue?
How do I feel about the past decisions and future consequences of the Gateway Forest Products disaster? I feel ripped off, and the future consequences are in fact upon us now. Local property taxes are creeping upward, but when combined with reduced services the true effect of wasting $20 million on a project "guaranteed to fail becomes much more apparent. YOU ARE ALREADY PAYING MORE FOR LESS. The terminology "guaranteed to fail requires both qualification and clarification; for beyond the community at large and the outside lenders, there were three involved parties in this project, each of which had something to gain or to lose. Those parties were and are: 1) LP/KPC; 2) The shareholder/managers of GFP; and 3) The Gateway Borough. Perception is not everything; indeed it is often chimerical or illusionary; thus the current Borough government perception that the community has gained something substantial in its ownership of so much of Ward Cove is highly suspect given the excessive costs involved and the fact that any benefit to the community is deferred to an indefinite future five years and out. By that time there may not be many folks left around here. For LP/KPC the GFP disaster was a win-win-win situation, upon which they profited substantially. For the shareholder/managers of GFP the Gateway Forest Products disaster was a win-win-lose situation; for while they profited substantially and enhanced their political standing with certain interest groups, they forfeited an incredible amount of good will and professional standing. For the Gateway Borough, despite the perception that owning so much of Ward Cove is good, this disaster was worse than a total loser. Not only is there the $20 million in wasted public funds that has brought us to this point, there is also the tens of millions of dollars lost by outside parties, to whom we have shown little respect and less concern, and the negative effects of this forfeiture of good will and local credibility is likely to be long-term and severe. Called, of all things, the "noble cause by its local political supporters; who I believe, for the most part, actually perceived this project as an engine for local jobs; this project from the beginning had far more to do with LP/KPC's local exit strategy than it had to do with creating a viable and sustainable local business operation. LP/KPC made or saved millions of dollars on this deal; how many millions is somewhat unclear; but $15 million to $20 million is identifiable, and no environmental cleanup costs have yet been included. In the beginning it was going to be LP building and operating the veneer mill; then it was to be a joint effort of LP and Sealaska. The original $7 million was actually loaned to LP, then they dropped out. Then, phoenix-like, emerges this new outfit, Gateway Forest Products, to pick up the mantle and advance the "noble cause. Throughout this process, which consumed at least six months of 1999, it was rush-rush to the next deadline, imposed by an outside agency, usually some problem that LP needed solving right now. None of these deadlines had anything to do with concern for the Borough's position in all of this; they were all demand deadlines imposed on local government by outside forces for their own purposes and benefits. Inspired by fear, ignorance, or simple honest faith, Borough officials hurriedly signed off on all of this and loaned this new outfit, GFP, a non-recourse loan in the amount of $7 million, collateralized by Ward Cove property (primarily). Had they simply followed their own rules and procedures, it would have ended right there; but no one wanted to look too close. Background checks were limited or non-existent, and there was no due diligence worth the name. Everything had to be hurried; there was no time for ordinary process; so the Borough accepted the due diligence report prepared by Macadam Partners on behalf of GFP, as required by its outside lenders, as adequate due diligence for Borough purposes as well. GFP's in-house due diligence report was accepted as satisfying the Borough's due diligence requirements! Macadam Partners, it was asserted at the time, satisfied all concerns about third-party objectivity for all due diligence purposes with which the Borough had any concern. THIS IS THE KEY FAILURE, for, as was later discovered, the three individuals employed by Macadam Partners to prepare these due diligence reports had no objectivity, third-party or otherwise, whatsoever. Before doing any due diligence at all they were 10% owners of Gateway Forest Products. And why would 10% owners say anything bad about their own company? In effect Gateway Forest Products began with a corrupt act and a misrepresentation, what most folks would call a lie. When later the Borough considered suing Macadam Partners, the Borough attorney basically recommended against it because of the Borough's compensatory negligence in not doing its own due diligence. A failure to follow its own procedures cost the Borough $20 million. The benefits to LP/KPC have been substantial. Prepaid stumpage in the amount of $9 million. Two million dollars for a veneer study which is allegedly bogus. The dumping of a piece of junk which had been laying around unused for a dozen years or more; the so-called veneer lathe bought by GFP, so obsolete, particularly in respect to its software functions, that it was never brought completely online. Millions of dollars in tax savings on capital gains for the disposal of the Ward Cove property and equipment. And, of course, they don't have to pay any more local property taxes because now the Borough owns the property; an intended effect, I should add, insofar as I can discern. The problem LP/KPC had with Ward Cove respective its disposal was the fact that property 40 to 50 years old, either highly depreciated or purchased at low cost, when sold will inevitably result in a substantial capital gains tax; in the millions of dollars in this case. If, as apparently occurred, this property is transferred at or near book value to an intermediate party before transfer to the final party, a game of smoke and mirrors can be played. This is a complex subject which requires several pages of text to explain in full. Basically, what occurred is that the property was transferred to GFP at or near book value, thus no capital gains of consequence were incurred at that point. The rest of GFP's liability to LP/KPC is made up with side notes, again in this case amounting to millions of dollars. An uncollected note is a write-off which generates a tax refund rather than a tax liability. If you know what you are doing, you can make as much money with negative numbers as you can with positive numbers. LP transferred the Ward Cove property to the Borough, etc., lost on the deal, and made money doing it. And, yes, there is a lot of evidence suggesting preconception; smart, sharp business on the part of LP. Win-win-win. The shareholder/managers of Gateway Forest Products forfeited an incredible amount of good will and professional status as a consequence of this major debacle. But financially, the evidence indicates they did pretty well. While it was not technically paid out for that purpose (technically the drawdown was a partial distribution of purported 1999 profits), the $941,272 early 2000 distribution did effectively reimburse the shareholder/managers for their original $1 million investment in this project. For the slightly more than two years of this project the shareholder/managers received approximately $1 million in reported salaries. While not all the shareholder/managers invested in West Coast Forest Products, the majority earned $800,000 on the purchase and resale of WCFP. Not reported previously is the sale of $2.2 million of property and equipment in the year 2000, on which a net profit of $1.3 million was passed out to the shareholder/managers, individual tax returns. Since the capital gains tax on this sum is quite substantial and the liability is individual, it seems logical they passed out to themselves the profit, too. Many of the tax benefits of a $20+ million net operating loss were forfeited by their own overreaching, but they still should realize tax benefits somewhere between $500,000 and $700,000. They did OK. Win-win-lose. The Borough got nothing more, nor less, than what LP wanted it to get, and in the form it wanted the Borough to get it. The Borough accrued no advantage by losing $20 million. Land is an understandable Alaskan obsession, since we are allowed to use so little of it, but prospective benefits five or ten years in the future, a $20 million hole in our wallet, and no property taxes on this property for many years to come may sound like a private sector dream, but it also appears to me to be a public and a community nightmare because one way or the other we have to pick up the slack. Lose-lose-lose. From the first distribution in early 2000 of somewhat more than $2 million of the $7 million until the Chapter 11 filing in February 2001, a series of troubling facts emerge. First, of course, is the now legendary $941,272 distribution; but what is more troubling is the obvious fact that most of this $7 million, which was prescribed as for the purpose of building a veneer plant, was in fact absorbed into operational costs before construction of the veneer plant began. Despite the sale of $2.2 million worth of property and equipment, something like 212 vendors were shorted $11 to $12 million on that construction. During 2000 GFP was losing an average of $600,000 a month. There was no functioning Board of Directors for GFP. There was no involvement by the Borough with oversight or management of this project beyond distributing money to GFP. During 2001 GFP was losing an average of $1 million or more a month, according to available reports. In the meantime Steven Hartung was paid a reported $400,000 as interim CEO, or whatever he called himself. It stopped when the money ran out; when, finally, no one would give them any more. It seems to me an independent Board of Directors might have pulled the plug when it was obvious it cost more to produce than they could make. Instead we allowed a group of "compulsive gamblers" free rein and doubled the pot, then watched them play until the money was gone. Sad, very sad. As for the future of the veneer mill itself, I see a number of problems. Only 30% of the raw material needed to operate is available; all the yard equipment is gone. I have heard of no contract or binding agreement with AIDEA to buy this thing from us. It adds up to one word, uncertainty. As a businessperson I have never felt comfortable with and have never invested substantially in uncertainty. As much as I hope for a successful conclusion to this endeavor, I have no certainty or confidence in that outcome at this time.
Question # 9 For All Candidates: Published Thursday - September 19, 2002 - 2:30 pm Our community focuses on the importance of 'Youth Asset Building' - I would like to know that our elected officials set a good example. Have any of the candidates been charged for any serious violations of the law other than for minor traffic tickets.
No.
Question # 10 For All Candidates: Published Sunday - September 22, 2002 -3:50 pm Would you recommend to all the citizens of Ketchikan that they support building a bridge to Gravina? If so, what would you say to community members about the short-term and long-term benefits to the community as a whole? If you support building a bridge, will you or your family personally benefit monetarily from bridge construction or do you or your family own property on Gravina?
The precise answer to the first part of your question is that's about as logical as telling everyone what soft drink they should consume. There are two very divergent schools of thought locally on this bridge which can generally be described as the "Hey, numbnuts, it's all we've got!" school and the "Yeah, but where does it lead?"school. And each 'school' is adequately represented by various groups, entities, and individuals (known and unknown). The "Yeah, but..." school is supported by such diverse groups as the "cave-dwellers," the "tree huggers," "antidevelopment elitists," certain marine pilots and air taxi operators, various tour operators, other aviation interests, "deadheads," "fruitcakes," a few mad fools, a handful of concerned citizens, and some guy named "Crazy Eddie" who no one has ever seen or heard of. The "Hey, numbnuts..." school is also supported by a number of different groups including the Chamber of Commerce, friends, and associates, the "Greedheads," the "North End gang," the "Elkins Cabal," "pro-development elitists," a handful of concerned citizens, the Borough Assembly, "those who want all the money for themselves," the "Ralph Bartholomew Memorial Society," the "Gravina Island Real Estate Association," various tour operators, the "Good Old Boys," other aviation interests, and local merchants, and some guy named "Friendly Fred" who no one has ever seen or heard of. And all this name calling went way beyond silly a long time ago. Simple practicality and pragmatism is what is required here, and I will discuss what I mean by that in a paragraph or two. First, however, my personal view. It is the wrong bridge, in the wrong place, at the wrong time. Economic and coincident population decline are our critical local problems. A $200 million construction project will employ some locals, indirectly employ many more, and fill up lots of rental housing and vacant homes for at least the duration of the project. But what then? The idea that a bridge to an essentially unoccupied island will create a new, sustainable local economy is bald and incredibly bold speculation. There is no real reason to assume that. A bridge to the mainland and a highway connection south, on the other hand, would significantly change local economic dynamics, more or less immediately. Which is not to say Nirvana will be achieved overnight; it could be years and years. But such infrastructure development allows the opportunity to occur. It allows free enterprise to work; to exploit for its own benefit and for the benefit of society. And when any free enterprise operation fails, we sweep it into the dustbin of history with little or no damage to society; and wait for the next free enterprise operation to work. Most importantly, such fundamental infrastructure contributes over not years, but decades, to new economic opportunity. One is an example of thinking small; the other an example of thinking big. One is short-term, the other long-term. The Gravina project has as its premise, if a bridge appears, new businesses will emerge, virtually magically (the movie "Field of Dreams" has been alluded to frequently). Building a link south has as its premise, provide the link and what can happen will happen in effect in a continuous, re-enervating process over decades of time. Both premises are very presumptive and assumptive; I prefer the long view. Nor are they mutually exclusive; but a link south might ultimately increase the consequence of a bridge from one rock to another rock, whereas a bridge from one rock to another rock in and of itself is not likely to contribute that much toward solving our local economic dilemma, in the long run. The "Hey, numbnuts..." school is saying we need relief now, and they have their point. The "Yeah, but..." school is concerned about the bridge's effect on current economic endeavors, its limited long-term economic effect, and the fact that many needs are unaddressed on this particular, currently occupied rock. They have their point, too. Simple pragmatism. I am skeptical about where this project is going. I have been advised the state is now supporting F1, the high bridge option; that's fairly new, but I haven't heard much chatter about it. Despite all this stuff about our Congressional delegation or the Feds in general locking us in to this project or nothing, it is my understanding the state is the final determinant of whether this project will go forward. I do not get the impression the state is that enthusiastic. So in the first place, this bridge project is far from a certainty. If elected your mayor, I will support enthusiastically what the electorate of this community decides to support, no matter my personal opinion. I differ in that regard from the prevailing attitude on our current Assembly, but that, of course, can cut either way. It is yours to decide, and I do not yet know your decision. It's 50-50 whether I'm going to like your decision or not; sounds like politics to me. Good politics, with the final authority in the hands of the people this project will affect. Simple practicality. If someone actually puts $200 million worth of jelly beans on the table, it might be secondary gut-check time for everybody in this community. That's a lot of jelly beans, and I haven't noticed much of a selection in the bowl recently. Third part of your question.
I own no property on Gravina Island, nor does any member of my
family. Never have.
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