Doing Business

When it comes to doing business globally, Anchorage is the place to be. All the basics for a thriving business are readily accessible. Below is some great information on the Anchorage business climate.

* Why do business in Anchorage?
* Anchorage Industries
* Anchorage Labor Market
* Office and Retail Space
* Downtown Anchorage Development
* Business Taxes
* Business Incentives
* Business Licensing

Why do business in Anchorage? 

Location, location, location.  When it comes to doing business globally, Anchorage is the place to be - and location is just one good reason.  All the basics for a thriving business are available

Anchorage is primed to accommodate companies seeking to grow and expand their reach, particularly those with global interests. Anchorage affords ample space, infrastructure, and business incentives. Coupled with the good fortune of an advantageous location, this makes Alaska’s young but sophisticated metropolis an ideal location for conducting world commerce.

The state is less than nine hours by air from Asia, Europe, North America, and 95 percent of the industrialized world. For this reason, it is home to major U.S. military installations. In addition, currently nearly 70 percent of all Asia-Europe air cargo and 95 percent of North America-Asia air cargo stops in Anchorage. The availability of international cargo uplift in Anchorage makes it an ideal location as a major distribution hub or for consolidation of inventory.

Ted Stevens Anchorage International Airport is the major gateway to the state. It has the distinction of being the preeminent international cargo crossroads for global freighter activity.

Although air is a key sector in Alaska’s transportation industry, businesses in the state can also capitalize on links provided by the Alaska Railroad, in addition to a highway system that accesses the rest of the nation via the Alaska Highway and carriers that call on the Port of Anchorage.

For companies importing component parts, Foreign Trade Zones exist in the city, at the port and at the airport. These zones allow for warehousing, inspection, display, and repackaging of goods without duty payments.

Alaska is also well connected technologically and primed for the expanding world of electronic commerce. In 1999, two new fiber-optic cables were installed between Alaska and the continental U.S., increasing capabilities of computer networks statewide.

A variety of business and tax incentive programs likewise make it beneficial for companies to locate here.

This combination of factors has allowed the Anchorage economy to grow and diversify over the past decade to the point where it is no longer as dependent on oil production or as vulnerable to fluctuations in that industry.

In October 1999, three key rating agencies reflected confidence in the city and its growth by assigning superior Municipality bond ratings. Moody’s raised the rating of Anchorage General Obligation Bonds from A1 to Aa3, and Standard & Poor’s assigned an AA rating to Anchorage’s general obligation school bonds series 1999B.

The quality of life in Anchorage is an added attraction. A maturing economy and excellent transportation connections have greatly reduced the cost of living and doing business in Anchorage over the past 25 years. Anchorage boasts numerous amenities that complement an enviable, unspoiled beauty.

As Alaska’s primary transportation, communications, trade, service, and finance center, Anchorage’s prosperity is tied to national and international markets for oil, gas, timber, mining, and seafood. In addition, the flow of tourists and air cargo also weigh heavily on the city’s performance and development. Finally, Anchorage is also the State’s government center, with 4,300 state employees and 10,000 federal employees in 1998.

Oil and Gas Industry - Oil production from Alaska accounts for over 18 percent of all oil produced in the United States. Alaska rates second in daily oil production behind Texas. In 2000, the oil and gas industry in Alaska employed nearly 8,400 Alaskans and created 30 percent of Alaskan’s personal income. In addition, oil revenues are the major source of income for the state. Nearly 85 percent of the state's budget is funded by oil revenues.

There are now more than a dozen oil-producing fields on Alaska’s North Slope. Oil from the Slope travels 800 miles from Prudhoe Bay to Valdez via the Trans Alaska Pipeline System.

In addition, a gas liquefaction plant in Nikiski, the only one of its type in North America, supplies 1.3 million barrels of liquefied natural gas to Japan each month.

Timber Industry - Alaska forest products exports totaled $187 million in 1998. Approximately 100 commercial sawmills and secondary manufacturers operate across the state. Timber species targeted for commercial harvest include Sitka spruce, western hemlock, western red cedar, and Alaska yellow cedar, which are the main components of the coastal rainforests of Southeast and Southcentral Alaska.

Historically, Alaska’s forest products industry has been based on exporting quality round logs and cants to the Pacific Rim and sending lower quality woods to Alaska’s two pulp mills. In the 1990's, however, the federal government forced a significant retreat in the forest products industry, which resulted in the closing of Alaska's major pulp mills in Sitka and Ketchikan.  Because of these government actions aimed primarily at limiting access to timber on federal lands, the production and distribution of other forest products has also declined.

Mining Industry - Low prices for precious metals and base metals for most of 1999 had a negative impact on the mineral industry worldwide, including Alaska. However, the sum of exploration and development investment in Alaska and value of minerals produced still exceeded $1 billion in 1998 for the third consecutive year.

Alaska mines zinc, gold, silver, lead, and copper, mainly from the Red Dog Mine near Kotzebue, the Green Creek Mine near Juneau, and Fort Knox Mine near Fairbanks. Alaska contains half the nation's coal reserves and its largest silver and zinc mines.

About 12,000 new state mining claims and 3,000 state prospecting sites were located in 1998, bringing the total number of active claims in Alaska to about 41,000.

Seafood Industry - The seafood industry is Alaska’s largest private industry employer, accounting for over 33,000 full-time jobs. In fact, 47 percent of Alaska’s private employment is related to seafood. Alaska is responsible for 60 percent of U.S. seafood production. More than 700 processing facilities of all sizes operate in Alaska, employing nearly 70,000 and generating an annual payroll exceeding $350 million.

Commercially harvested species are: sockeye (red), chinook (king), pink (humpy), and coho (silver) salmon; halibut; herring; snow, king, and dungeness crab; scallops; shrimp; pollack; Pacific cod; sablefish; Atka mackerel; rockfish; yellowfin sole; turbot; rex, flathead, and dover sole; Pacific Ocean perch; ling cod; sea cucumbers; urchins; abalone; and whitefish.

Almost every coastal community in Alaska is heavily reliant on the seafood industry. Anchorage is the largest fishing community, with 850 commercial permit holders and over 20,000 crewmembers residing in the area.

Tourism Industry - An estimated 1.4 million visitors traveled to Alaska in the summer of 1999, about 60 percent stopped in Anchorage. The Visitor Industry is Alaska’s second-largest private-sector employer, accounting for one in eight private-sector jobs. It is also Alaska’s fastest growing industry.

Visitors spend nearly $1 billion annually in Alaska, or about $770 per visitor, and inject $124 million directly into state and local treasuries in the form of taxes, fees, and other assessments.

The majority of Alaska visitors come for pleasure; however, a significant number also come for business, conventions, and to visit family and friends. In 2000, the Anchorage Convention and Visitors Bureau helped bring 434 conventions, trade shows, and meetings to Anchorage, with an estimated economic impact of $70.8 million. Seventy-seven percent of those conventions were held in the fall, winter, and spring.

Air Cargo Industry -  Ted Stevens Anchorage International Airport has the distinction of being the preeminent international cargo crossroads for global freighter activity. Federal Express, Northwest Airlines, United Parcel Service, and the U.S. Postal Service have all established international cargo sorting and distribution hubs in Anchorage because of the accessibility of Customs agents in dedicated Foreign Trade Zones. In fact, in 1999, Federal Express opened a new $48 million facility at the airport.

In 1998, the amount of air cargo landed at Ted Stevens Anchorage International Airport was 13.4 billion pounds. In comparison, the Federal Express Headquarters in Memphis, Tennessee, landed only 11.2 billion pounds.

Anchorage’s labor force is head and shoulders above the rest of the nation. Its relatively young workers are highly educated and career oriented. In 1998, the median age in Anchorage was 32.1, compared to a U.S. average of 36.2. Anchorage has a steady year-round employment base, with a summer boost from tourism, fishing, and construction activities.

Approximately 65 percent of all adult residents have completed a minimum of one to three years of college, placing Anchorage among the top metropolitan areas in educational attainment.

Anchorage’s job profile largely resembles that of the nation except that it has few manufacturing workers – less than 2 percent versus 15 percent nationwide.

Anchorage provides a great home to local businesses with its five anchored malls, including Fifth Avenue, Dimond, Northway, and University Malls, with anchor stores such as Nordstrom. The Fifth Avenue Mall, which was more than half vacant in the mid-1980s, is now almost full and has attracted major national retail chains such as Eddie Bauer, The Gap, and The Body Shop. In addition, most Anchorage neighborhoods have small shopping centers. 

Like other metropolitan areas in the United States, Anchorage retail expansion has been characterized by an influx of national "big box" stores. Today, Anchorage has two each of Costco, Sam’s Club, and Wal-Mart shopping centers, and two Office Depots. It also has a Home Depot, Gateway Country and Lowe's Home Improvement. In addition to Downtown, major retail areas can be found around North Muldoon, Dimond Boulevard, and Midtown Anchorage.

Anchorage's office space is located throughout the downtown and midtown areas.  In 1997, the office vacancy rate for Class A space was roughly six percent and the Class B and C vacancy rate was at 10 percent.  The monthly rent per square foot for Class A space ranged from .95 cents to $2.25.

A strong downtown is an important indicator of a community’s economic vitality. Over the past few years, Anchorage has taken a number of steps to bolster and improve its downtown areas.

Downtown Anchorage has experienced a renaissance in the 1990's. A major catalyst was the development of Town Square, located between the Performing Arts Center (PAC), City Hall, and the Egan Convention Center. Extensive landscaping transformed the square into a public plaza with a waterfall fountain, spectacular flower beds in the summer, and lighted trees in the winter.

In addition, a beautification program featuring flowers, benches, new streetlights, and road design improvements has greatly improved the attractiveness of the downtown area.

Additional efforts to improve the downtown area are also under way. In 1997, the Municipality worked with local businesses to establish a Downtown Improvement District. Most businesses agreed to pay an additional property tax assessment in return for new and enhanced services to improve the area’s safety, cleanliness, attractiveness, and quality of life.

In addition, the Ship Creek area, just north of Downtown, has been the focus of a major master planning effort by the Alaska Railroad Corporation. Proposed development includes road, rail, and utility improvements; trails and landscaping; and commercial office and retail development.

Alaska Corporate Income Tax – Alaska’s corporate net income tax is similar in structure to the federal income tax. It is a graduated percentage of taxable income ranging from 1 percent for net income below $10,000 to 9.4 percent for net income over $90,000.

Property Taxes – These are based on real and personal property and are levied on a full-assessed value at mill rates that range from 9 to 18 mills. In comparison, Anchorage’s average mill rates are lower than Seattle’s by approximately 4 mills.

Inventory Taxes – These are based upon 100 percent of the value of inventory. The mill rate is the same as for real estate. Inventory held for shipment outside of Alaska may be exempted from local inventory taxes.

Economic Development Incentive – The new business incentive program is an economic development grant program targeted at companies locating or expanding into new manufacturing or value- added business in Alaska. The program is focused on attracting substantial businesses that will create high-value, year-round jobs. "New business" refers to industries and operations that are new to Alaska (as opposed to "start-up" business).

Property Tax Abatement – Anchorage Municipal Code provides for tax exemptions pertaining to property and inventory for economic development. New or expanding businesses meeting certain criteria may be granted a property tax abatement.

Targeted Jobs Tax Credits – This is a federal tax credit program that encourages employers to hire new employees from targeted groups. An employer can claim 40 percent of up to $6,000 of an employee’s first year’s wages for a maximum credit of $2,400.

There are approximately 72,000 current Alaska business licenses. Everyone, including sole proprietors, partnerships, and corporations, who engages in a business activity in Alaska must hold a business license for that activity.

In addition, businesses which sell tobacco products must have a tobacco endorsement on their business license.

A business license is valid for two years – the current year in which the license is granted plus all of the next calendar year. All business licenses, however, expire on December 31 of the following year. The cost is $50 per license ($25 per year).

Professional or occupational licenses are also required in addition to business licenses for many activities. For example, attorneys, motor-vehicle dealers, health-care professionals, construction contractors, and numerous other professionals must have a professional or occupational license. The professional or occupational licenses must be obtained before a business license will be issued.

For more information about obtaining a business license, call the Division of Occupational Licensing at (907) 269-8173.

An additional license is required for some businesses that operate in Anchorage. Applications and specific information can be obtained at the Clerk’s office at (907) 343-4311. For a list of those businesses requiring municipal permits and licenses, visit www.muni.org/Services/Permits/index on the worldwide web.