,_— =^'^" 



370 



hotel business is the business travel attracted by the forest products industry, 

 many shops exist to service local demand and also serve visitors in the 

 summer. Transportation schedules and prices are set primarily for the local 

 market and visitors also benefit from the service. Were APC to shut down, it 

 is unlikely that as many shops, overnight facilities and transportation 

 schedules would exist. This makes the community less attractive and 

 certairJy more expensive for visitors since businesses will have to raise prices 

 to compensate for APC and related losses. For example, with less air and ferry 

 frequency, Sitka becomes less accessible and more expensive for visitors. 



Summary 



In summary, while other communities have had devastating economic 

 recessions during the 1986-88 period, there is nothing of the scale of an APC 

 closure on Sitka's economy to compare to. Sitka's projected 24% to 29% loss 

 would be two to three times that of any community in the state since 

 statehood. 



For households in other areas of the state, even modest recessions proved 

 devastating financially and emotionally. An economic dislocation of the scale 

 of Sitka's projected loss would cost every home-owning family and average of 

 $50,000 in the value of their house with no market to sell to. Job losses, 

 drained savings, ruined credit ratings, personal trauma and increased social 

 problems are just part of the package each household might be granted with 

 an APC closure. Leaps of 50% or more in utility rates and property taxes plus 

 cutbacks in municipal services ranging from police to health care and 

 education are certain to occur if local government attempts to remain solvent 

 as it loses millions in revenue from local and state sources. Households 

 would pay higher prices for virtually every good and service and have less 

 selection than before. Lower income families will be the soonest and hardest 

 hit because their reserves and alternatives are so much less than average. 

 They have less ability to survive even a short period of unemployment or to 

 move to another location for employment with their usually limited skills. 



The business community would be financially devastated and perhaps a third 

 or more of all businesses would close, accompanied by personal and business 

 bankruptcies, defaulted loans, loss of hundreds of jobs in the private support 

 industries and a collapse of both the commercial and residential real estate 

 market. The remaining businesses would operate with reduced profit 

 margins, offer less variety and charge higher prices in a significantly reduced 

 market. More local money will flow outside because less selection will be 

 available locally. The banking community would likely respond by closing 

 some branches, taking significant losses on bad business and consumer loans 

 and making credit in Sitka virtually impossible to obtain for those affected by 

 the loss of APC. No responsible banker would loan on anything affected by 

 the Sitka economy. 



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