MEMORANDUM

TO: Members, Kenai Peninsula Borough Assembly

FROM: Gary Superman, Assembly President

Ron Long, Assembly Vice President

DATE: March 21, 2005

SUBJECT: Resolution Supporting the Seward LVL Plant and the Nikiski MDF Plant

Over the past two years various individuals and organizations have considered and discussed the construction of an LVL (laminated veneer lumber) plant in Seward to process State-owned Interior, and perhaps even Forest Service timber into laminated veneer lumber (LVL) which is an engineered lumber product.

LVL is dimensional lumber, made up of parallel grain laminated veneers (as opposed to plywood, where the grain of individual veneers are laid up at right angles). It can be manufactured from any wood species, singly or in combination. The lumber is high value construction stock, resistant to shrinking, expansion, warp, cup, bow, twist, etc. The structural stress properties (tension, torsion, compression, etc.) are stable and predictable. There are variable and controllable inputs in the manufacturing process for fire resistance, fungicides, etc.

The physical feasibility of the proposed project is known, i.e. source, adequate timber supply, existing transportation infrastructure, space at tidewater for the plant, etc. The financial feasibility has not been quantified. The proposed timber supply on State lands can be made available through an administrative decision. Forest Service supply needs to be quantified. Such administrative decisions regarding use of a publicly owned resource should only be made after sufficient findings have been developed to demonstrate that such use is clearly in the public's best interest.

A thorough third party feasibility study regarding the LVL facility is vital in order to clearly demonstrate the presence or absence of those best interest findings, therefore this resolution.

At the same time, based on the completion of the "All Lands/All Hands" report (signed off by the federal, state and borough governments and private landowners) on the condition of much of the forest as a result of the spruce bark beetle epidemic, there is a second opportunity for an additional value-added wood product plant on the Kenai Peninsula. This is a medium density fiberboard (MDF) facility that could utilize timber now too far degraded for sawn lumber or peeled veneer. It has been recommended that this plant could be sited in the Nikiski area where logs and wood chips (first stage of the operation) can be trailered or barged in.

A proposal is before the Legislature to fund the feasibility study, and prepare a document (Business Plan) that would be suitable for preliminary presentation to public and private financing sources and to use to attract investors.

The Legislature (Kenai Borough area Legislators) has been advised that the combination LVL/MDF study will cost $265,000 and be done within five months. The LVL report was noted at $172,000 if it is to stand alone and the MDF at $121,000 if studied alone. The Kenai Borough Legislators have the complete packages.

If the borough is to oversee the studies then there should be an administrative figure added on. If the Legislature is to oversee the studies (as per the proposals sent in) then the numbers above are accurate.