SOCIOECONOMIC IMPACT MITIGATION

STANDARD OF REVIEW

The Mitigation Agreement is described in the CBJ Mining Ordinance at 49.65.135(a)(7) which states that the operator will negotiate and enter into an agreement with CBJ to establish responsibility for the mitigation of reasonably foreseeable and demonstrable adverse impacts. The operator is responsible for direct impacts. The CBJ is responsible for mitigating indirect impacts except where the costs of so doing are found by the City Manager to:

A. exceed the amount of any CBJ nonproprietary revenue increase attributable to the mining operation, and

B. require a direct and significant increase in local taxes or fees to adequately mitigate the impact.

If this fiscal condition were to occur, then the CBJ would seek mitigation for indirect impacts from the operator.

Further, the Mining Ordinance (CBJ 49.65.130(c)) requires that a Socioeconomic Impact Assessment (SIA) be prepared to provide information on beneficial and adverse impacts of the mining operation on existing and future local conditions and on the CBJ fiscal condition and general government functions. The SIA provides information in order that the CBJ determine the extent of these impacts and how they can be mitigated.

Highly speculative impacts are not included in the SIA or as part of the Mitigation Agreement. The Agreement is to be incorporated as part of the large mine permit.

BACKGROUND

A Draft Socioeconomic Impact Assessment (SIA) was prepared for the CBJ by Reed Hansen and Associates and released for public review in February 1997. A public hearing was held by the Planning Commission on March 4, 1997. The Final SIA was issued in May 1997.

The goal of the SIA is to estimate reasonably foreseeable and demonstrable impacts of the Kensington mine project on the following selected issues of importance to the CBJ:

• existing and future local socioeconomic conditions without mine development;

• the rate and demographic characteristics of any population changes induced by the mine project;
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• fiscal impacts of the mining operation and the mine-induced population on public facilities and services, including general government;
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• local facilities and services including transportation, public safety, education, health and social services, and recreation;
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• housing, employment, and local businesses; and
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• suggested mitigation.
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The study of the Kensington mine-induced impacts was approached as a "marginal impact analysis". The impacts of the project are predicted by analyzing the above-mentioned issues for the Juneau community both with and without the Kensington mine. The study develop two scenarios, or predictions for the future. These predictions are known as the "baseline" (without the project) and the "with project" scenarios. For any particular issue, the difference between the two is the impact of the mine project.

The SIA is based on extensive data-gathering and numerical modeling -- similar to the study performed in 1991-92 for the earlier Kensington mine proposal. The SIA is considerably more detailed than analyses for other purposes, such as an environmental impact statement, in order to develop a greater level of accuracy and information about the net impacts of the project. The analysis provides the basis for a mitigation agreement between the mine operator and the CBJ.

In summary, the SIA predicts the following socioeconomic impacts of the Kensington mine project:

• People inmigrating as a result of the Kensington mine will increase CBJ population by an estimated 665 persons, at full operations of the mine. This represents about two percent of the CBJ population.
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• Net housing demand due to the project is estimated at zero units during the first year and 21 units during the second year of mine construction. At full mine operations net housing demand increases to 127 units. While project-related housing demand represents a relatively small fraction of the total housing stock in Juneau (approximately 11,500 year-round units), the increase in requirements for housing is likely to cause a significant impact on housing prices and rental rates. The current housing market is tight, especially for multi-family housing, and vacancy rates are low although there has been some improvement since 1995. While new housing has been constructed in recent years, the supply of housing, particularly multi-family units, is expected to remain tight over the next few years (CBJ, 1997). The housing shortage impact falls hardest on low income and moderate income households especially those who currently do not own housing and who live in multi-family housing where demand continues to be high. However, the provision of 102 housing units, as is planned by Coeur Alaska, Inc. through an agreement with Goldbelt, Inc., would substantially mitigate the adverse effects of increased housing demand associated with the project.
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• The school-aged population associated with the mine project will increase Juneau School District enrollment by 133 students at full mine operations. The increased enrollment will moderately impact the existing deficiency in classroom space capacity at the middle and high school levels. The current shortfall in capacity for middle school grades (6-8) is being handled by use of portable buildings. The large pupil overload at Juneau Douglas High School (grades 9-12) is currently handled by use of the former Marie Drake Middle School facility. It is expected that pupil increases associated with the mine project will similarly be accommodated.
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• Generally, public services and facilities demands are expected to increase in proportion to the share the mine-related population represents of the total CBJ population. However, certain services and facilities provided by the CBJ are operating near or at capacity and are projected to remain so in the future. Increased population will add to the strain of over-utilized delivery systems. The impacted services and facilities provided by the CBJ include: health and social services, chemical dependency, community development planning, and libraries. The operating budgets of other service categories will require increases, but this can be facilitated from revenues generated by the project.
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• Licensed day care facilities, particularly those providing care to infants and toddlers, are typically in short supply and are projected to remain so over the life of the mine project. The mine-related population increase will adversely impact this situation by increasing demand for day care.
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• The overall impact of the project on the CBJ general and special funds and the Juneau school district results in a fiscal surplus of $3.9 million during the 17-year period of the estimated mine life (Fiscal Years 1998-2014), measured in terms of net present value (based on a 3 percent real discount rate). The net present value of the fiscal impact for the first five years (FY 1998-2002) amounts to a deficit of $0.16 million.
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ANALYSIS

According to the Kensington Socioeconomic Impact Assessment projections, the non-proprietary revenues to CBJ as a result of the Kensington mine project will exceed the projected CBJ expenditures for mine-induced indirect impacts to the community over the life of the project. The Kensington mine would not provide proprietary revenues to CBJ, such as royalties from ownership of the subsurface mineral rights. Thus, CBJ anticipates at this time that the local government will be responsible for mitigating indirect socioeconomic impacts from mine-related revenues.

Chapter VII of the Final SIA provides some suggestions for mitigating certain impacts anticipated from population growth induced by the Kensington mine. The areas of impacts identified for which mitigation may be needed are school enrollment/capacity, housing, day care facilities, chemical dependency/mental health services, and early mine closure.

• School Enrollment/Capacity. The Final SIA notes that project-related student increases, when coupled with projected baseline population growth, will lead to the need for additional classroom space, particularly at the high school level. It is anticipated that student increases are likely to be handled through the use of portable classrooms and the former Marie Drake Middle School. In the event a new high school is built, the Final SIA suggests that a provision be made to evaluate the project-related impacts with respect to a share of debt service attributable to the Kensington mine. At this time, CBJ anticipates that school costs related to mine-induced population growth will be covered out of the non-proprietary revenues anticipated from the mine project. The small number of projected mine-related high school students (39) relative to the potential size of new high school (1,000) does not warrant special consideration under a Mitigation Agreement.
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• Housing. The Final SIA suggests that potential housing demand from the mine population will be substantially mitigated by the proposed worker camp at the mine site and the provision for 102 housing units to be constructed under an agreement between Coeur and Goldbelt Inc. This is a positive and voluntary measure by Coeur. The CBJ does not presently provide housing as a municipal service, and has not announced any intention to do so within the period the mine will be operating. There is thus no basis to require housing mitigation from Coeur.
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• Day Care Facilities. The Final SIA notes that increased demand for day care services due to the Kensington mine will add to a situation with many facilities operating at or near capacity. The Final SIA estimates the potential of 50-55 preschool children in the mine-related population, and suggests that a permit condition could be established that Coeur provide day care facility space in the proposed housing. While we encourage Coeur to consider addressing the day care service needs of its mine employees as appropriate, CBJ does not routinely fund day care services, does not anticipate the need to raise taxes to meet mine-related day care needs, and therefore cannot justify imposing a mitigation requirement on Coeur. Therefore, staff has not proposed any mitigation to require the applicant to provide day care facilities. To the extent that the marketplace is unable to respond to the increased population of preschoolers, mitigating this need would fall to the CBJ, the state, the federal government, nonprofit groups, or charities. CBJ contributions would require a political and budgetary action that is not a routine practice at this time.
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• Mental Health/Chemical Dependency Services. The Final SIA suggests that some of the fiscal surpluses generated from the mine project could be used to increase staffing levels for these municipal services which operate at capacity, particularly during the winter. Again, this would be a policy and fiscal decision by the CBJ Assembly.

• Early Mine Closure. The Final SIA notes that early mine closure of the Kensington would not result in major impacts to Juneau because the mine-related population would be only a small percentage (2 percent) of the overall population. Given the net revenue surplus projected, the Final SIA suggests that CBJ might be able to mitigate some mine closure impacts, such as increased social service needs in the community. At this time, CBJ anticipates a provision of the Mitigation Agreement requiring 60-day notice by Coeur in advance of the mine closure, as provided for in the Mining Ordinance (CBJ 49.65.145(e)).
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At this time, CBJ and Coeur have negotiated a Socioeconomic Impact Mitigation Agreement. In general terms, the attached draft Mitigation Agreement:

1. defines the mine-related responsibilities of each party with respect to direct and indirect impacts;

2. provides for adjustments or amendments to the Agreement in the event that actual population-induced costs and non-proprietary revenues related to the mine are different than projected;

3. identifies socioeconomic factors (such as workforce size and demographics, assessed mine valuation and tax rates) that will be monitored during the life of the mine project;

4. provides for enforcement and assignment of the mitigation agreement; and

5. identifies Coeur Alaska, Inc. as the mine operator and responsible for the provisions of the Agreement.

Upon request, the City and Borough Manager allowed counsel for the Kensington Coalition to participate in the recent Mitigation Agreement negotiations between the CBJ and Coeur. At Coeur's request, the CBJ agreed to include a provision in the draft Mitigation Agreement (paragraph 2.2.2) that addresses socioeconomic mitigation measures regarding housing, child care, and school construction. The CBJ makes a commitment that, at such time when Coeur and the Kensington Coalition ratify their separate settlement agreement, the CBJ will renegotiate the Mitigation Agreement with Coeur to achieve the purposes of the housing, child care, and school construction provisions in the settlement agreement. In effect, Coeur would be committing to provide housing, child care services for its employees, and a proportionate share of the costs to construct a new school. The CBJ would enforce such provisions in a renegotiated Mitigation Agreement. While recognizing that under the anticipated costs and revenues in the Final SIA the CBJ has no authority to require Coeur to mitigate indirect impacts, the CBJ nevertheless agrees to this provision in support of efforts by Coeur and the Kensington Coalition to avoid litigation.

STAFF FINDINGS

1. Was a socioeconomic impact assessment prepared in accordance with the Mining Ordinance? CBJ 49.65.130(c)(1)

Yes. An SIA was prepared by an independent consultant retained by the Community Development Department. A draft SIA was distributed in February 1997. A public hearing on the draft was conducted on March 4, 1997. The final SIA was released in May 1997.

2. Has the operator negotiated and entered into a Mitigation Agreement?

CBJ 65.135(a)(7))

The operator has negotiated with the City and Borough Manager to establish a Mitigation Agreement. The parties have tentatively agreed to the provisions contained in the attached draft Mitigation Agreement. The City and Borough Manager provided the draft Agreement to the Planning Commission for its review and comment at its September 24, 1997 special meeting. The Agreement would be incorporated into the large mine permit, and the operator would enter into the Agreement by signing before CBJ issues any permit for the Kensington mine project.

As part of the attached draft Agreement, the City and Borough Manager finds that the costs of mitigating reasonably foreseeable and demonstrable indirect impacts of the mining operation do not exceed the amount of CBJ non-proprietary revenue increase attributable to the mining operation, based on the estimates in the Final SIA. Further, the Final SIA does not suggest, nor the Manager find, the need for a significant tax increase to mitigate anticipated indirect impacts. Therefore, the CBJ will be responsible for mitigating indirect impacts of the project, in accordance with the government services and facilities CBJ typically provides to local residents. Staff finds that the Final SIA adequately anticipates the provision of these routine government services and facilities as a function of mine-induced population growth and its effect on the CBJ fiscal expenditures during the life of the mine.

As part of the attached draft Agreement, Coeur agrees to comply with all conditions imposed upon it by the large mine permit. Staff finds that the safeguards, practices, and monitoring of the proposed project, together with the conditions of the large mine permit, will mitigate the direct impacts of the project.

STAFF RECOMMENDATION

Staff recommends that the draft Socioeconomic Impact Mitigation Agreement negotiated by the City and Borough Manager be incorporated into the large mine permit.

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