March 31, 2021
Dear Bethel Native Corporation shareholder:
Camai! Calialput 2020-aami wani kalikami paivngaut. Camek nallunrivsiaryukuvet, Mamterillermi calivimteni qayagaurniarpecia.
2020 was a unique year filled with challenges, uncertainties and unexpected opportunities. Every person, business and community was impacted by the global health pandemic. The year was one of change and adjustment that provided individuals and organizations an opportunity to reflect and adapt to new ways of interacting and operating. Bethel Native Corporation implemented additional health and safety protocols, established greater remote capabilities and continued to maintain business operations throughout the year. In 2020, the annual revenues reached $93,125,122. Despite the operational-level losses, the consolidated performance was strong and produced an income of $16,723,966. This year marks 47 years of successful operations.
Examining the operational performance, subsidiary company revenues declined from 2019. A portion of that reduction was due to the restrictions imposed by the health pandemic and subsequent delays impacting government contract work. Another portion of that reduction was intentional and part of the corporation’s strategic plan to rebalance operations overall. Implemented last year, this plan should continue to further reduce construction revenue while growing joint venture partnerships and professional services work. This focus is designed to reduce risk and improve operational performance over time.
Over the last four decades, Bethel Native Corporation has had years with successful operational income and years with earnings achieved through other income. In 2020, the other income component of the financials had a significant impact on the annual performance. Particularly impactful contributions in this section included a gain on sale related to the property holding in Colorado and a significant land contribution from the Corporation to the Bethel Elkartaa Settlement Trust (BEST).
One of the opportunities Bethel Native Corporation pursued and successfully completed last year was further diversification of the commercial property holdings. In December, Bethel Native Corporation successfully sold 50% of the Union Business Plaza in Colorado to a subsidiary of Calista Corporation. As a result, Bethel Native Corporation recognized a $2.8 million gain on the sale while still maintaining joint ownership of the property through a limited liability partnership called Avani, LLC. Diversifying real estate holdings has been a core line of business for many years and involves capitalizing on market timing to recognize increased property values and pursuing property sales once buildings have fully depreciated. This is a normal course of business and is done with properties held in Bethel, in Anchorage and elsewhere. This approach will continue to be an important component of achieving profitable operations for years to come.
Another innovative transaction positively impacting other income executed last year involved a transfer of a large portion of wetlands from Bethel Native Corporation to BEST. The property includes 85,485 acres of land located 58 miles southwest of Bethel between the villages of Tuntutuliak and Chefornak. The acreage is located within the Yukon Kuskokwim Delta Wildlife Refuge, and conservation was identified as the highest value use for that property. These characteristics made BEST the ideal placement of this property. Placed in BEST, the property maintains all of the same protections provided under the Alaska Native Claims Settlement Act (ANCSA) and cannot be sold to any third party. By completing this land transaction in 2020, Bethel Native Corporation achieved recognition of a sizeable unrealized gain listed under other income and secured over $73 million in future tax deductions. This equates to a cash value of over $15 million in tax savings applicable over the next 15 years. Bethel Native Corporation shareholders are all beneficiaries of BEST, and it is good to utilize this unique structure provided through ANCSA to facilitate long-term tax savings while enhancing land resources.
In December 2020, the BEST Board of Trustees authorized the distribution of $4.08 per unit (share) to all BEST beneficiaries. This was the third annual distribution from BEST. For 30 years, an annual dividend was paid to shareholders totaling over $11,000,000 in distributions. In 2018, shareholders voted to establish BEST and, already, over $1,983,172 has been distributed. The distributions made through BEST provide tax savings for the Corporation and ensure shareholder distributions remain tax free for all beneficiaries.
Throughout the last year, Bethel Native Corporation worked diligently to overcome the challenges presented by the adverse economic effects of the COVID-19 pandemic. This effort was achieved while continuing to maintain strong liquidity to meet all obligations and positioning the corporation to achieve future strategic goals.
Of paramount concern for the Bethel Native Corporation Board of Directors is the health and safety of shareholders and staff. As a result, the 2020 annual shareholders meeting was held virtually, and plans are in place to hold the 2021 annual meeting virtually, as well. Continued adherence to the recommended health guidelines and trust in the protections provided by the vaccines will help everyone move beyond this pandemic together. The Bethel area was hard hit by the pandemic, and witnessing our community’s resilience has been a powerful source of strength. Our collective endurance, patience and compassion will get us through this period in time.
Quyana Cakneq,
Anastasia Hoffman, President/CEO