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Climate-change relocation of Alaska village stops, after state audit finds potential wrongdoing

Alex DeMarban
An Army Reserve crew off-loads in Mertarvik, where Newtok is moving to higher ground. Capt. Christopher Larsen / US Army

An effort to move an eroding Southwest Alaska village that's a poster child for the negative effects of climate change has lurched to a dramatic halt. A state audit has uncovered potential wrongdoing and said the tribe running the multi-million dollar project should repay some $300,000 in state funds.

Now, with loads of taxpayer dollars already spent and costly materials sitting unused on the tundra, the 375 people in the village of Newtok are embroiled in a vicious dispute over tribal leadership that's playing out on Facebook and hamstringing the community's move.

Meanwhile, those who had been managing the project -- and may lose their positions in the tribal upheaval -- blasted the audit as grossly off-base and driven by a state that's prejudiced against tribes. Stanley Tom, the move's longtime leader, called the audit a "hit job" by state officials angry that the tribal council, through a corporation it created, had taken over management of the construction of the evacuation shelter.

The tribe has received more than $10 million in state grants for the shelter and an access road. It had initially hired the state Department of Transportation to oversee the shelter's construction on a hillside at the new, spring-fed townsite, 9 miles from the old village.

But the tribe wasn't happy with the state's work. So it ended the contract in 2011, essentially firing the state department.

"They don't want us to succeed," Tom said of state officials involved in the audit. "That's why they're doing public defamation and lies. They're discrediting us because we were saving lots of money on the relocation process and we wanted to do local hires."

"Absolutely not true," said Scott Ruby, director of the Division of Community and Regional Affairs, the lead agency for the move.

The state agency was happy to see the tribe take control of the project, he said. But Ruby requested the audit because a lot of state money was moving across the table and because of divisions within the tribe, with some members complaining that elections hadn't been held for years as they should have been.

"We think self-determination is great," he said. "They said, 'We want to do this for ourselves.' Well, that's great, go for it. But the work still needs to be done properly."

An unfinished emergency building

The land sitting beneath some of Alaska's 200-plus villages will cease to exist in coming years because of erosion and flooding, reports have found. Newtok, about 500 miles west of Anchorage, has experienced the most dramatic land loss as the growing Ninglick River that links the town to the Bering Sea has gobbled away vast slices of tundra.

With Tom at the helm for years, the soggy village has set the standard for other communities planning a move. It won a land exchange with the federal government a decade ago and dubbed the new site Mertarvik, a Yup'ik word meaning "getting water from the spring."

The effort gained steam in 2008 when military personnel arrived at Mertarvik as part of a domestic military program -- Innovative Readiness Training -- and voluntarily built such things as dirt roads and storage buildings. The village has already built some homes at the site, using federal money for low-income housing.

The community's pioneering approach made it a darling of state officials concerned with sticker-shock. The U.S. Army Corps of Engineers estimated that moving Newtok -- with its airstrip, school and other facilities -- would cost at least $80 million, or more than $200,000 a person.

But Newtok planned to relocate in pieces. That meant government assistance could arrive over time as budgets allowed. And investments that would have once gone into Newtok, such as for state-funded school construction, could instead be applied to Mertarvik, potentially saving millions.  

Lawmakers offered support, awarding big state grants starting in 2011 so the village could build the evacuation shelter. It would house all the villagers in case a major storm slammed into Newtok and cut off power and other services.

The state transportation department hired contractors and spent $2.6 million for the shelter's foundation. That concrete foundation and the metal pilings beneath it now sits in the weather at Mertarvik, awaiting an exterior shell.

Newtok plans to do it cheaper

The village ended the contract with the state, Tom said, in part because the state hired contractors from outside the village who spent too much money. Plus, only two villagers were hired. Meanwhile, costs for the center ballooned to $12 million, Tom said.

The tribal council thought it could build a shelter more cheaply and hire more residents. So it formed a new corporation to run the project -- Mertarvik Community Development Corp. -- and ditched the state's plans.

The corporation had the same leadership as the tribe, which meant Tom served as administrator. George Owletuck, a Yup'ik consultant for village projects who was once a staffer for Sen. Ted Stevens, was hired as chief executive.

After the new corporation took over management of the project, it was clear that Ruby and other state officials didn’t trust tribal leaders to get the project done right, said Owletuck.

"Before we started, our integrity, competence and intentions were attacked in meetings," he said. "So I knew from the get-go they were going to try to hang me out to dry."

The state is worried other tribes will try to do the same thing in the future, and remove potential work from the state, Owletuck said.

Walter Parker, a well-known consultant for Alaska Native tribes who has worked under various Alaska governors, said he voluntarily attended the meetings on behalf of Owletuck. He said state officials showed no interest in seeing the tribe play a larger role in the project. "The state would do nothing" to help Newtok, an approach that was in line with past efforts by the state to limit tribal power across Alaska, he said.

Ruby said he recalls Parker attending one meeting. That was when Ruby discussed restrictions on the grants, such as that all contracting rules would need to be met and that all permitting requirements would have to be completed.

"By outlining these restrictions on the grant money, I see how he could assume that we are not helping the tribe," Ruby said in an email. "But in reality, it is the same sort of meeting given to all grantees."

State out $302,000 for now

As for the audit, it found that the tribe should repay the state $302,000 because of such things as seemingly "fabricated" time sheets, items that were doubled-billed, and payments for work that appear to not have happened. Also, permitting hasn't been completed as it should, and contractors hired by the corporation weren't licensed.

Paperwork the tribal council sent to auditors suggests that Owletuck was in a position to double-dip, thanks to a potential conflict of interest. He was shown to be both chief executive of the corporation, and project manager of a contractor, Kenai Manufacturing, hired by the corporation. The pay for Owletuck would have been $60,000, said the audit.

Owletuck said in the audit that he was surprised his name showed up on that paperwork. He said he was never paid in that role, and the intention was that a villager would get the job. He said he has paperwork to support those facts.

The complaint also found that Owletuck and Tom received "exorbitant or unreasonable" wages out of line with median household incomes of $75,000 in Anchorage and $52,000 in the regional hub town of Bethel, in contrast to federal requirements.

In 2012, Owletuck made $90 an hour and Tom made $80.50 an hour. Annualized, that would amount to $202,000 for Owletuck and $167,000 for Tom, the audit said.

The men said the wages are far less than what other project managers, typically from outside rural Alaska, receive in the Bush.

"For the state to assert that my hourly billings were too much sounds like a racist assertion in my mind," Owletuck said. "It's OK for urban outside contractors to bill their time at huge rates, but Natives have to have make minimal wages?"

The audit also said paperwork suggests that some $697,000 in insulated panels -- already shipped to Mertarvik to serve as the exterior of the shelter -- may not be the right size and may not work with the existing foundation.

Owletuck said he's sure they'll work. But, Owletuck added that he hasn't seen them. They're sitting in sealed containers at Mertarvik.

Village divided

Ruby said the audit, which reviews only the period when the new corporation was in charge, shows the corporation did most things right. Some of the errors could simply be bookkeeping or paperwork mistakes, caused in part by excessive turnover.

It's possible that nothing was done wrong, and more information could bear that out. "We're waiting for a response (from the tribal council) to some of these things," he said.

Getting that response has been complicated by dissension in the village.

The state has recognized a new tribal council -- one that replaced Stanley Tom as tribal administrator. The new council hopes to solve the problems raised in the audit, according to a plan it's submitted to the state. But the Bureau of Indian Affairs, delayed in part by the federal shutdown, has not issued a final decision on whether the new council was properly installed.

Tom John, the tribal administrator who replaced Tom, would not comment, saying he was waiting for the BIA to make its decision.

Meanwhile, Stanley Tom has refused to let the members of the new council have access to the tribe's old offices and paperwork that could provide the state's auditor with additional information, Ruby said.

Tom has invited state officials to come to Newtok to review the books later this month. But it wouldn't be appropriate for the state to work with leadership it no longer recognizes, Ruby said. "To some extent, these issues have to be resolved by the community," Ruby said.

As for Owletuck, he said he's intentionally withheld information from the state's auditor, such as hundreds of emails that clearly show that he's worked the hours he's claimed. He did so because he knew the state had a pre-set agenda to stop the tribe from managing the project. He said the facts will show that he's right in the end.

"I wanted them to come up with a false report so we could prove them wrong," he said. "As far as I'm concerned, all they'll get from me is the bird. Anything else they can get from my attorney."

Contact Alex DeMarban at alex@alaskadispatch.com