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Prepared by Elise Paunic of McDuff, Inc. Prepared for McDuff, Inc. April 09, 2003 MEMORANDUM DATE: January 10, 2003 TO: Fred Washington, Headquarters Director of Land Resources FROM: Elise Paunic, Director of Alaska Division EP SUBJECT: Feasibility Study As you requested, I will conduct a study to determine the feasibility of building three cabins on the 1.14 acres of land near Talkeetna, Alaska. The land is vacant at this time, and it can no longer be used for recreation activities, because the area is steadily becoming a residential neighborhood. McDuff, Inc. needs to put this land to use, but I will begin the feasibility study this week, and I will send you frequent updates of my progress. When the study is completed I will inform you with the results.

Please give me a call if you would like additional details about the study or if you need any further work done regarding this matter. Introductory Summary McDuff, Inc. requested this feasibility study because the company owned land near Talkeetna, Alaska is vacant, and is not currently making any profits. The purpose of this feasibility study is to determine if the 1.14 acres of land could accommodate three 16 X 24 recreational cabins, which could then be rented out to generate potential revenue. There are three criteria I addressed within this study: time, cost, and the overall effectiveness of the project. I recommend that McDuff, Inc. approves this project as soon as possible, and begins construction of the cabins on May 1st, 2003.

TABLE OF CONTENTS PAGE TITLE PAG MEMO OF TRANSMITTAii INTRODUCTORY SUMMARY TABLE OF CONTENTS & LIST OF ILLUSTRATION iv PROJECT DESCRIPTION PROBLEM STATEMENT PROJECT SPECIFICATION BACKGROUND INFORMATION HISTORY OF THE PROBLEM RESEARCH ON THE PROBLEM IMPLICATIONS OF THE PROBLEM FEASIBLE SOLUTION TIME CONSTRAINT COSTS OF PROJEC DETAILED COST INFORMATION 10 DETAILED COST INFORMATION CONTINUED 11 EFFECTIVENESS 12 CHOSEN SOLUTION 13 CONCLUSION 13 ACKNOWLEDGEMENTS 14 REFERENCES. 15 APPENDIX. 16 LIST OF ILLUSTRATIONS PAGE TABLES 1. Census Population Histor. 6 2. Housing Characteristic 3.

Estimated Total Costs. 10 FIGURES 1. Talkeetna Survey 2. Gantt Chart Timeline APPENDICES A. Spenard Builders Supply (Building Kit Packet)... 16-24 B. Talkeetna Residents Survey. 25 C. Site Plan.

26 D. Acknowledgement of Existing Land Use Regulations 27-35 PROJECT DESCRIPTION McDuff, Inc. builds rental cabins on previously remote land. PROBLEM STATEMENT In 1960 McDuff, Inc. purchased 1.14 acres of remote land near Talkeetna, Alaska to use as recreation property, so employees could retreat to snow machine, dog sled, and engage in various recreational activities. In recent years the Talkeetna area has been experiencing a rapid growth in population, which has encircled this once remote property with year-round residences, borough maintained roads, and electricity supply. This land is no longer considered useful for its previously intended purpose. McDuff, Inc. is now faced with the dilemma of what to currently use this land for.

PROJECT SPECIFICATIONS According to LeRoy Oscar Anderson, author of Wood-Frame House Construction (1992), the four essentials of every good quality home are: an efficient plan, the right materials, sound construction, and energy efficiency. By fulfilling the specifications listed below McDuff, Inc. will solve the previously stated problem: 1. File an acknowledgement of existing land use regulations development checklist with the Matanuska-Susitna Borough, and include a sketch. Note: both of these are attached at the end of this study in the appendix.

2. Obtain necessary driveway permits. 3. Approve water and wastewater disposal systems with the Alaska Department of Environmental Conservation (ADEC). 4. Complete the design layout of three 16 X 24 cabins, and obtain necessary cabin materials and equipment.

5. Construct driveways. 6. Have Matanuska Electric Company (MEA) install the electricity supply to the property.

7. Prepare individual cabin sites for laying the foundations. 8. Install septic system. 9. Drill well for water supply.

10. Construct each foundation for the cabins according to the design plans. 11. Erect the three 16 X 24 cabins. 12.

Advertise the cabins for rent amongst the local area. Provided that the above steps are completed, McDuff's land will no longer be vacant, and will begin generating substantial revenue. BACKGROUND INFORMATION a.) History of the Problem: According to the Alaska Department of Community and Economic Development (DCED), from the years 1920 to 2000 the population of Talkeetna has consistently been growing. The table below shows the most current data that was provided by DCED.

Census Population History YEARS POPULATION 1920 70 1930 89 1940 136 1950 106 1960 76 1970 182 1980 264 1990 250 2000 772 Table 1 Talkeetna's population has been on the rise for quite a few years, and each year the area attracts new visitors, which tend to become year-round residents. The small town of Talkeetna (an Indian word meaning "river of plenty") is located at the mouth of the Talkeetna River where it meets with the Chulitna and Susitna Rivers. World-class charter fishing and scenic riverboat and raft trips make 200 miles of beautiful river accessible to all. Bear, beaver, bald eagle, and moose are frequently seen on the riverbanks.

Nestled at the base of Mount McKinley, North America's tallest peak, the historic village of Talkeetna has an outstanding panoramic view of the Alaska Range. Mountain climbers from all over the world travel to Talkeetna to attempt conquering Mount McKinley every year. Talkeetna is a unique small rural community, and a major tourist attraction in Alaska. As you can see there are many different characteristics about Talkeetna that make it appealing to visitors, and to local residents. Due to the overwhelming amounts of visitors each year, and that many of those visitors wish to become residents there is an extreme demand for housing. By building these three rental cabins, McDuff, Inc. will be providing much needed housing for the area. b.) Research on the Problem: After conducting a survey consisting of five yes or no questions amongst 20, year-round Talkeetna residents, the results of only one of those questions is listed in the following chart, but the complete survey is attached at the end of this study in the appendix.

Figure 1 As you can see many people feel that there is a definite demand for housing, and at this time not enough is available. The following information was provided by the DCED, which was obtained from the 2000 U.S. Census: Housing Characteristics Total Housing Units 528 Occupied Housing (Households) 358 Vacant Housing 170 Vacant Due to Seasonal Use 121 Owner-Occupied Housing 263 Median Value Owned Homes $88,000.00 Renter-Occupied Housing 95 Median Rent Paid $612.00 Total Households 358 Average Family Household Size 2.92 Non-Family Households 177 Population living in Households 772 Population living in Group Quarters 0 Table 2 c.) Implications of the problem on the following areas: society, safety, and environment: Since McDuff, Inc. has been using the 1.14 acres of land for employee retreats for some time now, but recently many residents have complained about snow- machines, and dogsled teams being in the residential area. In the past before the established residences came about it was perfectly fine to use the 1.14 acres for recreational purposes; although, at this current time if such activities continue it will have a negative impact on the society in Talkeetna. This issue also brings about some safety concerns, because the land at one point did not have road access, so it was permitted to travel on snow machines, four-wheelers, and dog sleds.

By now the land has borough maintained roads that cars and trucks travel on, and with the continuing use of snow machines, four-wheelers, and dog sled teams competing to use the well maintained roads could quite possibly cause some serious traffic accidents. The environment conservation of this residential area is also a huge concern, because dog sled teams leave a lot of fecal matter behind. This area has a lot of children playing outside throughout each year, and the allowance of dog sled teams in the area could possibly inflict disease amongst the local residents. The use of snow machines, and four-wheelers in this area creates a noise obstruction, which takes away from the pristine beauty of the area.

FEASIBLE SOLUTIONS There are three major criteria that I addressed. First, the time constraint issue, because Alaska building season is from May 1st through September 1st, so that is a fairly short period of time to finish the construction of three 16 X 24 cabins. Second, the cost of this project must be as little as possible although, the cabins must be of good quality for the price. Lastly, after the project is totally completed the project must prove its effectiveness, because it will bring in enough revenue to pay off McDuff's total costs for this project; furthermore, it must show that it was a good investment choice by the amount of revenue the three cabins will continuously generate. TIME CONSTRAINTS Alaska building season is from May 1st through September 1st, and below is a Gantt chart showing the pre-planned timeline to ensure the swift and successful completion of this project. The following timeline assumes that the below bulleted items have been completed prior to the beginning of building season: .

An acknowledgement of existing land use regulations development checklist has been filed with the Matanuska-Susitna Borough... The driveway permits have been acquired... The cabins design layout has been drawn up, and all of the needed building materials have been acquired. Figure 2 COSTS OF PROJECT McDuff, Inc. has not defined a budget for this project; although, the ending result must be of good quality workmanship for the total cost spent. The three cabins will be built by purchasing three 16 X 24 recreational cabin-building kits from Spenard Builders Supply in Wasilla, Alaska. The following price information was obtained from local businesses in the Anchorage Municipality, and Matanuska-Susitna Borough areas.

Below is a table showing the estimated total costs for this project. Materials Price Quote Source Prices ICBO Inspector Talkeetna Real Estate $600.00 Excavation Craig Taylor Equipment $1,000.00 Well Hood & Sons Pump & Drilling Co. $4,500.00 Septic A-TWO Septic $5,000.00 Foundation Spenard Builders Supply $4,500.00 Framing Spenard Builders Supply $30,000.00 Plumbing Spenard Builders Supply $3,000.00 Electrical Spenard Builders Supply $4,500.00 Insulation Spenard Builders Supply $1,500.00 Interior Trim Home Depot $9,000.00 Appliances Home Depot $3,000.00 Flooring Home Depot $1,500.00 Labor Approximate Bacon-Davis Wages $22,000.00 Miscellaneous Matanuska-Susitna Borough $2,000.00 TOTAL $92,100.00 Table 3 DETAILED COST INFORMATION Below is a detailed description of how each price quote was obtained along with the information that was provided: . ICBO Inspector: I spoke with Roger at Talkeetna Real Estate, and he gave a price quote of $600.00, which is based on what it would cost to have an ICBO inspector travel from Wasilla to Talkeetna to perform the inspection verifying that the cabins are all built to the Matanuska-Susitna Borough building codes... Excavation: I spoke with a representative at Craig Taylor Equipment, and the price quote of $1,000.00 is based on a rough estimate of what it would cost to rent the needed heavy equipment for the landscaping and construction needs for this project...

Well: I spoke with a representative at Hood & Sons Pump and Drilling Co. in Wasilla, Alaska, and the price quote he gave of $4,500.00 is a rough estimate of what it would cost to drill to install one well to accommodate the water needs of all three cabins. There would need to be one pressure tank installed in each cabin; whereas, one of those three pressure tanks would be the main pressure tank that runs the water pump from the well. The water pump would have to be at least 1/2 horsepower to be effective. The rough estimate for installation of the entire system is $4,500.00...

Septic: I spoke to a representative at A-TWO Septic Co. in Wasilla, Alaska, and he said that one 1000-gallon tank would be needed to accommodate all three cabins, and since the cabins will be in close proximity of each other it is not necessary to install a separate septic system for each. The price quote of $5,000.00 is a rough estimate of what it would cost to install the entire septic system. The routine maintenance of the installed septic system would run approximately $160.00 for every two years... Foundation: I spoke with a couple different representatives at Spenard Builders Supply in Wasilla, Alaska, and they provided me with a packet showing the detailed materials and prices that make up the total cost for a 16 X 24 recreational cabin building kit. I then multiplied those figures by three to come up with the price quote of $4,500.00 for the approximate total cost needed for all three of the cabins foundations... Framing: Based on the building kit packet the costs were multiplied by three to show the total cost of what it will take to frame all three cabins.

The approximate total framing cost is $30,000.00... Plumbing: Based on the building kit packet the costs were multiplied by three to show the total cost of what it will require to do the plumbing for all three cabins. The approximate total plumbing cost is $3,000.00... Electrical: Based on the building kit packet the costs were multiplied by three to show the total cost of what it will take to wire all three cabins.

The approximate total electrical cost is $4,500.00... Insulation: Based on the building kit packet the costs were multiplied by three to show the total cost needed for the insulation in all three cabins. The approximate total cost is $1,500.00... Interior Trim: After consulting a representative at Home Depot in Anchorage, Alaska, I was provided with the Home Depot Pro-Book Catalogue and some computer software that shows the price of everything that Home Depot sells. The interior trim costs I located within the software, and then multiplied the total costs by three to show the needed amount to install interior trim in all three cabins. The approximate total cost is $9,000.00...

Appliances: In the Home Depot Pro-Book Catalogue I located the most reasonably priced sinks, appliances (stove, refrigerator, stack washer / dryer etc. ), and bath tubs then I multiplied the cost of each by three to come up with the approximate total cost of all the appliances needed to accommodate three cabins. The rough estimate I acquired was $3,000.00... Flooring: In the Home Depot Pro-Book Catalogue I found the most economical flooring available then multiplied the total by three to acquire a rough estimate of the total cost to provide flooring to all three of the cabins. The rough estimate I acquired was $1,500.00... Labor: I researched on the Internet, and located the Bacon-Davis wages for laborers in Alaska. In order to complete this project within the previously discussed timeline I figured that there will need to be at least two laborers working 40 hours a week for the entire 16 week building period.

I chose to calculate the approximate labor costs by using the lowest Bacon-Davis wage of $16.84/hr. It is quite possible that the labor costs could exceed this figure since depending on the laborers skills and experience they might need to be paid a higher more appropriate wage. The total approximate costs for the labor of this project I found were $22,000.00... Miscellaneous: The reason I chose to put this miscellaneous figure into the potential total costs of this project is due to the fact that there could be some unforeseen costs accumulated during this project. Also, there are some legal fees for filing the necessary documents, and for acquiring the needed permits.

The total miscellaneous cost I have figured in to the projects total cost is $2,000.00. EFFECTIVENESS In order for this project to be implemented it must prove that it will result with supreme effectiveness, which means that the total costs accumulated upon completion of the project will be regained in the future from the revenue generated by the people paying the monthly rent on the cabins. As long as the three cabins are continuously rented out than McDuff, Inc. will continue to acquire substantial revenue long after the expenses for the project are reimbursed. According to the Alaska Department of Community and Economic Development (DECD) the most recent information available was taken from the 2000 U.S. Census. The information states that Talkeetna's average median rent is $614.00 per month, so McDuff, Inc. could charge at very least that much per month for rent on each of the cabins. The calculations below are based on charging $700.00 per month on each of the cabins.

This project is a very good investment choice. The following information proves the supreme effectiveness McDuff, Inc. will benefit from by choosing to engage in this investment. Monthly Rent for 1 Cabin = $700.00 12 Months in a Year X 12 Total Income a Year from 1 Cabin = $8,400.00 Number of Cabins = X 3 Total Income a Year from 3 Cabins = $25,200.00 Total Costs for Completion of Project = $92,100.00 Total Income a Year from 3 Cabins = $25,200.00 = 3.66 years Total Income a Year from 3 Cabins = $25,200.00 Number of Years to Reimburse Project Total Costs = X 3.66 Total Revenue Needed to Reimburse Project Total Costs = $92,232.00 It will take close to four years to reimburse McDuff, Inc. for the projects completion costs. After those costs have been regained McDuff, Inc. will continue to receive $25,200.00 revenue per year from the three cabins, which will be pure profit. The above calculations prove this projects supreme effectiveness. CHOSEN SOLUTION The chosen solution for the problem of what to do with the vacant land that McDuff, Inc has used for remote recreation property in the past is to build these three cabins.

By doing so McDuff, Inc. will not only benefit from knowing that the land is being used, but also will make a lot of profit from the renters of the cabins. The chosen solution works because it will maintain the residential area, provide people with homes, and McDuff, Inc will be making profit from the land and the cabins. CONCLUSION After conducting this feasibility study I have found these conclusions: . The population in Talkeetna is steadily growing... There is a proven demand for housing in the Talkeetna area... Using the 1.14 acres of land as recreational property is no longer feasible.

This project involves minimal risks such as: being able to meet the timeframe to successfully build three cabins within the short Alaska building season, and also a challenge to maintain full occupancy of the three cabins after the completion of the project. These risks are not that great, and the dedicated employees of McDuff, Inc. can overcome these risks and make this project successful through their well known structured teamwork capabilities. As you can see there are only two risks to take, but the benefits of making the choice to pursue this project are many. Benefits include: .

Making profits from the vacant land... Making profits from the three rental cabins... Maintaining the residential area... Providing housing to people in need...

Displaying the professional attitude of McDuff, Inc. among the Talkeetna people... Giving McDuff, Inc. a truly profitable investment that could last a lifetime. Anyone who reads this feasibility study and has questions or concerns please feel free to contact me, and we can schedule a time to meet in order to provide you with a clearer understanding of this project. Thank you. ACKNOWLEDGEMENTS In the process of completing this thorough feasibility study I have encountered several very educated people who assisted me in making this feasibility study possible. At this time I would like to acknowledge all who made this process easier by providing very informative data to me.

Below is a list of businesses to which I am truly appreciative: vs. Home Depot vs. Talkeetna Real Estate vs. Craig Taylor Equipment vs. Hood & Sons Pump & Drilling Co. vs. A-TWO Septic vs. Spenard Builders Supply vs. The local residents of Talkeetna whom participated in my survey.

Bibliography

Alaska Department of Community and Economic Development (2000 U.
S. Census) Population and Housing Characteristics. Retrieved April 06, 2003, from: web Anderson, L.
O. (1992).
Wood-Frame House Construction. Carlsbad, CA: Craftsman Book Company. Bacon-Davis Wages (2002, December 20) Retrieved April 08, 2003, from: web.