Former Chairman of the Board - May 2011 Annual Report

Dear Fellow Owners:

Let me begin by giving you an update on the state of the economy as it relates to the Seldovia Native Association Inc. (SNA) and its operations. The terrible recession was declared over last summer and unemployment had improved slightly to 9.4% by the end of 2010. This is the first recession recovery since the 1940s' that had not followed with a recovery in employment and  housing. Overall employment is projected to improve slowly and may take about three years to reemploy those who had lost their jobs in 2008 and 2009. This also had an impact on Alaska and we saw no-growth in tourism here in 2010. On the plus side there was an increase in   independent travelers to Alaska, which is expected to continue to grow in this coming season. 

Our management team at the Dimond Center Hotel did an outstanding job of marketing, improving service and taking more of the market share of customers available. Their efforts resulted in a profit by year's end instead of the budgeted loss that was projected. Combining our new strategies and the prospect of increased independent travelers we are looking at a much better year for the hotel in 2011.

Red Mountain's contracting operations in the Small Business Administration's 8(a) government contracting   program finished the year profitable. Our performance on our contracts had been very good and that high    performance has attracted more requests that will push the limits of our Bonding (insurance) ability. That is a very good growth position to be in. The Board is watching the attacks by Senator McCaskill on Alaska Native corporations in government contracting and our minority status. Hopefully the two Bills currently in Congress will not gain any more support. Your Board is also looking at options of 8(a) contracting in other areas. Our current 8(a) authorization will expire in a few years and we need craft a succession plan. During 2010 the Board and Management also worked on refining employee policies and ethics policy to keep Red Mountain in alignment with Federal Regulations. 

In 2010 the Board decided to close the Main Street Market. Its continued operation was unsustainable. The business was always intended to be able to pay its own way. Several factors arising in the past several years made the business unsustainable. We first had to cope with the loss of being able to make wholesale purchases. Followed by huge increases in utility costs that when combined with an extremely inefficient building design became uncorrectable. There are requests to keep the Bay View Suites open, however the utility costs are weighing against it. The Market does sit on a fabulous piece of waterfront property that includes the tidelands. 

In closing I want you to know that you have a very good, diversified and hard working Board of Directors. It   becomes quite clear in our discussions and debates that each Director has a strong interest in the success of SNA, a strong connection to our culture, and a strong connection to you, our fellow shareholders. I am pleased to see the Board's in depth examination of business proposals, willingness to discuss difficult subjects, and the respect for each other's point of view. Your Board of Directors gives Management clear guidance that is not conflicting, is purposeful, and with understandable objectives so they can confidently execute them. Thank you my fellow shareholders for putting your trust in all of us at SNA as we work to make SNA strong and prosperous in the coming year.

Louis Nagy, Jr.
Former Chairman of the Board