Alaska is a geographically vast and resource rich state, with many industrial opportunities such as energy, fisheries, and mining.
For businesses involved in seafood distribution contracts, fisheries contract law, or Alaska energy projects, purchasing land to provide a base of operations or to secure access to resources. The process for purchasing land in Alaska is similar to that of other US states, but there are some special considerations to keep in mind.
Japanese investors, including those considering Japanese seafood investment in the USA or Japanese energy investment in Alaska, are increasingly exploring these opportunities. In such cases, coordination with cross-border legal counsel experienced in both US Japan transactions and international energy project risk assessment is essential.
Determine your purpose and plan – Your objectives will shape the transaction. For example:
Legal structuring at this stage often involves input from a seafood supply agreement lawyer, LNG project contracts lawyer, or energy infrastructure legal counsel.
Research potential plots of land – There are government agencies such as the Alaska Department of Natural Resources (DNR) as well as private sources of information such as real estate agencies. We will talk more below about land sales by the DNR.
For transactions connected to regulated industries-such as fisheries or energy-this phase should also include early legal review as part of fisheries due diligence or Alaska energy project due diligence, particularly where regulatory approvals or environmental constraints may apply.
Ensure access and utilities – This is a key step in Alaska due to its great size and small population. Many areas are not accessible by road and do not have utilities such as water or electricity available. For example:
These factors mean that it is important to budget for developing access and utilities in addition to the cost to purchase the property and build on it.
Determine if there are any restrictions on development – Restrictions can include zoning (which regulates what kind of activity can be conducted on property), environmental (which operate to protect the subject parcel or nearby areas), or conservation (which serve to restrict development on a parcel in order to offset development which is taking place on another piece of land). This is particularly relevant for:
Private restrictions can be checked through an online property report service, or by contacting the DNR recorder’s office. There are often fees associated with such record searches. Public restrictions can be checked through the agency responsible. For example, zoning restrictions are generally handled at the municipal level and municipalities provide maps and guides to help understand these restrictions.
Working with Alaska energy regulatory counsel or lawyers experienced in seafood distribution contracts can help identify and mitigate these risks early.
Hire experts who are experienced with Alaska real estate and regulations – Given Alaska’s relatively small legal market, it is important to retain advisors with specific regional experience. While there are over 2,000 resident lawyers in Alaska, this number is much smaller compared to other US states such as New York, which means that retaining a lawyer in Alaska can be relatively difficult.
Depending on your project, this may include:
For Japanese clients, working with counsel familiar with Japanese renewable energy investments in the USA and cross-border deal structuring is particularly valuable.
Secure finances to make the purchase – Obtain financing, often through a lender willing to provide funding for an Alaska purchase. It’s also possible to obtain financing through private equity or venture capital. There may be conditions, such as getting a survey or appraisal of the land in question.
Financing considerations may vary depending on the industry:
A key component of financing is providing cash, and the larger the sum that you can provide, the lower the Loan to Value ratio (LTV). While a lower LTV ratio means lower amount of interest and an easier time finding a lender, it may mean that cash is tied up in the land purchase, making it unavailable for infrastructure development or operating costs, which can potentially lead to cash flow problems. An experienced lawyer can help you navigate these kinds of critical and complex considerations.
Perform due diligence – As with purchasing land anywhere, due diligence is an indispensable step. In addition to title checks, performing checks for natural hazards such as earthquakes, permafrost melting, or flooding is advisable. For example, the US Geological Survey provides maps showing the risk of earthquakes, and the Alaska Department of Commerce, Community, and Economic Development provides information about areas that are vulnerable to natural hazards.
Industry specific diligence may include:
Provide an offer and close the transaction – Once you are ready to make an offer, there are several steps which must be completed. First, documents such as a letter of intent, a non-disclosure agreement, and a purchase and sale agreement are executed. At this point, the purchaser generally provides an “earnest money” deposit, which is transferred to an escrow account (an account held by a neutral third party such as an escrow agent or title company). Once all closing conditions (conditions required to complete the transaction) have been satisfied, the escrow agent will disburse funds to the seller on the closing date (the date that the sale is finalized). Payment typically consists of the funds held in escrow, along with the balance of the down payment funds provided by the buyer, as well as funds provided by the lender or other financing source.
Where the transaction relates to operating businesses (e.g., a seafood processor or energy project), this stage may also involve:
Private land sales are, of course, generally available, subject to title restrictions and state or federal regulations. The State of Alaska, through the DNR, also conducts land sales. Some of these, such as the State of Alaska’s Land Auctions, are restricted to Alaska residents. However, the Over-The-Counter (OTC) purchase program and the Agricultural Auction program are available to anyone, resident or non-resident. The OTC program makes land that was not purchased by Alaska residents during auction available to all purchasers. Individuals, including non-residents, and corporations authorized to conduct business in Alaska are allowed to purchase land under this program. With both programs, availability is limited and there are not always parcels available for sale. Approximately 44 million acres of Alaskan land is held by several native corporations: 13 regional and over 200 village corporations. The shareholders of these corporations are generally native Alaskans, and the land is corporate private property for the benefit of shareholders. Because of this, while it is not impossible for there to be a sale of land, it is quite rare, and access is more commonly granted through permits, leases, or other use agreements, and these lands are often subject to corporate restrictions on the type of activity that is allowed (in addition to state and federal regulations).
Whether you are entering the Alaska market through seafood trade or energy investment, land acquisition is only one component of a broader legal and commercial strategy.
Investors-especially those pursuing Japanese seafood investment in the USA or U.S.-Japan energy projects-should approach these transactions holistically, integrating:
Engaging experienced counsel in Alaska seafood trade legal matters or international energy law can significantly reduce risk and improve transaction outcomes.
Disclaimer: This article provides general information as of the time of drafting only and does not constitute legal advice. Specific advice requires review of transaction documents and facts.