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Public Port Districts: Promoting Economic Development
HistoryLink.org Essay 9624
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Washington's public port districts play a critical role in the state's economy by stimulating business development and job creation that private companies cannot or do not undertake on their own. Run by commissioners elected by local voters, the state's public ports are the only government agencies in Washington whose primary purpose is to promote economic development, and they have authority that other agencies lack to engage in market-oriented business ventures. Washington public ports have used their combination of government powers and entrepreneurial orientation -- dubbed "public enterprise" (Olson) -- to create not just marine cargo terminals and airports but a whole range of industrial and commercial development, inland as well as on the waterfront. Many ports operate industrial areas that bring businesses to their districts. Other development efforts include running a rail line that local companies depend on, building cruise ship terminals, operating a wastewater treatment plant for local food processors, helping wire a rural area for broadband internet, and even providing "incubator buildings" for start-up wineries.
Public Investment Pays Off
Public port districts came into being in Washington a century ago precisely because civic leaders concluded that the private corporations that dominated the state's major commercial harbors -- primarily the transcontinental railroad lines -- were not investing in the improved harbor facilities necessary to retain and expand the maritime trade on which Washington, then as now, was particularly dependent. Within a few years after the Legislature passed the Port District Act in 1911, the success of the new public docks, warehouses, cold storage, and other improvements built by the first port districts, especially Seattle's, in expanding international trade made public ports an accepted part of the state's government and economic life and led to the formation of many more port districts.
As these ports on the waters of Puget Sound, the Strait of Juan de Fuca, Grays Harbor, and the lower Columbia River boosted commerce and industry by investing public funds -- tax collections and/or bonds backed by government credit -- in harbor improvements and modern cargo facilities, state leaders recognized that the port district model of promoting jobs and economic development through public investment worked for more than harbors. Ports were well-positioned to take on the responsibility of operating airports, whose importance in moving passengers and freight grew exponentially over the years.
In addition, the state Legislature turned to port districts, which had demonstrated their ability to promote industrial development along the waterfront, to stimulate development elsewhere. During the Great Depression, ports were authorized to create Industrial Development Districts (IDDs) -- designated areas where they could levy special taxes and prepare industrial sites with utilities, roads, rail lines, waterways, and other improvements to bring in new industries and jobs. In the 1950s, the Legislature significantly expanded port districts' powers to create Industrial Development Districts, and in the 1980s, industrial development was subsumed under a broader mandate for economic development.
With port districts engaging in general economic development, the Legislature clarified that "ports" could be created in districts without navigable water, and many were, especially in Eastern Washington. These "water-less port districts" (Torner) played an important role in making it possible for industry to take advantage of the region's inexpensive power and water supplies -- fruits of the federal government's investment in the Columbia Basin project. Private capital to fund the necessary infrastructure -- grain elevators, industrial sites, and the utility lines, sewers, and roads to serve them -- was scarce, so port districts made the investments, and employed experts in financing and industrial location to help existing businesses expand and bring new industries to the area.
In 2010, Washington's 75 port districts pursue their mission of economic development through a wide range of activities, with all but a few of the smallest ports engaged in multiple efforts. Seventeen ports operate major marine terminals -- 11 deepwater ports on the lower Columbia and salt water and six barge terminals on the mid-Columbia and Snake. Forty-one ports, including many of those 17, maintain recreational marinas, piers, or docks. Port districts own or operate 33 airports (including two seaplane bases). All these facilities for trade, shipping, and recreation bring business and jobs to their communities. (The Port of Seattle's Sea-Tac International Airport alone directly generates nearly 90,000 jobs, making it by far the state's largest single port-district enterprise).
The port districts' role in transportation is important and historically central, but it represents only part of their current portfolio. State ports also provide public parks and waterfront access points, promote tourism, and have increasingly taken lead roles in environmental cleanup and restoration. Perhaps not surprisingly, the fastest growing port activity is general industrial development -- 42 of the 75 ports currently operate industrial areas, and more such areas are continually being prepared.
The combined economic impact of the public investment in all these activities is significant. Studies conducted for the state's largest ports, including Bellingham, Everett, Longview, Olympia, Seattle, Tacoma, and Vancouver, demonstrate that their activity generates hundreds of thousands of jobs directly (those employed by the ports and their business tenants and customers) and indirectly (jobs created by the spending of the directly employed). When all 75 ports are considered, the total number of jobs generated is more than a quarter of a million.
It is far beyond the scope of this essay to detail all the myriad projects that Washington's public port districts have undertaken during their 100-year history to stimulate economic development. Instead, what follows are snapshots of a few representative examples that reflect some of the diverse ways in which ports around the state have worked to create jobs and economic growth in their communities.
Port of Pend Oreille: Pend Oreille Valley Railroad
The Port of Pend Oreille in the northeast corner of Washington was created for a single purpose: to take over the railroad line between Metaline Falls and Newport, on which local employers depended, when the line was abandoned by its private owner, the Chicago, Milwaukee & St. Paul Railroad (known as the Milwaukee Road). The Pend Oreille valley line -- part of the Idaho and Washington Northern Railroad that also extended from Newport to McGuires, Idaho, near Post Falls -- was built between 1909 and 1911 to connect a large timber mill at Ione and the Inland (later Lehigh) Portland Cement Company in Metaline Falls to the transcontinental Great Northern line at Newport. The Milwaukee Road acquired it in 1916.
By the late 1970s, with railroading in decline, the Milwaukee Road announced that the Newport-Metaline Falls line was no longer economically viable and would be abandoned. The Ione lumber mill and the Metaline Falls cement plant were both still dependent on rail transport, so abandonment would have closed two major employers, costing Pend Oreille County 300 jobs. With no private investors willing to take over the railroad, county voters in 1978 approved creation of the Port of Pend Oreille to do so.
The newly formed port district acquired the line from the Milwaukee Road in 1979, and renamed it the Pend Oreille Valley Railroad (POVA). For its first five years, the Port leased the line to Kyle Railways. Since October 1984, the Port has operated POVA itself. POVA's 16 full-time employees (and additional summer help) handle all the rail operations, maintain 85 miles of track, and service not only POVA's own locomotives and equipment but, by contract, other lines' equipment as well.
Although POVA made it possible for the cement plant and timber mill to continue in business, both eventually succumbed. But POVA continues to serve another major area business, the Ponderay Newsprint Company, which ships newsprint, recycled paper, and chemicals from and to its plant at Usk. With only one shipper left on the Metaline Falls-Newport line, in 1998 the Port leased a section of Burlington Northern Santa Fe Railroad track and extended POVA's service from Newport to Dover, Idaho. The Port continues to contribute significantly to the economy of Northeast Washington through the jobs produced at POVA and at the businesses whose existence the rail line facilitates. And it does so without collecting taxes. Supported largely by railroad revenues, the Port of Pend Oreille is one of the few that does not levy a property tax.
Port of Seattle: Cruise Ship Terminals
Although a wide variety of vessels have plied Seattle's harbor for years, one economically significant component of maritime commerce was scarce until the dawn of the twenty-first century: luxury cruise ships. In 1999, only six cruise ships visited Seattle. That changed in 2000 when the Port of Seattle opened the first phase of its Bell Street Pier Cruise Terminal on the city's central waterfront. Ships from the Norwegian and Royal Caribbean cruise lines made the new terminal their homeport and the total number of ship calls rose to more than 30.
The domestic cruise industry grew rapidly in subsequent years, in part because more Americans chose to vacation nearer home following the September 11, 2001, attacks. Seattle's convenient proximity to Alaska, one of the top domestic cruise destinations, boosted its growth as a cruise ship homeport. In 2003 the Port opened a second, temporary cruise terminal just south of downtown at Terminal 30 for another two cruise lines sailing from Elliott Bay to Alaska -- Holland America Line and Princess Cruises.
Two years later, in an effort to reduce pollution caused by cruise ships running their diesel engines while docked to produce needed electric power, the Port, in cooperation with Seattle City Light, unveiled a new power connection at Terminal 30 that allowed two specially designed Princess Cruises ships to plug into power from shore instead. Seattle was the second port in the nation to provide shore power for cruise ships and the first to have two shore power berths.
In 2009, the Port's $72 million Smith Cove Cruise Terminal at Pier 91 replaced the temporary cruise berths at Terminal 30. The new terminal's two berths also had land-based power connections to reduce pollution, and the 143,000-square-foot building atop the 4,000-foot-long Pier 91 featured airport-style baggage-handling and check-in along with sweeping picture-window views of the harbor, downtown skyline, and Mount Rainier. In 2010, ships from six different cruise lines called at the Port of Seattle's Bell Street and Smith Cove terminals, setting records of 223 calls and 931,698 paying passengers.
Those cruise ship calls contributed substantially to King County, as passengers and crew patronized Seattle-area restaurants, hotels, and souvenir stores, occasionally overrunning the Pike Place Market and other downtown tourist spots. Port studies estimated that each cruise call pumped almost $2 million into the regional economy and that in 2010 the industry accounted for $425 million in revenue, paid nearly $19 million in local and state taxes, and created more than 4,000 direct and indirect jobs.
Port of Sunnyside: Industrial Wastewater Treatment Facility
Established in 1964 in eastern Yakima County, the Port of Sunnyside came up with a unique way to help diversify the area's agriculture-based economy. It built an industrial wastewater treatment facility that serves food processors. The facility, whose operation is funded by fees charged to the industrial users, employs a treatment process the Port describes as "cradle to grave recycling" (Port of Sunnyside website). After passing through treatment lagoons, the treated water is sprayed on 400 acres of alfalfa fields that make up much of the 550-acre facility. The alfalfa is harvested and sold to area dairies and cattle ranches, completing the circle.
The treatment plant includes an accredited laboratory that tests and monitors the wastewater received and the treatment system. When nitrates from the facility began leaking into an aquifer (not used for drinking water), the Port upgraded the facility, creating wetland habitat along the Yakima River and discharging some treated water into the river during winter months, when there was no alfalfa crop to spray. Port staff has also worked with industries using the system to re-use more of their water, thus reducing the quantity that needs to be treated.
Building the treatment facility achieved the Port's goal of bringing more industries to the area. The facility opened in 1974 with a single customer, apple and pear processor Independent Foods. In 1990 Darigold established a powdered milk plant in Sunnyside to utilize the wastewater treatment and became the facility's largest single user. In 2004, Sunnyside's facility treated 44.1 million gallons of wastewater from 17 companies. Those businesses employed nearly 2,000 people with a combined payroll estimated at $47 million. Five of the top 10 taxpayers in the port district were directly connected to the Port, which operates industrial parks in addition to the wastewater treatment facility.
Port of Tacoma: Frederickson Industrial Area
The Port of Tacoma was one of the first to set up an Industrial Development District after the Legislature authorized them in 1939, designating an IDD on the Commencement Bay tideflats. World War II interrupted tenant recruitment, but by the late 1950s Purex, Concrete Technology, Stauffer Chemical, and Western Boat Building were all operating in the port's first Industrial District.
From 1968 through the early 1970s, longtime Port of Tacoma general manager Ernest L. "Roy" Perry (1918-2001) acquired 500 acres in Frederickson, an unincorporated area of Pierce County 13 miles south of the port's Commencement Bay terminals, to increase the Port land available for future industrial development and job creation. Subsequently the Port obtained heavy manufacturing zoning for the area and installed industrial-capacity utilities and other infrastructure. In 2010, the Frederickson Industrial Area is the largest industrial development site in the Puget Sound region with those features.
Over the years, the Port has sold industrial sites in Frederickson to a variety of companies that have brought many hundreds of jobs to Pierce County. In addition to those permanent manufacturing and distribution jobs, the ongoing development has created numerous construction jobs as the Port prepared sites and companies built their facilities.
A wide range of businesses operate in the Frederickson area. Boeing has a plant there that fabricates spars and wing skins for the 777, the new Dreamliner, and other planes. A nearby Toray Composites America facility supplies the Boeing plant with carbon fiber composite materials. Northwest Door, a privately owned company founded in Tacoma in 1946, opened a new 300,000-square-foot manufacturing plant and corporate headquarters at Frederickson in 2006. Two years later, home furnishings retailer IKEA opened its 830,000-square-foot Frederickson distribution center. Serving IKEA stores in the northwest U.S. and western Canada, the distribution center employs 125 people and virtually all the 10,000 products it stocks arrive through the Port of Tacoma, generating more jobs. Other companies in the Frederickson industrial area include Medallion Foods, which makes pasta for export to Japan, and Carlson Paving Products, which produces asphalt paving equipment.
Port of Walla Walla: Wine Incubator Buildings
Situated in the heart of Washington's wine country, the Port of Walla Walla has long counted wineries and wine-related businesses among its tenants. The Port, which has developed barge facilities for shipping grain and runs the Walla Walla Regional Airport, functions to a large extent as an economic development agency supporting local industries, among which wine-making is prominent. In addition to many other businesses, the Port's airport industrial park is home to more than a dozen wineries.
In 2006, the Port increased its support for the industry by creating an incubator program that helps graduates of Walla Walla Community College's Institute of Enology and Viticulture and other aspiring winemakers get started in business. Aided by a $985,000 state economic stimulus grant, the Port built three "wine incubator buildings" in the airport industrial park at a cost slightly more than $1 million. Two more wine incubators were constructed in 2008. Each of the five matching buildings, described by one reporter as looking "like a cul-de-sac of cuteness, with candy-colored facades and rooflines that evoke barns" (Butler), houses a separate start-up winery. The incubator buildings were quickly leased and five new wineries producing a wide variety of Walla Walla wines came into being: Adamant Cellars, Trio Vintners, Lodmell Cellars, Kontos Winery, and CAVU Cellars.
Wineries in the incubator buildings pay low monthly rent at the start of their leases, freeing them to use their available funds on high-quality equipment and supplies and to experiment with wine-making techniques and marketing strategies. Rental rates increase gradually over the course of the leases, which are limited to no more than six years, after which a fledgling winery must "hatch" from the incubator and move out on its own. Besides benefitting from the incubator buildings' low start-up rents, the neighboring winemakers share equipment and support each others' work.
Port of Whitman County: Broadband Telecommunications
In 1998, Internet entrepreneurs in and around Colfax, the county seat of Whitman County on Washington's eastern border, were dependent on agonizingly slow 28.8kb dial-up modem connections. Two years before that the small city had no Internet service at all. The problem was common to lightly populated rural areas across the country -- telecommunications companies saw little profit to be made. As Randy Bostrum, who was then manager of the Port of Whitman County, told a reporter in 1998, "We're kind of the last bit of the tail on the dog" (Sorensen). Indeed, just to get that first Internet link, Port officials, state legislators, and other Whitman County leaders spent two years battling U.S. West and appealing to the state Utilities and Transportation Commission.
In 2000, the state Legislature turned to port districts to help bring high-speed telecommunications and Internet access to rural communities. It authorized port districts in rural counties to develop the necessary infrastructure and provide wholesale telecommunications services. The Port of Whitman County was one of the first to get into the telecommunications business. By May 2000, the port was working with independent local telephone companies to develop the infrastructure that would provide multiple options for broadband Internet service to county residents.
The Port installed fiber optic cable, providing the largest-capacity broadband service, at its Pullman Industrial Park, which adjoins the Washington State University Research and Technology Park, and at the Port of Wilma, its largest and busiest waterfront terminal and industrial site, making both more attractive to business and commercial tenants. In 2010, as part of an $84 million package granted to the state to fund broadband projects under the economic stimulus program of President Barack Obama (b. 1961), the Port received $9.8 million to expand fiber optic service in rural areas of the county. The grant will fund construction of a fiber optic trunk line from Spokane to Whitman County, helping to bring more jobs to the Palouse region.
Robin Torner, "The Public Port Concept and Its Contribution to the Economic Development of Washington," typescript dated 1993, Washington Public Ports Association (WPPA) files, Olympia; "Industrial Wastewater Treatment Means Jobs," undated typescript (context, 2002), WPPA files, Olympia; David J. Olson, "Public Port Accountability," in Urban ports and Harbor Management ed. by Marc J. Hershman (New York: Taylor & Francis, 1988); Washington State Public Port Districts (Seattle: League of Women Voters of Washington, 1989); Commissioner Resource Guide (Oympia: Washington Public Ports Association, 2010); Washington Public Ports Association (WPPA) website accessed June 15, 2010 (www.washingtonports.org); Port of Pend Oreille website accessed October 14, 2010 (www.povarr.com); HistoryLink.org Online Encyclopedia of Washington State History, "Pend Oreille County -- Thumbnail History" (by Laura Arksey), http://www.historylink.org/ (accessed October 3, 2010); Kristin Jackson, "First Cruise Ship Docks at Seattle's New $72 million Terminal," The Seattle Times, April 25, 2009 (http://seattletimes.nwsource.com/html/home/index.html); Eric Sorensen, "Get Down To Brass Tacks Online -- Colfax Man Sells Antique Hardware To The World," Ibid., January 1, 1999; Port of Seattle website accessed October 14, 2010 (www.portseattle.org); Lia Steakley, "Loan Will Aid Sunnyside, Environment," Yakima Herald-Republic, November 11, 2004, p. B-1; "Business Briefs: Port of Sunnyside Named Port of Year," Ibid., December 22, 2002, p. F-2; Port of Sunnyside website accessed October 18, 2010 (www.portofsunnyside.com); "Gov. Gregoire Celebrates Grand Opening of IKEA Distribution Center," Office of the [Washington] Governor website accessed October 22, 2010 (www.governor.wa.gov/news/news-view.asp?pressRelease=996&newsType=1); Port of Tacoma website accessed October 15, 2010 (www.portoftacoma.com); Northwest Door website accessed October 15, 2010 (www.nwdusa.comlain ); Grant Butler, "Walla Walla's New Wine Wave," OregonLive.com website accessed October 20, 2010 (http://www.oregonlive.com/mix/index.ssf/wine_features/walla-walla-new-wine-wave.html); Catie McIntyre Walker, "Taking Flight: Walla Walla Wine Incubators," November 24, 2009, Palate Press website accessed October 20, 2010 (http://palatepress.com/2009/11/taking-flight-walla-walla-wine-incubators); Jonathan Nelson, " Port Power: Extending Their Reach," The Columbian, October 22, 2006, p. A-1; Port of Walla Walla website accessed October 20, 2010 (www.portwallawalla.com); Tom Sowa, "Grants Help Rural Networks," The Spokesman Review, March 6, 2010, p. A-6; Port of Whitman County website accessed October 25, 2010 (www.portwhitman.com); RCW (Revised Code of Washington) 53.08.005, 53.08.370-.380.
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Dallesport Industrial Park, Port of Klickitat, ca. 1980
Courtesy Port of Klickitat
Pend Oreille Valley Railroad locomotive
Courtesy Port of Pend Oreille
Track maintenance, Pend Oreille Valley Railroad
Courtesy Port of Pend Oreille
Pend Oreille Valley Railroad
Courtesy Port of Pend Oreille
Norwegian Star, Bell Street Pier Cruise Terminal, Seattle, June 2004
Courtesy Port of Seattle
Cruise ships docked at Smith Cove Cruise Terminal, Pier 91, Seattle, September 2009
Courtesy Port of Seattle
Waste Water Treatment Plant De-watering Facility, Port of Sunnyside, Yakima County, 2010
Courtesy Port of Sunnyside
Washington Governor Chris Gregoire at grand opening of IKEA distribution center, Frederickson Industrial Area, September 17, 2008
Courtesy Port of Tacoma
Wine incubator buildings, Walla Walla Regional Airport Business Park, 2006
Photo by Donna Lasater, Courtesy Port of Walla Walla
Wine incubator buildings, Walla Walla Regional Airport Business Park, 2008
Photo by Donna Lasater, Courtesy Port of Walla Walla
Port of Wilma, Snake River, Whitman County
Courtesy Port of Whitman County
Pullman Industrial Park, Port of Whitman County
Courtesy Port of Whitman County