PDA planning grant 2007

Narrative

Background


The Olympic peninsula is bounded by the Pacific Ocean to the West, The Straights of Juan de Fuca to the North, Admiralty Inlet and the Hood Canal to the East and Mason County to the South. Access from the mainland is limited to one highway ( HWY 101 from Olympia) and three ferries. The Hood Canal Bridge connects the Peninsula to Seattle via Bainbridge Island and Bremerton ferries. There are also ferries from Port Angeles to Victoria and from Port Townsend to Whidbey Island. There is no local passenger of freight rail service.

The region consists of two counties Clallam (pop 67,000) and Jefferson (pop 27,000). More than 95% of the region is National or State Park, the largest of which is the Olympic National Park, a major tourist attraction.


The incorporated cities in the area are:

Port Angeles 19,010
Port Townsend 8,865
Forks 3,175
Sequim 5,330
Total 36,380

Rural 57,620

Total Region 94,000
Until the mid 1980s, the Olympic Peninsula was a burgeoning economy based almost entirely on lumber, the area’s most abundant natural resource. Ecological regulation enacted at that time to protect the endangered Spotted Owl, soon put a major part of the local workforce out of a job and turned the entire region into an economic disaster area. The decline of the local fishing industry has exacerbated the economic problems and efforts to create a new basis for a sustainable economy in the area have been slow and not dramatically successful.

The fishing industry has not recovered and, more than twenty years after the cessation of logging, the last of the spotted owls are now being rounded up for a captive breeding program. Mitigation funding from the Federal and State government has hardly been proportionate to the scale of the economic disaster perpetrated by the Spotted Owl and much of that funding is scheduled to expire next year.

Change in Average wages 1990 to 2000 adjusted for inflation

Average wages in the region, (adjusted for inflation), actually decreased from 1990 to 2000. Unemployment exceeded 25% during this period. Economic Development Organizations were formed in both counties with a view to reversing this dire economic situation.

Recent Developments
Clallam County adopted a regional locally driven, self-sustaining “cluster” economic development model designed to leverage indigenous industry resources and assets. Clallam actively encouraged large retailers to locate in the county. Jefferson County did not adopt the “cluster” model until recently and discouraged major retailers from locating in the county.

The results of the efforts to develop the economy have been mixed. Average wages in the region are still 20-30% below the State Average. Public school enrollment in Jefferson County has declined to the point where many of the rural schools are not sustainable without property tax levies. Clallam County has seen a slight upturn in enrollment, a reflection of the fact that new family wage jobs are being created.


During the last 10 years, the region has attracted affluent retirees from California and elsewhere due to the natural beauty of the area and the low cost of housing. (relative to other areas) As a result of this increase in demand and a shortage of land suitable for residential building, local property values have soared and are now far beyond the reach of the typical average working family.

The current low unemployment rate of 4.5% is more a reflection of the exodus of our young job seekers to more lucrative job prospects off the Peninsula, and the influx of retirees (40% of the population vs. 25% in 2000) rather than any significant increase in available jobs. The total population has not grown significantly but the 25-50 population has decreased and the 50+ population has increased in both counties.

Most recent retail sales data also indicates that the region is lagging the State. The State of Washington enjoyed a record 9% increase in retail sales last year. Clallam increased by only 7% and Jefferson by a meager 0.8%, a reflection of the growth of the retail industry outside of Jefferson County.



Retail Tax Revenue/Growth 2005/2006
Area Taxable Retail Sales(millions) Retail Trade Only(millions) TRS/person Median Income
Clallam County $1020/ 7.2% $484/3.5 % $15,700 $42,367
Jefferson County $372/0.8% $119/2.1 $13,800 $42,620
Washington State $110,500/ 9% $49,400/7.5% $17,300 $51,794


Median Home prices were $231,000 in Clallam and $179,000 in Jefferson Co. in 2000 approximately 5 times the average regional wage. Today the median home price in Jefferson County is $312,000, 7.3 times the average wage. Clallam County faired slightly better with homes costing about 6.5 times the average wage. A two income family making average wages cannot afford the median priced home in this area.



Median Household Income 2000 2001 2002 2003 2004 2005 2005 % of WA
Clallam County $38,052 $39,702 $39,863 $40,124 $41,108 $42,367 81.8%
Jefferson County $39,122 $40,923 $41,385 $40,852 $41,801 $42,620 82.3%
State of Washington $48,397 $49,286 $49,771 $50,664 $51,762 $51,794

A recent survey of local industries in Jefferson County clearly indicated that a lack of skilled workers is still a major issue. No survey has been made recently in Clallam, but anecdotal evidence suggests that the same problem prevails there. Jefferson County’s manufacturing industry is dominated by Port Townsend paper, the regions largest employer in the private sector. This company has struggled financially for several years and entered bankruptcy in 2006 from which it has recently emerged. The Marine trade industry has seen healthy growth in Port Angeles and Port Townsend in the past. Recently it has leveled off in Port Townsend largely due to a lack of available land zoned appropriately for expansion. Marine trades and Manufacturing in Clallam are continuing to grow at a modest rate.

According to this same survey, Jefferson County is still not a “business friendly” community. This view has been a common result of surveys conducted since 2003
Recent data on the relationship between the public and private sectors is not available for Clallam County.

The growth in Retail jobs paralleled the growth in trade and efforts by the State of Washington and the local Joint Marketing board stimulated tourism in the region. Similarly, the influx of retirees has resulted in an increase in the number of health care workers. Unfortunately, Retail, Health-Care and Tourism are the lowest paid sectors of the regional economy. Together they represent 43% of the total workforce but less than 35% of the payroll. In contrast, local government employs 9% of the workforce but accounts for 15% of the region’s payroll. Growth in these low-paid sectors, unless matched by similar growth in other sectors actually reduce the region’s average wage and strain the already short supply of low income housing.

Conclusions
While the region’s economic development efforts have made a difference, it is clear that not enough is being done to stimulate family wage jobs creation in the region. Growth created by increases in Tourism and the Health Care demands of our retirees will lead to more serious shortages of low income housing and will not create family wage employment opportunities. A major effort is required to increase or higher wage jobs and attract new industries to the area in addition to stimulating our indigenous economy. Some changes therefore need to be made to the Comprehensive Economic Development Strategy submitted to the EDA in 2006.

To accomplish this the PDA needs accelerate its evolution from an “umbrella” role, coordinating the efforts of the local EDCs, to a regional development organization which identifies and focuses on broad projects which provide clear and immediate REGIONAL benefit. The PDA must reach out to all the regional organizations to create a prioritized list of these projects.


The PDA should revise the current (interim) CEDS and also create a detailed five-year plan of key economic development activity with measurable milestones and results. This plan should strengthen and focus the efforts to develop the indigenous industry clusters and include some radical changes in our approach to providing these industries with the skilled people they need. Effective, timely workforce development must be a top priority.

The PDA in conjunction with the local EDCs should embark on a major program to recruit new synergistic businesses to the area and to attract intellectual property developers who offer the opportunity for family wage jobs. Initially companies like this would have to import most of their employees, but eventually would provide family wage jobs to young people educated in the region. Attracting these industries requires identifying and building the modern technology infrastructure needed and providing incentives to these businesses to relocate.

The Scope of Work document attached and the interim CEDS update to be published shortly reflect these changes in direction.

Scope of Work

o Educate the PDA board in the Regional Economic Development process

o Determine concise, formal and measurable goals for the PDA. A reasonable goal would be “Achieve, within 5 years, a regional wage so that a dual-income family can afford the median price home” Set interim annual goals for Average Wage, Number of employees by sector and number of new businesses established

o Institute a formal Project Funding Application process and communicate the application process to all the relevant regional agencies. The application form should mirror EDA requirements to estimate the increase in jobs resulting from the project, the total cost of the project and the partners who support and promote the project.

o Create a formal “Project Review Committee” set regular meetings and develop funding criteria.

o Schedule the participation of Board members to participate in the developing the next CEDS and the five-year-plan according the procedures set out in the guidelines. Both the CEDS and the five-year-plan need to be a “living” document much like a business plan in the private sector where board members participate in its evolution and MEASURE their progress at least quarterly.

o Form Subcommittees charged with each of the major projects areas and have them report formally to the board with the same diligence as the treasurer might. The project areas must include

Workforce Development
o Skill set requirements
o Training requirements
o Joint ventures with local industry

Infrastructure Development
o Zoning
o Sewer & Water
o Fiber Optic and other technology

Solicitation strategy
o Determination of target industries and companies
o Determination of infrastructure and workforce requirement
o Highly targeted solicitation process.