PDA planing grant FINAL 2007

Peninsula Development Association
Planning Grant Application
Program Year July 1, 2007 through June 30, 2007

Purpose:

The Peninsula Development Association (PDA) is a two-county regional economic development organization. In the past, one of its primary activities was the support of the two resident economic development councils’ strategic plans, objectives, goals and outcomes. Also, the PDA’s quarterly meetings facilitated continued collaborations and communications on a regional level that would have not otherwise occurred. However, a combination of a heightened awareness of EDA funding expectations and recent changes within the economic development entities that make up the PDA have given the organization a new direction toward regional economic development planning and implementation.

In this second year of a three-year plan, the PDA seeks planning funds to implement a process to identify, evaluate and effectively prioritize projects with clear region-wide economic benefits. The top priority projects will then form the basis of the next update to the region’s Comprehensive Economic Development Strategy.

Background:

The Olympic Peninsula is bounded by the Pacific Ocean to the west, the Straits 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 ( Highway 101 from Olympia) and three ferry routes. 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 or freight rail service.

The region consists of two counties Clallam (pop 69,000) and Jefferson (pop. 28,700). Over 95% of the land in the region is owned or controlled by the government. This includes the Olympic National Park which is 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 60,620
Total Region 97,000
Until the mid 1980s, the Olympic Peninsula was a burgeoning economy based almost entirely on lumber, which was the area’s most abundant natural resource. After years of harvesting at an unsustainable rate, ecological regulations were enacted in the early ‘80’s to protect the endangered Spotted Owl. This soon put a major part of the local workforce out of a job (the highest unemployment at 19.1% in 1981) and the two counties were designated as an economically “distressed” area. The more recent decline of the local fishing industry has exacerbated the economic problems. Efforts to create a new basis for a sustainable¹ economy in the area have been slow and not dramatically successful.

Mitigation funding from the Federal and State governments has hardly been proportionate to the scale of the economic downturn and has been inadequate to provide the infrastructure needed for economic development. Much of the original mitigation funding is scheduled to expire in 2008.

Recent Developments
The results of the efforts to develop the economy have been mixed. 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 lacked the customer base to support major retailers. 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 with current property tax levies. Clallam County has also experienced a decrease in enrollment. This is due, in part, to competition from private schools, but also to the fact that many young people leave the area to find employment and raise a family. 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, therefore, more a reflection of the exodus of our young job seekers to more lucrative job prospects outside the region and the influx of retirees rather than any significant increase in available jobs. The total population has not grown significantly but the 25-50 year old population has decreased and the over-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 while the Olympic Peninsula region only increased by 5.4%

In 2000, median home prices were $125,000 in Clallam County and $173,000 in Jefferson County. The Housing Affordability Index (HAI) was 117 for Clallam County and 82 for Jefferson County, with 100 indicating a balance of a family's ability to pay. In 2006, the HAI for Clallam County fell to an average of 91, with median home prices of $239,000 and Jefferson County's HAI dropped to an average of 67 with median home prices of $326,000. These lower numbers indicate a dramatic reduction in workforce housing affordability.

¹ A sustainable economy generates jobs which pay enough to permit the average family to afford a median priced home
A recent survey of local industries in Jefferson County clearly indicated that a lack of skilled workers is still a major issue. Washington State’s Community Trade and Economic Development funded Business Retention and Expansion surveys in Clallam County, confirmed that the same problem prevails there. The Marine Trade and Manufacturing Industry had seen significant growth both in Port Angeles and Port Townsend in the past. Recently it has leveled off in Port Townsend largely due to the cost of land and the cost of developing the infrastructure needed for expansion. Marine trades businesses in Clallam continue to grow at a steady rate.

The growth in retail jobs in the region occurred mainly in Sequim (Clallam County) due to the opening of a several big box stores within Sequim’s city limits. Efforts by the State of Washington and the local Joint Marketing Cooperative (Jefferson and Clallam) have stimulated tourism in the region. Similarly, the influx of retirees has resulted in an increase in the number of health care workers. Unfortunately, retail, healthcare 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-paying sectors, unless outweighed by stronger 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. Therefore, the Board of Directors of the Peninsula Development Association concludes the following:

• Growth created by increases in tourism and the healthcare and service sector 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 assist our high demand/high wage businesses, support local entrepreneurs starting new businesses, and attract new industries to the area in addition to stimulating our indigenous economy.

• The PDA needs to accelerate its evolution from an “umbrella” role, supporting the efforts of the local EDCs, to a regional development organization which identifies and focuses on broad projects that provide clear and immediate regional benefit. The PDA must reach out and encourage all the regional organizations to participate in the identification and adoption of a prioritized list of regional economic development projects.

I. McFall 7/30/2007
Scope of Work

As proposed within the 2006-07 Peninsula Development Association’s Planning Grant, Phase II was defined as follows:

Research and develop process for cluster sustainability through project development:

• Correlate Comprehensive Economic Development Strategies (CEDS) document within identified regional industry cluster projects
• Develop project application process
• Develop project prioritization
• Research and develop additional finance and technical resources
• Research and implement ad

Therefore, beginning in funding year July 2007-June 2008 the following activities will occur
Activity Who When Budget
1. Update the historic and statistical data to represent the region comprehensively (ongoing during the year) that is required in the CEDS doc.
Contractor Ongoing.
2. Identify 3 to 5 “umbrella” topics such (for example only):
a. Workforce Training
b. Tourism
c. Infrastructure
d. Alternative energies
e. Transportation Board/contractor Fall 2007
3. Create an RFP project template
• Job creation
• Regional Impact
• Estimated Cost Board Fall/Winter 2007
4. Create a project prioritization process
• Scoring sheet
• Presentation by agencies/organizations Board/contractor Fall/Winter 2007
5. Publish RFP and receive regional projects from communities, ports, cities, etc. Board/contractor February 2008
6. Using prioritization process, identify viable projects that match CEDS overarching focus under umbrella topics Board/contractor March 2008
7. Identify in-house PDA projects to be included in CEDS document and begin identification of funding resources Board January-March
7. Hold hearings for project sponsors Board/contractor April 2008
8. Choose PDA sponsored projects through scoring and sponsorship Board April 2008
9 Compile and write first draft of CEDS 2008-09 document Board subcommittee May 2008
10 Finalize draft Board June 1, 2008
11 Submit 2008-09 CEDS document that includes identified projects to EDA Board July 1, 2008
12 Submit applications for project funding for both outside and in-house projects Partners and Board July 1, 2008