Peninsula Development
Association
Clallam & Jefferson Counties
Comprehensive Economic Development Strategy
2006
Peninsula Development Association
P.O. Box 1085
Port Angeles, WA 98362
Tel: 360.457.7793
Fax: 360.452.9618
E-Mail: lrotmark@clallam.org
Comprehensive Economic Development Strategy
Peninsula Development Association – 2006
PREFACE
The Peninsula Development Association (PDA) serves the people of Jefferson and Clallam Counties. Its main objective is to provide a cooperative platform for planning, development and implementation of local and regional plans, programs and projects that will increase the economic activity in the area and improve the quality of life for the people of the North Olympic Peninsula.
This document reviews the history and purpose of PDA, describes its strategic planning process, and summarizes the resulting goals, objectives and strategies. The update encompasses four subject areas. First, it reviews some of the methodology of creating wealth in the economy of the region. Secondly, labor force size, unemployment and population figures are examined to ascertain the direction of their changes. Also included are the PDA goals and finally, outlines of the individual entity’s economic strategies. It should be noted here that almost all jurisdictions within the North Olympic Peninsula are currently updating and approving their economic development elements of their respective comprehensive plans.
INTRODUCTION
The economic partners of the North Olympic Peninsula must recognize that the retention of a regional competitive advantage operate as a system. Therefore, policies in many areas are interdependent; and usually exhibit benefits only in the long run.
It should be understood that the PDA best serves the region when it supports communities recognition and response to changing conditions and opportunities. Therefore, the PDA should implement economic development strategies that assist its partners to:
• Leverage human capital and indigenous assets while making every effort to diversify its economic base.
• Ensure that the region maintains a qualified workforce by developing a community that embraces change and has access to high quality life-long learning.
• Align community resources in the creation of a diverse set of job opportunities in sustainable industry sectors with a focus on raising the average wage in Clallam and Jefferson Counties.
• Become a community of creative solutions where government, education, and business recognize, appreciate and adopt an entrepreneurial spirit.
• Make every effort to ensure that our communities’ physical infrastructure (roads, waterborne transportation, sewer, water, telecommunications, broadband, etc.) and human infrastructure (education, healthcare, public safety, housing and social support, etc.) keeps up with growth in a well-planned, cost effective way.
• Be an active participant in regional economic development initiatives with a focus on sustainable economic development projects.
STRATEGIC HIGHLIGHTS
Over the past few years, the PDA recognized that traditional measures taken to attract outside investment simply would not pull the region from the depths of a failing economy. Therefore, several new thought streams emerged relative to stabilization and expansion of the North Olympic Peninsula’s economic base.
• Successful regions build on their inherited assets (e.g., geography, diverse lifestyles, population, educational opportunities, businesses, governmental organizations) to create specialized economies that both differ from other regions and offer comparative advantages to local companies.
• Building strong regional economies takes a long and sustained effort. There are many steps in building a regional economy - developing inherent assets, creating new assets, linking companies to these assets, attracting outside companies.
• Successful regions do not rely on chance, but rather seek to institutionalize the innovative process by building strong educational and skill development centers to create continuous innovation and entrepreneurship.
• Small to medium sized enterprises are the greatest source of jobs and thus must be targeted for support in regional initiatives.
• Community economic development that helps the most disadvantaged help themselves; i.e. gain economic independence and sustainability.
PDA's Mission
PDA's mission is to foster a cooperative effort in planning, development and implementation of local and regional plans, programs and projects that will increase the economic activity in the area and improve the quality of life of its citizens.
PDA's Vision
The North Olympic Peninsula will become a region with an educated and trained workforce, healthy people, a sound physical infrastructure, a dynamic economic base and the local and regional capacity to be economically self-sustaining.
HISTORY OF PDA
The Peninsula Development Association has been recognized as the major development organization for the North Olympic Peninsula in the State of Washington. On October 31, 1984, PDA was formed as a non-profit corporation to promote economic and community development in cooperation with local government, businesses and private organizations. It responsibilities are that of a regional associated development organization.
PDA's main objective is to foster a cooperative effort in planning, development, and implementation of local and regional plans, programs and projects which will increase the economic activity in the area and improve the quality of life of its citizens. In order to accomplish this objective, PDA:
1. Represents the district-wide economic development program. As an Economic Development Administration (EDA) District, PDA has prepared a Comprehensive Economic Development Strategy (CEDS) that establishes a framework for long-range economic prioritization in the multi-county area.
2. Promotes assistance to businesses in PDA's two-county area. PDA serves as a regional link between the private sector and the government agencies.
3. Researches federal and state grant-in-aid programs in order to identify the proper funding source for local or regional projects;
4. Provides technical and planning assistance to local governments in preparing project applications for federal and state funding assistance;
5. Promotes cooperative arrangements and contracts among its members or other governmental agencies and private persons, corporations or agencies;
6. Assists in comprehensive planning for public facility projects within the region either directly by PDA personnel or through other public or private planning agencies;
7. Studies regional and local services and facilities affecting health, affordable housing, telecommunications, training, infrastructure, childcare, education/workforce training, land use and development;
PDA’s STRUCTURE
The PDA membership is comprised of representatives of the Counties of Jefferson and Clallam and includes representatives from the Board of Commissioners of each county, tribal communities, and representatives’ at-large of employment, education, labor.
A Board of Directors oversees the administrative functions of the PDA effort. The Executive Board consists of not less than eleven (11) and not more than twenty-one (21) members. Fifty-one percent of the Board of Directors must be elected officials. Representatives selected to serve on the Executive Board are named at the first meeting of each fiscal year and serve for the respective fiscal year. The following is a list of people who comprise the PDA membership (2006):
Officers:
Bill Hannan, President Port of Port Angeles
Jay Bennett, Vice-President Diversified Resources, Inc.
Herb Beck, Secretary/Treasurer Port of Port Townsend
Directors:
Katherine Baril Washington State University Extension-Jefferson County
John Beitzel City of Sequim
Ryland Bowechop Makah Tribal Council
Gary Cohn Port Angeles School District
Larry Crockett Port of Port Townsend
Bill Elliott (Alternate) City of Sequim
John Fischbach Jefferson County
Rod Fleck (Alternate) City of Forks
Hugh Haffner PUD of Clallam County
Marny Hannan Sequim-Dungeness Valley Chamber of Commerce
Marlin Holden Jamestown S’Klallam Tribe
Anthony Ingersoll North Olympic Peninsula Resource and Conservation District
Merle Pender Employment Securities Dept.
Wayne King Jefferson County PUD
Laurie Medlicott City of Port Townsend
Mary O’Neil-Garrett Peninsula College
Jim Parker (Alternate) Jefferson County PUD
Clyde Rasmussen (Alternate) North Olympic Peninsula Skills Center
Nedra Reed City of Forks
Karen Rogers City of Port Angeles
David Sullivan (Alternate) Jefferson County
Steve Tharinger Clallam County
Betsy Wharton City of Port Angeles
EDC Director
Linda Rotmark Clallam County EDC
CHANGE IN PDA REGION
Population 1990-2004 and Projections to 2015
County/State 1990 1995 2000 2001 2002 2003 2004 2010* 2015*
Jefferson 20,406 24,112 26,299 26,446 26,600 26,700 27,000 30,892 34,067
Clallam 56,204 61,461 64,179 64,454 64,900 65,300 65,900 67,754 70,769
State 4,866,692 5,470,104 5,894,121 5,974,900 6,041,710 6,098,300 6,167,800 6,648,112 7,096,501
Source: US Census and WA-OFM
*Projections
PDA Region Population 1990 2004 % Change
Jefferson 20,406 27,000 32.31%
Clallam 56,204 65,900 17.25%
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
EMPLOYMENT/UNEMPLOYMENT
Clallam County Jefferson County Washington State
2004Total Employment 24,950 12,030 3,012,900
Total Unemployment 1,490 580 193,700
Percent of Labor Force 5.6% 4.6% 6.0%
Civilian Labor Force 26,440 12,610 3,206,600
2003Total Employment 23,790 11,250 2,902,900
Total Unemployment 1,920 740 237,000
Percent of Labor Force 7.5% 6.2% 7.5%
Civilian Labor Force 25,710 11,990 3,139,900
2002Total Employment 23,310 10,870 2,882,600
Total Unemployment 1,880 770 226,700
Percent of Labor Force 7.5% 6.6% 7.3%
Civilian Labor Force 25,190 11,640 3,109,300
2001Total Employment 22,520 10,580 2,830,600
Total Unemployment 1,890 650 193,400
Percent of Labor Force 7.7% 5.8% 6.4%
Civilian Labor Force 24,410 11,230 3,024,000
2000Total Employment 23,030 10,420 2,896,300
Total Unemployment 1,900 590 159,300
Percent of Labor Force 7.6% 5.4% 5.2%
Civilian Labor Force 24,930 11,010 3,055,600
FUTURE EFFORTS
It is imperative that several key linkages be focused upon if the PDA is to assist its community partners in achieving economic health in the immediate term.
Infrastructure investment within the PDA region is crucial. However, the costs associated with increased environmental compliance regulations will affect local communities with small population base in regions like the North Olympic Peninsula. Within the past decade, regulations have increased considerably on the monitoring of public drinking water, wastewater, solid, hazardous and infectious waste, and air quality. Increased environmental regulations also have significant implications for the North Olympic Peninsula’s economy. PDA must take an aggressive leadership role in shaping policies at federal and state levels.
While the natural topography of the region presents many challenges to infrastructure improvements and affordable housing, it affords many opportunities for tourism development. The region contains a variety of marine adventure experiences, numerous state and county recreation areas and is home to the Olympic National Park (ONP). With such outdoor amenities, many recreational activities are available. The future financial stability of the ONP and its impact on the PDA region will be felt in tourism and job creation. For tourism to be an effective economic development strategy, its continued growth within the PDA region relies on the establishment of adequate infrastructure and increased public and private financial investment.
The economic outlook for the PDA region is looking brighter. There are, however many challenges that still face the workforce of the North Olympic Peninsula. The chronic economic barriers created from a reliance on an under-diversified economy, combined with a changing national economy, have resulted in under-employment, lower per capita income and increased poverty. While welfare reform has been successful in targeting training opportunities for the chronically unemployed, individuals who are under-employed often have fewer options in improving their skill level. The under-employed also share common barriers in obtaining and keeping employment such as the cost of child and elder care.
The good news is that the two counties are making progress in the region by using an industry ”cluster” approach as opposed to a traditional ”business recruitment” approach. Cluster collaboration acts as a tool to better understand the economy and utilize indigenous assets strategically. It also act as an organizational tool to engage industry leaders in a regional strategy and to foster communication, networking and improvement among the companies within clusters and across clusters. The appropriate entity must conduct regular asset mapping of their respective communities to ascertain current information for potentially new “clusters,” along with the development and maintenance of cluster strategic plans.
The PDA must assure that respective North Olympic Peninsula governments are supporting regional business development through creation of new capital and entrepreneurial programs. An entrepreneur can succeed anywhere but they are likely to be more successful in areas that have diversity in sources of capital, an enabling culture, strong local networks, and supportive infrastructure. Government leaders must facilitate and support private networks and create a regional commitment to entrepreneurial growth. The North Olympic Peninsula must continue to send out a clear message that they encourage and support entrepreneurship.
PDA must lead the establishment of public-private sector financial partnerships that espouse a commonly held vision and priorities for facilitating new business investment. This can be accomplished by strategically targeting local financial investments. Upon successful completion, market regional strengths to existing and potential investors by establishing and maintaining up-to-date information systems, mapping regional assets, providing information and advisory services, and streamlined investment facilitation processes.
PDA Identified Concerns
The PDA Board of Directors met on April 5, 2006 and identified several issues of concerns that the regional body should look at developing strategies addressing the concerns.
Workforce Development
Education and workforce training are crucial components of a regional economic development strategy, and skilled workforce is among the region’s most important assets. The importance of higher education in preparing students for high-paying jobs cannot be overstated. However, while traditional four-year and advanced degrees offer students the greatest range of post-graduation options, universities are not the only routes for obtaining skills that are in demand. A region’s education and workforce development system should encompass a wide range of options for people to obtain the tools necessary for succeeding in today’s labor market, including four-year university degrees, two-year degrees at community colleges, specialized certificate programs, and short-term training programs.
The region’s workforce is its most valuable asset for achieving sustainable economic development, but the advantages of higher education in today’s job market are not spreading to all citizens of the region equally. The transition from a manufacturing-based to a service-based, or “knowledge-based,” economy in the U.S. has put a premium on education and skills that allow for adaptable, life-long learning. Highly innovative companies require employees who are skilled in technical fields, such as math and science, but also have strong command of writing, business principles, and the capacity for creativity that drives innovation.
Skilled workforce is such a strong asset in the region that all economic development strategies must be built around it. We must continue to emphasize life-long learning and skill development to all segments of the workforce. As the technology downturn in 2001 showed, workers must have the ability to transfer knowledge and skills to industries in order to avoid unemployment or underemployment when an industry declines. In addition, a regional strategy in 2005 to address the large gaps in higher education attainment would be beneficial in terms of social equity and sustainable economic development. Diversity is an asset, and building human capital among all groups benefits the entire citizenry.
Affordable Housing
Achieving a sustainable balance between employment growth, residential growth, and availability of affordable housing is one of the greatest challenges facing many regions in the U.S., including the North Olympic Peninsula. Many regions that experienced dynamic growth in the booming years of the 1990s struggled to strike that balance, resulting in a steep decline in affordability.
Sustainable economic development is not possible if jobs are concentrated in areas where most workers cannot afford to live. There are myriad factors that affect housing affordability, such as supply and demand, per capita income, zoning, and more, but the relationship between housing and economic development must be addressed if regions are to avoid the problems associated with rapid suburbanization resulting from lack of housing affordability in growing urban areas.
Steady population and employment growth, combined with development patterns that result in increased instances of suburbanization and commute times, have presented difficult challenges to maintaining the region’s well-regarded quality of life. If the majority of high-paying jobs in the region remain concentrated in the urban cores, and local job creation does not keep up with the high rates of residential development, then those challenges will only increase as this region continues to grow in the immediate future.
Affordable housing, despite how the term is often used, is not exclusively about building low- cost, in-fill development homes for low-income residents in urban parts of a region. Maintaining affordable housing requires a comprehensive approach to residential development that allows for a range of housing options, costs, and locations. The challenge in the region is to address housing as part of a regional planning strategy that includes transportation, workforce development, and economic development programs.
Alternative Energy
There is strong interest in making the North Olympic Peninsula less dependent upon outside resources regarding our daily sustenance. To this end, there is a strong and growing initiative to utilize existing natural resources to become more self-sufficient in meeting our energy needs through the use of biomass, wave power, wind and solar energy.
• Biomass from forest, farm and human waste can be used to generate electricity through methane generation or direct combustion in co-generation facilities.
• Biomass from commercially grown terrestrial crops such as canola seed, switch grass and even fly larvae or from aquatic crops such as algae can be used to produce various biofuels including biodiesel and ethanol.
• Wave energy and the energy from ocean currents are readily available in the Straits. Some experimentation using wave energy to generate electricity is currently underway in Neah Bay.
• Wind energy is a viable source of electricity in selected areas of the peninsula, but has yet to be developed.
• Solar energy is also sufficient, especially in the Sequim-Dungeness area, but at this time only a small number of homes are using solar energy as a designed source of heat or incorporate photovoltaic panels for electric power.
To coordinate these diverse efforts, Peninsula College has formed the North West Institute for Renewable Energy (NWIRE) under its Center of Excellence to further this increase in self-sufficiency focusing on three areas of education, product development and research.
Also under development is an eco-industrial park that combines energy related businesses in one area, where the waste stream of one enterprise is the feedstock of another, thereby eliminating the concept of waste and increasing competitive advantage without the need for continual growth.
Multi-County Cluster Development
PDA recognizes that for the North Olympic Peninsula (NOP) to be able to strengthen the region’s economic base, work must be completed to synchronize the clusters. Previous cluster analysis in 2002 within Jefferson County indicated similar sectors to the established clusters within the Clallam netWorks organization. Regrettably, formal clusters were never established in Jefferson County. Clallam netWorks clusters are experiencing a lack of focus in varying degrees. The PDA must identify value-chain clusters for the entire NOP by conducting an updated analysis of the regional clusters to spot industry sector gaps that could be targeted for expansion or development within the "broader" region.
PDA must assist Jefferson County in securing technical assistance in updating the 2002 data and lead the formation of regional clusters for business support, development and targeted recruitment.
The PDA will become the regional economic development organization that will lead a multi-year phased project. The organization recognizes the need for planning a strong regional approach to economic development that blends its established processes with the new planning strategies. Jefferson County sees the benefit of cluster development and aspires to become an equal partner in the PDA’s cluster approach. Additionally, Clallam County has been recognized as a leader in cluster work, and strives to develop the next steps in successfully leveraging the cluster model.
Therefore, in recognition of local, regional, state and federal support of the cluster model, the Peninsula Development Association have initiated steps to develop a comprehensive, phased cluster approach that will become a model for Washington State Community Trade and Economic Development and the Economic Development Administration. This approach will reflect a regional economic development process that supports prioritized projects within the industry cluster as portrayed in the CEDS document. The Peninsula Development Association anticipates the application for additional technical support and funding at each phase.
PDA Strategies
Strategy 1: Support Comprehensive Small Business Services
Activities:
• Continue to reach out to businesses in more remote areas of the region and support the delivery of services via distance learning and teleconferencing
• Promote business access to capital through revolving funds, banks, tribes, and venture capital outlets, and other state and local sources through industry clusters
• Continue to give referrals to Washington Manufacturing Services to provide fee-for-service technical assistance for business
• Continue to support the Clallam Business Incubator, WSU Small Business Development Centers and SCORE Counselors, ICN Building
Strategy 2: Increase Business Development Opportunities
Activities:
• Collaborate with the District’s two economic development agencies and other parties (e.g., cities, ports, tribal entities, etc.) in their recruitment efforts
• Promote the retention and expansion of existing businesses
• Promote the use of industry cluster teams using cluster-based approaches
• Support the participation on the Washington State Community, Trade and Economic Development’s Business Retention and Expansion (BRE) process.
• Support the research, development, and marketing of value added secondary products specifically in forest resources and agriculture
• Collaborate with local Public Development Authorities on strategies and projects
• Assist the appropriate economic development entity with funding proposals that support further appropriate economic development
• Encourage, support, develop and host business education outreach programs
Strategy 3: Support Infrastructure Development Projects
Activities:
• Work with ports, counties, public utility districts, and cities within the District to define short- and long-term strategies for industrial park and high-tech campus development
• Review and promote local infrastructure development inside UGA areas, particularly in the areas of business parks, solid waste, and air service
• Encourage the development of telecommunications infrastructure throughout the District to allow for broad bandwidth, redundancy, and capacity to meet the future needs for voice and data transmission
• Encourage the development of a network of business incubator buildings for entrepreneurial enterprises throughout the District
• Foster partnerships with the ports, counties, cities, state, and federal governmental agencies to finance new construction
• Provide support for projects that generate jobs
• Monitor the state-mandated Growth Management planning process to ensure adequate land and services are available for targeted light manufacturing and high tech enterprises
Strategy 4: Promote Intergovernmental Collaboration
Activities:
• Become the model of an environment within the region of cooperation and partnership among the various jurisdictions resulting in better coordinated implementation of prioritized economic development projects
• Acknowledge strategies that are consistent among local comprehensive plans
• Encourage more user-friendly, efficient, and predictable systems for business permitting in jurisdictions throughout the region
Strategy 5: Promote Entrepreneurial Investment
Activities:
• Work to nurture a culture of entrepreneurship on the North Olympic Peninsula
• Support the development and marketing vocational training opportunities
• Support the expansion of entrepreneur training programs and courses on the North Olympic Peninsula
• Support through entrepreneurial referrals, the Clallam Business Incubator, a regional business support entity
Strategy 6: Workforce Investment
Activities:
• Encourage the capacity of local institutions and school districts to provide basic work-force readiness skills to help all students find and hold jobs
• Support the expansion of educational opportunities through telecommunications
• Support the increase of training institutions’ capacity, such as community colleges, to upgrade work-force skills and increase productivity
• Assist local area educational institutions in assessment processes, innovative program development, leadership and organizational development and training and capacity-building services
Strategy 7: Leadership Development
Activities:
• Support programs that foster leadership development and civic involvement
• Continue efforts to serve as conveners of community efforts and catalysts for economic development
• Support local-level planning to develop shared visions for communities and encourages the incorporation of local planning efforts into local and regional plans
Strategy 8: Create New Financial Investment Pools on the North Olympic Peninsula
Activities:
• Initiate linkage w/ existing asset management concerns on the North Olympic Peninsula (estate lawyers, investment managers, trust officers, etc.) to introduce PDA initiatives and member activities
• Lead a coordinated effort to promote existing non-traditional debt sources already available on the North Olympic Peninsula (Shorebank, Cascadia, USDA RD, Angel Funds, etc.)
Strategy 9: Economic Development Policies
Activities:
• Take a leadership role on the North Olympic Peninsula in working with Federal and State agencies to develop and implement broad policies and procedures that encourage economic progress
• Collaborate in the review and coordination of County, City, PUD, Tribal and Port Comprehensive Plans
Strategy10: Affordable Housing
Activities:
• Promote the identification of tools and programs to decrease infrastructure costs for development of affordable housing
• Support development of affordable starter homes
• Explore links between housing and economic development
Strategy11: Healthcare
Activities:
• Partner in the attraction of services to underserved areas of the region
• Advocate for affordable health care through collaboration
• Study the availability of affordable health care services to improve understanding of access to care in all areas of the region through regional healthcare cluster
• Support best practices in health care collaboration to help address the need for affordable solutions among large and small employers, as well as self-employed people
Strategy 12: Support Regional Cluster Development
Activities:
Benchmark Regional Clusters
• Identify regional clusters by updating Jefferson County’s previous work
• PDA shall support the formal clusters organization within Jefferson County
• Model and map systemic relationships between like clusters within the two counties.
Engage Regional Clusters
• Formalize communications channels between the two counties through the PDA
• PDA shall foster inter-firm collaboration through the two counties economic agencies
Organize/Deliver Services
• Organize and disseminate information by cluster
• PDA should lead the development of cross agency cluster teams
• PDA shall facilitate external cluster connections with public sector, education, investment networks and cluster growth opportunities.
Continue to Build Specialized Work Forces
• Support existing networks available in Clallam and Jefferson counties to qualify people for employment within the clusters
• Support established cluster skill centers and the creation of new virtual networks where needed within remote parts of the two counties
Stimulate Innovation and Entrepreneurship
• PDA shall seek unique investment vehicles that fund cluster innovation and business start-ups
• Continue support of the various existing and proposed cluster based incubators
• Encourage entrepreneurs’ networks
Market/Brand the Region
• PDA shall promote funding for targeted inward investment for marketing the region
• PDA will promote branding efforts within the North Olympic Peninsula’s tourism committees and organizations
Allocation of Resources/Investments
• PDA should encourage incentives or set aside funds for multi-firm projects that link two companies from the two counties
• PDA shall work with the two county’s economic agencies to develop a strategy that will invest in cluster R&D
Summary
North Olympic Peninsula residents will have the skills and knowledge necessary to compete in the world economy in the 21st century. The PDA shall act as a conduit of resources for the communities to have the physical infrastructure necessary for self-sustaining economic development and improved quality of life. The people and organizations of the region will have the vision and capacity to mobilize and work together for sustained economic progress and improvement of their communities. Additionally, North Olympic Peninsula residents will have the access to financial and technical resources to help build dynamic and self-sustaining local economies and businesses will have access to quality technical assistance.
The PDA shall take a leadership role in working with Federal and State agencies to develop and implement broad policies and procedures that encourage economic progress. The PDA shall support policies and programs that develop leadership skills within the communities and the PDA will be a leading entity in the development and capitalization of new investment capital for economic development projects. The PDA will support the expansion of business assistance and resources through business incubators through a cluster based economic development.
Showing posts with label ceds documents. Show all posts
Showing posts with label ceds documents. Show all posts
Sunday, October 28, 2007
Thursday, June 28, 2007
CEDS Draft 2007
A Comprehensive Economic Development Strategy
for the
Peninsula Development Association
June 2007
Ian McFall
Economic Development Council
P.O. Box 877
Port Townsend, WA 98362
Tel: 360.385.6767
Mail: director@edcjc.com
Contents
I Background
II Analysis of Economic Development Problems and Opportunities
III CEDS Goals and Objectives
IV Community and Private Sector Participation
V Strategic Projects, Programs and Activities.
VI CEDS Plan of Action
VII Performance Measures
Appendix 1: PDA’s STRUCTURE
Appendix 2: TRENDS IN REGIONAL POPULATION
Appendix 3: ALTERNATIVE ENERGY
I Background
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 75% of the local workers out of a job and turned the entire region into an economic disaster area. More than twenty years after the cessation of logging the last of the owls are being rounded up for a captive breeding program. Obviously decimating the logging industry didn’t prevent the demise of the owls. Despite this fact, 97% of the Olympic Peninsula is now controlled by the National or State Parks and the remaining 3% is the subject of some of the most stringent ecological regulation in the world.
Mitigation funding from the Federal and State government has hardly been proportionate to the scale of the economic disaster perpetrated by the Spotted Owl. Much of what little funding there is expires next year.
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 not been dramatically successful. Economic growth on the Peninsula was half that of the State last year and average wages are still 20-30% below the State Average. Public school enrollment, a leading indicator of a healthy economy, has steadily declined to the point where many of the rural schools are not sustainable without property tax levies. Due to the influx of well-heeled retirees, housing costs 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 prospects off the Peninsula, and the influx of retirees (now 46% of the population) rather than any significant increase in available jobs. The total population has not grown significantly.
The failure to create a new basis for a sustainable economy in the area is not for lack of trying.
No fewer than four Economic Development organizations exist today, all of which strive for economic development in the region. The Economic Development organizations alone number fifty dedicated people meeting every month and that doesn’t include the Chambers of Commerce and the Ports of Port Townsend and Port Angeles, who also expend a lot of energy on Economic Development.
However much of this effort has been to no avail and it is now the opinion of many residents of the region that, unless we do something very different from what we are doing today, the Olympic Peninsula will become a retirement community largely supported by Tourism with few opportunities for our young people.
II Analysis of Economic Development Problems and Opportunities
While the US and Washington State economies have recently enjoyed a healthy growth, the Olympic Peninsula Region has not kept up. For example, while Washington State as a whole had a record Taxable Retail Sales increase of 9% last year, Clallam saw only 7% and Jefferson County a meager 0.8%. (see table below). Part of the reason for Jefferson County’s dismal results is that, past “no-growth” policies in Jefferson County have stymied the growth of retail sales businesses in the county. As a result, most of the sales tax revenues generated by Jefferson residents is going to Clallam, Kitsap or Mason County.
Area Taxable Retail Sales(millions) Retail Trade Only(millions) TRS/person Average Earnings.
Clallam County $1020/ 7.2% $484/3.5 % $15,700
Jefferson County $372/0.8% $119/2.1 $13,800
Washington State $110,500/ 9% $49,400/7.5% $17,300
Wage rates in the region are slightly higher but still 30% below the state average and the government is still the largest (and highest wage) employer in Jefferson County with nearly twice as many employees as the next largest sector. The top three industry clusters after the Government, are also the lowest paid and, combined, amount to over one third of total employment in the region. Growth in tourism has increased employment in this, the lowest paid sector. Retirees who are now 46% of the population and make up a large part of our health care patrons have increased employment in the Health Care sector. The increase in employment in these low paid sectors depresses our average wage
.
Jefferson County Employment by sector
Sector Number of Employees Average Wage % of State Wage
Government 2089 $35,931 84%
Health Care 1287 $27,607 76%
Tourism 1227 $12,518 83%
Retail 1034 $20,445 75%
All Sectors 9016 $27,980 69%
Continued growth in tourism and an increase in the influx of retirees as baby-boomers reach retirement age in 2010 will perpetuate this trend. The influx of retirees has also escalated the demand for housing. In Jefferson County in particular, supply is limited due to very stringent environmental regulation and a lengthy permit process, which deters new construction. As a result demand has far exceeded supply and prices have soared. Average home valuations increased 40% at the last assessment. The average home is now out of reach of most working families in the area and unattainable for a single wage-earner family making the average wage.
Unemployment in the region is now an apparently healthy 4.5%. However, this more a reflection of the exodus of our young job seekers and the influx of retirees rather than a significant increase in the number of available jobs. This is reflected in public school enrollment, which declined again this year. Most of our rural public schools can no longer be sustained without property tax levies.
Environmental Regulation of the region has also served to restrict growth. 97% of the region is now parkland and the remaining 3% is subject to continually more stringent regulation. In Jefferson County in particular, sewer and water infrastructure needed to make areas designated for Urban Growth eight years ago have never been built. The cost of this infrastructure has spiraled upward with inflation and ever more complex and costly environmental regulation. More regulation, particularly with regard to water rights and pollution of the Sound should be expected. Most of regulation can be expected to be detrimental to commercial growth and a deterrent to many prospective new businesses.
The good news is that our Marine Trade and Manufacturing Clusters businesses have continued to grow. Unfortunately, they are severely restricted by the need for skilled people. In a recent survey of 1300 JeffCo businesses, lack of available skilled workers was listed as the number one issue limiting business growth. The Marine trades in Jefferson County are now topped out because of limited available space and business actually declined last year.
III CEDS Goals and Objectives
Our single minded goal must be to increase the average wage by removing the obstacles to growth in those clusters that have higher paying jobs and attract more businesses with higher paying jobs to the region. The influx or more retirees and the recent efforts by the State to promote tourism will serve only to increase employment in the lowest paid sectors, further depressing our average wage. We must therefore substantially increase employment in the higher paying clusters to offset this.
A reasonable overall objective would be to attain an average regional wage sufficient to qualify a two-income family for a mortgage to buy the average priced home in the region.
Based on current employment (in Jeffco), if tourism doubles in five years and the retired population reaches 65% we would have to quadruple employment in the other industry clusters to achieve this.
IV Community and Private Sector Participation
The private sector is disenchanted with the much of the public sector. Many businesses, particularly in Jefferson County feel that the region is unfriendly to business. Much of this criticism is justified. Permits from Community Development and Public Health departments take far too long to process. B&O taxes are high and deter small businesses from hiring full time employees. Infrastructure, desperately needed for business expansion, is delayed by politics, environmentalists, tribal issues, lack of adequate matching funding. As a result, some major projects have been “in-progress” for 10 years and have yet to break ground.
There is currently lots of planning and very little execution. In general, the private sector gets very involved with major development projects and is generally supportive of economic development. The process bogs down when a minority group objects to a project. In those cases, the public sector rarely displays the leadership qualities needed to realize the project in the face of minority dissent. Instead, the projects flounder and eventually either die or the developer withdraws in frustration.
The attitudes of the business surveyed are virtually unchanged from the Economic Assessment made by Daniel J Evans school of public affairs in 2003. (Sommers and Holabird)
V Strategic Projects, Programs and Activities.
Strategy for developing and retaining existing businesses
The strategy for retaining and promoting the growth of our existing businesses is a straight forward three-step process.
• Survey each key industry
• Determine the specific obstacles to growth for the major part of that industry
• Create and initiate a specific plan to reduce or eliminate those restrictions.
Such a survey was recently completed for 1300 of the 4500 businesses registered in Jefferson County as other than sole proprietorships. These included businesses involved in
• Tourism
• Marine trades
• Aquaculture and agriculture
• Health care
• Manufacturing
• Electronic Technology
• The Arts
According to the survey none of these businesses are market limited. Therefore, if the limitations to their growth were eliminated or reduced, their revenues and employment levels could be increased. The four major obstacles to growth identified by the survey were:
• Lack of skilled people and poor work ethic.
• Lack of available appropriately zoned facilities
• Lack of funds for regional market development
• Regulation
These findings are virtually the same as those of Sommers and Holabird in 2003
Based on this survey, discussions with all three Chambers of Commerce, several Rotary Clubs, three of the largest trade groups in the county and several of our local business leaders, there has emerged a consensus that the projects listed below are critical to economic growth in Jefferson County. A key part of our Economic Development strategy must be to create a realistic plan to complete these within budget and within a reasonable time-frame. This requires adequate funding and the political will to keep the projects moving forward even in the face of inevitable minority objections.
These projects are listed in the table at the end of this section. Estimated costs of these projects is preliminary as are the estimates of the employment increases which result from them. These estimates should be honed and the projects reprioritized appropriately.
Strategy to solicit New Businesses to locate in the region.
It emerges clearly from this analysis that growth in tourism alone will not lead to a sustainable economy. Furthermore, the growth in sectors other than Health Care and Tourism to achieve an increase in average wages for the region is very difficult to achieve. We therefore have to mount a substantial effort to attract intellectual property companies with higher paying jobs in addition to nurturing our existing industries.
Entrepreneurs and most corporations look for four things when making a decision to locate or relocate their business. The order of importance varies depending on the type of business.
o A pool of skilled people, an educational system likely to generate more of those people, and a place where they can attract key employees who, initially at least, may not available locally. The better the quality of life that the new location affords the more likely it is that these key employees can be retained. This is extremely important to small companies because the cost of losing and retraining a new employee is huge.
o “Business friendly” local and state government departments.
o Adequate, appropriately zoned facilities for their business.
o A local market for their goods or services.
Businesses which are synergistic to our existing businesses e.g. suppliers, distributors, component manufacturers etc who supply products and services to, or market the products produced by our indigenous industries will find an attractive, ready-made market here. These businesses, therefore, should be our first priority in our solicitation efforts because we have something to offer them. Information about key suppliers and distributors is readily available from our existing business leaders. We need to make a short list of these companies and have our local business leaders help us in a focused effort to solicit them to set up shop here.
We also need to attract the type of business that can use any surplus infrastructure we have available. In Jefferson County, the Port of Port Townsend has space and funding available to build facilities for aviation related businesses at the airport. The labor skills used to build composite light aircraft are similar to those used in our Marine Trade industry. So, here we can offer infrastructure and a pool of people with some of the right skills. We need to mount a serious “rifle-shot” effort to attract a significant business like this to the area.
Last but not least, we need to attract intellectual property developers to the area. This industry is environmentally clean and therefore easy to assimilate into this intensely ecologically-sensitive area, and it pays well. Three key things are required to attract intellectual property developers. These are:
a) Fiber optic Internet infrastructure
b) Incubator facilities for small start ups in this field
c) Funding to provide B&O tax breaks and other incentives to intice companies to relocate here.
These items are included in the following list of critical projects.
Project description
Partners Estimated Project Cost over 5 years Jobs Created over 5 years Priority
Develop our most needed workforce skills by radically changing our existing educational process and establishing apprentice ship programs. Public schools, Community Colleges Local industry associations $1.5 m 500 Top
Mount a Commissioner-level effort to get the Sewer completed in the Tri-Area UGA and in Brinnon DCD. PUD, County Commissioners $1.0 m 250 Very High
Obtain additional professional help to promote International and Domestic tourism on the Olympic Peninsula and fund it adequately Joint Marketing. Lodging Tax Advisory Committee 10% of Tourism Revenue 1000
Jeff. County Very High
Expand our existing Marine trade facilities and fund the Ports to accomplish this.
Port of PT, Port of PA. MTA. $1.5 m 250
Jeff Co Top
Fast Track the Pleasant Harbor Project with backing of the commissioners.
DCD, Commissioners $100,000 250 Top
Fund the expansion of Aquaculture infrastructure operated by the Port of Port Townsend DCD, Port of PT
Oyster Industry $500,000 50 High
Fund a highly targeted search for synergistic and Intellectual Property companies to relocate here. EDC, Port of PA and Port of PA $100,000 150 High
Organize the creation of an appellation “Olympic Peninsula” and provide funds to promote it. EDC, Chambers
Grower Assoc. Vintners etc $250,000 300 High
Form an Angel Capital fund EDC, private individuals, Banks $25,000 200 High
Initiate a project to deploy HS Internet capability and create Incubators. EDC, City of PA, State Park Ft. Warden $1.0 300 High
Fund a very small regional organization to manage dispersed low income housing for seasonal tourism workers EDC, City of PT, City of PA $125,000 200 Very High
Total 3450 35%
VI CEDS Plan of Action
1 Workforce Development
Our public schools and community colleges do not turn out graduates with skills that fit our indigenous industries and many graduates that do, don’t have an acceptable work ethic.
Action Items
a) Create a partnership between our Community colleges and local businesses to initiate an “apprenticeship” program where local businesses pay for their own employees to be trained in specific skills at the community college and students “intern” at local companies to hone there skills hands on. The EDC has started such a program in cooperation with the Marine Trade Association and the local Wooden Boat School. Similar programs exist in Clallam county.
b) Establish a “charter-style” vocational school to train high school seniors in specific trades including building industry, welding, finishing, fine woodcraft and electronic drafting. These are all skills in short supply within our existing marine trades cluster
c) We must provide “Work ethic training” in high school. College students learn about the real world in a place with a safety net. Those students who don’t pursue a college education and enter the job market after leaving high school don’t have that advantage. Liberal educational policies in public schools reward students with “gold stars for all” and play soccer games without keeping score. This doesn’t prepare our young people for the competitive world economy we live in. Entry-level employees need to be taught that performance counts and gold stars only go to winners. Today we have so many high school graduates who don’t seem to realize that Woody Allen was right.(90% of success is showing up) that large Washington corporations are now instituting management training programs on how to deal with this “Z generation”
Our public schools should institute a senior year course on “how to get a job and keep it”
2 Water/Sewer infrastructure.
Many of the zoning and permit restrictions which limit business growth in the area are the result of the requirement that facilities have sufficient available water (fireflow ) and sewer. To remove these constraints, the county needs to get the sewer built in Hadlock and take advantage of the State Park Sewer development in Brinnon. The Hadlock sewer has been ten years in the process. Elephants give birth in five. The County has spent nearly ten years and hundreds of thousands of dollars on studies related to this project and is yet to break ground.
Action Items:
a) Our Commissioners must be asked to champion this project despite the objections of the inevitable vociferous few. A person in DCD should be assigned to the project to plan and execute the project within 2 years
d) State Parks, DCD and the State funding organizations need to clarify their roles and create an action plan with a schedule to complete this in one year
3 Funding the Promotion of Olympic Peninsula Tourism
Tourism represents about 12% of our employment in the region. The growth rate in tourism slowed slightly due in some part to rising gas prices and higher travel costs. However, the growth of tourism derived revenues was lower in the Olympic Peninsula than for Kitsap and below the average for the state. In short, the Olympic Peninsula is losing market share.
The reason for the loss of market share is very likely related to relative spending on advertising to promote the area. The Olympic Peninsula generated over $2 million in Lodging tax revenues alone last year. Advertising expense was less than $100,000 about a quarter of Kitsap’s budget.
Action Items
a) Compare nearby area advertising budgets and Tourism revenues to that of the Olympic Peninsula and bring the Olympic Peninsula budget into line
b) Contract with a professional marketing organization to assist our own team to create an integrated promotional program including advertising
c) Initiate an effort to link the various Peninsula Visitor Centers in order to provide multi-facility availability/reservation capability at the centers and on-line.
d) Create a plan to deal effectively with the inevitable need for passports for travel to Canada. This will effect tourism negatively unless a long range plan to deal with the logistics is developed and executed in the next two years.
4 Expansion of Marine trade facilities
The Marine Trades in Jefferson County are restricted by both a shortage of skilled people and a lack of space required for expansion. The lack of skilled workers is addresses in previous section covering workforce development. Providing more space is more difficult and requires a major study in land use particularly in Port Townsend where the only available land that is appropriately zoned is used by the Paper Mill and the Kai Tai Lagoon area.
Action items
a) engage experts to do a long range land use project for Port Townsend with a view to expanding the Port Facilities possibly including land currently owned by the Paper Mill.
5 Fast Track the Black Point Project.
This project is a planned resort including a golf course and 800 condominiums. This will ad approximately $240 million to the assessed value of the county and generate 1.6 million in property tax revenues alone. The project is presently in the Environmental Impact Statement process. Although a few residents have objected, the majority of the local community is in favor of the project. It is essential that the county government recognize the economic value of this project and lend its full support.
Action Items
a) Assign a DCD employee to bird dog the project through the lengthy and complex EIS and permit process.
6 Funding aquaculture infrastructure operated by the port
The Port of Port Townsend owns and operates infrastructure in Quilcene that is used by several Oyster producers in the county. These facilities have degraded by silting and other issues some of which have been brought about by salmon preservation efforts. This infrastructure is key to the continued growth of the Oyster industry on Quilcene bay.
Action items
a) provide funding to the port to upgrade the infrastructure
7 Funding a search and INCENTIVES for synergistic and IP companies to relocate
We must attract new businesses to the region. This requires personal. In addition, incentives need to be established for new businesses to relocate. These funds need to be budgeted.
Action items
a) Fund the EDC to create a short list of companies in the target industries and actively solicit them.
b) Set aside B&O taxes to fund incentives to attract target companies.
8 Organization and funding of “appellation Olympic Penisula”
Much of the success of the Napa Valley and similar regions has been as a result of joint marketing efforts and creation of a local brand or “appellation” Local vintners, shellfish producers, salmon fisheries, organic crops growers and beef/dairy producers should form a similar consortium. This is already in an embryo stage but requires funding and management to really make it happen.
Action Item
a) Establish an “Appellation Olympic Peninsula” with seed funding for management and advertising
9 Formation of an Angel Capital fund
The growth of some of small businesses are restricted by lack of capital. We have a large number of retirees with vested interest in the community who have the wherewithal to provide financing. An angel fund should be established for this purpose.
Action Item
a) Provide funds to the PDA to organize the fund and solicit participants.
b) Integrate the Angel fund into the Economic development process to assist existing companies to expand their operations and to help attract promising new start-ups in the targeted industries.
10 Initiate a project to deploy HS Internet capability and create Incubator
To attract intellectual property developers requires fiber optic Internet infrastructure. Some Internet infrastructure is available on the Peninsula but is inadequate.
Action Item
a) fund a survey to determine needs of the target industry and fund implimentation
11) Fund a very small regional organization to manage dispersed low income housing
Tourism work is the lowest paid sector and highly seasonal. Seasonal workers have difficulty finding affordable housing.
Action Item
a) Fund a “housing agency” for low income and seasonal workers by creating an inventory of Additional Dwelling Units in the region and directing housing seekers to owners.
b) Relax ADU regulations to create more ADU properties since these are generally preferable to concentrated low income housing.
VII Performance Measures
We must measure the success of our Economic Development efforts simply by measuring the following parameters for Clallam and Jefferson Counties.
• Total number of non-government jobs
• Average non-government wages as a percent of State non-government wages.
• Total Taxable Retail Sales
• Total B&O Tax revenues.
• Proportion of workers who could qualify for a mortgage to purchase the average home.
Appendix 1: PDA’s STRUCTURE
The PDA membership is comprised of representatives of the Counties of Jefferson and Clallam and includes representatives from the Board of Commissioners of each county, tribal communities, and representatives’ at-large of employment, education, labor.
A Board of Directors oversees the administrative functions of the PDA effort. The Executive Board consists of not less than eleven (11) and not more than twenty-one (21) members. Fifty-one percent of the Board of Directors must be elected officials. Representatives selected to serve on the Executive Board are named at the first meeting of each fiscal year and serve for the respective fiscal year. The following is a list of people who comprise the PDA membership (2006):
Officers:
Bill Hannan, President Port of Port Angeles
Jay Bennett, Vice-President Diversified Resources, Inc.
Herb Beck, Secretary/Treasurer Port of Port Townsend
Directors:
Katherine Baril Washington State University Extension-Jefferson County
John Beitzel City of Sequim
Ryland Bowechop Makah Tribal Council
Gary Cohn Port Angeles School District
Larry Crockett Port of Port Townsend
Bill Elliott (Alternate) City of Sequim
John Fischbach Jefferson County
Rod Fleck (Alternate) City of Forks
Hugh Haffner PUD of Clallam County
Marny Hannan Sequim-Dungeness Valley Chamber of Commerce
Marlin Holden Jamestown S’Klallam Tribe
Anthony Ingersoll North Olympic Peninsula Resource and Conservation District
Merle Pender Employment Securities Dept.
Wayne King Jefferson County PUD
Laurie Medlicott City of Port Townsend
Mary O’Neil-Garrett Peninsula College
Jim Parker (Alternate) Jefferson County PUD
Clyde Rasmussen (Alternate) North Olympic Peninsula Skills Center
Nedra Reed City of Forks
Karen Rogers City of Port Angeles
David Sullivan (Alternate) Jefferson County
Steve Tharinger Clallam County
Betsy Wharton City of Port Angeles
EDC Director
Linda Rotmark Clallam County EDC
Appendix 2: TRENDS IN REGIONAL POPULATION
Population 1990-2004 and Projections to 2015
County/State 1990 1995 2000 2001 2002 2003 2004 2010* 2015*
Jefferson 20,406 24,112 26,299 26,446 26,600 26,700 27,000 30,892 34,067
Clallam 56,204 61,461 64,179 64,454 64,900 65,300 65,900 67,754 70,769
State 4,866,692 5,470,104 5,894,121 5,974,900 6,041,710 6,098,300 6,167,800 6,648,112 7,096,501
Source: US Census and WA-OFM
*Projections
PDA Region Population 1990 2004 % Change
Jefferson 20,406 27,000 32.31%
Clallam 56,204 65,900 17.25%
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
EMPLOYMENT/UNEMPLOYMENT
Clallam County Jefferson County Washington State
2004Total Employment 24,950 12,030 3,012,900
Total Unemployment 1,490 580 193,700
Percent of Labor Force 5.6% 4.6% 6.0%
Civilian Labor Force 26,440 12,610 3,206,600
2003Total Employment 23,790 11,250 2,902,900
Total Unemployment 1,920 740 237,000
Percent of Labor Force 7.5% 6.2% 7.5%
Civilian Labor Force 25,710 11,990 3,139,900
2002Total Employment 23,310 10,870 2,882,600
Total Unemployment 1,880 770 226,700
Percent of Labor Force 7.5% 6.6% 7.3%
Civilian Labor Force 25,190 11,640 3,109,300
2001Total Employment 22,520 10,580 2,830,600
Total Unemployment 1,890 650 193,400
Percent of Labor Force 7.7% 5.8% 6.4%
Civilian Labor Force 24,410 11,230 3,024,000
2000Total Employment 23,030 10,420 2,896,300
Total Unemployment 1,900 590 159,300
Percent of Labor Force 7.6% 5.4% 5.2%
Civilian Labor Force 24,930 11,010 3,055,600
Appendix 3: Employment by Business Sector
Business
Sector Clallam-County Jefferson-County Olympic Peninsula
#employed % of Total #employed % of Total #employed % of Total
Appendix 4: Alternative Energy
I’ve included this appendix because Alternative Energy was included in the previous CEDS. However, I believe that replacing fossil fuel with alternative energy sources is huge undertaking which can best be done at the State and National level. For this region to do more than institute tried and proven energy saving programs throughout the county would be an ineffective use of the limited funding we have available. However, much can be done with energy saving programs, some counties have saved as much as 15% of their energy costs for a very small investment. We should do the same. The local PUDs should provide an incentive for the general public to follow suit.
for the
Peninsula Development Association
June 2007
Ian McFall
Economic Development Council
P.O. Box 877
Port Townsend, WA 98362
Tel: 360.385.6767
Mail: director@edcjc.com
Contents
I Background
II Analysis of Economic Development Problems and Opportunities
III CEDS Goals and Objectives
IV Community and Private Sector Participation
V Strategic Projects, Programs and Activities.
VI CEDS Plan of Action
VII Performance Measures
Appendix 1: PDA’s STRUCTURE
Appendix 2: TRENDS IN REGIONAL POPULATION
Appendix 3: ALTERNATIVE ENERGY
I Background
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 75% of the local workers out of a job and turned the entire region into an economic disaster area. More than twenty years after the cessation of logging the last of the owls are being rounded up for a captive breeding program. Obviously decimating the logging industry didn’t prevent the demise of the owls. Despite this fact, 97% of the Olympic Peninsula is now controlled by the National or State Parks and the remaining 3% is the subject of some of the most stringent ecological regulation in the world.
Mitigation funding from the Federal and State government has hardly been proportionate to the scale of the economic disaster perpetrated by the Spotted Owl. Much of what little funding there is expires next year.
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 not been dramatically successful. Economic growth on the Peninsula was half that of the State last year and average wages are still 20-30% below the State Average. Public school enrollment, a leading indicator of a healthy economy, has steadily declined to the point where many of the rural schools are not sustainable without property tax levies. Due to the influx of well-heeled retirees, housing costs 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 prospects off the Peninsula, and the influx of retirees (now 46% of the population) rather than any significant increase in available jobs. The total population has not grown significantly.
The failure to create a new basis for a sustainable economy in the area is not for lack of trying.
No fewer than four Economic Development organizations exist today, all of which strive for economic development in the region. The Economic Development organizations alone number fifty dedicated people meeting every month and that doesn’t include the Chambers of Commerce and the Ports of Port Townsend and Port Angeles, who also expend a lot of energy on Economic Development.
However much of this effort has been to no avail and it is now the opinion of many residents of the region that, unless we do something very different from what we are doing today, the Olympic Peninsula will become a retirement community largely supported by Tourism with few opportunities for our young people.
II Analysis of Economic Development Problems and Opportunities
While the US and Washington State economies have recently enjoyed a healthy growth, the Olympic Peninsula Region has not kept up. For example, while Washington State as a whole had a record Taxable Retail Sales increase of 9% last year, Clallam saw only 7% and Jefferson County a meager 0.8%. (see table below). Part of the reason for Jefferson County’s dismal results is that, past “no-growth” policies in Jefferson County have stymied the growth of retail sales businesses in the county. As a result, most of the sales tax revenues generated by Jefferson residents is going to Clallam, Kitsap or Mason County.
Area Taxable Retail Sales(millions) Retail Trade Only(millions) TRS/person Average Earnings.
Clallam County $1020/ 7.2% $484/3.5 % $15,700
Jefferson County $372/0.8% $119/2.1 $13,800
Washington State $110,500/ 9% $49,400/7.5% $17,300
Wage rates in the region are slightly higher but still 30% below the state average and the government is still the largest (and highest wage) employer in Jefferson County with nearly twice as many employees as the next largest sector. The top three industry clusters after the Government, are also the lowest paid and, combined, amount to over one third of total employment in the region. Growth in tourism has increased employment in this, the lowest paid sector. Retirees who are now 46% of the population and make up a large part of our health care patrons have increased employment in the Health Care sector. The increase in employment in these low paid sectors depresses our average wage
.
Jefferson County Employment by sector
Sector Number of Employees Average Wage % of State Wage
Government 2089 $35,931 84%
Health Care 1287 $27,607 76%
Tourism 1227 $12,518 83%
Retail 1034 $20,445 75%
All Sectors 9016 $27,980 69%
Continued growth in tourism and an increase in the influx of retirees as baby-boomers reach retirement age in 2010 will perpetuate this trend. The influx of retirees has also escalated the demand for housing. In Jefferson County in particular, supply is limited due to very stringent environmental regulation and a lengthy permit process, which deters new construction. As a result demand has far exceeded supply and prices have soared. Average home valuations increased 40% at the last assessment. The average home is now out of reach of most working families in the area and unattainable for a single wage-earner family making the average wage.
Unemployment in the region is now an apparently healthy 4.5%. However, this more a reflection of the exodus of our young job seekers and the influx of retirees rather than a significant increase in the number of available jobs. This is reflected in public school enrollment, which declined again this year. Most of our rural public schools can no longer be sustained without property tax levies.
Environmental Regulation of the region has also served to restrict growth. 97% of the region is now parkland and the remaining 3% is subject to continually more stringent regulation. In Jefferson County in particular, sewer and water infrastructure needed to make areas designated for Urban Growth eight years ago have never been built. The cost of this infrastructure has spiraled upward with inflation and ever more complex and costly environmental regulation. More regulation, particularly with regard to water rights and pollution of the Sound should be expected. Most of regulation can be expected to be detrimental to commercial growth and a deterrent to many prospective new businesses.
The good news is that our Marine Trade and Manufacturing Clusters businesses have continued to grow. Unfortunately, they are severely restricted by the need for skilled people. In a recent survey of 1300 JeffCo businesses, lack of available skilled workers was listed as the number one issue limiting business growth. The Marine trades in Jefferson County are now topped out because of limited available space and business actually declined last year.
III CEDS Goals and Objectives
Our single minded goal must be to increase the average wage by removing the obstacles to growth in those clusters that have higher paying jobs and attract more businesses with higher paying jobs to the region. The influx or more retirees and the recent efforts by the State to promote tourism will serve only to increase employment in the lowest paid sectors, further depressing our average wage. We must therefore substantially increase employment in the higher paying clusters to offset this.
A reasonable overall objective would be to attain an average regional wage sufficient to qualify a two-income family for a mortgage to buy the average priced home in the region.
Based on current employment (in Jeffco), if tourism doubles in five years and the retired population reaches 65% we would have to quadruple employment in the other industry clusters to achieve this.
IV Community and Private Sector Participation
The private sector is disenchanted with the much of the public sector. Many businesses, particularly in Jefferson County feel that the region is unfriendly to business. Much of this criticism is justified. Permits from Community Development and Public Health departments take far too long to process. B&O taxes are high and deter small businesses from hiring full time employees. Infrastructure, desperately needed for business expansion, is delayed by politics, environmentalists, tribal issues, lack of adequate matching funding. As a result, some major projects have been “in-progress” for 10 years and have yet to break ground.
There is currently lots of planning and very little execution. In general, the private sector gets very involved with major development projects and is generally supportive of economic development. The process bogs down when a minority group objects to a project. In those cases, the public sector rarely displays the leadership qualities needed to realize the project in the face of minority dissent. Instead, the projects flounder and eventually either die or the developer withdraws in frustration.
The attitudes of the business surveyed are virtually unchanged from the Economic Assessment made by Daniel J Evans school of public affairs in 2003. (Sommers and Holabird)
V Strategic Projects, Programs and Activities.
Strategy for developing and retaining existing businesses
The strategy for retaining and promoting the growth of our existing businesses is a straight forward three-step process.
• Survey each key industry
• Determine the specific obstacles to growth for the major part of that industry
• Create and initiate a specific plan to reduce or eliminate those restrictions.
Such a survey was recently completed for 1300 of the 4500 businesses registered in Jefferson County as other than sole proprietorships. These included businesses involved in
• Tourism
• Marine trades
• Aquaculture and agriculture
• Health care
• Manufacturing
• Electronic Technology
• The Arts
According to the survey none of these businesses are market limited. Therefore, if the limitations to their growth were eliminated or reduced, their revenues and employment levels could be increased. The four major obstacles to growth identified by the survey were:
• Lack of skilled people and poor work ethic.
• Lack of available appropriately zoned facilities
• Lack of funds for regional market development
• Regulation
These findings are virtually the same as those of Sommers and Holabird in 2003
Based on this survey, discussions with all three Chambers of Commerce, several Rotary Clubs, three of the largest trade groups in the county and several of our local business leaders, there has emerged a consensus that the projects listed below are critical to economic growth in Jefferson County. A key part of our Economic Development strategy must be to create a realistic plan to complete these within budget and within a reasonable time-frame. This requires adequate funding and the political will to keep the projects moving forward even in the face of inevitable minority objections.
These projects are listed in the table at the end of this section. Estimated costs of these projects is preliminary as are the estimates of the employment increases which result from them. These estimates should be honed and the projects reprioritized appropriately.
Strategy to solicit New Businesses to locate in the region.
It emerges clearly from this analysis that growth in tourism alone will not lead to a sustainable economy. Furthermore, the growth in sectors other than Health Care and Tourism to achieve an increase in average wages for the region is very difficult to achieve. We therefore have to mount a substantial effort to attract intellectual property companies with higher paying jobs in addition to nurturing our existing industries.
Entrepreneurs and most corporations look for four things when making a decision to locate or relocate their business. The order of importance varies depending on the type of business.
o A pool of skilled people, an educational system likely to generate more of those people, and a place where they can attract key employees who, initially at least, may not available locally. The better the quality of life that the new location affords the more likely it is that these key employees can be retained. This is extremely important to small companies because the cost of losing and retraining a new employee is huge.
o “Business friendly” local and state government departments.
o Adequate, appropriately zoned facilities for their business.
o A local market for their goods or services.
Businesses which are synergistic to our existing businesses e.g. suppliers, distributors, component manufacturers etc who supply products and services to, or market the products produced by our indigenous industries will find an attractive, ready-made market here. These businesses, therefore, should be our first priority in our solicitation efforts because we have something to offer them. Information about key suppliers and distributors is readily available from our existing business leaders. We need to make a short list of these companies and have our local business leaders help us in a focused effort to solicit them to set up shop here.
We also need to attract the type of business that can use any surplus infrastructure we have available. In Jefferson County, the Port of Port Townsend has space and funding available to build facilities for aviation related businesses at the airport. The labor skills used to build composite light aircraft are similar to those used in our Marine Trade industry. So, here we can offer infrastructure and a pool of people with some of the right skills. We need to mount a serious “rifle-shot” effort to attract a significant business like this to the area.
Last but not least, we need to attract intellectual property developers to the area. This industry is environmentally clean and therefore easy to assimilate into this intensely ecologically-sensitive area, and it pays well. Three key things are required to attract intellectual property developers. These are:
a) Fiber optic Internet infrastructure
b) Incubator facilities for small start ups in this field
c) Funding to provide B&O tax breaks and other incentives to intice companies to relocate here.
These items are included in the following list of critical projects.
Project description
Partners Estimated Project Cost over 5 years Jobs Created over 5 years Priority
Develop our most needed workforce skills by radically changing our existing educational process and establishing apprentice ship programs. Public schools, Community Colleges Local industry associations $1.5 m 500 Top
Mount a Commissioner-level effort to get the Sewer completed in the Tri-Area UGA and in Brinnon DCD. PUD, County Commissioners $1.0 m 250 Very High
Obtain additional professional help to promote International and Domestic tourism on the Olympic Peninsula and fund it adequately Joint Marketing. Lodging Tax Advisory Committee 10% of Tourism Revenue 1000
Jeff. County Very High
Expand our existing Marine trade facilities and fund the Ports to accomplish this.
Port of PT, Port of PA. MTA. $1.5 m 250
Jeff Co Top
Fast Track the Pleasant Harbor Project with backing of the commissioners.
DCD, Commissioners $100,000 250 Top
Fund the expansion of Aquaculture infrastructure operated by the Port of Port Townsend DCD, Port of PT
Oyster Industry $500,000 50 High
Fund a highly targeted search for synergistic and Intellectual Property companies to relocate here. EDC, Port of PA and Port of PA $100,000 150 High
Organize the creation of an appellation “Olympic Peninsula” and provide funds to promote it. EDC, Chambers
Grower Assoc. Vintners etc $250,000 300 High
Form an Angel Capital fund EDC, private individuals, Banks $25,000 200 High
Initiate a project to deploy HS Internet capability and create Incubators. EDC, City of PA, State Park Ft. Warden $1.0 300 High
Fund a very small regional organization to manage dispersed low income housing for seasonal tourism workers EDC, City of PT, City of PA $125,000 200 Very High
Total 3450 35%
VI CEDS Plan of Action
1 Workforce Development
Our public schools and community colleges do not turn out graduates with skills that fit our indigenous industries and many graduates that do, don’t have an acceptable work ethic.
Action Items
a) Create a partnership between our Community colleges and local businesses to initiate an “apprenticeship” program where local businesses pay for their own employees to be trained in specific skills at the community college and students “intern” at local companies to hone there skills hands on. The EDC has started such a program in cooperation with the Marine Trade Association and the local Wooden Boat School. Similar programs exist in Clallam county.
b) Establish a “charter-style” vocational school to train high school seniors in specific trades including building industry, welding, finishing, fine woodcraft and electronic drafting. These are all skills in short supply within our existing marine trades cluster
c) We must provide “Work ethic training” in high school. College students learn about the real world in a place with a safety net. Those students who don’t pursue a college education and enter the job market after leaving high school don’t have that advantage. Liberal educational policies in public schools reward students with “gold stars for all” and play soccer games without keeping score. This doesn’t prepare our young people for the competitive world economy we live in. Entry-level employees need to be taught that performance counts and gold stars only go to winners. Today we have so many high school graduates who don’t seem to realize that Woody Allen was right.(90% of success is showing up) that large Washington corporations are now instituting management training programs on how to deal with this “Z generation”
Our public schools should institute a senior year course on “how to get a job and keep it”
2 Water/Sewer infrastructure.
Many of the zoning and permit restrictions which limit business growth in the area are the result of the requirement that facilities have sufficient available water (fireflow ) and sewer. To remove these constraints, the county needs to get the sewer built in Hadlock and take advantage of the State Park Sewer development in Brinnon. The Hadlock sewer has been ten years in the process. Elephants give birth in five. The County has spent nearly ten years and hundreds of thousands of dollars on studies related to this project and is yet to break ground.
Action Items:
a) Our Commissioners must be asked to champion this project despite the objections of the inevitable vociferous few. A person in DCD should be assigned to the project to plan and execute the project within 2 years
d) State Parks, DCD and the State funding organizations need to clarify their roles and create an action plan with a schedule to complete this in one year
3 Funding the Promotion of Olympic Peninsula Tourism
Tourism represents about 12% of our employment in the region. The growth rate in tourism slowed slightly due in some part to rising gas prices and higher travel costs. However, the growth of tourism derived revenues was lower in the Olympic Peninsula than for Kitsap and below the average for the state. In short, the Olympic Peninsula is losing market share.
The reason for the loss of market share is very likely related to relative spending on advertising to promote the area. The Olympic Peninsula generated over $2 million in Lodging tax revenues alone last year. Advertising expense was less than $100,000 about a quarter of Kitsap’s budget.
Action Items
a) Compare nearby area advertising budgets and Tourism revenues to that of the Olympic Peninsula and bring the Olympic Peninsula budget into line
b) Contract with a professional marketing organization to assist our own team to create an integrated promotional program including advertising
c) Initiate an effort to link the various Peninsula Visitor Centers in order to provide multi-facility availability/reservation capability at the centers and on-line.
d) Create a plan to deal effectively with the inevitable need for passports for travel to Canada. This will effect tourism negatively unless a long range plan to deal with the logistics is developed and executed in the next two years.
4 Expansion of Marine trade facilities
The Marine Trades in Jefferson County are restricted by both a shortage of skilled people and a lack of space required for expansion. The lack of skilled workers is addresses in previous section covering workforce development. Providing more space is more difficult and requires a major study in land use particularly in Port Townsend where the only available land that is appropriately zoned is used by the Paper Mill and the Kai Tai Lagoon area.
Action items
a) engage experts to do a long range land use project for Port Townsend with a view to expanding the Port Facilities possibly including land currently owned by the Paper Mill.
5 Fast Track the Black Point Project.
This project is a planned resort including a golf course and 800 condominiums. This will ad approximately $240 million to the assessed value of the county and generate 1.6 million in property tax revenues alone. The project is presently in the Environmental Impact Statement process. Although a few residents have objected, the majority of the local community is in favor of the project. It is essential that the county government recognize the economic value of this project and lend its full support.
Action Items
a) Assign a DCD employee to bird dog the project through the lengthy and complex EIS and permit process.
6 Funding aquaculture infrastructure operated by the port
The Port of Port Townsend owns and operates infrastructure in Quilcene that is used by several Oyster producers in the county. These facilities have degraded by silting and other issues some of which have been brought about by salmon preservation efforts. This infrastructure is key to the continued growth of the Oyster industry on Quilcene bay.
Action items
a) provide funding to the port to upgrade the infrastructure
7 Funding a search and INCENTIVES for synergistic and IP companies to relocate
We must attract new businesses to the region. This requires personal. In addition, incentives need to be established for new businesses to relocate. These funds need to be budgeted.
Action items
a) Fund the EDC to create a short list of companies in the target industries and actively solicit them.
b) Set aside B&O taxes to fund incentives to attract target companies.
8 Organization and funding of “appellation Olympic Penisula”
Much of the success of the Napa Valley and similar regions has been as a result of joint marketing efforts and creation of a local brand or “appellation” Local vintners, shellfish producers, salmon fisheries, organic crops growers and beef/dairy producers should form a similar consortium. This is already in an embryo stage but requires funding and management to really make it happen.
Action Item
a) Establish an “Appellation Olympic Peninsula” with seed funding for management and advertising
9 Formation of an Angel Capital fund
The growth of some of small businesses are restricted by lack of capital. We have a large number of retirees with vested interest in the community who have the wherewithal to provide financing. An angel fund should be established for this purpose.
Action Item
a) Provide funds to the PDA to organize the fund and solicit participants.
b) Integrate the Angel fund into the Economic development process to assist existing companies to expand their operations and to help attract promising new start-ups in the targeted industries.
10 Initiate a project to deploy HS Internet capability and create Incubator
To attract intellectual property developers requires fiber optic Internet infrastructure. Some Internet infrastructure is available on the Peninsula but is inadequate.
Action Item
a) fund a survey to determine needs of the target industry and fund implimentation
11) Fund a very small regional organization to manage dispersed low income housing
Tourism work is the lowest paid sector and highly seasonal. Seasonal workers have difficulty finding affordable housing.
Action Item
a) Fund a “housing agency” for low income and seasonal workers by creating an inventory of Additional Dwelling Units in the region and directing housing seekers to owners.
b) Relax ADU regulations to create more ADU properties since these are generally preferable to concentrated low income housing.
VII Performance Measures
We must measure the success of our Economic Development efforts simply by measuring the following parameters for Clallam and Jefferson Counties.
• Total number of non-government jobs
• Average non-government wages as a percent of State non-government wages.
• Total Taxable Retail Sales
• Total B&O Tax revenues.
• Proportion of workers who could qualify for a mortgage to purchase the average home.
Appendix 1: PDA’s STRUCTURE
The PDA membership is comprised of representatives of the Counties of Jefferson and Clallam and includes representatives from the Board of Commissioners of each county, tribal communities, and representatives’ at-large of employment, education, labor.
A Board of Directors oversees the administrative functions of the PDA effort. The Executive Board consists of not less than eleven (11) and not more than twenty-one (21) members. Fifty-one percent of the Board of Directors must be elected officials. Representatives selected to serve on the Executive Board are named at the first meeting of each fiscal year and serve for the respective fiscal year. The following is a list of people who comprise the PDA membership (2006):
Officers:
Bill Hannan, President Port of Port Angeles
Jay Bennett, Vice-President Diversified Resources, Inc.
Herb Beck, Secretary/Treasurer Port of Port Townsend
Directors:
Katherine Baril Washington State University Extension-Jefferson County
John Beitzel City of Sequim
Ryland Bowechop Makah Tribal Council
Gary Cohn Port Angeles School District
Larry Crockett Port of Port Townsend
Bill Elliott (Alternate) City of Sequim
John Fischbach Jefferson County
Rod Fleck (Alternate) City of Forks
Hugh Haffner PUD of Clallam County
Marny Hannan Sequim-Dungeness Valley Chamber of Commerce
Marlin Holden Jamestown S’Klallam Tribe
Anthony Ingersoll North Olympic Peninsula Resource and Conservation District
Merle Pender Employment Securities Dept.
Wayne King Jefferson County PUD
Laurie Medlicott City of Port Townsend
Mary O’Neil-Garrett Peninsula College
Jim Parker (Alternate) Jefferson County PUD
Clyde Rasmussen (Alternate) North Olympic Peninsula Skills Center
Nedra Reed City of Forks
Karen Rogers City of Port Angeles
David Sullivan (Alternate) Jefferson County
Steve Tharinger Clallam County
Betsy Wharton City of Port Angeles
EDC Director
Linda Rotmark Clallam County EDC
Appendix 2: TRENDS IN REGIONAL POPULATION
Population 1990-2004 and Projections to 2015
County/State 1990 1995 2000 2001 2002 2003 2004 2010* 2015*
Jefferson 20,406 24,112 26,299 26,446 26,600 26,700 27,000 30,892 34,067
Clallam 56,204 61,461 64,179 64,454 64,900 65,300 65,900 67,754 70,769
State 4,866,692 5,470,104 5,894,121 5,974,900 6,041,710 6,098,300 6,167,800 6,648,112 7,096,501
Source: US Census and WA-OFM
*Projections
PDA Region Population 1990 2004 % Change
Jefferson 20,406 27,000 32.31%
Clallam 56,204 65,900 17.25%
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
EMPLOYMENT/UNEMPLOYMENT
Clallam County Jefferson County Washington State
2004Total Employment 24,950 12,030 3,012,900
Total Unemployment 1,490 580 193,700
Percent of Labor Force 5.6% 4.6% 6.0%
Civilian Labor Force 26,440 12,610 3,206,600
2003Total Employment 23,790 11,250 2,902,900
Total Unemployment 1,920 740 237,000
Percent of Labor Force 7.5% 6.2% 7.5%
Civilian Labor Force 25,710 11,990 3,139,900
2002Total Employment 23,310 10,870 2,882,600
Total Unemployment 1,880 770 226,700
Percent of Labor Force 7.5% 6.6% 7.3%
Civilian Labor Force 25,190 11,640 3,109,300
2001Total Employment 22,520 10,580 2,830,600
Total Unemployment 1,890 650 193,400
Percent of Labor Force 7.7% 5.8% 6.4%
Civilian Labor Force 24,410 11,230 3,024,000
2000Total Employment 23,030 10,420 2,896,300
Total Unemployment 1,900 590 159,300
Percent of Labor Force 7.6% 5.4% 5.2%
Civilian Labor Force 24,930 11,010 3,055,600
Appendix 3: Employment by Business Sector
Business
Sector Clallam-County Jefferson-County Olympic Peninsula
#employed % of Total #employed % of Total #employed % of Total
Appendix 4: Alternative Energy
I’ve included this appendix because Alternative Energy was included in the previous CEDS. However, I believe that replacing fossil fuel with alternative energy sources is huge undertaking which can best be done at the State and National level. For this region to do more than institute tried and proven energy saving programs throughout the county would be an ineffective use of the limited funding we have available. However, much can be done with energy saving programs, some counties have saved as much as 15% of their energy costs for a very small investment. We should do the same. The local PUDs should provide an incentive for the general public to follow suit.
Graves letter 6.28.07
From: Lawrence Graves [mailto:LGraves@frontierbank.com]
Sent: Monday, July 02, 2007 12:34 PM
To: Teri Martin
Subject: Comprehensive Economic Development Strategy
Teri,
Could you forward these examples for other regions to all of the PDA board members, I believe this is the level of detail being required by EDA. In my opinion, neither the 2006 or draft 2007 Peninsula Dev. Assoc. CEDS documents are to the level of detail.
I have attached 3 links which are good examples of CEDS: Skagit County, Columbia-Pacific Region & Clearwater County.
http://www.skagitcounty.net/PlanningandPermit/Documents/2003EconDevStrategy.pdf
http://www.ghedc.com/downloads/GraysHarbor_ceds2006.pdf
http://clearwater-eda.org/CEDS%20Update%20June%202005.pdf
Please forward to members for their review, input(comment) and direction for our Comprehensive Development Strategy document.
Regards,
Lawrence
Sent: Monday, July 02, 2007 12:34 PM
To: Teri Martin
Subject: Comprehensive Economic Development Strategy
Teri,
Could you forward these examples for other regions to all of the PDA board members, I believe this is the level of detail being required by EDA. In my opinion, neither the 2006 or draft 2007 Peninsula Dev. Assoc. CEDS documents are to the level of detail.
I have attached 3 links which are good examples of CEDS: Skagit County, Columbia-Pacific Region & Clearwater County.
http://www.skagitcounty.net/PlanningandPermit/Documents/2003EconDevStrategy.pdf
http://www.ghedc.com/downloads/GraysHarbor_ceds2006.pdf
http://clearwater-eda.org/CEDS%20Update%20June%202005.pdf
Please forward to members for their review, input(comment) and direction for our Comprehensive Development Strategy document.
Regards,
Lawrence
PDA CEDS Final 2007
A Comprehensive Economic Development Strategy for the
Olympic Peninsula
June 2007
CEDS 2007
Ian McFall
Economic Development Council
P.O. Box 877
Port Townsend, WA 98362
Tel: 360.385.6767
Mail: director@edcjc.com
Contents
I Background
II Analysis of Economic Development Problems and Opportunities
III CEDS Goals and Objectives
IV Community and Private Sector Participation
V Strategic Projects, Programs and Activities.
VI CEDS Plan of Action
VII Performance Measures
Appendix 1: PDA’s STRUCTURE
Appendix 2: TRENDS IN REGIONAL POPULATION
Appendix 3: ALTERNATIVE ENERGY
I Background
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 75% of the local workers out of a job and turned the entire region into an economic disaster area. More than twenty years after the cessation of logging the last of the owls are being rounded up for a captive breeding program. Obviously decimating the logging industry didn’t prevent the demise of the owls. Despite this fact, 97% of the Olympic Peninsula is now controlled by the National or State Parks and the remaining 3% is the subject of some of the most stringent ecological regulation in the world.
Mitigation funding from the Federal and State government has hardly been proportionate to the scale of the economic disaster perpetrated by the Spotted Owl. Much of what little funding there is expires next year.
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 not been dramatically successful. Economic growth on the Peninsula was half that of the State last year and average wages are still 20-30% below the State Average. Public school enrollment, a leading indicator of a healthy economy, has steadily declined to the point where many of the rural schools are not sustainable without property tax levies. Due to the influx of well-heeled retirees, housing costs 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 prospects off the Peninsula, and the influx of retirees (now 46% of the population) rather than any significant increase in available jobs. The total population has not grown significantly.
The failure to create a new basis for a sustainable economy in the area is not for lack of trying.
No fewer than four Economic Development organizations exist today, all of which strive for economic development in the region. The Economic Development organizations alone number fifty dedicated people meeting every month and that doesn’t include the Chambers of Commerce and the Ports of Port Townsend and Port Angeles, who also expend a lot of energy on Economic Development.
However much of this effort has been to no avail and it is now the opinion of many residents of the region that, unless we do something very different from what we are doing today, the Olympic Peninsula will become a retirement community largely supported by Tourism with few opportunities for our young people.
II Analysis of Economic Development Problems and Opportunities
While the US and Washington State economies have recently enjoyed a healthy growth, the Olympic Peninsula Region has not kept up. For example, while Washington State as a whole had a record Taxable Retail Sales increase of 9% last year, Clallam saw only 7% and Jefferson County a meager 0.8%. (see table below). Part of the reason for Jefferson County’s dismal results is that, past “no-growth” policies in Jefferson County have stymied the growth of retail sales businesses in the county. As a result, most of the sales tax revenues generated by Jefferson residents is going to Clallam, Kitsap or Mason County.
Area Taxable Retail Sales(millions) Retail Trade Only(millions) TRS/person Average Earnings.
Clallam County $1020/ 7.2% $484/3.5 % $15,700
Jefferson County $372/0.8% $119/2.1 $13,800
Washington State $110,500/ 9% $49,400/7.5% $17,300
Wage rates in the region are slightly higher but still 30% below the state average and the government is still the largest (and highest wage) employer in Jefferson County with nearly twice as many employees as the next largest sector. The top three industry clusters after the Government, are also the lowest paid and, combined, amount to over one third of total employment in the region. Growth in tourism has increased employment in this, the lowest paid sector. Retirees who are now 46% of the population and make up a large part of our health care patrons have increased employment in the Health Care sector. The increase in employment in these low paid sectors depresses our average wage
.
Jefferson County Employment by sector
Sector Number of Employees Average Wage % of State Wage
Government 2089 $35,931 84%
Health Care 1287 $27,607 76%
Tourism 1227 $12,518 83%
Retail 1034 $20,445 75%
All Sectors 9016 $27,980 69%
Continued growth in tourism and an increase in the influx of retirees as baby-boomers reach retirement age in 2010 will perpetuate this trend. The influx of retirees has also escalated the demand for housing. In Jefferson County in particular, supply is limited due to very stringent environmental regulation and a lengthy permit process, which deters new construction. As a result demand has far exceeded supply and prices have soared. Average home valuations increased 40% at the last assessment. The average home is now out of reach of most working families in the area and unattainable for a single wage-earner family making the average wage.
Unemployment in the region is now an apparently healthy 4.5%. However, this more a reflection of the exodus of our young job seekers and the influx of retirees rather than a significant increase in the number of available jobs. This is reflected in public school enrollment, which declined again this year. Most of our rural public schools can no longer be sustained without property tax levies.
Environmental Regulation of the region has also served to restrict growth. 97% of the region is now parkland and the remaining 3% is subject to continually more stringent regulation. In Jefferson County in particular, sewer and water infrastructure needed to make areas designated for Urban Growth eight years ago have never been built. The cost of this infrastructure has spiraled upward with inflation and ever more complex and costly environmental regulation. More regulation, particularly with regard to water rights and pollution of the Sound should be expected. Most of regulation can be expected to be detrimental to commercial growth and a deterrent to many prospective new businesses.
The good news is that our Marine Trade and Manufacturing Clusters businesses have continued to grow. Unfortunately, they are severely restricted by the need for skilled people. In a recent survey of 1300 JeffCo businesses, lack of available skilled workers was listed as the number one issue limiting business growth. The Marine trades in Jefferson County are now topped out because of limited available space and business actually declined last year.
III CEDS Goals and Objectives
Our single minded goal must be to increase the average wage by removing the obstacles to growth in those clusters that have higher paying jobs and attract more businesses with higher paying jobs to the region. The influx or more retirees and the recent efforts by the State to promote tourism will serve only to increase employment in the lowest paid sectors, further depressing our average wage. We must therefore substantially increase employment in the higher paying clusters to offset this.
A reasonable overall objective would be to attain an average regional wage sufficient to qualify a two-income family for a mortgage to buy the average priced home in the region.
Based on current employment (in Jeffco), if tourism doubles in five years and the retired population reaches 65% we would have to quadruple employment in the other industry clusters to achieve this.
IV Community and Private Sector Participation
The private sector is disenchanted with the much of the public sector. Many businesses, particularly in Jefferson County feel that the region is unfriendly to business. Much of this criticism is justified. Permits from Community Development and Public Health departments take far too long to process. B&O taxes are high and deter small businesses from hiring full time employees. (65% of surveyed companies were within the city limits and subject to B&O tax) Infrastructure, desperately needed for business expansion, is delayed by politics, environmentalists, tribal issues, lack of adequate matching funding. As a result, some major projects have been “in-progress” for 10 years and have yet to break ground.
There is currently lots of planning and very little execution. In general, the private sector gets very involved with major development projects and is generally supportive of economic development. The process bogs down when a minority group objects to a project. In those cases, the public sector rarely displays the leadership qualities needed to realize the project in the face of minority dissent. Instead, the projects flounder and eventually either die or the developer withdraws in frustration.
The attitudes of the business surveyed are virtually unchanged from the Economic Assessment made by Daniel J Evans school of public affairs in 2003. (Sommers and Holabird)
V Strategic Projects, Programs and Activities.
Strategy for developing and retaining existing businesses
The strategy for retaining and promoting the growth of our existing businesses is a straight forward three-step process.
• Survey each key industry
• Determine the specific obstacles to growth for the major part of that industry
• Create and initiate a specific plan to reduce or eliminate those restrictions.
Such a survey was recently completed for 1300 of the 4500 businesses registered in Jefferson County as other than sole proprietorships. These included businesses involved in
• Tourism
• Marine trades
• Aquaculture and agriculture
• Health care
• Manufacturing
• Electronic Technology
• The Arts
According to the survey none of these businesses are market limited. Therefore, if the limitations to their growth were eliminated or reduced, their revenues and employment levels could be increased. The four major obstacles to growth identified by the survey were:
• Lack of skilled people and poor work ethic.
• Lack of available appropriately zoned facilities
• Lack of funds for regional market development
• Regulation
These findings are virtually the same as those of Sommers and Holabird in 2003
Based on this survey, discussions with all three Chambers of Commerce, several Rotary Clubs, three of the largest trade groups in the county and several of our local business leaders, there has emerged a consensus that the projects listed below are critical to economic growth in Jefferson County. A key part of our Economic Development strategy must be to create a realistic plan to complete these within budget and within a reasonable time-frame. This requires adequate funding and the political will to keep the projects moving forward even in the face of inevitable minority objections.
These projects are listed in the table at the end of this section. Estimated costs of these projects is preliminary as are the estimates of the employment increases which result from them. These estimates should be honed and the projects reprioritized appropriately.
Strategy to solicit New Businesses to locate in the region.
It emerges clearly from this analysis that growth in tourism alone will not lead to a sustainable economy. Furthermore, the growth in sectors other than Health Care and Tourism to achieve an increase in average wages for the region is very difficult to achieve. We therefore have to mount a substantial effort to attract intellectual property companies with higher paying jobs in addition to nurturing our existing industries.
Entrepreneurs and most corporations look for four things when making a decision to locate or relocate their business. The order of importance varies depending on the type of business.
o A pool of skilled people, an educational system likely to generate more of those people, and a place where they can attract key employees who, initially at least, may not available locally. The better the quality of life that the new location affords the more likely it is that these key employees can be retained. This is extremely important to small companies because the cost of losing and retraining a new employee is huge.
o “Business friendly” local and state government departments.
o Adequate, appropriately zoned facilities for their business.
o A local market for their goods or services.
Businesses which are synergistic to our existing businesses e.g. suppliers, distributors, component manufacturers etc who supply products and services to, or market the products produced by our indigenous industries will find an attractive, ready-made market here. These businesses, therefore, should be our first priority in our solicitation efforts because we have something to offer them. Information about key suppliers and distributors is readily available from our existing business leaders. We need to make a short list of these companies and have our local business leaders help us in a focused effort to solicit them to set up shop here.
We also need to attract the type of business that can use any surplus infrastructure we have available. In Jefferson County, the Port of Port Townsend has space and funding available to build facilities for aviation related businesses at the airport. The labor skills used to build composite light aircraft are similar to those used in our Marine Trade industry. So, here we can offer infrastructure and a pool of people with some of the right skills. We need to mount a serious “rifle-shot” effort to attract a significant business like this to the area.
Last but not least, we need to attract intellectual property developers to the area. This industry is environmentally clean and therefore easy to assimilate into this intensely ecologically-sensitive area, and it pays well. Three key things are required to attract intellectual property developers. These are:
a) Fiber optic Internet infrastructure
b) Incubator facilities for small start ups in this field
c) Funding to provide B&O tax breaks and other incentives to intice companies to relocate here.
There are two issues with this strategy. Initially, there are no benefits to local residents. If fact local residents may be adversely affected because new companies will bring highly paid workers with them initially, driving up housing costs. Once established these same companies will provide opportunities for young people in the county, but this is a long-term benefit. Over the long term, retirees may well represent the majority of voters and jobs will not be on their priority list for elected officials.
Key Economic Development Projects
Project description
Partners Estimated Project Cost over 5 years Jobs Created over 5 years Priority
Develop our most needed workforce skills by radically changing our existing educational process and establishing apprentice ship programs. Public schools, Community Colleges Local industry associations $1.5 m 500 Top
Mount a Commissioner-level effort to get the Sewer completed in the Tri-Area UGA and in Brinnon DCD. PUD, County Commissioners $1.0 m 250 Very High
Obtain additional professional help to promote International and Domestic tourism on the Olympic Peninsula and fund it adequately Joint Marketing. Lodging Tax Advisory Committee 10% of Tourism Revenue 1000
Jeff. County Very High
Expand our existing Marine trade facilities and fund the Ports to accomplish this.
Port of PT, Port of PA. MTA. $1.5 m 250
Jeff Co Top
Fast Track the Pleasant Harbor Project with backing of the commissioners.
DCD, Commissioners $100,000 250 Top
Fund the expansion of Aquaculture infrastructure operated by the Port of Port Townsend DCD, Port of PT
Oyster Industry $500,000 50 High
Fund a highly targeted search for synergistic and Intellectual Property companies to relocate here. EDC, Port of PA and Port of PA $100,000 150 High
Organize the creation of an appellation “Olympic Peninsula” and provide funds to promote it. EDC, Chambers
Grower Assoc. Vintners etc $250,000 300 High
Form an Angel Capital fund EDC, private individuals, Banks $25,000 200 High
Initiate a project to deploy HS Internet capability and create Incubators. EDC, City of PA, State Park Ft. Warden $1.0 300 High
Fund a very small regional organization to manage dispersed low income housing for seasonal tourism workers EDC, City of PT, City of PA $125,000 200 Very High
Total 3450 35%
VI CEDS Plan of Action
1 Workforce Development
Our public schools and community colleges do not turn out graduates with skills that fit our indigenous industries and many graduates that do, don’t have an acceptable work ethic.
Action Items
a) Create a partnership between our Community colleges and local businesses to initiate an “apprenticeship” program where local businesses pay for their own employees to be trained in specific skills at the community college and students “intern” at local companies to hone there skills hands on. The EDC has started such a program in cooperation with the Marine Trade Association and the local Wooden Boat School. Similar programs exist in Clallam county.
b) Establish a “charter-style” vocational school to train high school seniors in specific trades including building industry, welding, finishing, fine woodcraft and electronic drafting. These are all skills in short supply within our existing marine trades cluster
c) We must provide “Work ethic training” in high school. College students learn about the real world in a place with a safety net. Those students who don’t pursue a college education and enter the job market after leaving high school don’t have that advantage. Liberal educational policies in public schools reward students with “gold stars for all” and play soccer games without keeping score. This doesn’t prepare our young people for the competitive world economy we live in. Entry-level employees need to be taught that performance counts and gold stars only go to winners. Today we have so many high school graduates who don’t seem to realize that Woody Allen was right.(90% of success is showing up) that large Washington corporations are now instituting management training programs on how to deal with this “Z generation”
Our public schools should institute a senior year course on “how to get a job and keep it”
2 Water/Sewer infrastructure.
Many of the zoning and permit restrictions which limit business growth in the area are the result of the requirement that facilities have sufficient available water (fireflow ) and sewer. To remove these constraints, the county needs to get the sewer built in Hadlock and take advantage of the State Park Sewer development in Brinnon. The Hadlock sewer has been ten years in the process. Elephants give birth in five. The County has spent nearly ten years and hundreds of thousands of dollars on studies related to this project and is yet to break ground.
Action Items:
a) Our Commissioners must be asked to champion this project despite the objections of the inevitable vociferous few. A person in DCD should be assigned to the project to plan and execute the project within 2 years
d) State Parks, DCD and the State funding organizations need to clarify their roles and create an action plan with a schedule to complete this in one year
3 Funding the Promotion of Olympic Peninsula Tourism
Tourism represents about 12% of our employment in the region. The growth rate in tourism slowed slightly due in some part to rising gas prices and higher travel costs. However, the growth of tourism derived revenues was lower in the Olympic Peninsula than for Kitsap and below the average for the state. In short, the Olympic Peninsula is losing market share.
The reason for the loss of market share is very likely related to relative spending on advertising to promote the area. The Olympic Peninsula generated over $2 million in Lodging tax revenues alone last year. Advertising expense was less than $100,000 about a quarter of Kitsap’s budget.
Action Items
a) Compare nearby area advertising budgets and Tourism revenues to that of the Olympic Peninsula and bring the Olympic Peninsula budget into line
b) Contract with a professional marketing organization to assist our own team to create an integrated promotional program including advertising
c) Initiate an effort to link the various Peninsula Visitor Centers in order to provide multi-facility availability/reservation capability at the centers and on-line.
d) Create a plan to deal effectively with the inevitable need for passports for travel to Canada. This will effect tourism negatively unless a long range plan to deal with the logistics is developed and executed in the next two years.
4 Expansion of Marine trade facilities
The Marine Trades in Jefferson County are restricted by both a shortage of skilled people and a lack of space required for expansion. The lack of skilled workers is addresses in previous section covering workforce development. Providing more space is more difficult and requires a major study in land use particularly in Port Townsend where the only available land that is appropriately zoned is used by the Paper Mill and the Kai Tai Lagoon area.
Action items
a) engage experts to do a long range land use project for Port Townsend with a view to expanding the Port Facilities possibly including land currently owned by the Paper Mill.
5 Fast Track the Black Point Project.
This project is a planned resort including a golf course and 800 condominiums. This will ad approximately $240 million to the assessed value of the county and generate 1.6 million in property tax revenues alone. The project is presently in the Environmental Impact Statement process. Although a few residents have objected, the majority of the local community is in favor of the project. It is essential that the county government recognize the economic value of this project and lend its full support.
Action Items
a) Assign a DCD employee to bird dog the project through the lengthy and complex EIS and permit process.
6 Funding aquaculture infrastructure operated by the port
The Port of Port Townsend owns and operates infrastructure in Quilcene that is used by several Oyster producers in the county. These facilities have degraded by silting and other issues some of which have been brought about by salmon preservation efforts. This infrastructure is key to the continued growth of the Oyster industry on Quilcene bay.
Action items
a) provide funding to the port to upgrade the infrastructure
7 Funding a search and INCENTIVES for synergistic and IP companies to relocate
We must attract new businesses to the region. This requires personal. In addition, incentives need to be established for new businesses to relocate. These funds need to be budgeted.
Action items
a) Fund the EDC to create a short list of companies in the target industries and actively solicit them.
b) Set aside B&O taxes to fund incentives to attract target companies.
8 Organization and funding of “appellation Olympic Penisula”
Much of the success of the Napa Valley and similar regions has been as a result of joint marketing efforts and creation of a local brand or “appellation” Local vintners, shellfish producers, salmon fisheries, organic crops growers and beef/dairy producers should form a similar consortium. This is already in an embryo stage but requires funding and management to really make it happen.
Action Item
a) Establish an “Appellation Olympic Peninsula” with seed funding for management and advertising
9 Formation of an Angel Capital fund
The growth of some of small businesses are restricted by lack of capital. We have a large number of retirees with vested interest in the community who have the wherewithal to provide financing. An angel fund should be established for this purpose.
Action Item
a) Provide funds to the PDA to organize the fund and solicit participants.
b) Integrate the Angel fund into the Economic development process to assist existing companies to expand their operations and to help attract promising new start-ups in the targeted industries.
10 Initiate a project to deploy HS Internet capability and create Incubator
To attract intellectual property developers requires fiber optic Internet infrastructure. Some Internet infrastructure is available on the Peninsula but is inadequate.
Action Item
a) fund a survey to determine needs of the target industry and fund implementation
11) Fund a very small regional organization to manage dispersed low income housing
Tourism work is the lowest paid sector and highly seasonal. Seasonal workers have difficulty finding affordable housing.
Action Item
a) Fund a “housing agency” for low income and seasonal workers by creating an inventory of Additional Dwelling Units in the region and directing housing seekers to owners.
b) Relax ADU regulations to create more ADU properties since these are generally preferable to concentrated low income housing.
VII Performance Measures
We must measure the success of our Economic Development efforts simply by measuring the following parameters for Clallam and Jefferson Counties.
• Total number of non-government jobs
• Average non-government wages as a percent of State non-government wages.
• Total Taxable Retail Sales
• Total B&O Tax revenues.
• Proportion of workers who could qualify for a mortgage to purchase the average home.
Appendix 1: PDA’s STRUCTURE
The PDA membership is comprised of representatives of the Counties of Jefferson and Clallam and includes representatives from the Board of Commissioners of each county, tribal communities, and representatives’ at-large of employment, education, labor.
A Board of Directors oversees the administrative functions of the PDA effort. The Executive Board consists of not less than eleven (11) and not more than twenty-one (21) members. Fifty-one percent of the Board of Directors must be elected officials. Representatives selected to serve on the Executive Board are named at the first meeting of each fiscal year and serve for the respective fiscal year. The following is a list of people who comprise the PDA membership (2006):
Officers:
Bill Hannan, President Port of Port Angeles
Jay Bennett, Vice-President Diversified Resources, Inc.
Herb Beck, Secretary/Treasurer Port of Port Townsend
Directors:
Katherine Baril Washington State University Extension-Jefferson County
John Beitzel City of Sequim
Ryland Bowechop Makah Tribal Council
Gary Cohn Port Angeles School District
Larry Crockett Port of Port Townsend
Bill Elliott (Alternate) City of Sequim
John Fischbach Jefferson County
Rod Fleck (Alternate) City of Forks
Hugh Haffner PUD of Clallam County
Marny Hannan Sequim-Dungeness Valley Chamber of Commerce
Marlin Holden Jamestown S’Klallam Tribe
Anthony Ingersoll North Olympic Peninsula Resource and Conservation District
Merle Pender Employment Securities Dept.
Wayne King Jefferson County PUD
Laurie Medlicott City of Port Townsend
Mary O’Neil-Garrett Peninsula College
Jim Parker (Alternate) Jefferson County PUD
Clyde Rasmussen (Alternate) North Olympic Peninsula Skills Center
Nedra Reed City of Forks
Karen Rogers City of Port Angeles
David Sullivan (Alternate) Jefferson County
Steve Tharinger Clallam County
Betsy Wharton City of Port Angeles
EDC Director
Linda Rotmark Clallam County EDC
Appendix 2: TRENDS IN REGIONAL POPULATION
Population 1990-2004 and Projections to 2015
County/State 1990 1995 2000 2001 2002 2003 2004 2010* 2015*
Jefferson 20,406 24,112 26,299 26,446 26,600 26,700 27,000 30,892 34,067
Clallam 56,204 61,461 64,179 64,454 64,900 65,300 65,900 67,754 70,769
State 4,866,692 5,470,104 5,894,121 5,974,900 6,041,710 6,098,300 6,167,800 6,648,112 7,096,501
Source: US Census and WA-OFM
*Projections
PDA Region Population 1990 2004 % Change
Jefferson 20,406 27,000 32.31%
Clallam 56,204 65,900 17.25%
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
EMPLOYMENT/UNEMPLOYMENT
Clallam County Jefferson County Washington State
2004Total Employment 24,950 12,030 3,012,900
Total Unemployment 1,490 580 193,700
Percent of Labor Force 5.6% 4.6% 6.0%
Civilian Labor Force 26,440 12,610 3,206,600
2003Total Employment 23,790 11,250 2,902,900
Total Unemployment 1,920 740 237,000
Percent of Labor Force 7.5% 6.2% 7.5%
Civilian Labor Force 25,710 11,990 3,139,900
2002Total Employment 23,310 10,870 2,882,600
Total Unemployment 1,880 770 226,700
Percent of Labor Force 7.5% 6.6% 7.3%
Civilian Labor Force 25,190 11,640 3,109,300
2001Total Employment 22,520 10,580 2,830,600
Total Unemployment 1,890 650 193,400
Percent of Labor Force 7.7% 5.8% 6.4%
Civilian Labor Force 24,410 11,230 3,024,000
2000Total Employment 23,030 10,420 2,896,300
Total Unemployment 1,900 590 159,300
Percent of Labor Force 7.6% 5.4% 5.2%
Civilian Labor Force 24,930 11,010 3,055,600
Appendix 3: Employment by Business Sector
Business
Sector Clallam-County Jefferson-County Olympic Peninsula
#employed % of Total #employed % of Total #employed % of Total
Appendix 4: Alternative Energy
I’ve included this appendix because Alternative Energy was included in the previous CEDS. However, I believe that replacing fossil fuel with alternative energy sources is huge undertaking which can best be done at the State and National level. For this region to do more than institute tried and proven energy saving programs throughout the county would be an ineffective use of the limited funding we have available. However, much can be done with energy saving programs, some counties have saved as much as 15% of their energy costs for a very small investment. We should do the same. The local PUDs should provide an incentive for the general public to follow suit.
Olympic Peninsula
June 2007
CEDS 2007
Ian McFall
Economic Development Council
P.O. Box 877
Port Townsend, WA 98362
Tel: 360.385.6767
Mail: director@edcjc.com
Contents
I Background
II Analysis of Economic Development Problems and Opportunities
III CEDS Goals and Objectives
IV Community and Private Sector Participation
V Strategic Projects, Programs and Activities.
VI CEDS Plan of Action
VII Performance Measures
Appendix 1: PDA’s STRUCTURE
Appendix 2: TRENDS IN REGIONAL POPULATION
Appendix 3: ALTERNATIVE ENERGY
I Background
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 75% of the local workers out of a job and turned the entire region into an economic disaster area. More than twenty years after the cessation of logging the last of the owls are being rounded up for a captive breeding program. Obviously decimating the logging industry didn’t prevent the demise of the owls. Despite this fact, 97% of the Olympic Peninsula is now controlled by the National or State Parks and the remaining 3% is the subject of some of the most stringent ecological regulation in the world.
Mitigation funding from the Federal and State government has hardly been proportionate to the scale of the economic disaster perpetrated by the Spotted Owl. Much of what little funding there is expires next year.
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 not been dramatically successful. Economic growth on the Peninsula was half that of the State last year and average wages are still 20-30% below the State Average. Public school enrollment, a leading indicator of a healthy economy, has steadily declined to the point where many of the rural schools are not sustainable without property tax levies. Due to the influx of well-heeled retirees, housing costs 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 prospects off the Peninsula, and the influx of retirees (now 46% of the population) rather than any significant increase in available jobs. The total population has not grown significantly.
The failure to create a new basis for a sustainable economy in the area is not for lack of trying.
No fewer than four Economic Development organizations exist today, all of which strive for economic development in the region. The Economic Development organizations alone number fifty dedicated people meeting every month and that doesn’t include the Chambers of Commerce and the Ports of Port Townsend and Port Angeles, who also expend a lot of energy on Economic Development.
However much of this effort has been to no avail and it is now the opinion of many residents of the region that, unless we do something very different from what we are doing today, the Olympic Peninsula will become a retirement community largely supported by Tourism with few opportunities for our young people.
II Analysis of Economic Development Problems and Opportunities
While the US and Washington State economies have recently enjoyed a healthy growth, the Olympic Peninsula Region has not kept up. For example, while Washington State as a whole had a record Taxable Retail Sales increase of 9% last year, Clallam saw only 7% and Jefferson County a meager 0.8%. (see table below). Part of the reason for Jefferson County’s dismal results is that, past “no-growth” policies in Jefferson County have stymied the growth of retail sales businesses in the county. As a result, most of the sales tax revenues generated by Jefferson residents is going to Clallam, Kitsap or Mason County.
Area Taxable Retail Sales(millions) Retail Trade Only(millions) TRS/person Average Earnings.
Clallam County $1020/ 7.2% $484/3.5 % $15,700
Jefferson County $372/0.8% $119/2.1 $13,800
Washington State $110,500/ 9% $49,400/7.5% $17,300
Wage rates in the region are slightly higher but still 30% below the state average and the government is still the largest (and highest wage) employer in Jefferson County with nearly twice as many employees as the next largest sector. The top three industry clusters after the Government, are also the lowest paid and, combined, amount to over one third of total employment in the region. Growth in tourism has increased employment in this, the lowest paid sector. Retirees who are now 46% of the population and make up a large part of our health care patrons have increased employment in the Health Care sector. The increase in employment in these low paid sectors depresses our average wage
.
Jefferson County Employment by sector
Sector Number of Employees Average Wage % of State Wage
Government 2089 $35,931 84%
Health Care 1287 $27,607 76%
Tourism 1227 $12,518 83%
Retail 1034 $20,445 75%
All Sectors 9016 $27,980 69%
Continued growth in tourism and an increase in the influx of retirees as baby-boomers reach retirement age in 2010 will perpetuate this trend. The influx of retirees has also escalated the demand for housing. In Jefferson County in particular, supply is limited due to very stringent environmental regulation and a lengthy permit process, which deters new construction. As a result demand has far exceeded supply and prices have soared. Average home valuations increased 40% at the last assessment. The average home is now out of reach of most working families in the area and unattainable for a single wage-earner family making the average wage.
Unemployment in the region is now an apparently healthy 4.5%. However, this more a reflection of the exodus of our young job seekers and the influx of retirees rather than a significant increase in the number of available jobs. This is reflected in public school enrollment, which declined again this year. Most of our rural public schools can no longer be sustained without property tax levies.
Environmental Regulation of the region has also served to restrict growth. 97% of the region is now parkland and the remaining 3% is subject to continually more stringent regulation. In Jefferson County in particular, sewer and water infrastructure needed to make areas designated for Urban Growth eight years ago have never been built. The cost of this infrastructure has spiraled upward with inflation and ever more complex and costly environmental regulation. More regulation, particularly with regard to water rights and pollution of the Sound should be expected. Most of regulation can be expected to be detrimental to commercial growth and a deterrent to many prospective new businesses.
The good news is that our Marine Trade and Manufacturing Clusters businesses have continued to grow. Unfortunately, they are severely restricted by the need for skilled people. In a recent survey of 1300 JeffCo businesses, lack of available skilled workers was listed as the number one issue limiting business growth. The Marine trades in Jefferson County are now topped out because of limited available space and business actually declined last year.
III CEDS Goals and Objectives
Our single minded goal must be to increase the average wage by removing the obstacles to growth in those clusters that have higher paying jobs and attract more businesses with higher paying jobs to the region. The influx or more retirees and the recent efforts by the State to promote tourism will serve only to increase employment in the lowest paid sectors, further depressing our average wage. We must therefore substantially increase employment in the higher paying clusters to offset this.
A reasonable overall objective would be to attain an average regional wage sufficient to qualify a two-income family for a mortgage to buy the average priced home in the region.
Based on current employment (in Jeffco), if tourism doubles in five years and the retired population reaches 65% we would have to quadruple employment in the other industry clusters to achieve this.
IV Community and Private Sector Participation
The private sector is disenchanted with the much of the public sector. Many businesses, particularly in Jefferson County feel that the region is unfriendly to business. Much of this criticism is justified. Permits from Community Development and Public Health departments take far too long to process. B&O taxes are high and deter small businesses from hiring full time employees. (65% of surveyed companies were within the city limits and subject to B&O tax) Infrastructure, desperately needed for business expansion, is delayed by politics, environmentalists, tribal issues, lack of adequate matching funding. As a result, some major projects have been “in-progress” for 10 years and have yet to break ground.
There is currently lots of planning and very little execution. In general, the private sector gets very involved with major development projects and is generally supportive of economic development. The process bogs down when a minority group objects to a project. In those cases, the public sector rarely displays the leadership qualities needed to realize the project in the face of minority dissent. Instead, the projects flounder and eventually either die or the developer withdraws in frustration.
The attitudes of the business surveyed are virtually unchanged from the Economic Assessment made by Daniel J Evans school of public affairs in 2003. (Sommers and Holabird)
V Strategic Projects, Programs and Activities.
Strategy for developing and retaining existing businesses
The strategy for retaining and promoting the growth of our existing businesses is a straight forward three-step process.
• Survey each key industry
• Determine the specific obstacles to growth for the major part of that industry
• Create and initiate a specific plan to reduce or eliminate those restrictions.
Such a survey was recently completed for 1300 of the 4500 businesses registered in Jefferson County as other than sole proprietorships. These included businesses involved in
• Tourism
• Marine trades
• Aquaculture and agriculture
• Health care
• Manufacturing
• Electronic Technology
• The Arts
According to the survey none of these businesses are market limited. Therefore, if the limitations to their growth were eliminated or reduced, their revenues and employment levels could be increased. The four major obstacles to growth identified by the survey were:
• Lack of skilled people and poor work ethic.
• Lack of available appropriately zoned facilities
• Lack of funds for regional market development
• Regulation
These findings are virtually the same as those of Sommers and Holabird in 2003
Based on this survey, discussions with all three Chambers of Commerce, several Rotary Clubs, three of the largest trade groups in the county and several of our local business leaders, there has emerged a consensus that the projects listed below are critical to economic growth in Jefferson County. A key part of our Economic Development strategy must be to create a realistic plan to complete these within budget and within a reasonable time-frame. This requires adequate funding and the political will to keep the projects moving forward even in the face of inevitable minority objections.
These projects are listed in the table at the end of this section. Estimated costs of these projects is preliminary as are the estimates of the employment increases which result from them. These estimates should be honed and the projects reprioritized appropriately.
Strategy to solicit New Businesses to locate in the region.
It emerges clearly from this analysis that growth in tourism alone will not lead to a sustainable economy. Furthermore, the growth in sectors other than Health Care and Tourism to achieve an increase in average wages for the region is very difficult to achieve. We therefore have to mount a substantial effort to attract intellectual property companies with higher paying jobs in addition to nurturing our existing industries.
Entrepreneurs and most corporations look for four things when making a decision to locate or relocate their business. The order of importance varies depending on the type of business.
o A pool of skilled people, an educational system likely to generate more of those people, and a place where they can attract key employees who, initially at least, may not available locally. The better the quality of life that the new location affords the more likely it is that these key employees can be retained. This is extremely important to small companies because the cost of losing and retraining a new employee is huge.
o “Business friendly” local and state government departments.
o Adequate, appropriately zoned facilities for their business.
o A local market for their goods or services.
Businesses which are synergistic to our existing businesses e.g. suppliers, distributors, component manufacturers etc who supply products and services to, or market the products produced by our indigenous industries will find an attractive, ready-made market here. These businesses, therefore, should be our first priority in our solicitation efforts because we have something to offer them. Information about key suppliers and distributors is readily available from our existing business leaders. We need to make a short list of these companies and have our local business leaders help us in a focused effort to solicit them to set up shop here.
We also need to attract the type of business that can use any surplus infrastructure we have available. In Jefferson County, the Port of Port Townsend has space and funding available to build facilities for aviation related businesses at the airport. The labor skills used to build composite light aircraft are similar to those used in our Marine Trade industry. So, here we can offer infrastructure and a pool of people with some of the right skills. We need to mount a serious “rifle-shot” effort to attract a significant business like this to the area.
Last but not least, we need to attract intellectual property developers to the area. This industry is environmentally clean and therefore easy to assimilate into this intensely ecologically-sensitive area, and it pays well. Three key things are required to attract intellectual property developers. These are:
a) Fiber optic Internet infrastructure
b) Incubator facilities for small start ups in this field
c) Funding to provide B&O tax breaks and other incentives to intice companies to relocate here.
There are two issues with this strategy. Initially, there are no benefits to local residents. If fact local residents may be adversely affected because new companies will bring highly paid workers with them initially, driving up housing costs. Once established these same companies will provide opportunities for young people in the county, but this is a long-term benefit. Over the long term, retirees may well represent the majority of voters and jobs will not be on their priority list for elected officials.
Key Economic Development Projects
Project description
Partners Estimated Project Cost over 5 years Jobs Created over 5 years Priority
Develop our most needed workforce skills by radically changing our existing educational process and establishing apprentice ship programs. Public schools, Community Colleges Local industry associations $1.5 m 500 Top
Mount a Commissioner-level effort to get the Sewer completed in the Tri-Area UGA and in Brinnon DCD. PUD, County Commissioners $1.0 m 250 Very High
Obtain additional professional help to promote International and Domestic tourism on the Olympic Peninsula and fund it adequately Joint Marketing. Lodging Tax Advisory Committee 10% of Tourism Revenue 1000
Jeff. County Very High
Expand our existing Marine trade facilities and fund the Ports to accomplish this.
Port of PT, Port of PA. MTA. $1.5 m 250
Jeff Co Top
Fast Track the Pleasant Harbor Project with backing of the commissioners.
DCD, Commissioners $100,000 250 Top
Fund the expansion of Aquaculture infrastructure operated by the Port of Port Townsend DCD, Port of PT
Oyster Industry $500,000 50 High
Fund a highly targeted search for synergistic and Intellectual Property companies to relocate here. EDC, Port of PA and Port of PA $100,000 150 High
Organize the creation of an appellation “Olympic Peninsula” and provide funds to promote it. EDC, Chambers
Grower Assoc. Vintners etc $250,000 300 High
Form an Angel Capital fund EDC, private individuals, Banks $25,000 200 High
Initiate a project to deploy HS Internet capability and create Incubators. EDC, City of PA, State Park Ft. Warden $1.0 300 High
Fund a very small regional organization to manage dispersed low income housing for seasonal tourism workers EDC, City of PT, City of PA $125,000 200 Very High
Total 3450 35%
VI CEDS Plan of Action
1 Workforce Development
Our public schools and community colleges do not turn out graduates with skills that fit our indigenous industries and many graduates that do, don’t have an acceptable work ethic.
Action Items
a) Create a partnership between our Community colleges and local businesses to initiate an “apprenticeship” program where local businesses pay for their own employees to be trained in specific skills at the community college and students “intern” at local companies to hone there skills hands on. The EDC has started such a program in cooperation with the Marine Trade Association and the local Wooden Boat School. Similar programs exist in Clallam county.
b) Establish a “charter-style” vocational school to train high school seniors in specific trades including building industry, welding, finishing, fine woodcraft and electronic drafting. These are all skills in short supply within our existing marine trades cluster
c) We must provide “Work ethic training” in high school. College students learn about the real world in a place with a safety net. Those students who don’t pursue a college education and enter the job market after leaving high school don’t have that advantage. Liberal educational policies in public schools reward students with “gold stars for all” and play soccer games without keeping score. This doesn’t prepare our young people for the competitive world economy we live in. Entry-level employees need to be taught that performance counts and gold stars only go to winners. Today we have so many high school graduates who don’t seem to realize that Woody Allen was right.(90% of success is showing up) that large Washington corporations are now instituting management training programs on how to deal with this “Z generation”
Our public schools should institute a senior year course on “how to get a job and keep it”
2 Water/Sewer infrastructure.
Many of the zoning and permit restrictions which limit business growth in the area are the result of the requirement that facilities have sufficient available water (fireflow ) and sewer. To remove these constraints, the county needs to get the sewer built in Hadlock and take advantage of the State Park Sewer development in Brinnon. The Hadlock sewer has been ten years in the process. Elephants give birth in five. The County has spent nearly ten years and hundreds of thousands of dollars on studies related to this project and is yet to break ground.
Action Items:
a) Our Commissioners must be asked to champion this project despite the objections of the inevitable vociferous few. A person in DCD should be assigned to the project to plan and execute the project within 2 years
d) State Parks, DCD and the State funding organizations need to clarify their roles and create an action plan with a schedule to complete this in one year
3 Funding the Promotion of Olympic Peninsula Tourism
Tourism represents about 12% of our employment in the region. The growth rate in tourism slowed slightly due in some part to rising gas prices and higher travel costs. However, the growth of tourism derived revenues was lower in the Olympic Peninsula than for Kitsap and below the average for the state. In short, the Olympic Peninsula is losing market share.
The reason for the loss of market share is very likely related to relative spending on advertising to promote the area. The Olympic Peninsula generated over $2 million in Lodging tax revenues alone last year. Advertising expense was less than $100,000 about a quarter of Kitsap’s budget.
Action Items
a) Compare nearby area advertising budgets and Tourism revenues to that of the Olympic Peninsula and bring the Olympic Peninsula budget into line
b) Contract with a professional marketing organization to assist our own team to create an integrated promotional program including advertising
c) Initiate an effort to link the various Peninsula Visitor Centers in order to provide multi-facility availability/reservation capability at the centers and on-line.
d) Create a plan to deal effectively with the inevitable need for passports for travel to Canada. This will effect tourism negatively unless a long range plan to deal with the logistics is developed and executed in the next two years.
4 Expansion of Marine trade facilities
The Marine Trades in Jefferson County are restricted by both a shortage of skilled people and a lack of space required for expansion. The lack of skilled workers is addresses in previous section covering workforce development. Providing more space is more difficult and requires a major study in land use particularly in Port Townsend where the only available land that is appropriately zoned is used by the Paper Mill and the Kai Tai Lagoon area.
Action items
a) engage experts to do a long range land use project for Port Townsend with a view to expanding the Port Facilities possibly including land currently owned by the Paper Mill.
5 Fast Track the Black Point Project.
This project is a planned resort including a golf course and 800 condominiums. This will ad approximately $240 million to the assessed value of the county and generate 1.6 million in property tax revenues alone. The project is presently in the Environmental Impact Statement process. Although a few residents have objected, the majority of the local community is in favor of the project. It is essential that the county government recognize the economic value of this project and lend its full support.
Action Items
a) Assign a DCD employee to bird dog the project through the lengthy and complex EIS and permit process.
6 Funding aquaculture infrastructure operated by the port
The Port of Port Townsend owns and operates infrastructure in Quilcene that is used by several Oyster producers in the county. These facilities have degraded by silting and other issues some of which have been brought about by salmon preservation efforts. This infrastructure is key to the continued growth of the Oyster industry on Quilcene bay.
Action items
a) provide funding to the port to upgrade the infrastructure
7 Funding a search and INCENTIVES for synergistic and IP companies to relocate
We must attract new businesses to the region. This requires personal. In addition, incentives need to be established for new businesses to relocate. These funds need to be budgeted.
Action items
a) Fund the EDC to create a short list of companies in the target industries and actively solicit them.
b) Set aside B&O taxes to fund incentives to attract target companies.
8 Organization and funding of “appellation Olympic Penisula”
Much of the success of the Napa Valley and similar regions has been as a result of joint marketing efforts and creation of a local brand or “appellation” Local vintners, shellfish producers, salmon fisheries, organic crops growers and beef/dairy producers should form a similar consortium. This is already in an embryo stage but requires funding and management to really make it happen.
Action Item
a) Establish an “Appellation Olympic Peninsula” with seed funding for management and advertising
9 Formation of an Angel Capital fund
The growth of some of small businesses are restricted by lack of capital. We have a large number of retirees with vested interest in the community who have the wherewithal to provide financing. An angel fund should be established for this purpose.
Action Item
a) Provide funds to the PDA to organize the fund and solicit participants.
b) Integrate the Angel fund into the Economic development process to assist existing companies to expand their operations and to help attract promising new start-ups in the targeted industries.
10 Initiate a project to deploy HS Internet capability and create Incubator
To attract intellectual property developers requires fiber optic Internet infrastructure. Some Internet infrastructure is available on the Peninsula but is inadequate.
Action Item
a) fund a survey to determine needs of the target industry and fund implementation
11) Fund a very small regional organization to manage dispersed low income housing
Tourism work is the lowest paid sector and highly seasonal. Seasonal workers have difficulty finding affordable housing.
Action Item
a) Fund a “housing agency” for low income and seasonal workers by creating an inventory of Additional Dwelling Units in the region and directing housing seekers to owners.
b) Relax ADU regulations to create more ADU properties since these are generally preferable to concentrated low income housing.
VII Performance Measures
We must measure the success of our Economic Development efforts simply by measuring the following parameters for Clallam and Jefferson Counties.
• Total number of non-government jobs
• Average non-government wages as a percent of State non-government wages.
• Total Taxable Retail Sales
• Total B&O Tax revenues.
• Proportion of workers who could qualify for a mortgage to purchase the average home.
Appendix 1: PDA’s STRUCTURE
The PDA membership is comprised of representatives of the Counties of Jefferson and Clallam and includes representatives from the Board of Commissioners of each county, tribal communities, and representatives’ at-large of employment, education, labor.
A Board of Directors oversees the administrative functions of the PDA effort. The Executive Board consists of not less than eleven (11) and not more than twenty-one (21) members. Fifty-one percent of the Board of Directors must be elected officials. Representatives selected to serve on the Executive Board are named at the first meeting of each fiscal year and serve for the respective fiscal year. The following is a list of people who comprise the PDA membership (2006):
Officers:
Bill Hannan, President Port of Port Angeles
Jay Bennett, Vice-President Diversified Resources, Inc.
Herb Beck, Secretary/Treasurer Port of Port Townsend
Directors:
Katherine Baril Washington State University Extension-Jefferson County
John Beitzel City of Sequim
Ryland Bowechop Makah Tribal Council
Gary Cohn Port Angeles School District
Larry Crockett Port of Port Townsend
Bill Elliott (Alternate) City of Sequim
John Fischbach Jefferson County
Rod Fleck (Alternate) City of Forks
Hugh Haffner PUD of Clallam County
Marny Hannan Sequim-Dungeness Valley Chamber of Commerce
Marlin Holden Jamestown S’Klallam Tribe
Anthony Ingersoll North Olympic Peninsula Resource and Conservation District
Merle Pender Employment Securities Dept.
Wayne King Jefferson County PUD
Laurie Medlicott City of Port Townsend
Mary O’Neil-Garrett Peninsula College
Jim Parker (Alternate) Jefferson County PUD
Clyde Rasmussen (Alternate) North Olympic Peninsula Skills Center
Nedra Reed City of Forks
Karen Rogers City of Port Angeles
David Sullivan (Alternate) Jefferson County
Steve Tharinger Clallam County
Betsy Wharton City of Port Angeles
EDC Director
Linda Rotmark Clallam County EDC
Appendix 2: TRENDS IN REGIONAL POPULATION
Population 1990-2004 and Projections to 2015
County/State 1990 1995 2000 2001 2002 2003 2004 2010* 2015*
Jefferson 20,406 24,112 26,299 26,446 26,600 26,700 27,000 30,892 34,067
Clallam 56,204 61,461 64,179 64,454 64,900 65,300 65,900 67,754 70,769
State 4,866,692 5,470,104 5,894,121 5,974,900 6,041,710 6,098,300 6,167,800 6,648,112 7,096,501
Source: US Census and WA-OFM
*Projections
PDA Region Population 1990 2004 % Change
Jefferson 20,406 27,000 32.31%
Clallam 56,204 65,900 17.25%
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
EMPLOYMENT/UNEMPLOYMENT
Clallam County Jefferson County Washington State
2004Total Employment 24,950 12,030 3,012,900
Total Unemployment 1,490 580 193,700
Percent of Labor Force 5.6% 4.6% 6.0%
Civilian Labor Force 26,440 12,610 3,206,600
2003Total Employment 23,790 11,250 2,902,900
Total Unemployment 1,920 740 237,000
Percent of Labor Force 7.5% 6.2% 7.5%
Civilian Labor Force 25,710 11,990 3,139,900
2002Total Employment 23,310 10,870 2,882,600
Total Unemployment 1,880 770 226,700
Percent of Labor Force 7.5% 6.6% 7.3%
Civilian Labor Force 25,190 11,640 3,109,300
2001Total Employment 22,520 10,580 2,830,600
Total Unemployment 1,890 650 193,400
Percent of Labor Force 7.7% 5.8% 6.4%
Civilian Labor Force 24,410 11,230 3,024,000
2000Total Employment 23,030 10,420 2,896,300
Total Unemployment 1,900 590 159,300
Percent of Labor Force 7.6% 5.4% 5.2%
Civilian Labor Force 24,930 11,010 3,055,600
Appendix 3: Employment by Business Sector
Business
Sector Clallam-County Jefferson-County Olympic Peninsula
#employed % of Total #employed % of Total #employed % of Total
Appendix 4: Alternative Energy
I’ve included this appendix because Alternative Energy was included in the previous CEDS. However, I believe that replacing fossil fuel with alternative energy sources is huge undertaking which can best be done at the State and National level. For this region to do more than institute tried and proven energy saving programs throughout the county would be an ineffective use of the limited funding we have available. However, much can be done with energy saving programs, some counties have saved as much as 15% of their energy costs for a very small investment. We should do the same. The local PUDs should provide an incentive for the general public to follow suit.
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