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Feasibility of Private Auto Ferry Service Between Washington State and Vancouver Island, B.C

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Feasibility of Private Auto Ferry Service Between Washington State and Vancouver Island, B.C Joint Transportation Committee Feasibility of Private Auto Ferry Service between Washington State and Vancouver Island, B.C. EXECUTIVE SUMMARY January 2021 Final Report Acknowledgments The study was prepared by: Consultant Team: Progressions Community Attributes Inc. with Elliott Bay Design Group Collier Walsh Nakazawa Norton Rose Fulbright Paul Neal, Staff Lead, Washington State Legislature Joint Transportation Committee The Staff Workgroup and Policy Panel were instrumental in supporting this study. Staff Workgroup Policy Panel David Bremer, Washington State House Gordon Baxter, Puget Sound Maritime Trades Democratic Caucus Council, AFL-CIO Dave Catterson, Washington State Legislature Captain Eric Von Brandenfels, Puget Sound Pilots Joint Transportation Committee David Bremer, Washington State House Democratic Caucus Mickey von Dassow, San Juan County Dave Catterson, Washington State Legislature Joint Economic Development Council Transportation Committee Ray Deardorf, Washington State Ferries Victoria Compton, San Juan County Economic Reema Griffith, Washington State Development Council Transportation Commission Laurie Gere, City of Anacortes David Gudgel, Clipper Vacations David Gudgel, Clipper Vacations Erik Hansen, Washington State Office of Rick Hughes, San Juan County Financial Management Liz Lovelett, Washington State Senator, District 40 Terri Mast, Inlandboatmen’s Union Danny Masterson, Washington State Legislature Senate Danny Masterson, Washington State Legislature Transportation Committee Senate Transportation Committee Hannah McCarty, Washington State Senate Hannah McCarty, Washington State Senate Democratic Caucus Democratic Caucus Matt Miller, HMS Global Maritime Travis McGrath, Puget Sound Pilots Martin Presley, Washington State Senate Martin Presley, Washington State Senate Republican Caucus Republican Caucus Dana Quam, Washington State House Republican Caucus Dana Quam, Washington State House Alex Ramel, Washington State Representative, District 40 Republican Caucus Beth Redfield, Washington State Legislature House Beth Redfield, Washington State Legislature Transportation Committee House Transportation Committee John Sternlicht, Economic Development Alliance of Eric Shjarback, City of Anacortes Skagit County Brenda Treadwell, Port of Anacortes John Vezina, Washington State Ferries Dan Worra, Port of Anacortes Summary of Findings Feasibility Private ferry service from Washington to Vancouver Island is feasible. A private operator would likely use a foreign flag vessel, therefore, it is unlikely the private operator would provide service to the San Juan Islands. Any private operator would have to comply with the same regulatory requirements as the current service. Private ferry service operators have expressed interest in providing the service. Economic Impacts Washington State Ferries Even if the ferry service is privatized, Washington State Ferries (WSF) still needs to replace the MV Elwha or face a high risk of system-wide service disruption. Privatizing Anacortes to Sidney service is expected to have a relatively minor impact on WSF funding needs over the next 20 years. Anacortes/Fidalgo Island Anacortes/Fidalgo Island could experience negative economic impact if a 42-car vessel provided service or a positive economic impact with a 80-car vessel. Establishing a private international ferry terminal in Bellingham would have a negative economic impact on Anacortes/Fidalgo Island and a positive impact on Bellingham. San Juan Islands Without service to the San Juan Islands, San Juan County would lose a direct ferry connection to Sidney resulting in a negative economic impact with privatization. Regional Maritime Jobs While WSF is assumed to lose one position year round and a full crew in the summer, private service could create additional maritime jobs that may be non-union or unionized labor. Executive Summary Contents Purpose & Approach 5 Purpose Approach Staff workgroup and policy panel Feasibility 7 Evaluating feasibility Is there private sector interest? What are feasible private ferry service models? Potential Impacts of Privatization 12 What are the impacts of feasible service models? Impacts to WSF Economic impacts Sales tax revenue Family wage jobs Conclusion 22 4 Purpose & Approach Purpose With the retirement of the MV Elwha, one of two Washington State Ferries (WSF) vessels capable of providing international service, a private operator approached the Legislature proposing private auto ferry service between Washington State and Vancouver Island. During the 2020 Legislative session, the Senate considered a bill modifying pilotage requirements to facilitate private service (SB 6667). While the bill did not pass, the Legislature commissioned this study, examining the feasibility of replacing the current WSF route between Anacortes and Sidney, B.C., with private auto ferry from Washington State to Vancouver Island, Canada. This study provides information to decision makers about the feasibility of potential private auto ferry service and the anticipated impacts. This study does not include a comprehensive assessment of a specific route, public-private partnerships, or steps toward implementation. Approach The study was undertaken in a stepped approach. First, this study outlined the feasibility of private auto ferry service and developed potential private ferry service models. Then, impacts of the potential ferry service models were identified and evaluated. Is private auto ferry service feasible? Can legal requirements be Is there private sector satisfied? interest? No Yes Yes No Service cannot Service cannot be privatized be privatized What are feasible ferry service models? What are the impacts of the feasible service models? Impacts to Economic Sales Tax Family WSF Impacts Revenue Wage Jobs Click here for the Proviso 5 commissioning the study. Purpose & Approach Staff Workgroup and Policy Panel The study was strengthened by the Staff Workgroup and Policy Panel, who provided valuable feedback as the approach and findings were developed. The Staff Workgroup was convened to provide expertise and represented the interests of state and local agencies. The workgroup was consulted at three meetings during the study to review and provide input in advance of presentations to the Policy Panel. The Policy Panel participants included District 40 Legislators as well as local government elected officials and agency representatives. The Policy Panel was briefed on operational, budget, and economic issues specific to this study. The Policy Panel discussions identified a number of policy considerations that, while outside the scope of this study, were considered highly relevant to some policy panel members. In an effort to provide a discussion of those concerns while still delivering the study required by the budget proviso, we invited the policy group to write a report chapter addressing their concerns. District 40 Legislators City of Anacortes San Juan Economic Development Council Economic Development Washington Washington State Alliance of Skagit County State Ferries Legislative Staff Puget Sound Pilots Port of Anacortes Inlandboatmen’s Union (IBU) HMS Global Clipper Vacations Maritime The San Juan County Economic Development Council prepared a report on other considerations. The San Juan County Economic Development Council prepared a report in response to the policy considerations that were not included in the scope of this study. Refer to Part II of the report for the Additional Considerations Regarding Anacortes-Sidney Ferry Privatization Feasibility. Click here for more information on 6 the study’s purpose and approach. Feasibility Evaluating feasibility Two factors defined feasibility for this study including identifying legal requirements surrounding private auto ferry service operating in the Puget Sound and understanding the level of private operator interest in providing this service. With this information, the team developed potential ferry service models that offered a sufficient rate of return to make service financially feasible for a private operator. The team reviewed terminal and route options centered around two distinct vessel types, significantly differing in speed and capacity. Based on the operating profile and level of service, comprised of frequency of departures and vessel capacity, the team estimated the fares necessary for an operator to make a 10% profit. >> Can legal requirements be satisfied? Identify state statutes that would require amendment to accommodate private auto ferry service business needs. >> Is there private sector interest? Reach out to private ferry operators to discuss their interests, potential challenges and opportunities to privatizing the Anacortes to Sidney service. >> What are feasible private ferry service model(s)? Develop ferry service models that provide a return on investment. The process of reviewing feasibility is illustrated in the feasibility flow model. Is private auto ferry service feasible? Can legal requirements be Is there private sector satisfied? interest? No No Yes Yes Service cannot Service cannot be privatized be privatized What are feasible service models? Evaluate options. Identify Estimate Route Profile Ridership Terminal Location Fare Range Vessel Type Operating Costs 7 Feasibility >> Can legal requirements be satisfied? There are different regulations and standards for U.S. Built and U.S. Flag vessels compared with Foreign Built and Foreign Flag Yes, the operator could vessels. The following sections outline potential legal constraints
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