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Economic Evaluation of Regional Impacts for the Proposed Gateway Pacific Terminal at Cherry Point

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Economic Evaluation of Regional Impacts for the Proposed Gateway Pacific Terminal at Cherry Point Economic Evaluation of Regional Impacts for the Proposed Gateway Pacific Terminal at Cherry Point Prepared for the Puget Sound Regional Council July 2014 The PFM Group 1200 Fifth Avenue, Suite 1220 Seattle, WA 98101 Phone: 206.264.8900 2 Logan Square, Suite 1600 18th & Arch Streets Philadelphia, PA 19103 Phone: 215.567.6100 Fax: 215.567.4180 Parametrix 411 108th Avenue NE, Suite 1800 Bellevue, WA 98004 Phone: 425.458.6200 Fax: 425.458.6363 HR&A Advisors 99 Hudson Street, 3rd Floor New York, NY 10013 Phone: 212.977.5597 Fax: 212.977.6202 Consultant Team Public Financial Management, Inc. Public Financial Management (PFM) is the nation's largest independent financial advisor to state and local governments. PFM’s national reputation for independence, initiative and integrity is provided by more than 500 professionals in more than 35 offices across the nation – including Seattle. In 2011, PFM assessed the economic impact of the Gateway Pacific Coal Terminal on Whatcom County. Parametrix Parametrix is one of the top ten engineering firms in the Puget Sound area and has a long history of working with the Puget Sound Regional Council. Parametrix completed a 2012 study for the City of Seattle reviewing the impact of the proposed Gateway Pacific Terminal on rail traffic in Seattle. HR&A Advisors, Inc. HR&A Advisors is a national leader in economic development strategy – working on economic impact analyses across the nation. HR&A has completed economic impact analyses of large-scale economic development projects including ports, intermodal rail facilities, airports, brownfields redevelopments, and public parks. In the central Puget Sound region, HR&A was part of the team that developed the Seattle Central Waterfront Framework Plan for the City of Seattle. Simpson Consulting Simpson Consulting has a long and diverse portfolio of railway economics, strategic planning, network rationalization, passenger rail coordination and capital planning roles inside the railway industry and as a consultant to public agencies and private firms across the U.S. and Canada. The firm focuses on issues pertaining to growing public sector interest in both freight and passenger rail issues. Table of Contents EXECUTIVE SUMMARY 5 INTRODUCTION 14 PROJECT SUMMARY 17 REGIONAL RAIL PROFILE 32 Movement of Goods and People by Rail in the Central Puget Sound Region 35 Proposed Coal Export Terminals and Terminal Expansion Projects in the Pacific Northwest 53 Additional New Proposed Commodity Shipments Through Pacific Northwest Region by Rail 60 REGIONAL IMPACTS 64 Regional Impacts: Domestic and International Trade 68 Regional Impacts: Transportation System 92 Regional Impacts: Land Use 113 Regional Impacts: Environment 116 THE COMMUNITY-SPECIFIC IMPACTS AND OPPORTUNITIES ASSOCIATED WITH THE PROPOSED GATEWAY PACIFIC TERMINAL 127 Estimating the Economic Impact of Increased Gate-down Time 128 Estimating the Effect of Gateway Pacific Terminal Train Traffic on Property Values 130 Mitigation Analysis for Selected Crossings in the Puget Sound Region 132 City Of Stanwood 143 City Of Marysville 148 City Of Edmonds 156 City Of Seattle 162 City Of Kent 168 City Of Auburn 176 City Of Sumner 181 City Of Puyallup 186 City Of Tacoma 191 Town Of Steilacoom 196 City Of Everett 201 City Of Snohomish 206 City Of Monroe 211 City Of Maple Valley 220 APPENDIX A: STAKEHOLDER OUTREACH 225 APPENDIX B. METHODOLOGY 226 APPENDIX C. DETAILED CROSSING INVENTORY 228 APPENDIX D – ECONOMIC ANALYSIS SUPPORTING DATA 231 Executive Summary Executive Summary Project Summary • SSA Marine (SSA) has proposed the development of Gateway Pacific Terminal – a full-service dry bulk commodity export-import facility on approximately 1,200 acres at a naturally occurring deep-water location in Cherry Point, Washington , approximately sixty miles north of Snohomish County. • Upon completion of all construction and operational enhancements, the terminal’s total export capacity would be approximately 54 million metric tons of dry bulk commodities per year – making it the largest facility of its type on the west coast of the United States. • At full build out (54 million metric tons of dry bulk commodities annually), the proposed terminal would add a total of 18 new trains per day (9 to the terminal and 9 from the terminal), each with an estimated train length of 8,500 feet, or 1.6 miles. • The Federal government, State of Washington and Whatcom County determined that an Environmental Impact Statement (EIS) was required for the development of the terminal under the National Environmental Policy Act (NEPA) and Washington State’s State Environmental Policy Act (SEPA). Drafting of the EIS began in 2013, and it is estimated that completion of a final EIS will require approximately two years. Permitting decisions will not be finalized until after the completion of the EIS. • Studies by Martin Associates and Finance & Resource Management Consultants both projected significant job growth as a result of the construction and operation of the terminal. Public Financial Management’s report found that while there were potential economic benefits to the terminal, there were potential costs as well – with a focus on the need for potential mitigation and the degree to which terminal construction and operation would put other sources of economic activity in Whatcom County at risk. Each report focused largely on impacts in and around Whatcom County. • Studies by Parametrix and Community Attributes, Inc. focused on impacts in the City of Seattle. The Parametrix study identified risks related to projected increases in gate-down time at road crossings and the resulting negative effect on traffic flows to and from the waterfront area. The Community Attributes study identified a series of economic impacts. Potential benefits included a small portion of jobs related to project development – due, in part, to SSA’s location in Seattle. In addition, potential upgrades in rail capacity to meet new demand from the terminal could also benefit the Port of Seattle. The Community Attributes study, however, also identified costs related to value of travel time due to increased traffic (close to a half million dollars annually), the need for investments in mitigation and projected property value decline. Economic Evaluation of Regional Impacts of Proposed Gateway Pacific Terminal Executive Summary Puget Sound Regional Council Page 5 Regional Rail Profile • Rail freight service in the Puget Sound region is largely provided by Burlington Northern Santa Fe (BNSF) and Union Pacific (UP). Service is provided along a north- south main line that runs roughly parallel to Interstate 5 and three east-west routes that cross the Cascade Mountains. In addition, a number of short-line railroads provide service that connects to these routes. • Rail freight volume in the region has significantly increased over the years and is projected to continue increasing over the next twenty years – consistent with national and statewide trends. Between 1991 and 2010, rail freight volume traveling through Washington grew by 81 percent – from 64 million tons to 116 million tons. Annual Tons of Freight Moved by Rail in Washington State (millions) 250 238 200 150 116 100 64 Tons (millions) Tons 50 0 1991 2010 2035 (proj) Tons of Freight Moved by Rail in Washington State (millions) • The Washington State Department of Transportation projects that statewide freight rail volume will grow by an additional 130 percent by 2035. In the Puget Sound region, marine-related rail freight increased from under 20 million tons in 1998 to 32.6 million tons in 2010: marine related rail freight in the region is projected to grow by at least 52.2 million tons by 2030 – a 160 percent increase. Marine Freight Rail Tonnage Moving Through Puget Sound and Washington Coast (millions of tons) 140 131.6 120 100 84.8 80 60 Tons (millions) Tons 40 32.6 20 0 2010 2030 proj. (moderate growth) 2030 proj. (high growth) Marine Freight Rail Tonnage Moving Through Puget Sound and Washington Coast • Most goods moving by rail through the state and the region are agricultural or farm products – including cereal grain and animal feed. Projected growth in rail freight Economic Evaluation of Regional Impacts of Proposed Gateway Pacific Terminal Executive Summary Puget Sound Regional Council Page 6 volume is driven by an increase in dry bulk (non-grain) materials and containers. • Rail service is critical to the operations of the Ports of Seattle, Everett and Tacoma, which together account for $105.2 billion in export and import activity annually. Port officials report that between 60 and 70 percent of all goods moving through the ports are moved, at least in part, by rail. Estimated Value of Goods Moved to/from Ports of Everett, Seattle and Tacoma by Rail 2012 Est. Value of Imports and Exports - Port of Minimum Est. Percentage of Goods 2012 Est. Value of Goods Tacoma, Port of Seattle, Port of Everett to/from Ports Moved by Rail Traveling on Rail to Ports $105.2 billion 60% $63.1 billion • Rail service is also critical to Pierce, King, and Snohomish Counties’ $50 billion per year export market. For example, transportation equipment accounts for more than 70 percent of metro area exports, most of this related to aerospace. Boeing, one of the area’s major transportation equipment manufacturers, relies on rail for transportation of parts. • The central Puget Sound region is also increasingly dependent on rail for the movement of people. Between October 2012 and September 2013, there were 1.28 million Amtrak on/offs in Washington: more than 60 percent were at three of the state’s most used stations that serve the region – Seattle (which, alone, accounted for nearly 50 percent of the statewide total), Tacoma and Olympia/Lacey. In 2012, there were more than 2.8 million boardings (riders) on the Sounder commuter rail service – up by 10.5 percent in one year: in 2013, boardings (riders) were up by approximately 9 percent through September.
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