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PORT OF MOSES LAKE Comprehensive Scheme of Harbor Improvements

Final August 30, 2019

BST Associates Contents

Contents ...... i Figures ...... ii Tables ...... iv Chapter 1. Overview of the Port ...... 1 Mission Statement ...... 1 Role of the Port ...... 2 Strategic Plan Goals ...... 2 Accomplishments of the Port ...... 4 Governance of the Port ...... 5 Chapter 2. Heritage of the Port ...... 6 Before the Port ...... 6 Creation of the Port ...... 6 First Years ...... 7 Industrial Development ...... 8 Other Projects ...... 9 Related Development ...... 10 Chapter 3. Regional Background ...... 11 Regional Overview ...... 11 Land use ...... 12 Economic Base ...... 13 Population ...... 15 Income ...... 16 Education ...... 19 Employment ...... 19 Employment in Manufacturing ...... 21 Largest Employers ...... 21 Employment at the Port of Moses Lake ...... 23 Tourism ...... 24 Housing ...... 26 Supply Chain Links ...... 28 Roads ...... 28 Airports ...... 29 Railroads ...... 30 Low-Cost Electricity ...... 32

Table of Contents i Chapter 4. Strategic Plan ...... 33 Airport ...... 33 Overview ...... 33 Recent Projects ...... 33 Air Cargo ...... 34 Industrial Space ...... 37 Existing Industrial Park ...... 37 GCIA Employment Center ...... 37 Westside Employment Center ...... 39 Buildings ...... 41 Industrial Wastewater System ...... 42 Railroad ...... 43 Foreign Trade Zone ...... 46 Key Projects ...... 47 Chapter 5. Finance ...... 48 Financial Trends ...... 48 Operating Revenues ...... 48 Operating Expenses ...... 49 Non-operating Revenues and Expenses ...... 50 Net Income & Net Position ...... 50 Financial Projections ...... 52 Operating Revenues ...... 52 Operating Expenses ...... 52 Non-Operating Revenues and Expenses ...... 52 Net Income & Net Position ...... 52 Capital Improvement Plan ...... 54 Financing ...... 54 Debt ...... 54 Proposed Financing Structure ...... 55

Figures Figure 1-1: Location of the Port of Moses Lake ...... 1 Figure 1-2: Port of Moses Lake Organizational Chart ...... 5 Figure 2-1: Boeing Flight Test Center...... 7 Figure 2-2: Terminal Building ...... 9 Figure 2-3: C-17s at Moses Lake ...... 9 Figure 2-4: SGL Carbon Fiber Plant ...... 10

Table of Contents ii Figure 3-1: Location ...... 11 Figure 3-2: County Designation of Lands in Port District ...... 13 Figure 3-3: Population Trends...... 16 Figure 3-4: Population Forecast for Grant County ...... 16 Figure 3-5: Personal Income Trends ...... 17 Figure 3-6: Average Annual Wages, Adjusted for Inflation ...... 18 Figure 3-7: Educational Attainment in Grant County ...... 19 Figure 3-8: Employment Trends in Grant County ...... 20 Figure 3-9: Grant County Employment Comparison ...... 20 Figure 3-10: Employment Trends at Port Tenants ...... 23 Figure 3-11: Trends in Lodging Receipts ($1,000s) ...... 26 Figure 3-12: Grant County Housing Trends ...... 26 Figure 3-13: Moses Lake Housing Types ...... 27 Figure 3-14: Single-Family House Value Trends ...... 27 Figure 3-15: Median Rent Trends ...... 28 Figure 3-16: Traffic Counts ...... 29 Figure 3-17: Airports in Grant County...... 30 Figure 3-18: Railroads Serving Moses Lake ...... 31 Figure 3-19: Priest Rapids Dam ...... 32 Figure 4-1: Chartered 747 Loading Cherries at GCIA ...... 36 Figure 4-2: Grant County International Airport Employment Center ...... 39 Figure 4-3: Westside Employment Center ...... 41 Figure 4-4: Port of Moses Lake Leased Buildings ...... 42 Figure 4-5: Northern Columbia Basin Railroad Project ...... 45 Figure 5-1: Port of Moses Lake Operating revenues (2014-2018) ...... 48 Figure 5-2: Port of Moses Lake Operating revenues (2014-2018) ...... 49 Figure 5-3: Net Income Trend (2014-2018) ...... 50 Figure 5-4: Net Income Trends and Projections (2014-2018) ...... 52 Figure 5-5: Port of Moses Lake Outstanding Debt ...... 55

Table of Contents iii Tables Table 3-1: Existing Land Use Inventory ...... 12 Table 3-2: Source of Personal Income ...... 18 Table 3-3: Manufacturing Employment in Grant County ...... 21 Table 3-4: Grant County Largest Industrial Employers ...... 22 Table 3-5: Direct Travel Impacts in Grant County ($ millions) ...... 25 Table 4-1: Recent FAA Grant History ...... 34 Table 5-1: Port of Moses Lake Financial Trends, 2014-2018 ($1,000s) ...... 51 Table 5-2: Port of Moses Lake Financial Projections, 2018-2023 ...... 53 Table 5-3: Capital Improvement Plan ($1,000) ...... 54 Table 5-4: Capital Improvement Plan ...... 56

Table of Contents iv Chapter 1. Overview of the Port The Port of Moses Lake is a special purpose district under Washington State law (Chapter 53 RCW), created by a community vote in 1965 for the purpose of opening the Grant County International Airport and developing surrounding areas to support economic development. The Port of Moses Lake is officially known as Grant County Port District 10. The Port District boundaries are centered in Moses Lake, and encompass a significant portion of the county. As illustrated in Figure 1-1, the district boundaries extend as far as 14 miles east of the City of Moses Lake, 10 miles to the south, 10 miles to the east, and 15 miles to the north. The main asset owned by the Port of Moses Lake is the Grant County International Airport, located approximately six miles northwest of the Moses Lake central business district. All of the Port’s properties are located on or adjacent to the airport. The Port’s assets include the airport, more than 1.2 million square feet of buildings, developed and undeveloped industrial land, an industrial wastewater treatment facility, and a foreign trade zone. The Port serves users from a variety of sectors, including aviation and manufacturing.

FIGURE 1-1: LOCATION OF THE PORT OF MOSES LAKE

Mission Statement The Mission of the Port of Moses Lake is to take the long view in promoting economic and community vitality in Greater Moses Lake through leadership, stewardship and partnerships in aviation, transportation and industrial development.

Chapter 1. Overview of the Port 1 Role of the Port The Port of Moses Lake was created by voters in 1965 to take over Larson Air Force Base, which was scheduled for closure in 1966. The goal of the new Port was described as follows: "Primarily, the Port of Moses Lake plans to acquire, operate, develop, construct, maintain, and regulate the property known as Larson Air Force Base, Washington, and to create industrial development facilities, also, rail or motor vehicle transfer and terminal facilities, or any combination of such transfer and terminal facilities. To acquire, operate, develop, construct, maintain, and regulate other commercial and industrial improvements, also, rail or motor vehicle transfer and terminal facilities, or any combination of such transfer or terminal. To acquire, develop, operate, maintain and regulate recreational facilities." Aviation has always been at the core of the Port’s operations. The long runways and sparsely populated surrounding region make the airport ideal for flight operations. The Boeing Company strongly backed the creation of the Port, in order to preserve the airport for testing aircraft and for training; since that time Boeing has used the airport to test each of its new models. In addition, other manufacturers use the airport for development and testing of new aircraft. Training is also a key role of the airport. Japan Airlines used the airport as its main training base for 40 years, and hundreds of other airlines have trained crews there. The Department of Defense also continues to use the airport for training. In addition, Big Bend Community College operates a flight training program at the airport. The Port of Moses Lake is heavily involved in industrial development. The Port has worked closely with other local stakeholders to attract major manufacturers to the area, to both port-owned property and to privately owned land. Key selling points for industry include large amounts of inexpensive land, and some of the least expensive electricity in the country. In addition, the Port’s industrial wastewater treatment facility provides a critical service to Port tenants and other nearby employers. Strategic Plan Goals The following goals were adopted by the Port Commission as part of the recently completed Port of Moses Lake Strategic Plan. Goal 1. Adopt financial practices that protect the Port’s long-term financial stability.  Strategy 1.a. Develop a long-term, rolling, multi-year, cash flow analysis that projects the Port’s anticipated financial performance in order to support and evaluate its strategic decisions. (Annually beginning in 2019)  Strategy 1.b. Establish a set of investment and borrowing guidelines that define the Port’s expected rate of return with all costs considered. In doing so, define the Port’s tolerance for risk. (2019)  Strategy 1.c. Resolve legacy challenges (leases and contracts) that are impeding the Port’s ability to reach its goals and achieve its Mission. (Ongoing) Goal 2. Consider and adopt a long-term property tax use policy.  Strategy 2.a. Adopt a property tax policy that describes the desired and intended use of property taxes and long-term projected level of taxation. (2020) Goal 3. Adopt an approach and schedule to developing the Port’s annual operating and capital budgets.  Strategy 3.a. Create an annual budget development calendar including a strategic Commission/staff retreat and an update to the Port’s Strategic Plan in order to inform the annual capital/operating budget and an update to the Port’s Master Plan. (2020)

Chapter 1. Overview of the Port 2 Goal 4. Institutionalize best practices for project and organizational management and communication.  Strategy 4.a. Calendar routine operational and project-based staff meetings. (Ongoing-2019)  Strategy 4.b. Develop a sound project and initiative management practice and provide training opportunities. (Implement in 2020)  Strategy 4.c. Schedule preliminary project and initiative reviews with the Port’s Commission early on, and then routinely, as the project or initiative progresses. (Ongoing)  Strategy 4.d. Explore the creation of an annual Commission agenda calendar and improve the scheduling of Commission meeting agenda items. (Annually beginning in 2019) Goal 5. Prior to the budget, develop a Port Outreach and Communication Plan.  Strategy 5.a. Seek Commission approval and budget for of an annual community and industry outreach plan that communicates the Port’s priorities and intentions to its tenants, the community and relevant industries. (Annually beginning in 2020)  Strategy 5.b. Undertake a Port branding process to update and freshen the Port’s image and ‘look’ to its customer base, community and partners. (Fall 2019) Goal 6. Complete a staff assessment and staff development analysis.  Strategy 6.a. Evaluate the current staff configuration, roles and responsibilities, capacity, and make recommendations on adjustments. Specifically embrace a project management model that assigns individual project leads. (Spring 2019)  Strategy 6.b. Develop a succession plan to ensure seamless operation of the Port. (2019) Goal 7. Develop and annually adopt a Port Marketing Plan.  Strategy 7.a. Develop and recommend for adoption an annual Port Marketing Plan that prioritizes the Port’s efforts, short-term and long-term, to attract new and retain existing tenants and customers. (Annually beginning in 2019) Goal 8. Solidify the continued presence of contributing anchor partners that are necessary to the Port’s success.  Strategy 8.a. Through informal and formal relationships identify and address the factors that contribute to the long-term presence of key anchor partners including the US Military and Big Bend Community College. (Ongoing) Goal 9. Increase the Port’s available industrial land capacity.  Strategy 9.a. Implement the findings and recommendations of the Westside Employment Center (WEC) Analysis including: o Undertake regulatory actions including a Planned Actions Environmental Impact Statement and adjustments to the urban Growth Boundary. (2019) o Develop a fundable infrastructure plan. o Craft a targeted marketing plan to attract industry to WEC. o Fund and implement the focused WEC marketing plan. Goal 10. Evaluate the impacts and demands of creating a Washington inland hub for air cargo.  Strategy 10.a. Complete the needed infrastructure assessment and seek State or Federal grant support for both design and construction. (2019)  Strategy 10.b. Craft and adopt an air cargo marketing plan. (2019)  Strategy 10.c. Retain consulting support to target specific agricultural users. (2020)

Chapter 1. Overview of the Port 3 Goal 11. Attract new and retain existing manufacturing employers.  Strategy 11.a. Further solidify and maintain the Port’s long-term business and cultural connection to Asian economies to uncover future business opportunities. (Ongoing)  Strategy 11.b. Through community partnerships develop strategies to address increasing workforce pressures created by the Port’s business development success. (Ongoing) Goal 12. Prioritize infrastructure investments (power, rail, wastewater).  Strategy 12.a. Develop multi-year approaches to securing readily available electric power to new and expanding tenants. (Ongoing)  Strategy 12.b. Complete the environmental impact statement and secure funding for the relocation of the rail to avoid the current congestion in the commercial area of Moses Lake. (Ongoing)  Strategy 12.c. Develop a locally supported approach to increase the Port’s wastewater treatment capacity to accommodate biological waste to attract and retain food processors. Goal 13. Improve passenger air and road transportation infrastructure to support the local economy and quality of life.  Strategy 13.a. Continually monitor the developments with passenger air service at Pangborn Memorial Airport, Spokane International Airport, and SeaTac International Airport for opportunities to re-enter the passenger aviation market. (Ongoing)  Strategy 13.b. Seek partnerships with private industry and State/federal grants to extend road connections from Highway 17 to Port industrial properties. (Ongoing)  Strategy 13.c. Continue to evaluate options for other modal opportunities for Passenger Service. Accomplishments of the Port  Port District created: 1965  Boeing contract signed: 1966  Japan Airlines lease signed: 1968  Port purchases additional 707 acres: 1973 o Includes a number of buildings, including the eight-place hangar complex and Paint Hangar.  Port extends water line to site of new Western Kraft mill: 1978 o In Port district, not on Port land  Sundstrand Data Control Group opens manufacturing plant on Port land: 1981  Foreign Trade Zone completed: 1994  Genie Industries begins operations: 1998  Terminal building completed: 1998  Industrial wastewater treatment facility constructed: 2000  Port district boundary expanded: 2003  SGL Carbon Fiber begins operations: 2011  Industrial wastewater expansions: in 2014, 2015, 2016  Cold storage constructed & cherry charter air cargo flights: 2018

Chapter 1. Overview of the Port 4 Governance of the Port The Port of Moses Lake is governed by three elected commissioners. The Commission sets Port policy, which is then carried out by the Executive Director. Figure 1-2 illustrates the organizational structure of the Port. The Port has five lines of business, each of which has a director. These directors report to the Executive Director.  Military, aviation operations and facilities  Finance administration and human resources  Freight mobility, utilities, and specialty  Industrial and commercial real estate  Business and economic development

FIGURE 1-2: PORT OF MOSES LAKE ORGANIZATIONAL CHART

Chapter 1. Overview of the Port 5 Chapter 2. Heritage of the Port The history of the Port of Moses Lake is rich and compelling; the following description of this history is primarily excerpted and condensed from The Port of Moses Lake, A History, by Jim Kershner. Before the Port In 1964, the U.S. Department of Defense announced that it was planning to close Larson Air Force Base, a keystone of the Moses Lake economy since 1942. Larson was a major Strategic Air Command (SAC) base and a Titan missile base that employed about 4,000 workers and housed about 8,000 people - in a town whose entire population was only 11,299. The base began operating in late 1942, when the army opened the Moses Lake Army Air Base just north of town for training P-38 pilots and later, B-17 Flying Fortress crews. Moses Lake, in the rain shadow of the Cascades, turned out to have ideal flying weather: clear weather most of the time, high ceilings the rest. Most important of all, it had vast amounts of air space, clear of competing air traffic. At the end of World War II, the Moses Lake Army Air Base was briefly mothballed. Then, in 1948, Moses Lake landed its biggest windfall: the installation reopened as a U.S. Air Force base, the headquarters of the 325th All- Weather Fighter Wing. The base initially brought in more than 1,000 military personnel and civilian employees. The base grew even bigger in the 1950s as it acquired a troop carrier wing and an air transport operation. Because of its proximity to the big Boeing plants on Puget Sound, Larson soon became a Boeing test flight center for B-52 Stratofortress bombers and KC-135 refueling tankers. The Air Force built a massive hangar at the base, capable of holding eight B-52s at once. In 1960, Larson became a Strategic Air Command base under the 4170th Strategic Wing and also acquired three Titan missile-launching facilities, scattered in the countryside. Creation of the Port The Moses Lake community had a one-and-a-half-year grace period until the official closure of the base was scheduled on June 30, 1966. A group called the Larson Action Committee immediately sprang to action and sent several delegations to Washington D.C. to try to talk the Department of Defense out of their decision. When that proved unsuccessful, they formed subcommittees to look into the best options for turning this huge air base into a community asset. By March of 1965 they realized that a public port district might be a particularly powerful tool. Public port districts were first authorized in Washington state in 1911 mainly to help maritime ports develop public docks, wharves and other infrastructure and to provide public control of the state's harbors. The state legislature later broadened the definition of a public port to allow non-maritime communities to create their own taxing districts for a variety of economic development projects - including airports. The port issue appeared on the November 1965 ballot, and passed with a ninety percent approval rating. Three port commissioners were elected on the same ballot. On November 15, 1965, the Grant County commissioners passed a resolution certifying the creation of Grant County Port District No. 10, the Port of Moses Lake. In December the new commissioners codified the mission of the Port in a "Plan of Action": "Primarily, the Port of Moses Lake plans to acquire, operate, develop, construct, maintain, and regulate the property known as Larson Air Force Base, Washington, and to create industrial development facilities, also, rail or motor vehicle transfer and terminal facilities, or any combination of such transfer and terminal facilities. To acquire, operate, develop, construct, maintain, and regulate other commercial and industrial

Chapter 2. Heritage of the Port 6 improvements, also, rail or motor vehicle transfer and terminal facilities, or any combination of such transfer or terminal. To acquire, develop, operate, maintain and regulate recreational facilities." The key element of the plan was to acquire the air base once the federal government officially declared it surplus. The Port recruited a crucial ally — The Boeing Company — to help make its case for taking over the airfield. The FIGURE 2-1: BOEING FLIGHT TEST CENTER company had long used Larson's long runways and uncluttered airspace to test its B-52 bombers and other military aircraft. Boeing went on record as saying it wanted to use the former Larson runways and facilities to train airline pilots and flight crews as part of its commercial airplane business. The aircraft giant, based in Seattle, said it wanted to expand its training programs and that Larson would be key to that expansion. Boeing was delivering dozens of Boeing 707s and 727s to airlines around the world, and those airline flight crews had to be trained. Meanwhile, the newest 727 and the new 737 would soon need to be tested. The Boeing 747, a giant airliner that needed a long runway, was also in the planning stages. Source: Port of Moses Lake The airspace around Boeing Field in Seattle and Paine Field in Everett were too crowded for all of this training and development work, and residents were starting to complain about noise. At Moses Lake, training flights could take off and land all day. As it turned out, Boeing's involvement was more than sufficient to solidify the Port's case. The federal government granted the Port of Moses Lake all of the runways and almost all of the other aviation-related facilities at the old airbase. Larson was renamed the Grant County Airport as of July 1, 1966, and the Port immediately approved a contract with Boeing. The contract ran through 1980 and Boeing agreed to underwrite some of the airport's operating expenses during the first year. First Years Boeing was booming and it was using the Grant County Airport even more than the Port had hoped. When Boeing sold 707s to a domestic airline, that airline's instructors would come to Moses Lake to learn how to fly and operate the plane. Those instructors would then fan out around the U.S. and train their own flight crews. For Boeing's foreign airline clients, the situation for the Port was even better. Those foreign airlines didn't just train their instructors in Moses Lake; they sent over their entire flight crews, and more than 300 foreign carriers would eventually participate in Boeing jet training at More than 300 Grant County Airport. foreign airlines have The landing fees generated by Boeing in 1968 would total $372,099, making it trained in Boeing easily the most important revenue source of the Port's airport division that year. jets at Moses Lake For comparison, the Port's tax levy brought in only $46,000 that year. In 1968 the federal government put more former Larson facilities up for bid, and Boeing purchased a large hangar, a tank farm, and fueling facilities to support its testing and training programs. In 1968, also, the Port landed one of its most important tenants, Japan Air Lines, or JAL. JAL was looking for a new facility to conduct its flight training, and Moses Lake offered the airport facilities, open airspace, and sparsely populated region that it needed. In order to convince JAL to move training operations to Moses Lake the Port needed to find living facilities for the crews and to secure an adequate supply of jet fuel.

Chapter 2. Heritage of the Port 7 Because there was a lack of hotel rooms in the area the Port worked with a private developer to convert the former Larson bachelor officers' quarters into a kind of home-away-from-home for Japanese pilots and crew. The Port’s fixed-base-operator negotiated with refineries in Montana to guarantee the huge amounts of jet fuel needed. Japan Air Lines originally made a commitment of three-to-five years at Moses Lake, but it turned out to be the beginning of a forty-year relationship. In 1969 Boeing flew the new 747 from Everett, where it was built, to Moses Lake for testing. Additional 747s were flown to Moses Lake that year, and together they made over 1,500 takeoffs and landings at Moses Lake. Testing continued as the 747 entered commercial service in 1970. This was just the beginning of the 747 legacy at the Port. Jim Abram, the jet fuel supplier, subsequently embarked on a world tour to the headquarters of nearly all of the world's major airlines, and convinced twenty-four of the twenty-seven foreign purchasers of Boeing 747s to train their 747 crews in Moses Lake. Industrial Development By 1972 the Port commissioners and management realized that the Port's future was not only in running the airport, but also in using the vast acreage and infrastructure inherited from Larson to create new businesses and industries for Moses Lake. The local community wanted the Port to create new jobs in the community as well as to keep its relationships with Boeing and Japan Air Lines. The Port had from the beginning attracted businesses and industries to its vast hangars and other buildings. Dozens of small companies, ranging from a commercial mushroom-growing operation to a mobile home manufacturer, had done business there but none of these employed more than 100 workers. Progress in attracting major employers was slow, but began to change through the 1970s. One key factor was the Port's 1973 purchase of an additional 707 acres of former Larson land from the federal government, bringing the Port's total to about 4,500 acres. A large portion of the new property was purchased strictly to protect the runway's approach pattern, but the rest was purchased as industrial development property. The purchase included a number of buildings, including the huge eight-place hangar complex, once used for B-52s, and another massive building called the Paint Hangar. One of the Port's first big industrial success stories came in 1978 when Western Kraft Co., a manufacturer of cardboard boxes, proposed moving to Moses Lake. However, a lack of water at the proposed site caused the company to start looking elsewhere. The Port worked out a deal in which it helped extend an 11,000-foot water line to the site, which cemented the deal. The plant, now part of International Paper Co., has been a significant Moses Lake employer ever since. In quick succession in 1981, three big firms announced plans to move to Moses Lake. The first was Union Carbide, which was looking to manufacture high-grade polycrystalline silicon for the electronics industry. The $85 million plant was finished in late 1984, as the personal computer industry was exploding. Demand for the silicon was so high that the plant doubled in size by 1986 The second big company was Sundstrand Data Control Group, a high-tech avionics company which already had a big presence in Redmond, Washington. Sundstrand was seeking a facility to manufacture electronic data recording boxes for aircraft and other related components. The Moses Lake plant opened in May 1981 and initially employed about seventy-five people, but that later grew to 125. The third company was International Titanium, Inc., which built a $25 million plant to manufacture titanium sponge, a metal widely used in the commercial and military aerospace industry. The plant employed 125 people, with an annual payroll of about $2.5 million.

Chapter 2. Heritage of the Port 8 Neither the Union Carbide or International Titanium plants were located on Port land proper, but were within the confines of the port district, which meant they boosted the Port's tax base. Sundstrand leased Port facilities on Port land. Other firms, including Tama Chemicals (now doing business as Moses Lake Industries), Chemi-Con Materials, and the Renewable Energy Corp. (REC-Silicon), would commit to Moses Lake in ensuing years. Other Projects Regular commercial air service to Grant County Airport started in 1977, operating from an old terminal building FIGURE 2-2: TERMINAL BUILDING left over from Larson. As service and traffic increased, the need for a new, modern terminal grew, and in 1995 the Port decided to go ahead with the project. At the same time, the FAA had already committed to replacing its old control tower in the terminal building with a new $3.3 million air traffic control tower, 2,000 feet north of the terminal. The new 30,000 square foot terminal was dedicated on April 2, 1998. The project’s $5.7 million cost was paid with bonds, and for the first time the Port used its ability to levy property taxes on district residents. The Port first started developing a Foreign-Trade Zone in 1987, in order to help Chemi-Con Materials and other manufacturers. A Foreign-Trade Zone allows manufacturers to bring in the necessary foreign materials they need to make their products without paying a duty on them. The Port first had to work with the U.S. Customs Service to become a “user-fee port of entry”, meaning, the Port and its tenants must foot the bill for a resident customs office. Then the Port had to apply to the U.S. Foreign-Trade Zone Board and meet a number of complex requirements. The 316-acre zone was finalized in October 1994. The Industrial Wastewater Treatment Facility was another project by the Port that was critical to local industry. The idea of building an Industrial Wastewater Treatment Facility began in 1995 when the City of Moses Lake and the state Department of Ecology ruled that the old Larson wastewater plant and the City's other treatment facilities did not have the capacity to handle expansion at what is now Chemi-Con. This was a major setback for the company, casting doubt on the firm’s expansion plans. To solve the immediate issue for Chemi-Con, and to provide for new industries, the Port partnered with the county and the city to build a new plant which was dedicated in 2000. The facility has subsequently been expanded twice, significantly upgrading its capacity. In February 2003, the port's taxing district nearly doubled in square miles, through annexation. Voters in an area northeast of the original Moses Lake Port District--one of the few parts of Grant County not already in a port FIGURE 2-3: C-17S AT MOSES LAKE district--voted 214-169 to become part of the Port of Moses Lake. This added another 360 square miles to the 380 existing square miles. The Port continues to serve the U.S. military in a variety of ways. For example, Joint Base Lewis-McChord near Tacoma stages a large number of C-17 cargo plane training flights at the airport, and practices assault landings on one of the runways. In 2011, Fairchild Air Force Base in Spokane moved almost all of its air refueling tankers to the Grant County International Airport for approximately one year while Fairchild’s runways were being repaved. Other bases and branches of the military also use the airport as a base of operations for yearly training exercises. Source: U.S. Air Force

Chapter 2. Heritage of the Port 9 Aircraft testing and research continues to be a key activity at Grant County International Airport. Boeing has used the airport for testing each of its new aircraft, up to and including the 787 series, the 737 MAX, and the 747-800. Other companies also take advantage of the local airspace and airfield capacity; most recently this has included Mitsubishi Aircraft Corporation. In 2014 Mitsubishi announced its intention to build a flight test center for a new regional jet. Mitsubishi partnered in the project with AeroTEC, a Seattle-based company specializing in flight testing, engineering, and certification partnering. Related Development The Port of Moses Lake has helped attract tenants to other properties in the Port District, including those not owned by the Port. As an example, the Port played a key role in attracting the SGL Automotive Carbon Fibers Group/BMW carbon fiber parts plant in 2010. The plant is adjacent to, but not on, Port property. The Port’s wastewater treatment and Foreign Trade Zone were critical components in the firm’s decision to locate in Moses Lake. The Port has also been instrumental in attracting several other industries to Moses Lake over the decades. These plants are not on Port property but they have been key contributors to the region's economic base. For example:  REC-Silicon is a major employer in the Port District, and has undertaken massive expansion since locating in Moses Lake,  The Port assisted Eka Chemicals, Inc. with site selection, and  The Port provided industrial revenue bonds and other assistance to National Frozen Foods and Basic American Foods. The billions of dollars in investment by these firms has significantly increased the Port’s tax base, and helped to solidify the Port’s financial position.

FIGURE 2-4: SGL CARBON FIBER PLANT

Source: 610 KONA

Chapter 2. Heritage of the Port 10 Chapter 3. Regional Background An understanding of the economic conditions and development trends in Grant County is critical to determining the context and opportunities for development at the Port of Moses Lake. The following chapter evaluates several key variables that describe the economic trends in Grant County. Regional Overview Moses Lake is located in the heart of the Columbia Basin in central Washington. The Columbia Basin is a large area in the Pacific Northwest that serves as the drainage basin for the Columbia River and numerous tributaries. Central Washington was a sparsely populated high desert area prior to the construction of the Grand Coulee Dam (approximately 60 miles north of Moses Lake) in the 1930s. The City of Moses Lake was incorporated in 1938, with a population of 301. The population increased dramatically during World War II, with the establishment of Moses Lake Army Air Base (later renamed Larson Air Force Base, now Grant County International Airport). Population growth was also spurred by the opening of the Columbia Basin Irrigation Project in the1950s, which provided irrigation to wide areas of Central Washington.

FIGURE 3-1: LOCATION

Source: Grant County International Airport Master Plan1

1 Coffman Associates, Grant County International Airport Master Plan, August 2014.

Chapter 3. Regional Background 11 Land use The following is excerpted from the 2018 Grant County Comprehensive Plan Update.2 Despite the population growth of recent decades Grant County is still mostly rural, with a 2018 population of 97,350 people spread across 2,791 square miles. Much of the county consists of wide expanses of open lands, including diverse farmlands and arid foothills. Grant County’s 15 incorporated cities and towns, and their surrounding urbanized areas constitute the Urban Growth Areas (UGAs). Outside the UGAs is a significant amount of land comprising the natural resource base of the County’s economy. Scattered outside the UGAs and among the resource lands are areas of land neither well suited for agriculture nor suitable for urban level development. These non-resource, non-urban areas comprise the rural land base of Grant County. The county encompasses a total of approximately 1,700,634 acres. Of all the lands under County jurisdiction, agriculture as a land use constitutes the highest percentage (67%). As indicated in Table 3-1 nearly 1,144,417 acres are devoted to some form of agricultural production. Agricultural areas are located throughout Grant County. In general, the location of agriculture has been strongly influenced by construction of the irrigation facilities of the Columbia Basin Project, most of which occurred from the 1940s through 1960s. Significant areas of dryland agriculture also exist throughout the County, primarily in the north. Unimproved or vacant land is the second-largest land use, accounting for 448,581 acres, or 26% of the total. The remaining 105,500 acres account for approximately 6.1% of all land in the County. Nearly half of this land (i.e. 45%) is residential, and most of the rest is split relatively evenly among recreational, transportation, and commercial/trade uses. Industrial uses are a subset of the Commercial Miscellaneous and Commercial/Trade categories.

TABLE 3-1: EXISTING LAND USE INVENTORY

Area Percentage Land Use Classification1 (Acres) of Total Residential 47,304 2.78 Commercial Miscellaneous 4,132 0.24 Commercial/Trade 13,256 0.78 Service 5,856 0.34 Transportation 13,189 0.78 Recreational 15,563 0.92 Resource Agriculture, Mining, Fishing 1,147,553 67.48 Open Space 5,110 0.30 Unimproved/Vacant 448,581 26.38 Unimproved Other 90 0.01 Total 1,700,634 Source: White Bluffs Consulting

2 White Bluffs Consulting. Grant County Comprehensive Plan Update, Draft Comprehensive Plan, February 2018.

Chapter 3. Regional Background 12 Of the 1,700,634 acres of land in Grant County, approximately 29% (493,747 acres) is owned and controlled to some extent by the state or federal government. The largest single publicly owned parcel is the Wahluke Slope portion of the Hanford Reach National Monument, which is owned by the U.S. Department of Energy. Wahluke Slope is 66,580 acres in total, and is part of the larger U.S. Fish and Wildlife Service managed County land of 90,664 acres. The district boundaries of the Port of Moses Lake encompass approximately 229,000 acres, or 12.8% of the county total. Within the Port District, 5,300 acres is owned by the Port, which includes the airport and industrial area. Of this Port-owned total, 3,500 acres is dedicated to airport use. As shown in Figure 3-2, most of the land within the Port District boundaries is sparsely developed. Three of the least dense land use groupings account for almost 84% of the land in the Port District, including Agriculture (includes Agricultural Service Center, Agriculture Irrigated, and Agriculture Rangeland), Rural (includes Rural Community, Rural Remote, Rural Residential, and Rural Resource), and Open Space. The City of Moses Lake is located entirely in the Port District, and accounts for nearly 6% of the land in the District. The remaining 11% is split between a number of designations, none of which accounts for more than 3% of the total. The County Comprehensive Plan designates approximately 4,500 acres as Port of Moses Lake. This designation provides for areas owned and operated by the Port of Moses Lake, and the Port maintains master planned land uses within this land use designation.

FIGURE 3-2: COUNTY DESIGNATION OF LANDS IN PORT DISTRICT

Open Space, 15% Rural, 24%

City of Moses Lake, 6%

Residential, 3% Port of Moses Lake, 2%

Urban Reserve, 2% Industrial, 1% Shoreline Development, 0% Commercial, 0% Public Facility, 0% Agriculture, 47%

Source: Grant County Planning Department data Economic Base Moses Lake’s economic base has traditionally relied on agriculture, but now it also includes manufacturing and technology. Several companies have moved to the area including SGL Group (which manufactures carbon-fiber), Genie Industries (aerial lift cranes), Joyson Safety Systems (vehicle air bag systems), and Chemi-Con (specialized aluminum products). The potential for additional industrial development is strong, but it is important to understand the strengths, weaknesses, opportunities and threats of the region. The Port of Moses Lake is acting in concert with public and private partners to build on the region’s strengths and to shore up deficiencies in order to stimulate economic development.

Chapter 3. Regional Background 13 As described in the recent Grant County Comprehensive Plan Update3, the strengths, weaknesses, opportunities, and threats include: STRENGTHS Grant County has several strengths that enhance potential opportunities for growth.  A substantial resource endowment because the Columbia Basin is one of the nation’s most productive agricultural growing regions.  A growing agriculture-related complex with a critical mass of agricultural service and supply firms providing productive inputs to agricultural producers.  A first-rate transportation network, o The County is bisected by the state’s major east-west interstate (I-90). o The County is also bisected by Burlington Northern/Santa Fe Railroad’s main east-west rail line. o The County is home to one of the largest airfields in the country, with one of the longest runways.  Significant cost advantages of doing business, which includes: o One of the cheapest electric power rates in the United States, and o Large amounts of inexpensive industrial land.  Strong presence in export markets with high levels of foreign investment.  H-2A and other temporary farm worker housing and labor supply.  Significant levels of exports.  Grant County is reasonably well-positioned for expansion within emerging industries and has a growing reputation for local cooperation in economic development between local governments.  Quality of life factors and relative low cost-of-living because Grant County is an attractive area for relocation and expansion and housing is highly affordable compared with other areas. There is also a rich cultural heritage in Grant County.

WEAKNESSES Grant County also has some liabilities compared with other counties, against which it must inevitably compete for scarce public and private investment dollars.  Limited capacity for wastewater treatment and water distribution facilities in certain areas. The Port is acting to resolve infrastructure issues within its jurisdiction.  Limited legal mandate to influence some areas of economic development policy.  Limited retail growth in many communities.  Lack of adequate skilled labor.  Weakness in developed tourism and recreational facilities.  Lack of efficiency in air service. The Port is striving to develop commuter air service and air freight service.

3 White Bluffs Consulting. Grant County Comprehensive Plan Update, Draft Comprehensive Plan, February 2018.

Chapter 3. Regional Background 14 OPPORTUNITIES In addition to inherent economic assets and liabilities, Grant County has a number of opportunities for economic development.  Internationalization of the local economy.  Increased technology-oriented economic development.  Trained labor force.  Value-added agricultural products.  Broad state government commitment to rural economic development.  Increased cost for development in Puget Sound.  Increased orientation toward leisure and recreation.  Growth in retirees – provides an opportunity to attract and retain residents.  Columbia Basin Project, which provides irrigated water for agriculture that has transformed the economy of Grant County. THREATS Grant County also faces some external threats that could impinge upon its future economic prospects.  Farm and manufacturing labor supply - maintaining adequate farm labor supply will continue to be a challenge for the future.  Removal of dams on Columbia-Snake River system – if dams on the Columbia-Snake River system (outside Grant County) are dismantled, there will be indirect negative impacts felt far and wide within eastern Washington.  PUD dams and transmission/distribution infrastructure – aging infrastructure, power distribution systems, and transmission facilities are expensive to maintain and are inefficient in meeting demand. Population Grant County had 97,350 residents in 2018, according to estimates from the Washington State Office of Financial Management (OFM). Population growth averaged 2.1% from 1990 through 2018, with higher growth rates occurring earlier in the period. (See Figure 3-3). As described above, the county is relatively rural, with 43.9% of the population living outside of incorporated areas. This has been changing slowly over time, however, and the share of population in unincorporated areas fell from 48.2% in 1990. The rate of population growth in unincorporated parts of Grant County averaged 1.7% from 1990 through 2018, while the rate of growth in incorporated areas averaged 2.4% per year. Grant County has 15 incorporated cities and towns, with populations that range from as low as 50 to as high as 23,660. Moses Lake is the largest of these, and accounted for 24.3% of all county residents in 2018. Moses Lake has also been growing faster than the county, with average population growth of 2.7% per year. As a result of this faster growth, Moses Lake’s share of county population increased from 19.3% in 1995 to 24.3% in 2018.

Chapter 3. Regional Background 15 FIGURE 3-3: POPULATION TRENDS

120,000 30%

100,000 25% n o i

80,000 20% t a n l o u i p t o a l

60,000 15% P

u f p o

o P e r

40,000 10% a h S 20,000 5%

- 0% 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Moses Lake Other Incorporated Unincorporated Moses Lake Share

Source: Washington State Office of Financial Management Grant County is likely to grow faster than the state from 2017 through 2040, according to projections by OFM. Population growth for Grant County is projected to range from a low of 0.6% per year to a high of 2.2% per year, compared with statewide projected growth of 0.3% to 1.8%. Based on these estimates, by 2040 the population of Grant County is projected:  to increase by approximately 13,900 under the low forecast (a total of 14.4%) and to reach 109,500,  to increase by nearly 37,400 under the mid-range forecast (a total of 38.1%) and to reach 133,000, and  to increase by nearly 63,000 under the high forecast (a total of 63.0%) and to reach 158,500.

FIGURE 3-4: POPULATION FORECAST FOR GRANT COUNTY

180 160 )

s 140 0 0

0 120 , 1 (

100 n o i 80 t a l

u 60 p o

P 40 20 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 4 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0

Low Mid High Source: WA State Office of Financial Management, BST Associates Income Personal income per capita in Grant County saw strong growth from 2001 through 2017. On a nominal basis, income increased from approximately $21,900 per capita in 2010 to $38,300 per capita in 2017, with growth averaging 3.6% per year. During this period the rate of income growth in Grant County was higher than the rate of

Chapter 3. Regional Background 16 inflation (i.e. 2.1% per year); as a result, real income (i.e. nominal income adjusted for inflation) also grew. As measured in 2017 dollars, per capita income in Grant County grew from approximately $30,300 in 2001 to $38,300 in 2017. (See Figure 3-5). Income in Grant County grew faster than that of the surrounding region from 2001 through 2017.4 In 2001, per capita income in Grant County was 89.7% of the regional average. In 2017 this rose to 93.0% of the regional average. Income in Grant County also grew slightly faster than the statewide average from 2001 through 2017. On a nominal basis, income in Grant County grew at an average of 3.6% per year, compared to a statewide average of 3.5%. Adjusted for inflation, Grant County income grew at 1.5% per year and Washington income grew at 1.4% per year.

FIGURE 3-5: PERSONAL INCOME TRENDS

$70,000 a

t $60,000 i p

a Grant C

r $50,000

e Grant (adj.) P

e Region $40,000 m

o Region (adj.) c n I

l $30,000 Washington a

n Washington (adj.) o s

r $20,000 e P $10,000

$0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7

Source: Bureau of Economic Analysis Most personal income is generated from three sources: earnings from work, dividends/interest and rent, and transfer payments. (Transfer payments are income payments to persons for whom no current services are performed, and include such items as Social Security, worker’s compensation, and Medicare). (See Table 3-2). Statewide, a declining share of personal income is from work earnings, but in Grant County this share has not changed substantially since 2001. In Washington, the share of personal income generated by work earnings fell from 68% in 2001 to 63% in 2017. In Grant County, work earnings accounted for 59% of personal income in 2017, the same share as in 2001. A more pronounced difference between Grant County and the state is the dependence on transfer payments. In Grant County in 2017, 24% of personal income was generated by transfer payments, an increase of 2% from 2001. Statewide, only 14% of personal income was generated by transfer payments in 2017, an increase of 1% from 2001.

4 Surrounding region includes the following counties: Grant, Adams, Benton, Douglas, Franklin, Kittitas, Lincoln, and Yakima.

Chapter 3. Regional Background 17 The share of income from investments is lower in Grant County than it is statewide, and this share has dropped in Grant County while growing statewide. In Grant County this share dropped from 19% in 2001 to 17% in 2017; statewide the share grew from 19% in 2001 to 22% in 2017. The lack of growth in the share of income from work earnings, combined with the increase in the share from transfer payments, underscores the need for jobs in the region, especially those that pay well. The Port of Moses Lake plays a critical role in attracting these types of jobs.

TABLE 3-2: SOURCE OF PERSONAL INCOME

Item 2001 2006 2011 2016 2017 Grant County Earnings from Work 59% 61% 60% 60% 59% Dividends, Interest & Rent 19% 16% 16% 17% 17% Transfer Payments 22% 23% 24% 23% 24% Washington State Earnings from Work 68% 66% 64% 63% 63% Dividends, Interest & Rent 19% 21% 20% 23% 22% Transfer Payments 13% 13% 16% 15% 14% Source: BST Associates, Bureau of Economic Analysis Average annual wages in Grant County are substantially lower than those in both Washington state and the United States, and have been for most of the past three decades. The gap between Grant County and Washington has grown over time; Grant County average annual wages were 26.7% lower than statewide wages in 1990, and this gap grew to 35.4% in 2017. Statewide wages are distorted by the high wages in King County. With King County omitted, Grant County wages were 17.2% lower than the statewide average in 2017, which was essentially the same gap as in 1990. Annual average wages in Grant County were 29.7% lower than U.S. average in 1990, and this gap grew to as much as 36.5% in 2000. However, after 2000 Grant County saw faster wage growth, and by 2017 this gap had dropped to 27.6%. (See Figure 3-6).

FIGURE 3-6: AVERAGE ANNUAL WAGES, ADJUSTED FOR INFLATION

$70,000

$60,000

$50,000 e g a $40,000 W

l a

u $30,000 n n A $20,000

$10,000

$0 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Grant State State Less King U.S. Source: Washington Employment Security Department

Chapter 3. Regional Background 18 Education The educational level of adults in Grant County has increased over time, with a drop in the number of those not completing high school and an increase in the number with at least some college education. In 2017 nearly half of residents 25 and older had attended college.

 The share of adults with no high school diploma or less than an 9th grade education declined from 27.8% in 2000 to 23.5% in 2017.  The share of adults with a high school diploma or GED fluctuated during that period, finishing 2017 slightly higher than in 2000.  The share of adults with some college or an Associate’s degree grew from 30.7% to 31.5%.  The share with a Bachelor’s degree or higher grew from 13.7% to 16.7%.

FIGURE 3-7: EDUCATIONAL ATTAINMENT IN GRANT COUNTY

35%

+ 30% 5 2

n 25% o i t a l 20% u p o

P 15%

f o

e 10% r a h

S 5% 0% 2000 2005 2010 2015 2017 No High School Diploma / Less than 9th Grade High School Diploma/GED Some College / Associate's Degree Bachelor's Degree / Master's or Higher

Note: Residents 25 years and older Source: U.S. Census Bureau, American Community Survey Employment Unemployment in Grant County is at the lowest level it has been since prior to the recession (i.e. 2008 through 2010). In both 2017 and 2018 the average unemployment rate in the county was 6.3%, slightly lower than the 6.5% rate of 2007. The rates in 2017 and 2018 were also the lowest the county has seen since 1990. At the same time that the unemployment rate was falling, the labor force in Grant County was growing. The number of workers in the county grew from a low of 31,200 in 2001 to nearly 45,700 in 2018; the number also increased in all but three years during that period. The number of unemployed workers in Grant County was lower in 2018 than it was in 2001, and substantially lower than it was during the height of the recession. At the peak of the recession nearly 4,700 workers in Grant County were seeking jobs, but by 2017 this had fallen to fewer than 2,900. (See Figure 3-8).

Chapter 3. Regional Background 19 FIGURE 3-8: EMPLOYMENT TRENDS IN GRANT COUNTY

50,000 12% 45,000 10% 40,000 35,000 8% 30,000 Unemployed 25,000 6% Employed 20,000 Unemp. Rate 4% 15,000 10,000 2% 5,000 0 0% 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 9 9 9 9 9 0 0 0 0 0 1 1 1 1 1 0 2 4 6 8 0 2 4 6 8 0 2 4 6 8

Source: Employment Security Department/LMEA; U.S. Bureau of Labor Statistics The economy of the United States has been evolving from manufacturing to trade and services, and this is true in Washington, as well. This shift is also occurring in Grant County. As illustrated in Figure 3-9, the service sector in Grant County now accounts for almost twice as many jobs as manufacturing. Between 2000 and 2018 the share of jobs in the service sector grew from 29% to 32%, while the share of manufacturing jobs fell from 19% to 15%. The number of manufacturing jobs in Grant County has expanded, even though this sector’s share of total employment has declined. The manufacturing sector in Grant County was negatively impacted by the recession, with employment falling from approximately 4,600 jobs in 2000 to 4,000 jobs in 2010, a drop of more than 13%. Since 2010 employment in manufacturing has seen strong growth, and in 2018 the sector employed more than 4,700 workers in Grant County.

FIGURE 3-9: GRANT COUNTY EMPLOYMENT COMPARISON

Government

Other Services

Retail Trade

Wholesale Trade 2000 Transp & Public Utilities 2010 2018 Manufacturing

Mining, Logging, Const.

0% 5% 10% 15% 20% 25% 30% 35% Source: Washington Employment Security Department, U.S. Bureau of Labor Statistics

Chapter 3. Regional Background 20 Employment in Manufacturing Manufacturing is a key focus of the Port of Moses Lake, and many of the largest manufacturers in Grant County are either tenants of the Port of Moses Lake or users of the Port’s facilities. These include Genie Industries, SGL Carbon, and Joyson Safety Systems, among others. Food processing employs approximately 2,000 workers in Grant County, the most of any manufacturing sector in the county. This number has remained relatively steady over time, illustrated in Table 3-3. In addition to food manufacturing, beverage manufacturing provided an additional 177 jobs in 2017; this was a substantial increase over the 24 jobs in the sector in 2005. The Port currently has no food processing tenants, but plans to pursue this market once the wastewater treatment facility is upgraded to handle biosolids. Chemical manufacturing is another major part of the sector in Grant County, and one Manufacturing is a that is directly supported by facilities at the Port of Moses Lake. Employment in key focus of the chemical manufacturing also rose sharply between 2005 and 2017, growing from 184 Port of Moses Lake jobs to 488 jobs. Chemical firms that are tenants of the Port or are wastewater treatment plant users include AstaReal Technologies Inc. and Moses Lake Industries. Non-metallic mineral products are another key manufacturing sector supported by the Port of Moses Lake. Employment in this sector jumped from 467 in 2005 to nearly 700 in 2010. Employment then dropped to 591 jobs in 2015 and 421 jobs in 2017. Many of the jobs associated with the increase in employment, as well as with the subsequent drop, are at REC Silicon. REC has invested heavily in its Moses Lake facility, but is currently operating at limited capacity due to trade issues between the U.S. and China. Manufacturing jobs generally pay well. The average manufacturing wage in Grant County in 2017 was $53,500. This figure represents an increase of 17% over the inflation-adjusted level in 2005. Annual wages in the manufacturing sectors supported by the Port of Moses Lake are even higher; in 2017 the average wage in chemical manufacturing was $72,000, and in non-metallic mineral products it was $84,500.

TABLE 3-3: MANUFACTURING EMPLOYMENT IN GRANT COUNTY

Average Employment Annual Wage (in 2017 dollars) Industry 2005 2010 2015 2017 2005 2010 2015 2017 Food processing 2,160 1,979 2,060 2,048 $41,400 $44,300 $49,100 $49,400 Beverage production 24 74 137 177 $23,200 $34,900 $35,400 $32,500 Chemical manufacturing 184 266 421 488 $72,000 $70,200 $69,500 $70,200 Nonmetallic mineral products 467 697 591 431 $52,500 $81,600 $95,100 $84,500 Fabricated metal products 55 88 57 50 $41,500 $57,400 $43,300 $49,000 Other industries 635 863 1,819 1,679 $49,200 $48,100 $39,300 $48,100 Total Manufacturing 3,525 3,967 5,085 4,873 $45,800 $53,500 $52,200 $53,500 Source: BST Associates, WA State Employment Security Dept Largest Employers The list of the largest private sector employers in Grant County shows that the majority of these are located in or near Moses Lake. (See Table 3-4). As described in the Westside Employment Center Study, this list of major industrial employers helps to define the industrial clusters that exist in Grant County; these clusters include food processing, aviation services, and other manufacturing, among others.  In this list of Grant County's largest employers, there were four companies in food processing in Moses Lake, with combined employment of 922. An additional six food processing firms (including cold storage) were located in Quincy, Royal City, and Warden, with total employment of 1,247. Combined, these firms accounted for a total of 2,169 workers.

Chapter 3. Regional Background 21  The Aviation and Aerospace sector had three companies with a total of 502 workers, all in Moses Lake. There were nine other companies in diverse manufacturing sectors in Moses Lake, with combined employment of 2,596 workers.  Based on the current local composition of industrial companies, it is evident that the Moses Lake area can support a wide range of manufacturing operations, but the current dominant clusters are food processing, other manufacturing, and aviation services.

TABLE 3-4: GRANT COUNTY LARGEST INDUSTRIAL EMPLOYERS

Company City Product or Service Type of Facility NAICS Emp. Genie Industries Moses Lake Aerial Work Platforms Manufacturing Plant 33392 950 Joyson Safety Systems Moses Lake Automotive Air Bags Manufacturing Plant 33639 430 National Frozen Foods Moses Lake & Quincy Corn & Pea Processing Processing Plant 31141 460 AeroTEC/ Mitsubishi Aircraft Moses Lake Aerospace Flight Testing Flight Testing Facility 48819 400 Moses Lake Industries Moses Lake Industrial Chemicals HQ & Manufacturing 32518 355 J. R. Simplot Company Moses Lake Potato Products Processing Plant 31141 282 REC Silicon Moses Lake Polysilicon Manufacturing Manufacturing Plant 32510 150 D&L Foundry Moses Lake Manhole Cover Manufacturing HQ & Manufacturing 33151 185 SGL Automotive Carbon Fiber Moses Lake Carbon Fiber Manufacturing Plant 33599 129 Basic American Foods Moses Lake Dehydrated Potato Processing Processing Plant 31142 110 International Paper Moses Lake Corrugated Box Manufacturing Manufacturing Plant 32221 110 Chemi-Con Materials Moses Lake Electrolytic Aluminum Foil Manufacturing Plant 33131 90 Western Polymer Moses Lake Potato Starch Processing HQ & Manufacturing 31121 70 ATS/ Greenpoint Technologies Moses Lake Aerospace Maintenance & Repair Branch Facility 48819 67 AstaReal Moses Lake Biotechnological Microalgae Processing Plant 32541 67 Sonico Moses Lake Aerospace Maintenance & Repair HQ & Operations 48819 35 Quincy Foods LLC Quincy Frozen Vegetables Headquarters 31141 420 Lamb Weston Quincy Frozen Potato Processing Processing Plant 31141 402 Lamb Weston Warden Frozen French Fries Processing Plant 31141 340 Washington Potato Company Warden Dehydrated Potato Headquarters 33151 190 Lineage Logistics Quincy Cold Storage Branch Facility 49310 160 Microsoft Quincy Data Center Branch Facility 51820 135 Eldorado Stone Royal City Stone & Brick Processing Manufacturing Plant 32799 125 Royal Ridge Fruit Royal City Fruit Processing Headquarters 31141 115 Amway / Nutrilite Quincy Botanical Extraction Branch Plant 32541 83 Oath: Data Quincy Data Center Branch Facility 51820 50 Intuit Quincy Data Center Branch Facility 51820 50 NTT Data/Dell Quincy Data Center Branch Facility 51820 46 Source: Grant County EDC website, 2018b, as reported in Port of Moses Lake Westside Employment Center Economic Feasibility Study, Maul Foster Alongi 2018 Target industry clusters for the Port of Moses Lake are clearly described in the Westside Employment Center Study, and include Agriculture and Food Processing, Aviation and Aerospace Services (with Research and Clean Tech), and Other Manufacturing. Major factors behind the focus on these industry clusters include:  Agriculture and Food Processing. Employment in the food products manufacturing sector is projected to increase. Grant County is a growing center of agriculture and food processing.

Chapter 3. Regional Background 22  Aviation and Aerospace Services, with Research and Clean Tech. Forecasts from the FAA indicate strong growth in the Aviation and Aerospace sector, despite declining employment in this sector in Washington State due to a large number of retirements. For Grant County, there appear to be positive opportunities to participate in the supply chain of products and services to a sector that is projected to see strong growth nationally.  Other Manufacturing. Other manufacturing should also offer opportunities for business recruitment or development in Grant County. o Employment in electrical equipment and appliance manufacturing is projected to grow by 1.73% annually from 2021 to 2026. o Other manufacturing sectors predicted to increase employment include non-metallic mineral products, fabricated metal products, machinery products, computer and electronic products, and other transportation products. Employment at the Port of Moses Lake Tenants of the Port of Moses Lake are a key source of jobs in the area. The EDC conducts an employment census every year for the largest employers in Grant County; according to the 2017 census (the most recent available), large Port tenants employed nearly 2,000 workers from 2016 through 2018. (See Figure 3-10). As discussed above, the Port actively helps to recruit industries to the Port District, regardless of whether they locate on Port property or elsewhere in the Tenants at the Port of district. While not located on Port property, a number of these firms utilize the Moses Lake employ Port Wastewater Treatment Facility and/or the Foreign Trade Zone. Large approximately 2,000 firms located in the Port District but not on Port property employed more than people 1,400 workers in 2017, and have employed more than 1,700 in recent years. The number of jobs associated with Port tenants varies over time, depending on general economic conditions as well as on the specific mix of industries represented by the tenants, and the state of each of these sectors. Since 2006 the number of jobs provided by Port tenants essentially doubled, growing from approximately 1,000 jobs in 2006 to nearly 2,000 jobs in 2018. Jobs provided by non-tenants also saw a major increase, jumping from 630 in 2006 to more than 1,400 in 2018.

FIGURE 3-10: EMPLOYMENT TRENDS AT PORT TENANTS

4,000

3,500

3,000

s 2,500 e e y o

l 2,000 p m

E 1,500

1,000

500

- 2 2 2 2 2 2 2 2 2 2 2 2 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 6 7 8 9 0 1 2 3 4 5 6 7 8

Port Tenants Other in Port District Source: Grant County EDC employer survey Many of the largest employers in Grant County are located in the Port District, both on and off Port-owned property. Brief descriptions of these firms are presented below.

Chapter 3. Regional Background 23 Large port tenants with year-round operations include:  Chemi-Con Materials manufactures electrolyte aluminum foil for capacitors. Chemi-Con is a user of the Port Wastewater Treatment facility.  Genie Industries manufactures boom lifts, and is the largest private employer in Grant County. Genie is planning a new research and customer showroom building at the Port of Moses Lake. Genie is also a user of the Port Wastewater Treatment facility.  Greenpoint Technologies creates custom interiors for commercial jetliners, for private individuals and heads of state. Aviation Technical Services (ATS) provides maintenance/repair/overhaul services for these same aircraft, and sub-leases space from Greenpoint.  Joyson Safety Systems (formerly Takata Corp.) produces automotive airbag inflators and related propellants  Mitsubishi / AeroTEC. AeroTEC is a Seattle-based aerospace test, engineering and certification company that works with a variety of aircraft manufacturers. It is currently working with Mitsubishi to certify the new MRJ regional jet. In addition to those tenants, other parties that use the Port’s facilities at various times include:  Military training (Joint Base Lewis-McChord with 8,000 operations per year, Naval Air Station Whidbey Island, exercises with other bases such as Fairchild and McConnell, and others). The military may construct a dedicated operations center on the airport.  The U.S. Forest Service operates a forest fire air-tanker base in Moses Lake during fire season, operating aircraft as large as DC-10’s. The base also uses the Port Wastewater Treatment facility.  Boeing tests aircraft at Grant County International Airport and owns its facilities, but leases additional space from the Port when needed. Major employers who utilize the Port Wastewater Treatment facility, but are not tenants of the Port, include:  AstaReal Technologies Inc. (Fuji Chemical Industry) produces natural astaxanthin for use in nutritional supplements and functional foods and beverages. The process uses cultivated algae in an indoor photobioreactor.  SGL Automotive Carbon Fibers, produces carbon fiber materials for the automotive industry. SGL imports raw material from Japan, and then exports the finished carbon fiber.  Moses Lake Industries produces ultra-high purity process chemicals for semiconductor wafer fabrication, silicon wafer production, LCD production, Through Silicon Via (TSV), and packaging. Tourism Developers have approached the Port about the potential to build a hotel on Port-owned property at the airport. There is currently no lodging available at the airport, and visitors conducting business with Port tenants must stay in hotels near downtown. The lodging market in Grant County has seen substantial growth for an extended period, and may support the addition of a hotel at the airport.

Chapter 3. Regional Background 24 Visitor spending increased at an average rate of 3.2%, from 2010 through 2017, according to estimates by Dean Runyan Associates.5 Approximately 90% of this spending was on non-travel goods and services, including accommodations, food services, retail, food stores, and arts, entertainment & recreation. Travel spending supported more than 3,300 jobs in Grant County in 2017, an increase of more than 15% over 2010 employment. Earnings associated with these jobs grew by nearly 39% over the same period, and jumped from $62.7 million to $87.0 million. Local tax receipts generated by travel spending grew from $5.4 million to $7.0 million, while state tax receipts grew from $13.8 million to $17.0 million. (See Table 3-5).

TABLE 3-5: DIRECT TRAVEL IMPACTS IN GRANT COUNTY ($ MILLIONS)

Ave. Annual Chg. 2010 2012 2014 2015 2016 2017 16-17 10-17 Visitor spending - total 209.0 215.3 235.1 233.0 244.8 260.7 6.5% 3.2% Non-transportation 183.5 186.9 207.4 209.6 221.6 234.4 5.8% 3.6% Transportation 25.5 28.5 27.7 23.4 23.2 26.3 13.4% 0.5% Earnings (Current $) 62.7 66.8 75.9 75.3 80.2 87.0 8.5% 4.8% Employment (jobs) 2,900 2,980 3,160 3,130 3,250 3,340 2.7% 2.1% Tax receipts - local 5.4 5.6 6.3 6.3 6.8 7.0 3.1% 3.7% Tax receipts - state 13.8 14.0 15.5 15.7 17.0 17.9 5.3% 3.8% Source: Dean Runyan Associates Lodging receipts in Grant County grew substantially from 2001 through 2017, according to data from the Washington State Department of Revenue. Total receipts in the county increased from less than $13.6 million in 2001 to nearly $37.5 million in 2017. (See Figure 3-11). Moses Lake accounts for the largest share of lodging receipts, although this share has decreased slowly. In 2001, lodging receipts in Moses Lake totaled $7.7 million, and accounted for 57% of the county total. In 2017, lodging receipts in Moses Lake were $17.1 million, and accounted for 46% of the county total. The primary reason for the decrease in market share is strong growth in other parts of the county. Lodging receipts in Moses Lake grew at 5.1% per year from 2001 through 2017, compared to growth of 8.1% in the rest of the county (not adjusted for inflation). Growth in lodging receipts outpaced the rate of inflation, in both Moses Lake and the rest of the county; inflation adjusted growth averaged 2.5% per year in Moses Lake and 3.0% in the rest of the county.

5 Dean Runyan Associates. Washington State Travel Impacts & Visitor Volume 200—2017p, May 2018.

Chapter 3. Regional Background 25 FIGURE 3-11: TRENDS IN LODGING RECEIPTS ($1,000S)

$40,000

$35,000 ) s

0 $30,000 0 0 ,

1 $25,000 $ (

s t p i $20,000 Other e c

e Moses Lake R

$15,000 g n i g $10,000 d o L $5,000

$0

Source: Washington State Department of Revenue Housing A growing share of the housing stock in Grant County is located in Moses Lake. According to data from OFM, the share of housing in Moses Lake grew from 20.3% of the county total in 1990 to 25.8% in 2018. The county-wide growth rate for housing averaged 1.9% per year from 1990 through 2018, while the growth rate in Moses Lake averaged 2.7% per year. (See Figure 3-12).

FIGURE 3-12: GRANT COUNTY HOUSING TRENDS

45,000 30% 40,000 25% 35,000 g s 30,000 20% n t i i s n u U o 25,000 g H

15% n f i s 20,000 o

u e o r H 15,000 10% a h S 10,000 5% 5,000 - 0% 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Moses Lake Other Incorporated Unincorporated Moses Lake Share

Source: Washington State Office of Financial Management, Forecasting Division In recent years, the largest share of housing growth in Moses Lake has been in multi-family units. From 2010 through 2018, 739 new multi-family units were added to the inventory in Moses Lake, accounting for 49% of all new housing. The number of single-family units grew by 620, accounted for 41%, while 158 mobile homes and other special types of housing were added, accounting for 10% of new units. In total, the number of housing units in Moses Lake grew from 8,365 in 2010 to 9,882 in 2018, an increase of 1,517 units. (See Figure 3-13). Despite the strong growth in multi-family housing, single-family houses still account for more than 62% of all housing units in Moses Lake. Multi-family units account for 26% of housing, and mobile homes / other special types account for 11%.

Chapter 3. Regional Background 26 FIGURE 3-13: MOSES LAKE HOUSING TYPES

12,000

10,000

s 8,000 t i n U

g 6,000 n i s u o

H 4,000

2,000

- 2010 2011 2012 2013 2014 2015 2016 2017 2018 Single Family Multi Family Mobile Home /Other

Source: Washington State Office of Financial Management, Forecasting Division Prices for single-family houses are higher in Moses Lake than in the Moses Lake metro area. According to estimates from Zillow, in January of 2019 the median value of a house in Moses Lake was $189,600, compared with a metro area average of $176,100. (See Figure 3-14). Housing values in the region have recovered strongly from recession-induced declines. Median home values for the metro area reached a low of $116,100 in July of 2012, but increased in most months following. Home prices in Moses Lake followed a similar trajectory, reaching a low of $130,800 in July of 2012 and increasing in most of the following months. Median prices in the Moses Lake metro area grew at an average annual rate of 5.3% from December of 2012 through December of 2018; in Moses Lake median prices grew at 4.9%. Price growth was strongest in the most recent three years, growing at 8.0% per year in the Moses Lake metro area and 7.7% per year in Moses Lake.

FIGURE 3-14: SINGLE-FAMILY HOUSE VALUE TRENDS

$250,000

$200,000

x $150,000 e d n I

e $100,000 u l a V

e $50,000 m o H $0 0 0 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

l l l l l l l l l n n n n n n n n n n u u u u u u u u u a a a a a a a a a a J J J J J J J J J J J J J J J J J J J Moses Lake Metro Ephrata Moses Lake Quincy

Source: Zillow The median rent price in Moses Lake was $1,075 in December of 2019, which was slightly higher than the Moses Lake metro area level of $1,001. (See Figure 3-15).

Chapter 3. Regional Background 27 Rents have not increased as quickly as house prices. From 2012 through 2018 rents grew at an average annual rate of 2.5% in Moses Lake and 1.8% in the metro area. Rates increased faster in recent years, with average annual growth in Moses of 5.7% per year from 2015 through 2018, and at 4.5% per year in the metro area.

FIGURE 3-15: MEDIAN RENT TRENDS

$1,400

$1,200

$1,000 x

e $800 d n I $600 e u l a

V $400

e

m $200 o H $0 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

v y v y v y v y v y v y v y v a a a a a a a o o o o o o o o N N N N N N N N M M M M M M M Moses Lake Metro Ephrata Moses Lake Quincy

Source: Zillow Supply Chain Links The supply chain of Grant County depends on the efficiency of its road, rail and air systems. The Port of Moses Lake is considering how to improve access to national and international markets from the Port district to outside markets. This includes improving access from the planned Westside Employment Center (discussed in Chapter 4) to State Route 17, improving access from Moses Lake onto the BNSF mainline, and continuing efforts to attract and enhance air cargo and passenger service. This section reviews the infrastructure and usage of the Grant County transportation systems. Specific projects being undertaken by the Port to improve access and expand supply chain links are described in Chapter 4. Strategic Plan. Roads Grant County International Airport is located approximately eight miles north of Interstate 90 (I-90) via State Highway 17. I-90 provides east/west access across the state. The airport is also located approximately 38 miles south of U.S. Highway 2 (an alternative east-west route across the state), and 50 miles north of Interstate 395. Moses Lake is approximately 175 miles by road from Seattle, 100 miles from Spokane, 100 miles from Yakima, and 75 miles from the Tri-Cities. Traffic volumes increased steadily over the past two decades, as shown in Figure 3-16. This figure presents traffic count data (measured in “AADT”, or annual average daily traffic) at two points on I-90 and three points on SR17. On I-90 west of Moses Lake (west of the Hansen Road interchange) daily traffic grew from 12,000 vehicles per day in 1997 to 16,000 vehicles per day in 2017. On I-90 east of Moses Lake (east of the SR17 interchange) daily traffic grew from 9,200 vehicles per day in 1997 to 12,000 vehicles per day in 2017. Traffic counts are higher on parts of SR17 than they are on I-90 in the Moses Lake area. For example, on SR17 at Kittelson Rd (immediately north of the I-90 interchange) traffic grew from 16,000 vehicles per day in 1997 to 19,000 vehicles per day in 2017, and at Patton Boulevard (immediately south of the entrance to Grant County International Airport) the count grew from 15,000 in 1998 (data for 1997 was not available) to 19,000 in 2017.

Chapter 3. Regional Background 28 North of the airport, traffic on SR17 drops significantly; on SR17 north of McConihe Road traffic grew from 6,400 vehicles per day in 1997 to 8,500 vehicles per day in 2017.

FIGURE 3-16: TRAFFIC COUNTS

25,000

20,000 c i f f a r T

y

l 15,000 I-90 E. of SR17 i a

D I-90 W. of Hansen Rd

. g

v SR17 at Kittelson Rd A

10,000 l

a SR17 S. of Patton Blvd u

n SR17 N. of McConihe Rd n A 5,000

0 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

Source: WSDOT

Airports Grant County has eight public-use airports that support a wide variety of users and aircraft types. All airports in the County are classified under the FAA National Plan of Integrated Airport Systems (NPAIS). Airports are categorized by type of activities, including commercial service, primary, cargo service, reliever, and general aviation airports.  Grant County International is the only Commercial Service airport in the county.  Ephrata Municipal and Grand Coulee Dam are categorized as General Aviation airports.  Quincy Municipal, Wilson Creek, Warden Municipal, and Moses Lake Municipal are categorized as Municipally Owned airports.  Desert Air is classified as a Private Ownership Public Use airport. Aviation in Grant County has been of significant importance since the 1940s when the U.S. Army established airfields in Moses Lake and Ephrata. The Grant County International Airport, with one of the longest runways in the United States, is a world-class heavy jet testing and training facility for the Boeing Company, the United States military, and a variety of other companies. The Ephrata Municipal Airport serves recreational aircraft, in particular, glider and aerobatics clubs that host events there. Other airports serve local residents and visitors to the County.

Chapter 3. Regional Background 29 FIGURE 3-17: AIRPORTS IN GRANT COUNTY

Source: Google Earth Railroads Rail service within Grant County is provided by Burlington Northern Santa Fe Railroad (BNSF), Palouse River and Coulee City Rail System (PCC), Columbia Basin Railroad (CBR), and Port of Royal Slope. (See Figure 3-18).  The BNSF main line parallels SR 28 west of Quincy and runs east to Lincoln County. This is the principal service route between the Puget Sound area, Spokane and points east.  The PCC operates the line (owned by WSDOT) that extends from Coulee City to Lincoln County, and runs parallel to SR 2.  The CBR operates one line through Grant County from Moses Lake to Connell (in Franklin County) where it connects to the BNSF Spokane-Pasco main line.  The Port of Royal Slope owns a branch rail line that runs from Royal City to Connell. The CBR line to Connell connects to the Port of Moses Lake, but the segment of line from the City of Moses Lake to Port property is out of service due to a bridge that is structurally unsound. The Port is currently planning a project,

Chapter 3. Regional Background 30 the Northern Columbia Basin Railroad Project (“NCBR”) that would restore rail service to its properties via an alternative route. This plan is discussed in Chapter 4. The purpose of the NCBR Project is to restore rail service to the Port of Moses Lake/Grant County International Airport, and to provide new rail service to over 2,000 acres of industrial-zoned lands adjacent to the airport and along the Wheeler Industrial Corridor in Moses Lake. Lack of rail service has been a barrier to attracting new industry, expanding existing industries, and attracting agricultural producers. Limited cost-effective shipping options have been an impediment to local companies shipping products to/from West Coast ports and the Midwest. The Port has competed for and lost several major national projects in recent years due to the lack of freight rail access.

FIGURE 3-18: RAILROADS SERVING MOSES LAKE

Source: MWH Master Plan 2014

Chapter 3. Regional Background 31 Low-Cost Electricity One of the major assets of Grant County, and one that the Port of Moses FIGURE 3-19: PRIEST RAPIDS DAM Lake promotes to prospective tenants, is electricity rates that are some of the lowest in the nation. Residential rates in Grant County average 4.2 cents per kilowatt hour, compared to the national average of 11.8 cents. Industrial rates are even lower. In addition to being low-cost, much of the electricity is produced by renewable sources. The Grant County Public Utility District operates two major hydro-electric dams on the Columbia River (Priest Rapids and Wanapum dams) as well as several small projects on main irrigation canals (Quincy Chute and Potholes East Canal). In addition, the PUD is an investor in the Nine Canyon Wind Project, a large wind turbine project located south of Kennewick Source: Grant County PUD These factors were critical in attracting SGL Carbon Fiber to Moses Lake. In its quest to minimize the carbon footprint of its electric vehicles, BMW (an original partner in the plant) conducted a worldwide search for a location that provided affordable renewable energy. Other factors that were critical included good supply chain links, favorable infrastructure conditions, existing utilities, a skilled labor force, and fast permitting process.

Chapter 3. Regional Background 32 Chapter 4. Strategic Plan The Port of Moses Lake owns a number of assets, including the Grant County International Airport and surrounding industrial infrastructure. The following section describes each of these assets, provides information on recent projects, and details planned improvements. Airport Overview Grant County International Airport is located six miles northwest of the Moses Lake central business district. The airport provides support to commercial, military, and private aircraft. The U.S. Air Force, Boeing, and other companies test aircraft at the facility. The airport averages 150 operations each day.

The current runway system consists of five runways, with the longest at 13,500 feet, Runway 14L-32R is one of the longest runways in the country. The airport encompasses approximately 4,650 acres of land, including 240 acres of aircraft ramp. one of the longest runways in the Storage for general aviation aircraft includes 20 hangar buildings, and there are United States currently 64 aircraft based at the airport. The airport has two fixed based operators, or “FBOs”: Columbia Pacific Aviation and Million Air. These FBOs provide a variety of services and facilities, including hangar storage, tie-downs, flight instruction, aircraft rental, aircraft maintenance, and fueling. In addition to the FBOs, Big Ben Community College, which is located on former Larson property and has facilities on the airport, offers flight training, aircraft maintenance, and other programs. A major role of the airport is aircraft testing and training, both civilian and military. In order to facilitate these activities, the Port worked with the FAA to designate a specific section of airspace known as the North Training Area. The special separated status in the North Training Area allows for testing and training to occur in an uncongested airspace designed solely for the advancement of the aerospace industry through test flights. In addition, the nearby Okanogan and Roosevelt Military Operations Areas combined provide approximately 11,478 square miles of protected airspace for training. Recent Projects Projects completed at the airport over the past 20 years are listed in Table 4-1, along with the value of the FAA grant associated with each project.

Chapter 4. Strategic Plan 33 TABLE 4-1: RECENT FAA GRANT HISTORY

Year Grant # Description Amount 1999 20 Acquire SRE blade, install signs, rehab and expand terminal parking lot (Ph. II) $203,476 1999 21 Reconstruct Rwy. 4/22 design $140,801 2000 22 Rehabilitate Runway 4-22, including REIL, LAHSO lights $2,584,258 2002 23 Master plan update $221,752 2002 24 Security enhancements, remark runway hold lines $414,161 2002 25 Construct SRE building $1,148,858 2002 26 Security enhancements $23,338 2003 27 Modify ARFF training facility, install MIRL Rwy. 14L-32R, security fencing $573,122 2004 28 Rehabilitate Runway 14L-32R $191,475 2004 29 Rehabilitate Runway 14L-32R $4,916,637 2005 30 Acquire snow removal equipment (SRE) $1,179,098 2006 31 Rehabilitate Taxiway D $500,000 2007 32 Rehabilitate runway lighting - 14L-32R and 4-22, rehabilitate Taxiway $2,519,200 2009 33 Rehabilitate apron, rehabilitate taxiway $114,093 2009 34 Rehabilitate T-hangar taxiway, install enhanced taxiway markings $1,178,144 2009 35 Rehabilitate apron, security enhancements $533,344 2010 36 Acquire ARFF vehicle $632,524 2011 37 Rehabilitate east apron (Ph. I design and construction) $2,500,000 2012 38 Rehabilitate apron $4,422,408 2013 39 Master plan study $302,860 2014 40 Rehabilitate Runway - 14L/32R, Rehabilitate Taxiway $422,700 2015 41 Rehabilitate Access Road $472,500 2017 42 Reconstruct Runway - 14L/32R, Rehabilitate Taxiway $427,534 2018 43 Rehabilitate Taxiway $164,104 Total $25,786,387 Source: FAA Records accessed on 3/14/2019, http://www.faa.gov/airports/aip/grantapportion_data/, and GCIA Master Plan 2014 Air Cargo Air cargo is a growth market targeted by the Port of Moses Lake. The Port has had recent success in attracting charter cargo flights, and is planning for additional growth. One of the drivers behind the planning for air cargo is the results of a recent statewide analysis performed by the Joint Transportation Committee (JTC) of the Washington State Legislature. This study evaluated the current and future capacity of the statewide air cargo system, with a focus on:  Educating policy makers about air cargo movement at Washington airports,  Exploring possibilities for accommodating the growing air cargo market at more airports around the state, and  Identifying the State of Washington’s interest and role in addressing issues arising from air cargo congestion. Seattle-Tacoma International Airport (Sea-Tac or SEA) dominates the Washington state air cargo market. The Washington State Department of Transportation’s Washington Aviation System Plan (2017) states:

Chapter 4. Strategic Plan 34 “the ability of SEA to accommodate and expand air cargo activity, particularly international freighter service, should be closely monitored due to recent, dramatic, increases in demand and discussions of expansion of air passenger and maintenance, repair and overhaul activities.” The JTC study identified opportunities and constraints for utilizing capacity at a variety of existing airports around the state to meet the increasing demand for cargo operations. A 10-year forecast conducted as part of the JTC study projects that air cargo tonnage in Washington will grow a compounded annual average growth rate of 4.4 percent. This will result in 870,000 annual metric tons of enplaned and deplaned air cargo in 2026, up from 566,000 metric tons in 2016. Sea-Tac is anticipated to reach 580,000 metric tons during the forecast period. Air cargo in Washington state is primarily generated by activity at Sea-Tac, King County International Airport (Boeing Field), and Spokane International Airport. Sea-Tac and Boeing Field combined have an 85 percent share of the total Washington state air cargo market. Spokane, the third largest cargo airport in the state, represents an 11 percent share of the Washington state market. Other non-hub and small commercial passenger airports within the state account for only 4 percent of the total air cargo volumes moved in 2016. Spokane International Airport is the dominant eastern Washington commercial service airport. It also serves as a key air cargo transshipment and distribution center for FedEx and UPS. The Spokane International Airport Business Park is home to a new 2.4 million square foot e-commerce fulfillment center. The JTC report noted that the three most immediate air cargo development opportunities for Washington state airports are the following:  Maintain and expand the existing integrator (i.e., Amazon, DHL, FedEx, UPS) operations around the state in conjunction with the private sector.  Attract air charter operations for exports of agricultural products, particularly perishable freight and vegetables, from central Washington airports.  Develop non-hub airports into centers for regional ground-based logistical operations. The JTC report recommends that “(t)o attract the logistics/distribution market, the state should promote to individual airports the “inland port” or airport logistics park model used by Rickenbacker International Airport and Huntsville International, leveraging their designations as U.S. Ports of Entry, Foreign Trade Zones and branding themselves “Global Logistics Centers” and actively recruiting intermodal business in the ocean cargo, railroad and motor carrier markets”. 6 Grant County International Airport (GCIA) is a Port of Entry and has a Foreign Trade Zone, making it a potential location for such a logistics center. The JTC report noted that “It is noticeable that Grant County International Airport, in contrast to the other airports with less than 1 percent market share, has both significantly larger aviation facilities and land availability around the airport. Its 13,500-foot-long by 200-foot wide runway can accommodate all the existing large cargo aircraft up to the Antonov 225. This available infrastructure may create opportunities in the future”. The ability of GCIA to handle air cargo offers a major advantage for regional air cargo exports such as cherries. The proximity of Grant County International Airport to the cherry orchards, the excellent highway infrastructure, and the lack of traffic (compared with Sea-Tac International) minimize the time to move cherries from tree to market. Truck drivers are also able to make three round-trip runs per day between the orchard and the airport, compared with one trip per day to and from Sea-Tac.

6 WSP & KPA, Washington State Air Cargo Movement Study Final Report: Appendix A – Market, Facilities and Forecast Technical Report. May 9, 2018.

Chapter 4. Strategic Plan 35 These advantages were demonstrated during the 2018 cherry harvest, when the Port worked with a major cherry shipper to test the operation of dedicated charter flights out of Grant County International. During the previous season, delays in shipping through Sea-Tac led to excessive warming of the cherries waiting to be exported and caused significant spoilage. In response, the Port of Moses Lake converted an existing maintenance hangar to cold storage using temporary cooling units, and also paved and made upgrades to the electrical service. The Port also provided air cargo handling equipment. During the 2018 harvest test, Grant County International handled eleven charter planes, each of which carried 100 to 125 tons of cherries. The operation was successful in maintaining the cherries at the proper cold temperature, and the cherries typically arrived at market within three days of harvest. The Port of Moses Lake is actively recruiting additional shippers, and has developed plans for additional cargo handling facilities, including cold storage.

FIGURE 4-1: CHARTERED 747 LOADING CHERRIES AT GCIA

Source: Columbia Basin Herald

Projects planned for the airport are laid out in the Grant County International Airport Master Plan.7 The largest project is reconstruction of approximately 3,900 feet of Runway 14L-32R to remove a vertical hump that creates a line of sight issue. The project also replaces lighting, signs, and electrical systems. The majority of the project is funded through FAA grants. Other pavement projects include:  Taxiway A/blast fence and FOD slurry seal,  Taxiway G repair,  Generic pavement repair, and

7 Coffman Associates, August 2014.

Chapter 4. Strategic Plan 36  New apron east of Terminal, in front of Building 2115 and Building 2116. Planned projects for airport buildings include:  HVAC upgrades to the Tracon (Air Traffic Control Tower) building,  Maintenance of the equipment shed,  A/C fire suppression for the pump house,  Roof replacement for Building 2101 (fire station),  Diesel exhaust upgrades to the fire station, and  Potential military training facility. The airport master plan also lists the replacement of snow removal equipment as a priority, as well as the acquisition of additional snow removal equipment. Industrial Space One of the key assets of the Port of Moses Lake is land and buildings that are zoned for industrial uses. The Port leases existing land and buildings to industrial tenants, and is planning the addition of more land to the available inventory. The land and buildings enable the Port to fulfill one of its original goals, to develop areas surrounding Grant County International Airport in order to support economic development. Existing Industrial Park The majority of the Port’s existing land for heavy industrial use is located along the east side of the airport, with land and buildings for lighter industry located on the south side of the airport. In addition, two tenants whose work involves explosive materials are located on large acreages on the north side of the airport. Several of the Port’s largest tenants are located on the east side, including Genie Industries and Chemi-Con. (See Figure 4-2). The Port-owned heavy industrial land on the east side of the airport is adjacent to privately-owned industrial land. Several major firms (including SGL Carbon Fiber and Asta Real) are located on private land. The Port currently leases 631 acres of land. This includes 282 acres leased to Joyson Safety Systems, which works with explosive materials, and another 229 acres leased for agriculture. The remaining 120 acres are leased to a variety of tenants in a wide range of acreages. Two of the Port’ s major industrial tenants, Chemi-Con and Terex, account 54 acres, and two government tenants (Joint Base Lewis-McChord and the U.S. Forest Service) account for another 53 acres. The remaining leases range in size from less than one-half acre to 9.3 acres. GCIA Employment Center The Port worked with the City and County to designate lands surrounding the eastside properties in a larger employment center, which includes a mix of public and private lands. This “Grant County International Airport Employment Center” (GCIA Employment Center) encompasses approximately 1,258 acres. The goal of the employment center is to strengthen the existing aerospace and manufacturing clusters. Although a definitive plan for long-term development of the site has not yet been identified, in order to facilitate future permitting the Port conducted an environmental review under State Environmental Policy Act (SEPA). The output of this review was an Environmental Impact Statement (EIS) that analyzed two Action Alternatives and a No Action Alternative. Both Alternative 1 and Alternative 2 would meet the Port’s, County’s, and City’s goal of

Chapter 4. Strategic Plan 37 strengthening the existing aerospace and manufacturing cluster at and near the airport.8 Development under Alternative 1 would focus on heavy manufacturing and warehouse sectors, and under Alternative 2 would focus on the light manufacturing and technology sectors. Alternative 3 is the No Action alternative. Alternative 1 represents development with an emphasis on heavy manufacturing and warehouse uses. A roughly 70:30 mix of these two industrial uses is assumed. Under this alternative, a total of up to approximately 8.8 million sq. ft. of new building area would be developed onsite over the approximately 20-year build-out period (approximately 6.3 million sq. ft. of new heavy manufacturing/ warehouse building area and approximately 2.5 million sq. ft. of new aviation development/revenue support building area). The new building area onsite would provide capacity for a total of approximately 13,520 new employees. Alternative 2 represents development of the site with an emphasis on light manufacturing and technology uses. Under this alternative, a total of up to approximately 10.1 million sq. ft. of new building area would be developed onsite over the approximately 20-year build-out period (approximately 7.3 million sq. ft. of new light manufacturing/ technology building area and approximately 2.8 million sq. ft. of new aviation development/ revenue support building area). The new building area onsite would provide capacity for a total of approximately 19,010 new employees. Future actions for the GCIA Employment Center may include:  Approval of a Master Plan for the site by the County, Port and City, to be based on a plan that has been agreed to by these parties and the other property owners at the site,  Permitting and construction of infrastructure, buildings and other improvements, and  Execution of a Development Agreement between the County, Port, City and other property owners at the site.

8 Port of Moses Lake and Grant County. Final Environmental Impact Statement Grant County International Airport Employment Center Project, November 2015.

Chapter 4. Strategic Plan 38 FIGURE 4-2: GRANT COUNTY INTERNATIONAL AIRPORT EMPLOYMENT CENTER

Source: EA. ESRI, 2015 Westside Employment Center The Westside Employment Center (WEC) is a 2,299-acre undeveloped area on the west side of Grant County International Airport that could be developed to attract industrial users. The Port has completed a feasibility of this development, and is currently working to secure funding for the initial infrastructure. Large Port-owned industrial sites on the east side of Grant County International Airport are almost completely occupied, and the Port and other property owners have been approached by industries looking to site their businesses on the west side of the airport. The addition of the Westside Employment Center site not only expands opportunities for the Port of Moses Lake to continue serving the growing market for the aviation and aerospace

Chapter 4. Strategic Plan 39 sector, but also provides sites for other industries, including food processing, clean energy / clean tech, and aerospace. As a master planned industrial complex, it will provide a coordinated location for major employers. The initial project will construct the infrastructure backbone improvements, including:  a new intersection at SR 17 (upgrading current intersection at McConihe Rd NE),  a 3.5 mile entrance road, and  water main, sewer main, industrial waste water line, and conduit for power and telecommunications along the main entrance road. Once the entrance into the Project is built and the main road constructed, each of the property owners will be responsible for making site improvements based on their customers’ needs, including internal roads, buildings, parking lots, landscaping, water, sewer, and power connections. The Port was awarded a loan and a grant from the Washington State Community Economic Revitalization Board (CERB) in March 2019 for the initial infrastructure project. The money from CERB ($2,550,000 loan and $450,000 grant) will be matched with $3,000,000 in local resources. The local funds will be raised through the formation of a Local Improvement District (LID), which the majority of the private owners are interested in forming along with the Port. Of the 2,299 total acres at the proposed WEC, 70% (1,607 acres) is owned by the Port and 30% (692 acres) is privately owned. Approximately 1,200 acres are located in the Moses Lake Urban Growth Area (UGA) and are zoned to support industrial development. The remaining 1,100 acres outside the UGA are designated Rural Remote (Rrem) or Rural Residential (RR1); these zones allow low density residential use and limited commercial use, and industrial uses are not permitted. In order to utilize the entire WEC area for industrial purposes a modification to the Moses Lake UGA will need to be approved. Section 19 (640 acres) is being rezoned to Heavy Urban Industrial. The WEC is bound by 10 Road NE to the north, GCIA airfield to the east, SR 17 to the south and rural lands to the west. (See Figure 4-3).

Chapter 4. Strategic Plan 40 FIGURE 4-3: WESTSIDE EMPLOYMENT CENTER

Source: Maul Foster Alongi9 Buildings The Port owns approximately 50 buildings with a total of more than 1.2 million square feet of leasable space, of which nearly 1.1 million square feet is currently leased. Included in the inventory is a wide variety of building types and uses, such as aircraft hangars, industrial space, office space, and warehouses. The majority of these buildings are located on the south side of the airport, with a few in the eastside industrial area. (See Figure 4-4).

9 Maul Foster Alongi, Port of Moses Lake Westside Employment Center Economic Feasibility Study, December 2018.

Chapter 4. Strategic Plan 41 The buildings range in size from less than 1,000 square feet to more than 400,000 square feet. Many of the buildings were constructed by the military prior to the closing of the air base, and the Port has invested substantially in upgrading and maintaining these, through projects such as new roofs and remodels. The Port has also constructed a number of new buildings, including the terminal / port office building, warehouses, T-hangars, and a cross-dock facility, among others. The largest project planned by the Port is a new building for Terex (Genie Industries). This building will be a research and development facility for designing new lift equipment, as well as a customer showroom. The facility will be located adjacent to the existing Terex operations on the east side of the airport (Building 5820 in Figure 4-4.). The total cost of the project is $17.5 million, which will be financed through a revenue bond, paid by Terex. A number of smaller projects focus on maintaining existing structures, including replacing roofs and making other upgrades.

FIGURE 4-4: PORT OF MOSES LAKE LEASED BUILDINGS

Source: Port of Moses Lake Industrial Wastewater System The Port of Moses Lake operates a wastewater treatment facility designed for industrial customers. This system currently serves six industrial clients located on or near the airport. These clients are: AstaReal, Chemi-Con, Genie,

Chapter 4. Strategic Plan 42 U.S. Forest Service, Moses Lake Industries, and SGL Carbon Fiber. Because the current system is not designed to process biological material, it does not handle wastewater from food processors. The idea of building an Industrial Wastewater Treatment Facility began in 1995 when the City of Moses Lake and the state Department of Ecology ruled that the old Larson wastewater plant and the city's other treatment facilities did not have the capacity to handle a planned expansion at Chemi-Con (known at the time as USKDK). Failure to resolve this issue threatened the planned expansion. The city changed its wastewater regulations in 1996 to address the immediate problem of the USKDK expansion. However, in order to attract additional industrial tenants a long-term solution was needed. In 1997, the Port proposed a new Industrial Wastewater Treatment plant near the airport, which would vastly increase capacity. The Port partnered with the county and the city in building the new facility, which was dedicated in 2000. The system is based on land application. The facility receives effluent through a gravity collection system to a central transmission station, from which it is sent under pressure to storage lagoons. The Port applies this stored water onto a forage crop during the summer months. The wastewater treatment facility originally began operation with storage capacity of 27 million gallons, with processed water spread on 120 acres of spray fields. Expansion of the wastewater treatment facility began in 2014, in order to accommodate growth of existing users and the addition of new users.  Phase 1 (2014) – added a second lagoon with capacity of 31 million gallons, doubled the capacity of the wet well and the irrigation station.  Phase 2 (2015) – purchased additional land to increase spray field capacity by 400%, constructed a new center pivot to double spray field acreage.  Phase 3 (2016) – extended four-inch main line 5,800 ft to the east to incorporate the current light industrial park In addition, in 2015 the Port applied to the Department of Ecology to substantially increase the throughput of the wastewater treatment plant, and the permit was granted in that year. Permitted daily influent inflow increased to 400,000 gallons per day and maximum daily influent flow increased to 900,000 gpd. In order to use the land application process, the Port must also irrigate with fresh water. The expansion of spray field capacity required the acquisition of additional water rights, as well as construction of a new well to access that water. The additional water rights have now been acquired, and construction of the well is currently out to bid. The Port is now studying the addition of either a Reverse Osmosis (RO) and/or a Membrane Bio-Reactor (MBR) system. These systems would expand the types of industrial users that could be accommodated. Notably, these new systems would allow the Port to process waste water from food processing operations, which is not allowed with the existing system. The Port of Moses Lake is also studying the creation of a joint sewage and water treatment utility with the City of Moses Lake that would serve both the Port and the Larson community. The existing City-owned Larson facility was built by the Air Force to handle the wastewater from the air base and its community, and is designed to handle organic waste, while the Port’s system is not. The Larson system also has excess capacity. Operating the two systems together would expand capacity of both and allow the port to attract customers that produce organic waste, such as food processors. Railroad The Port of Moses Lake industrial area and the Grant County International Airport (GCIA) are connected to the mainline rail system by a shortline rail branch line that is owned and operated by the Columbia Basin Railroad. The northern end of this line terminates on Port property near the intersection of 21st Ave NE and Andrews St NE. This line is currently out of service, however.

Chapter 4. Strategic Plan 43 In order to restore service to the GCIA area the Port has developed a plan to construct a connection via a new alignment. Construction on this project, called the Northern Columbia Basin Railroad Project, is anticipated to break ground in 2020. The purpose of the Northern Columbia Basin Railroad Project is to provide rail service to lands designated for industrial development in the northern part of the City of Moses Lake as well as to the south and east of the GCIA, to enhance opportunities for economic development, and to attract new rail-dependent businesses to those areas. Investment in this project would also ensure the continued use and preservation of rail infrastructure in the Moses Lake region. Key outcomes of the project would include: relocating the existing rail line that runs through downtown Moses Lake, improving existing track between Parker Horn and the GCIA, and constructing new rail lines north of Moses Lake. (See Figure 4-5). The Columbia Basin Railroad informed the Port of Moses Lake in 2003 that they were considering abandoning the existing line that runs from McDonald siding (approximately five miles southeast of downtown) through Moses Lake to the GCIA, due to the low volume of shipments and the poor condition of the line. The specific rail line under consideration follows an inefficient path that stretches from Wheeler (just east of town) south to McDonald siding, before heading west and north back through downtown Moses Lake to GCIA10. In 2009 the situation became critical when a trestle was damaged and the only existing rail line that served the Port and GGIA was closed.11 Permanently eliminating rail access to the Grant County International Airport and the surrounding industrial property could have significant impacts on local businesses, transportation interests, the regional economy and future growth considerations. Lack of rail service has been a barrier to attracting new industry, expanding existing industries, and attracting agricultural producers. Limited cost-effective shipping options have been an impediment to local companies, and the Port has competed for and lost several major national projects in recent years due to the lack of freight rail access. For example, GCIA was considered as a location for a new assembly plant for the Boeing 787, but was dropped from consideration in part due to the lack of rail access. Future economic and residential growth in Moses Lake is incompatible with multiple trains moving through the downtown area multiple times every day, creating significant safety and inconvenience issues for local residents. However, maintaining rail service to the two industrial corridors in Moses Lake (along Wheeler Road and the Grant County International Airport) is paramount to future economic growth, especially given the existing industrial facilities and infrastructure that add to the marketability of Moses Lake for industry and commerce.12 Abandonment of the existing line that runs through town is a priority of the City of Moses Lake, and the City plans to convert the existing right of way into mixed-use path that would extend from the Pelican Point area, through the city center, and to Highway 17. Abandonment of that section of line would be a separate action before the Surface Transportation Board (STB) and would be subject to a separate environmental review. As shown in Figure 4-5, the Northern Columbia Basin Railroad Project consists of three distinct rail segments that will be owned by the Port and operated by the Columbia Basin Railroad.

10 Jessup and Casavant, Rail Line Investment Alternatives Resulting from Abandonment: A Case Study of Moses Lake, WA, July 2003. 11 Port of Moses Lake, Northern Columbia Basin Railroad Project Fastlane FY17 Grant Application, December 2016. 12 Jessup and Casavant, July 2003.

Chapter 4. Strategic Plan 44  Segment 1 provides five miles of rail along a new right of way running from the Wheeler community to the Parker Horn area. This segment serves the existing Wheeler Industrial Corridor and allows trains to bypass downtown Moses Lake;  Segment 2 provides three miles of new rail service to lands adjacent to the Port and airport by extending an existing, unused rail line;  Segment 3 upgrades and reopens the existing, unused rail line that restores rail service to the Port and connects Segments 1 and 2. FIGURE 4-5: NORTHERN COLUMBIA BASIN RAILROAD PROJECT

Source: MWH Master Plan 2014 Required planning that has been completed for this project includes:  The first required study was a feasibility project, which was completed by WSDOT in 2006. Based on the results of this analysis the project moved into the environmental analysis phase.  The Preliminary Environmental Assessment was completed in 2008 and the Final Environmental Assessment in 2009. The Surface Transportation Board (STB) accepted the results of the Final Environmental Assessment and authorized construction in 2009.

Chapter 4. Strategic Plan 45 The Port has secured approximately $30 million for construction of the rail line, which essentially completes the financing needed for the project.  State funding ($19.9 million) was awarded through the 2015-2017 Transportation Revenue Package approved by the Washington State Legislature and administered by WSDOT; it covers engineering, right-of-way acquisitions, environmental documentation and permitting, and will partially fund construction.  Federal funding is via a $9.9 million federal grant that was awarded in 2017. Federal money cannot be spent until the project wins approval from the Surface Transportation Board (STB); the permit application is currently before the STB, with approval anticipated in September 2020. Foreign Trade Zone In the United States, a Foreign-Trade Zone (FTZ) is a geographical area, in (or adjacent to) a United States Port of Entry, where commercial merchandise, both domestic and foreign, receives the same Customs treatment it would if it were outside the commerce of the United States. Businesses with operations in an FTZ can receive foreign merchandise for storage, assembly, manufacturing and processing without being subject to formal Customs entry procedures, duties and federal excise taxes. These fees are not due until the merchandise is transferred from the FTZ and is ready for consumption by U.S. customers. If the goods are exported, then no duties or taxes are paid on those items. Also, if the imported goods or materials are substantially transformed, they may be subject to a lower tariff. The Port of Moses Lake Foreign Trade Zone (FTZ #203) was originally established in 1994 and converted to an Alternative Site Frame Work (ASF) in 2010. Under the ASF arrangement, zone sites must be within or adjacent to a U.S. Customs and Border Protection (CBP) port of entry – specifically, within 60 The Foreign Trade Zone statute miles of, or within 90 minutes’ driving time from, the outer limits of the is critical to many of Port of Moses Lake, the CBP port of entry. Subzone sites that are outside the 60 miles/90 minutes driving time from the outer limits of the CBP port of entry may the largest employers alternatively qualify to be considered adjacent if they work with the CBP Port Director to ensure that proper oversight measures are in place. For many of the manufacturers in and around the Port of Moses Lake the FTZ is a critical asset. Major employers, such as Chemi-Con and SGL Carbon Fiber, import raw materials for processing in Moses Lake and then export finished products to other countries. The firms do not have to pay customs duties on the products that are exported. The Alternative Site Framework for FTZ 203 allows business in the following Washington counties to benefit from FTZ status:  Benton County  Chelan County  Columbia County  Douglas County  Franklin County  Grant County  Kittitas County  Lincoln County  Okanagan County  Walla Walla County

Chapter 4. Strategic Plan 46  Yakima County Key Projects The Port Strategic Plan outlines several key initiatives, including:  Airport o Preliminary design and environmental assessment for runway 14L-32R line of sight, o Repair taxiways and pavement, o Construct new apron in front of Building 2115 and Building 2116, o Maintain and upgrade existing buildings and structures, and o Purchase equipment.  Industrial Park o Construct new R&D Building for Terex, o Replace roofs, make other upgrades.  Wastewater Treatment Plant o Construct well to exercise newly-acquired water right, o Create joint sewage and water treatment utility with the City of Moses Lake.  Rail Project o Segment, 1 construct new rail line between the Wheeler community and Parker Horn, o Segment 2, extend existing track from south of the airport to the industrial lands on the east side of the airport, and o Segment 3, refurbish existing track between Parker Horn and the airport. o The Port has secured the required funding ($20 million federal and $10 million state); federal money will be released once STB approves project (anticipated in September 2020).  Westside Employment Center o Construct main road, including intersection with SR17, o Construct utility backbone, o The Port of Moses Lake was awarded $3,000,000 from the Washington State Community Economic Revitalization Board, to be matched with $3,000,000 in local resources, o To generate the local match, the Port is working with the affected private land owners to form a Local Improvement District (LID).

Chapter 4. Strategic Plan 47 Chapter 5. Finance This chapter reviews recent financial trends of the Port of Moses Lake for the period of 2014 to 2018, and presents financial projections for 2019 through 2023. Financial Trends The financial results for the past five years are presented in Table 5-1. Operating Revenues Operating revenues at the Port of Moses Lake consist of revenues from operations, property lease/rental operations, and other sources (expense reimbursement and concessions). Between 2014 and 2018, operating revenues increased from $5.2 million in 2014 to $6.9 million, or at an average rate of 7.4% per year. Operating revenues decreased slightly from 2017 to 2018, due primarily to a decline in other operating revenues. (See Figure 5-1).

FIGURE 5-1: PORT OF MOSES LAKE OPERATING REVENUES (2014-2018)

$8,000 $7,000 $6,000

s $5,000 0 0

0 $4,000 , 1 $ $3,000 $2,000 $1,000 $0 2014 2015 2016 2017 2018 Airport Operations Property Lease/Rental Operations Other Source: Port of Moses Lake The major sources of operating revenue for the Port of Moses Lake are described below.  Property leases and rentals account for the lion’s share of the Port’s operating revenues, averaging 65.1% of operating revenues over the five-year period from 2014 to 2018. Revenue from these sources increased at 4.4% per year on average. The policy of the Port of Moses Lake is to lease property only, and to not sell. o During the five-year period, the Port had an average of approximately 86 leases per year and 55 tenants, spread over 945 acres and approximately 1.1 million square feet of building space. The port received approximately $3.5 million in rent in 2018. o The next largest source of property income came from use of the Port’s industrial wastewater system. The industrial wastewater system is paid for through subscription fees, system development fees, and state and local contributions. In 2018, revenues from providing wastewater services was approximately $780,000. o The Port also generated revenue through equipment rentals (approximately $15,300 in 2018).  Revenues from airport operations grew from $1.2 million in 2014 to $2.0 million in 2018, or at 12.6% per year on average. As a result of this rapid growth, the airport’s share of Port operating revenues increased from 24.1% in 2014 to 29.1% in 2018.

Chapter 5. Finance 48 o Landing fees, which are the main source of revenue from airport operations (83% of total), accounted for $1.7 million in 2018. Landing Fees are currently $1.10 per 1,000 lbs. and assessed on aircraft over 12,500 lbs. The Department of Defense is the largest generator of landing fees. o Other airport revenues sources include fuel flowage (8.8% of airport revenues), FTZ subscription dues (5.9%), and other sources of revenue (ARFF training, badges, and U.S. Customs fees).  Other operating revenues primarily consist of expense reimbursement and other miscellaneous sources. Operating Expenses Operating expenses consist of general operations, maintenance and general/administrative expenses as well as depreciation and amortization. Between 2014 and 2018, operating expenses ranged from a low of $7.0 million in 2014 to a high of $8.8 million in 2017. (See Figure 5-2). The swings in expenses occurred due to changes in annual spending for maintenance, and to declining charges for depreciation/amortization.

FIGURE 5-2: PORT OF MOSES LAKE OPERATING REVENUES (2014-2018)

$10,000 $9,000 $8,000 $7,000 s

0 $6,000 0

0 $5,000 , 1

$ $4,000 $3,000 $2,000 $1,000 $0 2014 2015 2016 2017 2018 General Operations Maintenance General and Administrative Depreciation and Amortization Source: Port of Moses Lake Operating expenses are described below.  Expenses for General Operations (GO) include the fire department (49% of total in 2018) and payroll (35%), with materials and supplies accounting for the remaining 16%. GO expenses increased at an average annual rate of 12.7% per year from 2014 to 2018. However, most of the increase occurred in 2015 (46% increase), due to an accounting adjustment that shifted expenses from General Operations to Maintenance.  Expenses for Maintenance fluctuated between 2014 and 2018, from a low of $1.4 million in 2018 to a high of $2.1 million in 2015. Over this five-year period, maintenance expenses declined by -7.2% per year.  Expenses for General and Administrative (G&A) increased from $1.0 million in 2014 to $1.8 million in 2018, or at 16.1% per year. In 2018, G&A expenses consisted of materials and services (84% of total G&A expenses, including charges for legal/consultant services and insurance); payroll (12%) and other expenses (3%).  When combined, these three categories of expenses increased at an average annual rate of 6.3% from 2014 to 2018.  Depreciation expense is charged to operations in order to allocate the cost of capital assets over their estimated useful lives, using the straight-line method. As the Port’s depreciable assets have declined, the annual depreciation expense has declined.

Chapter 5. Finance 49 Non-operating Revenues and Expenses Non-operating revenues include taxes levied for general purposes, capital grant funds, and other (interest revenue less interest expense). Property taxes are the largest source of non-operating revenue. Ports are permitted to tax property at a maximum rate of $0.45 per $1,000 of assessed value. The assessed value of properties in the Port District grew relatively slowly and steadily from 1996 through 2006, but fell from 2011 through 2013. After 2013 the assessed value in the Port District averaged approximately $3.71 billion (except in 2015). Property taxes levied by the Port followed the same growth pattern as assessed value. Between 2014 and 2018, property taxes increased at 3.2% per year. Capital grants depend on the types of projects being undertaken and the Port’s ability to obtain grants. As a result, these funds range widely from year to year, from a low of $0.5 million in 2016 to a high of $2.3 million in 2017. Interest income of $175,000 was partially offset by interest expense of $53,000 in 2018. Net Income & Net Position Net income for the Port of Moses Lake increased from $0.5 million in 2015 to $2.9 million in 2018, producing average annual growth of 52.1%. Excluding depreciation, net income rose at 8.1% from 2014 to 2018. (See Figure 5-3).

FIGURE 5-3: NET INCOME TREND (2014-2018)

$6,000

$5,000

$4,000 s

0 $3,000 0 0 ,

1 $2,000 $

$1,000

$0 2014 2015 2016 2017 2018 -$1,000 Net income Net income excluding depreciation

Source: Port of Moses Lake

 The net position of the Port increased at 1.7% per year, growing from $45 million in 2014 to $48 million in 2018.  The Washington State Auditor reviewed the Port’s financial performance and found that the positive net change in fund equity and enterprise fund cost recovery were both favorable.

Chapter 5. Finance 50 TABLE 5-1: PORT OF MOSES LAKE FINANCIAL TRENDS, 2014-2018 ($1,000S)

CAGR Financial Component 2014 2015 2016 2017 2018 2014-18 Operating Revenues Airport Operations $1,247.3 $1,758.6 $1,688.6 $1,967.7 $2,007.0 12.6% Property Lease/Rental Operations 3,692.3 4,012.6 4,135.7 4,449.5 4,379.0 4.4% Other 245.5 383.4 850.2 600.2 508.5 20.0% Total Operating Revenues 5,185.1 6,154.6 6,674.5 7,017.4 6,894.5 7.4%

Operating Expenses General Operations 1,433.7 2,097.2 2,235.3 2,328.0 2,316.6 12.7% Maintenance 1,939.7 2,139.6 1,499.0 1,756.0 1,437.2 -7.2% General and Administrative 1,016.7 1,232.4 1,508.8 2,071.7 1,846.0 16.1% Depreciation and Amortization 2,735.7 3,077.1 2,775.9 2,679.1 1,585.9 -12.7% Total Operating Expenses 7,125.9 8,546.3 8,019.0 8,834.9 7,185.6 0.2% excl Dep/Am 4,390.1 5,469.3 5,243.1 6,155.8 5,599.7 6.3%

Net Operating Income (1,940.7) (2,391.8) (1,344.5) (1,817.5) (291.1) 37.8% excl Dep/Am 795.0 685.3 1,431.4 861.6 1,294.8 13.0%

Non-Operating Revenues (Expenses) Tax Levied for General Purposes 1,473.2 1,530.4 1,797.0 1,702.2 1,668.9 3.2% Capital Grant Funds 987.9 770.9 554.5 2,268.1 1,388.1 NM Other 18.9 (1.7) 15.2 22.9 122.1 59.5% Total Nonoperating Revenues, Net 2,480.0 2,299.5 2,366.6 3,993.2 3,179.1 6.4%

Net Income 539.2 (92.3) 1,022.1 2,175.7 2,888.0 52.1% excl Dep/Am 3,275.0 2,984.8 3,798.0 4,854.8 4,473.9 8.1%

Net Position end of year 45,180.6 43,974.4 44,996.5 47,172.2 48,352.4 1.7% Source: Port of Moses Lake Annual Financial Reports; 2018 is preliminary and may be adjusted

Chapter 5. Finance 51 Financial Projections Financial projections for the next five years are presented in Table 5-2. Operating Revenues Operating revenues are projected to increase from $6.9 million in 2018 to $9.3 million in 2023, or at 6.3% per year. Airport operations are projected to grow at 3.3% per year and property leases are expected to grow at 8.3% per year, while other operating revenues are expected to decline slightly during the forecast period. Projected growth in operating revenue is driven largely by new projects, including the new Terex R&D facility, military training facility, and expansion of air cargo operations. Excluding these new projects, operating revenues from the existing base of Port operations are expected to increase at 0.4% per year from 2018 through 2023. Operating Expenses Operating expenses (excluding depreciation and amortization expenses, which are not known) are projected to increase at 4.0% per year from 2018 to 2023. Growth in operating expenses by category includes:  General operation expenses are projected to grow at 3.0% per year from 2018 to 2023,  Maintenance expenses are projected to grow at 7.2% per year, and  General Administrative expenses are projected to grow at 2.6% per year. Non-Operating Revenues and Expenses Non-operating revenues include property taxes, capital grants, and interest income.  Property taxes are projected to grow at 1.8% per year from 2018 to2023,  Capital grants are unknown, and  Net interest income is expected to decline at -1.0% per year. Net Income & Net Position Excluding depreciation, net income is projected to dip slightly in 2019 and then stay above $4.0 million from 2020 to 2023. (See Figure 5-4).

FIGURE 5-4: NET INCOME TRENDS AND PROJECTIONS (2014-2018)

$6,000

$5,000

$4,000 s 0 0

0 $3,000 , 1 $ $2,000

$1,000

$0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Source: Port of Moses Lake The net position of the Port increased at 1.7% per year from $45 million in 2014 to $48 million in 2018.

Chapter 5. Finance 52 TABLE 5-2: PORT OF MOSES LAKE FINANCIAL PROJECTIONS, 2018-2023

Actual Projected CAGR Financial Component ($1,000s) 2018 2019 2020 2021 2022 2023 2018-23 Operating Revenues Airport Operations $2,007.0 $1,832.2 $1,899.6 $2,137.1 $2,319.4 $2,356.3 3.3% Property Lease/Rental Operations $4,379.0 $4,434.4 $6,270.6 $6,260.2 $6,480.8 $6,523.7 8.3% Other $508.5 $370.1 $372.4 $379.8 $387.4 $395.1 -4.9% Total Operating Revenues $6,894.5 $6,636.7 $8,542.6 $8,777.1 $9,187.6 $9,275.1 6.1%

Operating Expenses General Operations $2,316.6 $2,719.0 $2,462.8 $2,533.3 $2,605.1 $2,680.5 3.0% Maintenance $1,437.2 $1,824.0 $1,891.4 $1,937.7 $1,986.2 $2,036.9 7.2% General and Administrative $1,846.0 $1,829.1 $1,970.8 $2,015.2 $2,048.6 $2,095.6 2.6% Depreciation and Amortization $1,585.9 $0.0 $0.0 $0.0 $0.0 $0.0 NM Total Operating Expenses $7,185.6 $6,372.1 $6,325.0 $6,486.2 $6,639.9 $6,813.0 -1.1% excl Dep/Am $5,599.7 $6,372.1 $6,325.0 $6,486.2 $6,639.9 $6,813.0 4.0%

Net Operating Income -$291.1 $264.6 $2,217.7 $2,290.9 $2,547.7 $2,462.1 NM excl Dep/Am $1,294.8 $264.6 $2,217.7 $2,290.9 $2,547.7 $2,462.1 13.7%

Non-Operating Revenues (Expenses) Tax Levied for General Purposes $1,668.9 $1,756.4 $1,774.0 $1,791.7 $1,809.6 $1,827.7 1.8% Capital Grant Funds $1,388.1 $0.0 $0.0 $0.0 $0.0 $0.0 -100.0% Other $122.1 $64.7 $85.4 $102.2 $112.2 $116.1 -1.0% Total Nonoperating Revenues, Net $3,179.1 $1,821.1 $1,859.4 $1,893.9 $1,921.8 $1,943.9 -9.4%

Net Income $2,888.0 $2,085.7 $4,077.0 $4,184.7 $4,469.5 $4,406.0 8.8% excl Dep/Am, Cap Grants $3,085.8 $2,085.7 $4,077.0 $4,184.7 $4,469.5 $4,406.0 7.4% Source: Port of Moses Lake

Chapter 5. Finance 53 Capital Improvement Plan The Port of Moses Lake is planning a $36.0 million capital improvement plan (CIP) from 2019 to 2023, as shown in Table 5-3. The full CIP is located in Table 5-4.. The cost improvements by area are allocated as follows:  Industrial properties account for $19.4 million. The construction of a new R&D Building for Terex (estimated cost of $17.5 million) accounts for the lion’s share of improvements to industrial properties. The remainder consists of building upgrades, such as roof replacements and other upgrades.  Airport improvements account for $8.6 million. The major component of these improvements is preliminary design and environmental assessment for runway 14L-32R LOS. The Port’s portion of this project is estimated at $2.5 million. Other improvements include maintenance and upgrades to existing buildings and structures.  The Westside Employment Center requires improved road access. Planned improvements to Road G NE will enable access to State Route 17, and is estimated to cost $6.5 million,  The wastewater system will be upgraded (includes water rights and a well). The Port’s cost of these improvements is estimated to be $1.3 million.  Capital projects for administration (estimated at $170,000) include construction of a memorial park next to the Terminal and a capital contribution to Big Bend Community College.

TABLE 5-3: CAPITAL IMPROVEMENT PLAN ($1,000)

Area 2019 2020 2021 2022 2023 Total Percent Administration $90 $20 $20 $20 $20 $170 0.5% Airport 2,400 3,760 825 825 825 8,635 24.0% Industrial properties 18,370 620 120 120 120 19,350 53.8% Rail ------0.0% Wastewater 2,300 - - - - 1,300 3.6% Westside Employment Center 6,500 - - - - 6,500 18.1% Total $29,660 $4,400 $965 $965 $965 $35,955 100.0% Source: Port of Moses Lake Financing The Port of Moses Lake has a variety of means to finance the CIP plan, including:  self-financing from cash flow,  issuing General Obligation (GO) bond or Revenue bond debt,  obtaining grants and/or loans from public and private entities, and  creating a local improvement district (LID), among other sources of financing. Debt The Port has financed most of its prior capital improvement with grants, loans and bonds. As shown in Figure 5-5, the Port’s debt payment load is scheduled to fall from approximately $618,000 in 2019 to $68,000 in 2022 and $62,000 in 2023. Several bond issues are scheduled to expire in three years or less. One loan, related to two CERB loans for construction at the wastewater treatment plan, is scheduled to expire in 2020. Another loan, related to construction of a facility for FedEx, is scheduled to expire in 2021.

Chapter 5. Finance 54 FIGURE 5-5: PORT OF MOSES LAKE OUTSTANDING DEBT

$700

$600

$500 s

0 $400 0 0 ,

1 $300 $

$200

$100

$0 2019 2020 2021 2022 2023

Source: Port of Moses Lake Proposed Financing Structure The Port’s strategy for financing the proposed CIP is as follows:  Terex R&D Facility – finance with a revenue bond, paid by Terex,  Road G NE improvements: o Revenue bond (financed by a LID) at $2.3 million o CERB Loan at $2.45 million o CERB Grant at $550,000 o LT GO Bond at $1.2 million  Self-financing through available revenue, estimated at approximately $1.7 million per year.

Chapter 5. Finance 55 TABLE 5-4: CAPITAL IMPROVEMENT PLAN

Item Area 2018 2019 2020 2021 2022 2023 Capital Improvements Preliminary Design/Environmental Runway 14L-32R LOS - Port Portion $0 $10,000 $2,500,000 $0 $0 $0 Roof Replacement - 5 Yr Plan Airport $0 $0 $500,000 $500,000 $500,000 $500,000 2101 - Fire Station Airport $200,000 $0 $0 $0 $0 $0 Bldg 3033 - Terex Industrial $0 $250,000 $0 $0 $0 $0 Bldg 2501 - Bekins Industrial $0 $250,000 $0 $0 $0 $0 Fire Station - Diesel Exhaust Airport $43,160 $0 $0 $0 $0 $0 Bldg 5820 - Terex - Rate-of-Rise Values Industrial $120,000 $120,000 $120,000 $120,000 $120,000 $120,000 Copy Machine Admin $7,000 $0 $0 $0 $0 $0 Taxiway A/Blast Fence FOD Slurry Seal Airport $200,000 $200,000 $0 $0 $0 $0 Taxiway G Repair Airport $300,000 $0 $0 $0 $0 $0 Generic Pavement Repair Airport $0 $200,000 $200,000 $200,000 $200,000 $200,000 Warehouse Site Devp Plan 24th Ave/ 22nd Ave 2500/2600 Blocks Industrial $0 $0 $0 $0 $0 $0 HVAC Tracon Airport $0 $300,000 $0 $0 $0 $0 Upgrade 2901/2902 Industrial $0 $250,000 $0 $0 $0 $0 Maintenance Wash Bay Upgrade Airport $0 $0 $0 $0 $0 $0 Wash Rack Enclosure Airport $0 $0 $50,000 $0 $0 $0 Demolition 401/408 Airport $0 $0 $0 $0 $0 $0 Gate A2 Airport $0 $50,000 $0 $0 $0 $0 Air Cargo Airport $0 $0 $185,000 $0 $0 $0 Fish Bowl Egress Door Airport $0 $25,000 $0 $0 $0 $0 Equipment Shed - Maintenance Airport $0 $0 $200,000 $0 $0 $0 A/C Fire Suppression Pump House Airport $0 $40,000 $0 $0 $0 $0 ARFF Storage Pond Airport $0 $100,000 $0 $0 $0 $0 Memorial Park next to Terminal Admin $0 $70,000 $0 $0 $0 $0 BBCC Capital Contribution Admin $0 $20,000 $20,000 $20,000 $20,000 $20,000 Subtotal $870,160 $1,885,000 $3,775,000 $840,000 $840,000 $840,000

New Equipment Purchases Fire Station Medical Vehicle Airport $30,000 $0 $0 $0 $0 $0 Wide boom weed and deicer sprayer Airport $45,000 $0 $0 $0 $0 $0 Maintenance Vehicle/Equipment Airport $30,000 $150,000 $100,000 $100,000 $100,000 $100,000 Subtotal $105,000 $150,000 $100,000 $100,000 $100,000 $100,000 Table continues on following page

Chapter 5. Finance 56 (CONTINUED)

Item Area 2018 2019 2020 2021 2022 2023 New Capital Military Training Area Airport $700,000 $0 $0 $0 $0 $0 Utility Extension Fuel Ramp Airport $0 $300,000 $0 $0 $0 $0 Rail Road Rail $0 $0 $0 $0 $0 $0 Road G NE WEC $0 $6,500,000 $0 $0 $0 $0 Terex R&D Building Industrial $0 $17,500,000 $0 $0 $0 $0 Asset Management System - Work Orders Admin $0 $0 $0 $0 $0 $0 Sidewalk - 2300 Block, Andrews & 22nd Industrial $0 $0 $0 $0 $0 $0 New Construction - Generic Warehouse Industrial $0 $0 $500,000 $0 $0 $0 New Construction - Bldg 2521 Apron Airport $0 $0 $0 $0 $0 $0 New Construction - 3303 Twin Bldg $0 $0 $0 $0 $0 $0 Subtotal $700,000 $24,300,000 $500,000 $0 $0 $0

Wastewater Waste Water Well Wastewater $0 $1,300,000 $0 $0 $0 $0 Water Right Wastewater $0 $1,000,000 $0 $0 $0 $0 Subtotal $0 $2,300,000 $0 $0 $0 $0

Reserve Fire Suppression Pump Replacement - $200,000 Airport $0 $25,000 $25,000 $25,000 $25,000 $25,000 LOS Construction Project Airport $1,000,000 $1,000,000 $0 $0 $0 $0 Subtotal $1,000,000 $1,025,000 $25,000 $25,000 $25,000 $25,000

Total Capital Plan 2,675,160 28,660,000 4,400,000 965,000 965,000 965,000

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