$1.1 million city project to benefit SEH

Land purchase could allow expansion, create 1,000 local jobs

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The city of Vancouver has committed $1.1 million that will ultimately help chipmaker SEH America Inc. expand its existing campus.

The money, from a loan to be repaid by city utility customers, will buy 4 acres in the Oakbrook neighborhood and develop wetlands so that SEH’s expansion can proceed. City officials are now seeking an additional $5 million to complete the project before new state water quality requirements kick in for the company two years from now.

The real estate deal, expected to close within weeks, will allow the city to meet state and federal water quality requirements unrelated to SEH’s expansion plans.

It will also help SEH avoid costly improvements at its own site and will set the stage for an expansion that would create approximately 1,000 jobs in Clark County.

This growth, which would take place on SEH’s current campus, would be the first of two large expansions the company announced when it purchased Hewlett-Packard’s 174-acre campus in June 2009. The second would take place on the former HP campus.

SEH doesn’t have any immediate plans to start building, said Tatsuo Ito, executive vice president of SEH America in Vancouver. But the semiconductor industry is “booming” and the company has recently started to hire again, Ito said. SEH has added 70 employees to the payroll in the past two months, bringing total employment to 900 at its Vancouver facility.

As the economy continues to improve, Tokyo-based parent company Shin-Etsu Handotai will start to increase its capacity worldwide, Ito said. The Vancouver plant will compete with other sites in the U.S., Europe and Asia for the company’s resources.

The low value of the dollar against the Japanese yen favors exports from the U.S. and expansion of manufacturing capacity, but electricity costs and environmental permitting costs have risen here, making this location less competitive for expansion, Ito said. The added expense of meeting state environmental regulations is one more critical factor the company will consider when deciding whether to proceed with construction in Vancouver, Ito said.

Water rules

SEH holds a permit to release its clean industrial wastewater into Peterson Creek, which originates at its semiconductor fabrication plant at 4111 N.E. 112th Ave. The company is currently allowed to maintain the creek’s temperature at 69.8 degrees, but new requirements from Ecology will lower that maximum to 63.5 degrees, said Tonnie Cummings, water cleanup plan coordinator for the Washington Department of Ecology.

The department earlier this year approved a $1.1 million low-interest state revolving-fund loan to the city to buy and develop plans for the 4 acres bordering Peterson Creek in the Oakbrook neighborhood near Northeast 35th Street and 101st Court.

Negotiations are now under way with owner and developer Mason Wolfe to buy the property for about $300,000 — half the original cost estimate, said Brian Carlson, public works director for the city of Vancouver. The remainder of the loan will cover the preliminary engineering and permitting to transform the site into a wetland that would improve water quality in the creek and downstream in Burnt Bridge Creek.

Without the city’s wetlands project, SEH would have to meet the new water temperature standards by either buying machinery to cool the water before it’s released or paying more to divert the water into the city’s sanitary sewer system, Cummings said. Both are expensive options that hurt the company’s bottom line.

When SEH expands, it will add to the volume of water it will need to cool or dispose of, which could increase the cost of meeting its permit requirements. Such an expense could be enough to delay or kill the project.

“I can’t tell you (the city’s project) will bring jobs tomorrow; it’s all a process to put (SEH) in the position to be competitive to make expansions,” said Bob Schaefer, an attorney and member of the board at SEH America.

Companies are typically responsible for meeting their own permit requirements, but the Burnt Bridge Creek greenway expansion project is a special case because the city’s interests overlap so much with those of SEH.

Though the city’s proposed wetlands project will benefit SEH, its first purpose is to meet state and federal requirements for water quality in Burnt Bridge Creek, said Carlson, the city public works director.

“A big part of what we’re looking at doing we would be doing regardless of SEH,” Carlson said.

Burnt Bridge Creek carries excessive concentrations of pollutants that make it uninhabitable to salmon and other wildlife. The city needs the extra water volume from an expansion at SEH to keep the concentration of pollutants low in Burnt Bridge Creek during the summer months.

In the summer, high temperatures become an issue for the wastewater. Building the wetlands will help cool the wastewater before it reaches Burnt Bridge.

“It’s a win-win for everybody,” said Ray Keim, chairman of the Oakbrook Neighborhood Association, which lobbied the city to block a proposed nine-lot subdivision on the site. But, he said, “the city is going to pay a pretty penny for the property.”

The city last year was approved for a $6.6 million federal stimulus grant to buy the site and construct the wetlands but couldn’t meet the project deadlines, which required a “shovel ready” site.

It must now find additional funding to cover the total $5 million cost of building the wetlands project. SEH, which has already contributed to some initial engineering studies, is one potential source of future funding, Carlson said.