In a time when local governments are cutting jobs amid budget austerity, the Port of Vancouver chugs full-speed ahead in the opposite direction.
Its brand of economic stimulus? The West Vancouver Freight Access project, a $150 million, 27-mile expansion of rail tracks that will speed cargo and handle more of it.
It’s 40 percent complete, and the port’s ramping up for the finish line.
Just in the last several weeks, the port has signed two multi-million-dollar construction and engineering contracts to prod the freight rail project forward.
“We’re in delivery mode now,” said Curtis Shuck, the port’s director of economic development and facilities.
The port expects to create 1,000 permanent jobs in the next five to 10 years as it increases its rail capacity, helps existing companies expand their operations, and builds out Terminal 5 — where Australian mining giant BHP Billiton plans to construct a potash export facility.
Port officials forecast that the freight rail project, to be completed by 2017, will create about 4,000 construction jobs over its lifespan.
“If you’re in this kind of construction business, this is great news,” said Scott Bailey, regional labor economist for the state Employment Security Department. “We have a documented shortfall in infrastructure spending in this country — a backlog of $1.8 trillion.”
Bailey added of the freight rail initiative — the largest capital project in the port’s 100-year history: “This is the public side of investment that is necessary for private investment to happen.”
Projects move ahead
Public sector employers in Clark County, including local governments and school districts, have shed 500 jobs in the past 12 months.
Meanwhile, there’s little — if any — interest on the part of federal lawmakers to pursue more government spending, particularly in light of the fight over raising the nation’s debt ceiling.
At the port, the story is different. In November, its three elected commissioners approved a 46 percent increase in the port’s budget for 2012, with a substantial increase in grant money going toward the rail expansion.
Nearly 60 percent of the port’s $84.65 million spending plan next year is allocated for capital projects, reflecting the port’s plan to kick into high-gear construction of the West Vancouver Freight Access project.
Earlier this month, port commissioners approved an increase in the port’s contract with its lead consultant on the project — Portland-based HDR Engineering — bumping it from $6.01 million to $11.58 million.
That increase is by design: The port’s multiyear agreement with HDR anticipates the port paying the company as much as $16 million for its services, which include designing elements of the project,
overseeing construction and handling environmental permits.
The HDR deal came just weeks after port commissioners voted unanimously to approve another piece of the West Vancouver freight rail project: $11.28 million worth of construction that will separate train and vehicle traffic at Gateway Avenue by building an overpass.
Initially, port officials thought the Gateway overpass would come later in the overall project timeline. But the port’s success at winning, through a competitive process, a $10 million grant from the U.S. Department of Transportation moved the Gateway undertaking to the front burner.
Along with the thousands of jobs the freight rail initiative is projected to create, the port estimates its spending on the rail expansion — at roughly $90 million so far, with about $60 million to go — will generate about $400 million in private capital investment.
Federal oversight
To be sure, the freight rail’s path to completion will hardly be easy.
With the federal grants the port has secured will come federal oversight of its rail project. For example, the port must report job numbers and other performance outcomes — including cargo volumes — to federal officials as it spends $10 million in federal transportation dollars on certain elements of the freight rail venture.
Federal officials “want to know what economic benefits result from the investment they’re making,” Theresa Wagner, the port’s communications chief, said in an email to The Columbian.
Port leaders haven’t all agreed on how the port should fund completion of the freight rail program.
In November, commissioners voted 2-1 to approve the port’s 2012 budget, including the ramp-up to build freight-rail tracks. That vote included an increase in the port’s property tax collections by about $99,000 to roughly $10 million. The owner of a property with an assessed value of $250,000 will pay $103.61 — up $1.97 from 2011 — for the port’s share of property tax collections.
A Vancouver resident who testified during the commissioners’ public hearing called the action “arrogant and wrong.”
Commissioner Nancy Baker said increasing the port’s tax levy fulfilled the port’s “responsibility to create jobs.” Commissioner Jerry Oliver, who otherwise has supported expanding the port’s rail system, cast the dissenting vote, saying the timing wasn’t right to ask taxpayers for more and that the port didn’t need the extra property tax revenue.
Deadlines and negotiations
Although the port has secured most of the right of way it needs to install its train tracks, it hasn’t won over everybody. Victor Winkler, president and CEO of Metro Metals Northwest Inc., the parent of port tenant Pacific Coast Shredding, is locked in negotiations with the port over the disruptive impacts its rail project will have on his operations.
The port’s rail project also comes with deadlines and potential pitfalls, as a port-commissioned study revealed last summer:
• While the port has done a good job of diversifying its revenues, its borrowing costs to complete the freight rail expansion could increase depending on fluctuations in cargo volumes, including components for producing wind energy — a sector that is “highly volatile” because its feasibility is “highly dependent on state and federal policy.”
• Under an agreement with BNSF Railway, the port is on the hook to complete parts of the West Vancouver Freight Access project by specific deadlines. Failure to meet these deadlines could potentially result in a lawsuit by BNSF or termination of the agreement by BNSF.
Port officials, however, believe they’re making steady progress.
“We feel very confident that we’ll deliver the project by 2017,” said Wagner, the port’s communications chief.
Said Shuck, the port’s economic development director: “We had been in this planning piece and now what we’re doing is we’re getting to the point where it’s go time. We’re executing the plan.”
Aaron Corvin: http://twitter.com/col_econ; http://on.fb.me/AaronCorvin; 360-735-4518; aaron.corvin@columbian.com.
