7c Maritime Blue Final Report
THE ECONOMIC CASE FOR THE MARITIME CENTER AT FISHERMEN'S TERMINAL April, 2018 Item No. 7C Attachment 1 Prepared for: Meeting Date: January 8, 2019 ACKNOWLEDGMENTS This report was prepared by The Maritime Alliance, Delawarde Consulting, and ECONorthwest for and under contract to the Port of Seattle. We received assistance and direction from the Port, as well as valuable information and perspectives from numerous individuals during stakeholder outreach events. Cover Artwork provided by:Intergovernmental Oceanographic CommissionGlobal Ocean Observing System (IOC-GOOS) Artwork by Glynn Gorick depicting the Ocean Observing System www.themaritimealliance.org www.delawardeinc.com www.econw.com TABLE OF CONTENTS TABLE OF CONTENTS 1 Executive Summary 2 Introduction 4 Growing Economic Opportunity in Washington's Maritime Sector 8 Benchmarking / Case Studies 12 Innovation Gaps in the Maritime Sector 17 Needs Analysis 20 Vision and Mission Statement 21 Business Plan 25 Operating Plan 28 Recommended Next Steps Appendices THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL EXECUTIVE SUMMARY EXECUTIVE SUMMARY The state of Washington is developing a The Blue Economy includes both traditional maritime industries and Maritime Blue Initiative with a vision of an innovative BlueTechsectors such as autonomous underwater vehicles, electrification of marine vessels, offshore renewable energy, remotely Innovation Center anchoring its efforts. operated vehicles and sensors. While maritime is one of the oldest industries in the world, the traditional industry has been slow to innovate and yet very few regions are currently focused on the fast-growing, innovative BlueTechsectors. This is beginning to change as ports and regions around the world are promoting sustainable ocean and water industries that optimize conservation and promote economic development. The State of Washington is developing a Washington Maritime BLUE initiative with the vision of being a leading center for sustainable maritime industries in the United States by 2050. This initiative calls for the creation of a Maritime Innovation Center, which the Port of Seattle has identified as a strategic initiative and is the focus of this report. The Port proposes to renovate the Seattle Ship Supply building, which is part of a larger redevelopment effort at Fishermen's Terminal with support from multiple potential partners and stakeholders. What is clear in our research of incubation programs is that co-location of like-minded businesses or startups with collaboration from academia, industry and policy-makers is critical to help facilitate the needed culture for innovation in maritime. The Maritime Innovation Center will: 1) raise the profile of maritime industries in a crowded media space, 2) leverage regional expertise in high-tech software and data companies to introduce disruptive technologies in the maritime field, 3) introduce young people to exciting new careers, and 4) support early stage maritime companies with a hub-and-spoke model of collaboration across the entire maritime sector in Washington State. THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 1 INTRODUCTION INTRODUCTION The Port of Seattle hired The Maritime Alliance (TMA) to develop a business plan for the proposed Maritime Innovation Center and conduct outreach to generate and evaluate interest in the project. TMA enlisted the services of Delawarde Consulting and ECONorthwest, collectively known as the Project Team, to help conduct this study and complete this report. The Project Team reviewed materials provided by the Port of Seattle and other sources to assess the broader maritime sector in the State of Washington and developed a list of relevant contacts in academia, industry and government which should be included in outreach efforts. Our outreach efforts began with a series of sector-based meetings organized by the Port in August 2017. These effects were followed by a Strengths-Weaknesses-Trends workshop facilitated by the McDowell Group in October 2017 in order to get a baseline perspective of the current state of maritime industries in Washington and to begin developing a mission and vision. Based on additional outreach and meetings with maritime stakeholders around Puget Sound, the Team developed an online "Washington State is a place where nature and humans are survey that was sent to approximately 400 relevant stakeholders in an effort to gather inextricably linked A place where ingenuity is measured not additional data which is summarized in this report and provided in the appendix. Finally, only by it's success, but also by its impact in a changing world. the Project Team participated in a design How we live, work, and play along the working waterfront is charrette organized by Miller Hull to develop a series of conceptual designs for the proposed an indicator, or model, of how we can live in coordination with Center, which the Team used to develop each other and our natural resources." basic assumptions about the use and scale of available space for purposes of creating pro Washington Maritime Blue website forma financial models. 2 | ECONorthwest INTRODUCTION The 'Blue Economy' represents the sum of economic activity including ocean and water industries. The innovation center is proposed to occupy a redeveloped Seattle Ship Supply building at Fisherman's Terminal. The project will honor the rich maritime history in region and foster a new generation of entrepreneurs, fishers, inventors, and workers working to build a sustainable and robust maritime economy. The innovation center would support next generation inventions that drive the competitiveness of Washington State's Blue Economy, and would be a key pillar of an effort led by the State of Washington Department of Commerce to develop a strategy for Washington Maritime BLUE: 2050 Vision for a Sustainable Maritime Industry. The facility would bring together leaders from education, industry, and government to address challenges and opportunities within an organized maritime cluster and support classes, events, incubator activities, technical assistance, and research and development that ultimately helps the industry innovate and Blue Economy ClusterA regional concentration of sustain its competitive advantage. related ocean and water industries that helps increase The scope of this report is to evaluate stakeholder interests, develop a vision and its competitiveness globally through collaboration, events mission for the proposed Maritime Innovation and promotional activities and usually managed by a non- Center, and suggest a business plan that can inform future decisions about how to manage profit organization. and operate the space. THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 3 GROWING ECONOMIC OPPORTUNITY IN WASHINGTON'S MARITIME SECTOR The global 'Ocean Economy' 16 SECTORS OF THE BLUE ECONOMY is valued on a conservative Aquaculture & Fishing Oceanography & basis by the Organization for Biomedicine Marine Science Boats & Shipbuilding Ports & Maritime Economic Cooperation and Transportation Cables & Connections Development (OECD) at $1.5 Defense & Security Professional Services trillion (2010) and growing "If it's wet, it's Blue" Desalination/Clean Water Robotics & Submarines to $3.0 trillion by 2030, on a Marine Recreation Telecommunications Very Large Floating Platforms 'business as usual' basis. Ocean Energy & Minerals Ocean Instrumentation Weather Science & Climate Changes GROWING ECONOMIC OPPORTUNITY IN WASHINGTON'S MARITIME SECTOR The growing Blue Economy is just beginning The global 'Ocean Economy' is valued on a to gain recognition globally as regions start conservative basis by the Organization for to recognize the importance of the ocean Economic Cooperation and Development for economic development, recreation, (OECD) at $1.5 trillion (2010) and growing sustenance, and quality of life purposes. to $3.0 trillion by 2030, on a "business as The role of the ocean in our daily lives is usual" basis. The global water and wastewater continously increasing. When we think about technology industry is valued at approximately the "Big 5" issues for human lifewater, food, $500 billion for a total Blue Economy of $2.0 medicine, energy and "real estate"we are trillion, and yet there is little recognition of this. really thinking about the ocean. The Blue Today, there is no list of the top BlueTech Economy represents the sum of economic clusters around the world and, when that activity related to the ocean and water in list is created, the State of Washington will all its forms, with an increasing interest to be well-positioned to be included given its further develop emerging industries in ocean available natural resources, maritime expertise observation, renewable energy, and other and geographic concentration of companies, sustainable uses of the ocean to optimize government research facilities, and university conservation and economic development. labs that are focused on developing innovative ocean technologies. 4 | ECONorthwest GROWING ECONOMIC OPPORTUNITY IN WASHINGTON'S MARITIME SECTOR The proposed Maritime Innovation Center will ANNUAL ECONOMIC IMPACT OF THE MARITIME INDUSTRY IN WASHINGTON STATE build on the rich legacy of maritime industry and scientific discovery in Washington. It will connect people and resources through a hub-and-spoke model to encourage innovation and promote BlueTechcompanies that will $17.1B $20.7B $37.8B contribute to the vision of Washington being Indirect Indirect/Induced recognized as a leading center for sustainable Combined Impact to maritime industries. Revenue Revenue WA Economy THE ECONOMIC IMPORTANCE OF THE MARITIME SECTOR Like many resilient industries that have evolved over time, Washington's Maritime HUB AND SPOKE MODEL market has adapted its industry to make a more encompassing impact across an -Washington Sea Grant -CoMotion Labs -APL & Collaboratory -School of Oceanography increasingly diverse set of industry sectors. -School of Marine and -Pacific NorthWest National Environmental Affairs Marine Energy Center According to the recent Washington State -Northwest Fisheries Science Center -Western Washington -Seattle Maritime Academy -Pacific Marine Environmental Lab University -Northwest School of Maritime Sector Economic Impact Study -Office of Coast Survey -Northwest Center of Wooden Boat Building -National Weather Service (April 2017), "in 2015, Washington's Maritime Excellence for Marine -Schmidt Ocean Institute University of Manufacturing Technology -Washington State University industry supported 69,500 jobs, $4.7 billion Washington NOAA Educational/ in wages, and $21.4 billion in business Institutions revenue". Among the key maritime subsectors, commercial fishing and seafood processing, boat and ship building, repair, and -Fishing Fleet Washington -Maritime Blue -BlueNorth Fishing Industry -Washington State Ferry System State maintenance provided the greatest number of -Trident Seafoods MARITIME jobs and business revenue for Washington. INNOVATION In addition to direct jobs supported, the CENTER Ocean Washington maritime sector supported an Investment -Private Equity Funds Community Instrumentation additional 121,600 jobs throughout the state -SeaBird Scientific -Biosonics -Angel Funds Industry -Kongsberg/Simrad -Sequoia Scientific economy; for every direct job in maritime, an -Corporate investors additional 1.8 jobs were supported through US Coast Guard Marine indirect and induced impacts. Maritime District 13 Industry sector wages had a ripple effectevery US Navy -Foss Maritime direct dollar in labor wages was associated -Crowley Maritime -Vigor Marine with an additional $1.06 in wages elsewhere -IO Currents in Washington. The multiplier effects of the -Aerojet Rocketdyne -Bremerton/Keyport -Whidbey Island NAS -NUWC -Everett Homeport -Naval Base Kitsap THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 5 GROWING ECONOMIC OPPORTUNITY IN WASHINGTON'S MARITIME SECTOR Puget Sound has all the components needed to be a world leader in BlueTechinnovationa well-established maritime industry and a burgeoning tech sector. When you combine this with the institutional assets in education, research and defense, the only thing missing is a forum to connect it all. Washington maritime sector activities also growth was observed within the self-employed acknowledges that national systems for supported a significant bump of $37.8 billion workers in the Commercial Fishing and evaluating economic activity in the Blue in business revenues across Washington. Seafood Processing subsector. Overall, the Economy are outdated and likely do not Washington's Maritime Sector is measured largest subsector of total employment was the accurately capture BlueTechsubsectors. through monitoring: Maritime Logistics and Shipping subsector, Therefore, it is recommended that public which grew at a Compound Annual Growth agencies support efforts to develop new Business establishments Rate of 1.3% from 20122015. approaches to evaluating the Blue Economy, Jobs, including workers covered by After adjusting for inflation, wages among including the creation of satellite income unemployment insurance and those who Washington's maritime industries increased accounts and new policies to update the are self-employed by $200 million from 20122015, primarily North American Industrial Classification Wages due to the proportional impact of the Maritime System (NAICS) codes and other standards Business revenues generated from Logistics and Shipping subsector, contributing to include BlueTechas a category. With new maritime activities $1.5 billion in wage disbursements. The methods and tools, economists and investors second largest contributor to wages and will have greater ability to evaluate market size salary during 2015 came from the $1.2 and track economic performance of the Blue The total number of sector employer establishments remained steady between billion within the shipbuilding, repair and Economy over time. 2012 and 2015, while the sector saw growth in maintenance subsector. total employment over the same time period, Business revenues from output, generated by HARNESSING THE POWER AND which suggests there is growth within each OPPORTUNITY OF INNOVATION private sector operations within the maritime establishment but not significant levels of new sector, experienced meaningful growth Maritime is one of the oldest industries in firm formation. The reasons for the slower rate between 20122015. After adjustments the world. For much of human history, as of firm formation is complex, yet it seems clear for inflation, the maritime sector increased explorers traveled by sea to discover new that intentional efforts to support entrepreneurs business revenue by $1.5 billion. Much of lands and opportunities or nations battled by targeting constraints and focusing on this business revenue was seen within the in the high seas, maritime represented innovation may support continued wage and Commercial Fishing and Seafood Processing the height of human ingenuity, technology employment growth overall in the sector. sub-sector, contributing the largest proportion and innovation. Newspaper headlines and The total employment growth within the of business revenue of about $9.4 million. stories of heroic figures who 'conquered' Washington maritime sector was about 2.6% the sea were celebrated, attracting young The Project Team notes that much of the between 2012 and 2015. Among the maritime and innovative talent to pursue careers economic activity is attributed to legacy subsectors, the largest increase of employment in maritime. However, when humans or traditional maritime subsectors and 6 | ECONorthwest BENCHMARKING / CASE STUDIES discovered flight and developed a digital Leveraging the maritime sector's propensity world where information and status were for cultivating self-starting employment achieved at the speed of sound or light, we opportunities with the region's hallmark collectively lost our connection to the sea innovation and technology ecosystem and the world's innovators focused their provides tremendous potential to create new attention on software for global commerce economic opportunities in the industry. A and consumer technologies. There is business incubator and start up programs tremendous need and opportunity to bring can help facilitate the transformation of maritime into the digital world and develop existing business practices while also creating cleaner and more sustainable industries space for new approaches and ideas. There to promote renewed enthusiasm for this is tremendous potential to align innovative growing Blue Economy. With Seattle's global technology development with education influence in digital commerce, information and workforce development programs, technologies and communications, there is investment capital, research, and outreach to a unique opportunity to marry these in this promote further expansion of new sustainable region. A Maritime Innovation Center will industries in the Blue Economy. serve as a catalyst in this effort. THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 7 BENCHMARKING / CASE STUDIES BENCHMARKING / CASE STUDIES The Project Team notes that ports and regions worldwide are taking steps to focus on promoting ocean technology innovations and entrepreneurship in ways that fit their own unique set of circumstances. We highlight a few efforts below in order to help position the Port of Seattle's proposed Maritime Innovation Center. ALTASEALOS ANGELES, CA The Port of Los Angeles has a long term agreement in the form of a public-private partnership with the non-profit organization Alta Sea to manage a 35-acre waterfront site that includes space for a planned Engagement Center or Event Space, Science Hub for classes and education providers, and a Research Hub and Business Incubator (~10,000 sq.ft). The campus will initially focus on with space available to startups as well as large companies that want to locate adjacent to the water. Public/Private Partnership between the Port of Los Angeles and Alta Sea with a 50-year lease Repurposed 35-acre waterfront site for combined research, co-working/incubator, education, and public event space Focused on aquaculture and BlueTechsectors, including remotely operated vehicles (ROVs), autonomous underwater vehicles (AUVs), and autonomous surface vehicles (ASVs) Port provides extensive rent credits in return for educational programming. Rent credits lower the cost for tenants, which would pay: $9/SF/Yr for incubator tenants $18/SF/Yr for medium-sized tenants $22/SF/Yr for large-sized tenants CENTRE FOR OCEAN VENTURES AND ENTREPRENEURSHIP (COVE)HALIFAX, NOVA SCOTIA Converted an old Coast Guard facility into a hub for scientific research, events, incubator space, ocean technology tenants, and workforce programming Significant government funding and support Focused on ocean technologies Governed by a nonprofit organization that is similar to a cluster, and its incubator is contracted out to another company that specializes in running incubators. 8 | ECONorthwest BENCHMARKING / CASE STUDIES NEWLABBROOKLYN NAVY YARD, BROOKLYN, NY Converted 84,000 square feet from an old Navy Yard in Brooklyn into an urban innovation space with prototyping, 3D printing, CNC machines, wood and metal shop with support staff. Inter-disciplinary focus on innovation and entrepreneurship, but no specific focus on maritime New York City Economic Development Corporation funded $2.5 million to the private, for-profit company New Lab to operate the center for five years Also includes corporate sponsors and a mix of startup and mature companies that pay rent PORTXLROTTERDAM, THE NETHERLANDS "World's first Port Accelerator," spun out of the Port of Rotterdam, runs as an independent accelerator General co-working office space with fast-paced programming for startups that are selected through a competitive process in cohorts Value proposition is the connection to the port and a growing number of end-users at one of the largest ports in the world RDM ROTTERDAMROTTERDAM, THE NETHERLANDS Converted from a defunct shipyard into a new interdisciplinary space that supports events, technical training academy, an incubator, storage space with a wave tank, and other testing facilities Co-located with a senior secondary vocational school and a higher professional educational program Supported with funding from the European Commission, the Port of Rotterdam, and other sponsors Focused on maritime technologies and other ocean related verticals including innovative housing concepts over water and design THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 9 BENCHMARKING / CASE STUDIES THE COLLABORATORY AT APL-UWSEATTLE, WA Operated by the University of Washington Applied Physics Laboratory Specific focus on marine and ocean technologies Supports a synergistic ecosystem for marine technology research and development Hosted companies require demonstrated commercial capability Provides co-location space for 1012 small-medium sized companies, events, meetings, shared access to APL resources and facilities Provides a forum to develop linkages between APL, industry and other institutions CO-MOTION LABSSEATTLE, WA Part of the University of Washington with three physical locations. Non-profit self-sustainability model Average 6090 startups at any given time with a multi-industry approach Includes engineering, computer sciences, life sciences, clean tech and AR/VR for example Offers a wide degree of incubator and accelerator programs and networking with needed resources for business nurturing PUREBLUESEATTLE, WA Tacoma-based accelerator Specific sector focus on water related technologies Partially funded with grants from the U.S. Department of Commerce and an equity sharing arrangement with a private LLC Many parallels exist between the water industry and ocean/maritime with respect to the present level of innovation, degree of fragmentation, and attractiveness to investor 10 | ECONorthwest BENCHMARKING / CASE STUDIES HIGH DEGREE OF ENTREPRENEURIAL PROGRAMMATIC CONTENT ANALYSIS OF CASE STUDIES (Incubator and Accelerator Programs) Proposed Center The diagram on this page showcases a continuum of some of the entrepreneurial (conceptual) hosting programs mentioned in this report. Along the horizontal line, programs to the right have an increasing degree of BlueTech STRICT focus while moving towards the top shows INCUBATOR OR STRONG OCEAN programs with a high level of programmatic ACCELERATOR OR MARITIME PROGRAM ONLY FOCUS content including seminars on topics such as (Not both) accounting and finance, business plans, human resources, investment funding, and more. It is important to note that the University RDM of Washington has two exceptional entrepreneurial programs, each with a NewLab different area of focus. Co-Motion Labs APL Collaboratory offers well-organized incubator/accelerator programmatic support across a broad range of industries with dedicated staff to support 6090 companies at a time. The APL HOSTING/ CO-LOCATION ONLY Collaboratory brings together 1012 small companies focused on maritime technology co-located within a synergistic university The above diagram shows the case studies discussed in this report along two dimensions chosen to depict comparisons specific for this Report. The cases shown are all highly successful against their own individual missions ecosystem to provide a forum for advancing and their position on this graph should not in any way be interpreted as a measure of effectiveness or performance. research and development and spurring economic growth. Both programs are affiliated with the University of Washington and offer models and potential partnerships for the There is not a clear recipe for how to make A cluster organization, like the one envisioned Port of Seattle to consider as it develops a business entrepreneurship and innovation through the State of Washington's Maritime Maritime Innovation Center. It is possible to programs successful. What is clear in our BLUE Strategy can be the bond that keeps create a hybrid model, perhaps through a research of incubation programs around partners working together, engaged, and able private-public partnership with the University the world is that co-location of like-minded to project internationally. While the cluster or other organizations, to operate the Center businesses or startups with collaboration organization can be a potential operator of and serve as a convener that promotes from partners in academia, industry, and the incubator, it is not necessary; however the collaboration and supports innovation in the policy is critical to help facilitate the need for cluster organizer should be actively engaged maritime sector. culture innovation. and ideally co-located with the incubator for . the reasons mentioned above. THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 11 INNOVATION GAPS IN THE MARITIME SECTOR INNOVATION GAPS IN THE FINDINGS OF PROJECT TEAM OUTREACH MARITIME SECTOR One of the major assignments to the Project Team was to work with the maritime To accelerate innovation, the creation of a stakeholders in the region and establish supportive and nurturing environment is entrepreneurial focus points for the proposed necessary. Four basic elements are required: Maritime Innovation Center. As the maritime ideas, people to make inventions, customers cluster is inclusive of many small and to purchase them, and a supporting culture to fragmented segments it is important to facilitate the process. formulate the mission, vision, and goals of By drawing on results from the previous the Center in as simple a form as possible for outreach section, we call out this synopsis of proper focus. the higher-level gaps that need to be prime in In formulating our proposed mission and vision any Innovation Center design process: for the Center, we gathered information from four Lack of public awareness was the most primary sources that were heavily biased on commonly mentioned element as well as all input from interested stakeholders, as opposed the resulting issues it causes including lack to pre-existing literature. These sources are: of linkages, specific resources, workforce 1. Strength, Weaknesses, and Trends Workshop development programs, etc. 2. Regional Outreach Events 3. Personal Interviews 4. An Online Survey 12 | ECONorthwest INNOVATION GAPS IN THE MARITIME SECTOR Innovation as described is an idea followed by invention combined with a commercial success. SWT Workshop Outcomes As a diverse and fragmented industry, 1. SWT Workshop steeped in many longstanding traditions, it is Elements to Broaden A workshop to discuss the region's maritime Idea Area Topics For expected that there would be considerable Maritime Innovation Strengths, Weaknesses, and Trends (SWT) in Future Exploration areas of concern to address. In our analysis, Ecosystem Seattle facilitated by Heather Haugland of the we report on key findings from each source McDowell Group (See Summary in Appendix) Public awareness Ballast water and articulate outcomes into two primary The SWT exercise clearly indicated that the Workforce solutions areas which support creation of the Center: development Alternative vessel region has a vibrant marine industry built on Supportive elements needed to broaden strong heritage with world renowned local Specialized propulsion the maritime innovation ecosystem assets and institutions. However, the public investors Idea Area Topics to identify important gaps awareness of maritime is not keeping pace with Stronger linkages in the industry (note some of these are better-known industries. This lack of awareness amongst existing quite specific and others are rather open is believed to be slowing the pace of innovation resources ended) and causing a workforce shortage and skills (knowing where gap. Important trends include: to go) A synopsis of each source follows: Alternative low carbon vessel Access to the propulsion system right lab and Increasing use of surface and testing facilities undersea robotics (having access to Climate change (with attention to changes use them) in the Arctic) Numerous challenges to the seafood industry from both the resource collection and consumer product standpoint THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 13 INNOVATION GAPS IN THE MARITIME SECTOR 2. Public Outreach Tour Public Outreach Outcomes Regional Outreach Events in Anacortes, Port Elements to Broaden Idea Area Topics Hadlock, and Bremerton facilitated by Heather Maritime Innovation For Future Haugland of the McDowell Group (See Ecosystem Exploration Summary in Appendix) Gaining the Hybrid energy Regional outreach event findings aligned cooperation systems closely with the SWT Workshop. In the North of local micro Sound meeting, workforce development competitors to Renewable was emphasized along with leveraging local marine energy collaborate expertise on environmental sustainability. Undersea Some frustrations were expressed in getting Dealing with the robotics some of the smaller local companies to think impacts of climate of themselves as collaborators as opposed change (public Net-pen fisheries to competitors. At Port Hadlock, the region's recognition of) reputation for high quality, craftsmanship, and local cutting-edge laboratory research was 3. Personal Interviews KEY POINTS emphasized. Concerns cited include: Interviews with approximately 40 individuals The key points from outreach informing Plans for the working waterfront by Delawarde Consulting (See Personal the suggested mission and vision Transforming local innovations into longer Interview Summary in Appendix Item) statements include: term prosperity for the region by retaining successful companies that otherwise are Personal outreach focused more on specific The Center should support entrepreneurs acquired and/or move out of the region. needs for the Center to fulfill wants from a and established companies; raise the Duplication of effort (i.e whatever is done broad cross section of industry players. While industry profile to attract investment; and in the Center should be complementary most subjects had narrowly defined interests forge stronger connections across the to other resources in the region and along their organizations' specific missions, existing maritime/ocean tech industries and non-duplicative). there was a strong desire to accelerate the the broader tech industry in Puget Sound. pace of innovation across the board in marine The region is rich in maritime resources and ocean technology. One example that and heritage, but this is under recognized came up multiple times was the automation of by the general public and policy makers the fisheries observer program. who are being overshadowed by high-tech. A mechanism for driving innovation in this sector is widely supported. The existing Seattle Ship Supply building is recommended for becoming the central forum and organizing element within a hub and spoke model because of its location and surrounding resources and representation of heritage. 14 | ECONorthwest INNOVATION GAPS IN THE MARITIME SECTOR Personal Interviews Outcomes 4. Online Survey indicated a large amount of interest in the Elements to Broaden Idea Area Topics An online survey was sent to over 400 Maritime Innovation Center and the respective Maritime Innovation For Future stakeholders conducted by ECONorthwest results show the preferences for individuals Ecosystem Exploration (See Summary in Appendix section) who most likely could become involved with the facility at some point in the future. Alternative The Maritime Innovation Center Survey A narrative summary of major takeaways is Unique needs of the propulsion was developed to gauge interest in and included below: maritime industry: systems preferences for a proposed Center from a Median Robotics targeted population of maritime industry Overall, a plurality of the respondents entrepreneur age in "Pin boning" contacts and related stakeholders. The Center self-identified as being affiliated with the 40's is proposed to comprise three programmatic Maritime Business sector (40%), with the Fragmented Fisheries elements: (1) an incubator/accelerator, second largest category self-identifying market; limited Total observer (2) active connections between industry as Government (17.7%). Responses Addressable Market program and academia within a maritime focused from these sectors largely mirrored the (TAM) headroom automation "innovation network," and (3) education remaining sample throughout the survey, Uneducated and training resources that would serve with minor variations highlighted below. Modernizing investors the fishing fleet the maritime community. A model facility In regards to views of the maritime Specific co-location is anticipated to provide a full spectrum of industry, the Maritime Business sector Fish net spaces for BlueTech services to growing maritime businesses while has a slightly lower opinion of maritime technology entrepreneurs catalyzing innovation within its communities. industry visibility than the remaining Identified "step Higher margin The survey was designed to generate broader sample, while the Government sector seafood recognition and understanding of the needs of felt that the maritime industry had lower out" spaces products for for successful targeted stakeholders. The survey questions "innovation" performance. US consumers enterprises allow the Port of Seattle to better understand Across the entire survey sample, the top Decreasing the views of startups and SMEs in maritime three business and innovation barriers for Hosting space with environmental and BlueTechsectors with a potential interest firms trying to grow in the maritime industry both hardware and footprint and in a Maritime Innovation Center. The survey were (1) lack of public policy and incentives software support for improving was sent to stakeholders who have been support, (2) workforce talent, skills, and BlueTech compliance identified as potentially having an interest in a development, and (3) understanding of the Formal linkages Maritime Innovation Center. business/opportunities within the maritime so industry and Since the survey was not administered to sector. academia/govt. can a random sample of the population, the The Maritime Business sector was work well together results cannot be extrapolated beyond the less concerned with understanding Public education respondents who completed the survey. business/opportunities and more about local seafood However, the individuals who responded concerned with access to investors industry and funding. The Government sector was more concerned with a lack of research and development resources. THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 15 INNOVATION GAPS IN THE MARITIME SECTOR Charrette Collage Survey Demographics Funder/Invest or Non Maritime business Industry group Academenic/Research Workforce development Other (mix of business/gov/research) Government/Economic development Maritime business 0% 10% 20% 30% 40% 50% Of the hundreds of people who took the survey, people in the maritime business were the largest group. In addition, the survey had representation from other major stakeholders in the innovation space. The top three trending technology issues There was no single overwhelming In terms of the common incubator features, transforming maritime businesses were: (1) emphasis in response to open-end the most important across all sectors was electrification, (2) ship and vessel design questions focused on specific components access to laboratory, fabrication, or testing innovation, and (3) marine renewables. of the Maritime Innovation Center itself; space, with event space and office space The Government sector identified these however, respondents provided additional identified as the least important. This same issues, while the Maritime Business detail in areas of maritime economic theme continued to appear in the question sector saw autonomous and underwater development, facility configuration, about specialized incubator features, with vehicle and systems development as more incubator/accelerator services, and public equipment-related features ranking at the transformative than marine renewables. policy objectives. top of the list for all sectors. In regards to the proposed Maritime Both the Maritime Business and Innovation Center itself, all sectors Government sectors saw themselves indicated that the facility should promote getting involved predominantly in workforce knowledge transfer, business incubation, development, while the remaining sample and workforce development roughly was most likely to become involved with equally, while hosting public events was knowledge transfer and joint applied seen as less important. research activities. 16 | ECONorthwest The Washington State martime sectorNEEDS ANALYSIS needs to be more innovative. NEEDS ANALYSIS SIGNIFICANT BARRIERS TO GROWTH When considering a plan to build an activity IN THE MARITIME SECTOR Excellent system and program for increasing the As part of our research we surveyed likelihood for innovation, it is important to approximately 400 people and asked them take note of assets already in place within to assess a large range of business and the region. Since the maritime sector is also innovation challenges in the maritime sector. quite complex with many subsectors, the The list shows the top identified challenges. supporting resources are equally complex with overlapping priorities in other areas. 1) Lack of public policy & incentives support While by no means an exhaustive list, we 2) Workforce talent, skills, & development make note of the following examples: 3) Understanding business/opportunities Needs Improvement Natural Resources within the maritime sector 0% 20% 40% 60% Existing Entrepreneurial Assets 4) Access to investors & funders The Washington State maritime sector needs to be more Shipbuilding, Marine Architecture, and 5) Lack of research & development innovative: 2 out of every 3 respondents felt that the Marine Transportation resources innovation performance is not comparable to other industries. University of Washington Other Educational or Institutional Assets Federal Assets NATURAL RESOURCES EXISTING ENTREPRENEURIAL ASSETS Seafood & Fishing Industry The physical and geographic attributes of As one of the world's leading tech regions, Ocean & Marine Instrumentation Industry the Puget Sound Region is an enormous Washington state is fortunate to have a advantage that is often overlooked in its well-established culture of innovation. This ranking of importance, so we listed it first. culture is supported by over 50 existing Included in Puget Sound is: entrepreneurial hosting programs (incubators, A large shoreline accelerators and the like) in Puget Sound alone. While this is encouraging from the Deep water port overall standpoint of having a startup culture Proximity to Alaska & Arctic with the needed support structures across Proximity to Asia/Pacific Rim/BC broad industries, there are no start-ups with a specific focus on the maritime/oceanographic Protected freshwater harbor industry, with the exception of the University Sustainable fisheries of Washington's APL Collaboratory. The Collaboratory's unique distinctions are Clean air and abundant energy and explained in the benchmarking section. water resources It is important for any plan going forward to leverage and showcase these attributes. THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 17 NEEDS ANALYSIS SHIPBUILDING, MARINE ARCHITECTURE, UNIVERSITY OF AND MARINE TRANSPORTATION WASHINGTON While Puget Sound is not unique in the US UW is not the only for having shipyards and architects, it is educational institution unique in the variety of commercial activities involved in maritime supported. We note that not only are there or ocean activities; existing skill sets and capabilities for well- however it clearly stands out because of the known shipbuilders such as Vigor (Tacoma, number and size of programs it has that are Seattle, Port Angeles), shipbuilding expertise either supporting or can support maritime/ also extends to the Naval Shipyard, aluminum oceanographic programs. This includes: boats, and the local craftsmen in Port Hadlock Washington Sea Grant skilled in traditional wooden boat building. OTHER EDUCATIONAL OR Marine logistics companies such as Foss Applied Physics Lab (including INSTITUTIONAL ASSETS the Collaboratory) Maritime and Crowley Maritime have a large Western Washington University (has presence in the region. This large installed School of Oceanography programs in Marine Sciences, Energy, base can serve both as a needs source and School of Marine and Environmental Affairs and Autonomous Vehicles) where innovative technologies can be applied. In addition, Washington State operates the Pacific Northwest National Marine Northwest Center of Excellence for Marine Energy Center largest commuter ferry system in the country, Manufacturing and Technology (Skagit which also creates opportunities of scale for Co-Motion Labs entrepreneurial Valley College) clean alternative propulsion systems. hosting program Seattle Maritime Academy (Seattle Central College) Northwest School of Wooden Boat Building Schmidt Ocean Institute. Washington State University Food Science 18 | ECONorthwest NEEDS ANALYSIS Everett, and Whidbey Island. The Naval hulls and other equipment as well as unique Undersea Warfare Center (NUWC) facility opportunities for innovation and testing. After in Keyport has a large testing range fishers harvest their catch the seafood must for underwater vehicles and expressed be processed, marketed, and delivered to willingness to cooperate with interested consumers. Many of these companies are users (entrepreneurs in early proof of also present on the ship canal and elsewhere, concept stages) as the catch is processed and exported, with US Coast Guard District 13D13's Area opportunities for innovation at each stage of of Responsibility encompasses four states the supply chain. and the entire Pacific Northwest coast Pacific Northwest National Laboratory OCEAN & MARINE INSTRUMENTATION INDUSTRY (PNNL)Part of the Department of Energy, PNNL features many locations in the Puget Sound is one of the leading parts of FEDERAL ASSETS the country for underwater technology which Pacific Northwest including a Research NOAA Western Regional CenterHouses Center in Seattle and the Marine Sciences includes robotics, sensors, and platforms the largest variety of NOAA programs Laboratory in Sequim for providing the necessary information at a single location in the United States for climate forecasters, ocean operators (Includes National Ocean Service, National SEAFOOD & FISHING INDUSTRY (industry), and public safety. While numerous, Marine Fisheries Service, Office of Oceanic most of the companies in this segment are A significant portion of Alaska's fishing and Atmospheric Research & National small and have close relationships with one fleet has been based in Seattle for over Weather Service). It employs the largest or more of the groups listed abovetwo of 100 years. As a consequence, there are NOAA staff outside the Washington, D.C., the better-known are SeaBird Scientific and highly experienced shipbuilding, repair and metropolitan area Kongberg/Simrad. maintenance services in close proximity to US NavyThe Navy has a large Fishermen's Terminal. The Chittenden locks presence in the region including major allow fishing boats to spend their off season facilities in Bangor, Bremerton/Keyport, on fresh water, which means less corrosion of THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 19 VISION AND MISSION STATEMENT VISION AND MISSION STATEMENT VISION STATEMENT Puget Sound in Washington State becomes a world leading hub for sustainable maritime and ocean industries by creating an ecosystem of innovation that drives productive collaboration among academia, industry and government. When people think about sustainable BlueTechindustries, we want them to think about Puget Sound in the same way the world equates finance with New York or technology with Silicon Valley. MISSION STATEMENT To provide relevant, timely, and targeted support for early stage marine and ocean-oriented companies in the creation of new innovations to modernize the industry and create good-paying Blue Jobs. This support will be achieved by leveraging local assets and providing the necessary linkages to leverage the collective strength. STRATEGIC OBJECTIVES Create local economic development Build the necessary linkages (hub and spoke) and accelerate maritime industry growth Attract new entrepreneurs to BlueTech Retain local companies and talent Leverage the region's orientation towards environmental sustainability, technology innovation, and maritime heritage Attract investment Workforce and development 20 | ECONorthwest BUSINESS PLAN BUSINESS PLAN OVERVIEW The Port of Seattle owns the Seattle Ship Supply building at Fishermen's Terminal (FT) and is renovating the 12,000 sq. ft. structure as part of a broader redevelopment effort at FT. The Port of Seattle has an unrealized opportunity to renovate the existing property into a Maritime Innovation Center which would include incubator office space, fabrication space, and event space for workforce development programs and public outreach. The renovation effort would support the region's and state's efforts to grow the maritime sector. POTENTIAL OPERATING AND GOVERNANCE STRUCTURES This proposal suggests a strategic move forward by the Port of Seattle to invest in renovating the existing building into the symbolic and functional home for the future of the region's maritime industry and innovation center. To support the project, the Port of Seattle should consider the following issues regarding its role in hosting a physical space and partnering with the broader public and private interests in the maritime industry. There are a number of operational and governance structures under which the proposed Maritime Innovation Center might operatethese range from direct provision models including Port management of the Center to forming one of many types of formal partnerships with either public or private organizations. Deciding the appropriate model THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 21 BUSINESS PLAN Access to specialized spaces will be key Access to specialized spaces will be key elements of the innovation center: People who took the survey felt that access elements of the innovation center. TOP FIVE RATED INCUBATOR SERVICES to lab, fabrication, and testing space should be priority offering for the innovation center. Survey respondents were asked to assess a large range of incubator services. This list shows the top identified challenges. Event space 1) Shared resources with research centers, testing facilities, universities and private companies Office utilities and IT support 2) Guidance and mentorship from (computers, telephones, etc.) business leaders/investors 3) Business support service provider Conference, break space, and assistance (e.g. HR, legal, marketing) collaboration rooms 4) Access to general equipment for testing or fabrication of prototypes Laboratory or fabrication or testing 5) Classes/training for workforce and s pa ce skills development 0 2 4 6 Importance, low to high requires an evaluation of the model's tradeoffs Operational flexibility: the ability to OPERATING OPTIONS with respect to several key criteria that would deliver Center activities via contracts, There are options available to the Port that be related to executing on the Center's partner with other academic and peer it could employ to operate and govern the mission. The key criteria to consider include: institutions, and engage in a mix of center. These include: Facilitate access to capital: different types public and private activities. Accountability: each entity will Port of Seattle governed and operated by of entities (i.e., public, private, nonprofit) a contractor (i.e. private group, economic will have different sources of capital that have unique success metrics and development agency or universitythey can access at different costs and accountability mechanisms. affiliated enterprise) legal limitations. The best model will be one that facilitates Non-profit governed and operated by a Financial exposure: tax exempt status access to low cost capital, minimizes contractor (i.e. private group, economic and ability to realize economies of scale operating costs (is tax exempt and able to development agency or universityor leverage in-kind contributions are achieve economies of scale on the operations affiliated enterprise) both factors which influence the financial side), and is mission-driven and accountable viability of the proposed Center and differ A public-private partnership that includes to stakeholders. among ownership and operating models. desired aspects of other models 22 | ECONorthwest BUSINESS PLAN INCUBATOR AND ACCELERATOR The incubator/accelerator program will feature Table 2: Maritime Innovation Center Program Concept PROGRAM ACTIVITIES the following programmatic elements: PROGRAM ELEMENT RENTABLE SF A key component of the Center will be the Advice (e.g. legal, accounting, marketing, business incubator and accelerator program. Incubator space 3,600 permitting) and assistance (including The Center is anticipated to be a provider support for obtaining access to private and Anchor office space 1,300 with special expertise in serving early government loans) state business ventures. It will also provide Accelerator space 800 Business training (writing plans, budgeting.) space, facilities, and business mentorship Event space 2,300 programs to support growth in maritime- Classes, seminars, and/or on-the-job training oriented business. The incubator space and Common area/ Guidance and/or mentoring from business 4,000 Conference/Admin accelerator services could create tailored leaders or investors programs to meet the needs of participating TOTAL 12,000 Help with hiring (entry-level employees or businesses. The incubator would cater experienced professionals) Source: ECONorthwest, 2018 to entrepreneurs developing early stage business ideas and technologies in search Industry events and promotions of viable business ideas. The accelerator MARITIME INNOVATION CENTER Shared resources with research SPACE CONCEPT program could cater to businesses with centers, universities, test facilities, defined products and business plans trying to and private companies The Port of Seattle has completed preliminary scale their efforts. space and design concepts to map out the MARITIME AND TECHNOLOGY TENANTS potential space program within the Seattle The Center could be fitted out to provide for the following space capabilities and The Center could also offer access or Ship Supply building at FT (See Summary amenities; however, final decisions would a satellite office for anchor tenants from Report and Conceptual Drawings by Miller need to be made regarding service breadth existing maritime sector businesses that want Hull in Appendix Section). The concept for the to co-locate with and support early stage facility is for a 12,000-square foot building that and program requirements: innovations. The Center should also have a includes five programmatic components: 24/7 access for participating companies to strategy for "step-out" space as companies offices and co-working spaces Incubator office and fabrication shop space grow and mature, as well as "step-in" space Conference, break space, and available to companies from outside the Accelerator office space collaboration rooms region that want to test the local market. Other tenant office space Event space Event space Laboratory or fabrication or testing space, Shared tenant space; conference rooms, such as a tool workshop and 3-D printers and Center administrative office space IT support (computers, telephones, etc.) Table 2 above shows the facility space needs Flexible space environments (easily by component and informed by a design reconfigured office furniture, rolling doors, charrette coordinated by the Port of Seattle's cubes, private "phone booths," etc.) architect. ECONorthwest describes each component in detail on the following page. Access to water/marine infrastructure and equipment THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 23 BUSINESS PLAN The space program serves as a guide Anchor tenant office space for future physical planning and financial This component includes office space for assessments. additional tenants that would benefit from Collectively, the Center office space, co-location within the Center. These tenants other tenant office space, and incubator/ might include other more established accelerator space comprise the office areas businesses in the maritime sector that can within the Center. lend advice and guidance while having access to innovations and startups. Center office space This component includes the office space Shared tenant space for Center administration office space The shared tenant space includes common and operations. areas which would be available to all office tenants and their guests. These shared Incubator and Accelerator tenant office space spaces include: a reception area, a mailing, This component includes a mix of rentable printing, and production station, a storage co-working, independent stations, and room, a break room with a full kitchen, and a dedicated office space needed to support the conference room that seats at least fifteen. individuals and firms in the Center's programs. Event space Incubator and Accelerator tenant fabrication/ The event space is a venue for the Center and flex space industry groups to host events. The space This component includes a mix of fabrication should be flat and open, allowing for a variety and flex space that can be used as a of uses including meetings, audio/visual workshop and/or office space depending on events, and gatherings. The specific design of the needs of the current program tenants. the event space should also allow for double duty as flex space for office and incubator tenants. 24 | ECONorthwest OPERATING PLAN OPERATING PLAN reflect that this is a new facility with stateof-the-art offerings in office, fabrication, This section presents an operating forecast for and event space (current co-working space the Maritime Innovation Center. An operating in this part of the office market range forecast shows revenues and expenses between $150 to $300 per membership). associated with operations only. It does not include investment items (e.g. capital costs) Accelerator tenants: Revenue estimates or finance items (e.g. debt service payments), assume that tenants will pay on average both of which factor into the feasibility of a $200 per month for memberships for project. These are assumed to be a condition dedicated office space capable of holding of Port of Seattle investment in the Ship 3-4 employees. Supply Building. This forecast describes Office tenants: Revenue estimates assume facility operations, presents revenue forecasts, that office tenants will pay $25 per square breaks down costs by segment, and foot per year (triple net rents). These rents concludes with an operating income forecast. reflect that this is a new facility with state- The forecast is built upon: of-the-art offerings in office, fabrication, Data gathered on performance and event space (current office rents in the benchmarks, models and best immediate range between $25 to $35 per management practices and an inventory of square foot per year). specialized equipment from other similar Fabrication space: The facility will include incubators or innovation centers fabrication spaces to be managed Real estate market data by the proposed Maritime Innovation Center. This space would be covered by Information on comparable facilities individual memberships. Consultation with industry associations The event space: ECONorthwest estimated event center revenues using per square REVENUE SEGMENTS foot rental revenues from the proposed This forecast assumes that the Proposed event space. It assumes that the Center Maritime Innovation Center will generate would generate revenue from 30 paid revenue from the following sources: events paying current market rents for event space in the area (it will also likely Incubator tenants: Revenue estimates host unpaid events). assume that tenants will pay on average $200 per month for memberships. Under In total, the Proposed Maritime Innovation the space program above, the Center Center is anticipated to generate $228,000 in might have space for 50 dedicated revenues per year, or $19,000 per month. spaces at full utilization; however, it might overbook the site to account for time of day fluctuations on utilization. These rents THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 25 OPERATING PLAN OPERATING EXPENSES Utilities: ECONorthwest estimated the benefits generated by the facility. The financial This section summarizes the operating Proposed Maritime Innovation Center performance of the facility could be improved expense assumptions used in the financial utilities on a per square foot basis at its through more aggressive rent structures of forecast for two program assumptions. First, current location and applied this cost to the office tenants or through public and private the program will likely need to run on a very number of square feet at the new location support of its mission. lean budget at start up and make choices that are not leased to tenants about enhancing its services as the center Maintenance/Janitorial/Grounds: The RESERVE/CAPITAL FUND and its programs mature. At the time of this model segments this expense item into The facility will need to fund operating report, it is assumed that the Port will operate three sections: the fabrication space, event reserves as well as a capital replacement the facility with specialized staff who are space and office space. The fabrication fund. Generally, a capital replacement study knowledgeable about business startups in the additional professional service assistance will need to be undertaken to determine a maritime sector. The analysis also assumes which will be needed replacement schedule and cost obligation that the Port will use 1) its existing staffing and estimate; however, a rough standard of operating capacity in the Fishermen's Terminal Marketing: Our analysis assumes that $1 per square foot per year (seen in other the proposed Maritime Innovation Center area to provide gap coverage for events and similar facilities) would be needed to target will need to have a budget for marketing other building maintenance, and 2) rely on approximately $12,000 per year for the fund. the site to prospective tenants and to in-kind contributions from project sponsors to advertise events OTHER FUNDING CONSIDERATIONS supplement basic operations of the Center Event/Programming: Our analysis assumes Many incubator facilities are governed in such outside of any firmer financial commitments. that the proposed Maritime Innovation a way that allows outside revenue support The operating expense model does not include Center will need to have a budget for from government and industry sources. Given three essential cost items that are assumed hosting and programming events their unique mission, finding opportunities to be covered by the Port of Seattle: 1) cost to lease the land, 2) start up and tenant for corporate sponsorship, government Consumable Materials and Supplies: The grants, philanthropic, or industry support is improvement cost to fit out the space, and 3) proposed Maritime Innovation Center will a reasonable basis for funding. For the Port debt service to support facility construction. need to purchase general office supplies to of Seattle and its economic development maintain its operations Table 3 lists the operating expense mission, there are several funding categories and their annual estimated FINANCIAL FORECAST considerations to explore: expenses. Each category is discussed in NET OPERATING INCOME Direct support through their existing tax levy more detail as follows. Table 3 shown on the following page outlines the financial performance of the proposed Indirect support through charges on The calculations for the four operating its existing or future maritime real expenses are: Maritime Innovation Center for its first 10 estate holdings Payroll and Benefits: Currently, it is years of operations allowing time for ramp up. ECONorthwest anticipates that the Center will Further work by the Port would need to be estimated that the facility will need 1 not generate a net-positive operating income. conducted to test the feasibility and revenue full-time and limited hourly staff and This is the purely financial outlook, since it adequacy of any of the options listed above. would scale staffing based on need and does not take into consideration the important economic conditions economic, fiscal, and community development 26 | ECONorthwest OPERATING PLAN Table 3: Net Operating Income YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 Revenues Incubator space $38,100 $89,300 $92,400 $95,700 $99,000 $102,500 $106,100 $109,800 $113,600 $117,6 0 0 Anchor office space $32,500 $33,500 $34,500 $35,500 $36,600 $37,700 $38,800 $40,000 $41,200 $42,400 Accelerator space $26,400 $ 27, 2 0 0 $28,000 $28,800 $29,700 $30,600 $31,500 $32,500 $33,400 $34,400 Event space $18,600 $19,500 $20,500 $21,500 $22,600 $23,700 $24,900 $26,200 $ 27, 5 0 0 $28,900 Revenue Total $115,6 0 0 $169,500 $175,400 $181,600 $187,9 0 0 $194,500 $201,300 $208,400 $215,700 $223,300 Operation Costs Operating Fee (Staff Costs) $112,20 0 $114,40 0 $116,70 0 $119,100 $121,400 $123,900 $126,300 $128,900 $131,500 $134,100 Supplies/Equipment/IT $20,000 $20,400 $20,800 $21,200 $21,600 $2 2,10 0 $22,500 $23,000 $23,400 $23,900 Meeting and Event Expenses $2,500 $2,600 $2,600 $2,700 $2,700 $2,800 $2,800 $2,900 $2,900 $3,000 Marketing $5,000 $ 5,10 0 $5,200 $5,300 $5,400 $5,500 $5,600 $5,700 $5,900 $6,000 Professional Services $5,000 $ 5,10 0 $5,200 $5,300 $5,400 $5,500 $5,600 $5,700 $5,900 $6,000 Utilities $30,000 $30,600 $31,200 $31,800 $32,500 $33,100 $33,800 $34,500 $35,100 $35,900 Maintenance $60,000 $61,200 $62,400 $63,700 $64,900 $66,200 $ 67,6 0 0 $68,900 $70,300 $71,700 Leasehold Excise Tax $24,700 $25,600 $26,500 $ 27,4 0 0 $28,400 $29,400 $30,400 $31,500 $32,600 $33,700 Operations Total $259,400 $265,000 $270,700 $276,500 $282,400 $288,500 $294,700 $301,100 $307,600 $314,200 Net Operating Income $(143,800) $(95,500) $(95,300) $(94,900) $(94,500) $(94,000) $(93,400) $(92,700) $(91,900) $(90,900) Source: ECONorthwest, 2018. THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 27 RECOMMENDED NEXT STEPS RECOMMENDED NEXT STEPS The Port of Seattle should consider these findings and deliberate on the following set of decision points. Develop and refine conceptual drawings for the layout and needs requirements of the proposed Maritime Innovation Center including architectural renderings, site layout, and office and workshop components. Structure a long-term funding strategy for the Maritime Innovation Center that includes a holistic approach to Fishermen's Terminal and other ideas for promoting innovation that creates and encourages new sources of revenue to the Port. Reconvene a broad-based advisory committee to inform future decision making, inclusive of public agency officials, education and university partners, industry leaders, sponsors, and other stakeholders as appropriate. Develop commitments from public and private project sponsors. The Port has signaled its commitment to support Determine governance and operating On the policy side, it is recommended that innovation in the maritime sector. Other structure. As the project moves forward, public agencies support efforts to develop regional and state economic development the Port will need to select a preferred new approaches to evaluating the Blue interests, and maritime industries, have operating model and develop a strategy Economy including the creation of satellite shared interests. Additional work should that is most appropriate, including but not income accounts and efforts to update the be done to identify which groups would limited to, the possibility of negotiating North American Industrial Classification like to be directly involved in sponsoring a memorandum of understanding, System (NAICS) codes and other standards the innovation center, including developing a public-private partnership, to include BlueTechas a category. determining levels of financial and other issuing a request for information, or in-kind support necessary to launch the evaluating other options internally or facility. externally with non-profit, for-profit, or university operators. 28 | ECONorthwest APPENDICES This page left intentionally blank APPENDICES LIST OF APPENDICES MARITIME INNOVATION CENTER OUTREACH MEETINGS IN ANACORTES & PORT HADLOCK PROPOSED MARITIME INNOVATION CENTER GREEN PAPER To establish background and focus for the study, the Port hosted three outreach events. The first This is a short policy brief discussing how was a SWT workshop in Seattle on October an innovation center could interface with 17 (summarized previously). The second a dynamic economy and local economic and third events were outreach meetings development efforts. This paper was used to in outlying Puget Sound communities, with preface attendees at the Maritime Innovation the aim of gathering input from stakeholders Center Workshop. outside the immediate vicinity of Seattle. These outreach efforts recognize that many innovative MARITIME INNOVATION solutions, technologies and best practices have CENTER WORKSHOP been accelerating in small and rural maritime The Port of Seattle hosted a workshop on communities around the state. This document October 17th with a variety of stakeholders to summarizes the proceedings of the two outreach identify the major strengths, weaknesses, and meetings, held on December 1314, 2017. trends of Puget Sound's maritime sector, as well as gather input to form a vision for the center. MARITIME INNOVATION CENTER This document summarizes the workshop. INTERVIEW SYNOPSIS As part of the discovery process to develop the MARITIME INNOVATION CENTER plan for the Center, interviews were conducted DESIGN CHARRETTE in person or on phone with 35 people (28 As the Port redevelops Fishermen's Terminal it distinct organizations) representing a broad wants to restore its Seattle Ship Supply building spectrum of interested entities. This document and turn it into a facility that can support summarizes key findings from those interviews. entrepreneurs and established companies. The Port contracted with the Miller Hull Partnership MARITIME INNOVATION CENTER SURVEY to complete a design charrette for the Ship The Maritime Innovation Center Survey was Supply building as a location for the Maritime developed to gauge interest in and preferences Innovation Center. for a proposed Maritime Innovation Center from a targeted population of maritime industry contacts. The survey was designed to generate broader support and understanding of the needs of targeted stakeholders. This document summarizes the key findings from the survey. THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 31 This page left intentionally blank HEADER THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 33
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