7b. McDowell Group Presentation Slides
Item No. 7b_supp_1 Meeting date: June 27, 2017 Economic Impact of the Hiram M. Chittenden Locks August 12, 2016 Lake Washington Ship Canal Users Group Prepared for: Port of Seattle Reason for the Study Ballard Locks is 100 years old and needs up to $60 million in new investment to make major systems reliable and safe USACE (US Army Corps of Engineers) budget process prioritizes investment based on a formula for national economic benefit that tends to emphasize shipping tonnage. Ballard Locks transits approx. 1 million tons/yr of freight U.S. coastal shipping is approx. 1 billion tons/yr (not counting foreign shipments) There are approx. 200 other locks systems in the U.S. Ballard Locks provides many benefits for which the Corps' economic analysis traditionally has not fully accounted Methodology Study Purpose Describe and quantify, where possible, the full range of economic activity facilitated by or dependent on the Locks Study Tasks Interviews with 55+ businesses, business associations, public agencies, tribes, USACE Collection and analysis of secondary data (past studies, Locks usage and repair history, state and federal fisheries, Fish & Wildlife, Nat'l Marine Manufacturers Assn., WA Maritime Federation, City of Seattle, demographic, economic data) Economic impact analysis Stakeholders contributed to proposal, scope of work, interview targets, study progress Analytical Approaches Value of business activity and employment that has evolved over a century and today is directly dependent on Locks operations Reduced costs/increased efficiency businesses realize as a result of the Locks' unique location Impact of brief closures on dependent businesses and agencies Impact of longer (3-month) closure (would businesses relocate, downsize, fail?) Locks-Dependent Businesses Businesses that generate revenue directly from operations inside Locks and depend on transits of materials or customers E.g., Shipyards, yacht sales, moorage, construction materials Businesses headquartered inside the Locks, generating revenue primarily outside the locks E.g., Marine products manufacturers, commercial fishing companies, passenger cruise companies Businesses with no permanent presence in the lakes or ship canal, but that benefit economically from services provided inside the Locks E.g. Marine insurance, legal, and other professional services; marine salvage and other vessels not specifically addressed in the report Ballard Locks Budget and Funding Routine Operations and MaintenanceBudget Between $8.0 and $8.4 million/yr from 2011 through 2017. Non-routine Repairsand Upgrades Expenditures Avg of $1.8 million/yr over the same period Major projects remain unfunded Major (Non-Routine) Projects Needed Major Project Approximate Cost Large Lock Emergency Closure System (partly complete) $4 million to $8 million Filling Culvert Valve and Machinery $5 million to $12 million Large Lock Gate Rehabilitation $6 million to $10 million Emergency Generator Connections Less than $1 million Saltwater Drain Intake System and Diffuser Well $5 million to $10 million Small Lock Emergency Closure $1 million to $5 million Electrical System $5 million to $7 million Small Lock Machinery $3 million to $5 million Saltwater Barrier Replacement $1 million to $2 million Total Needed ~ $30 million to $60 million Value of the Ballard Locks Economic Value Environmental and Public Infrastructure Value Tribal Obligations Public Safety Economic Value Busiest in nation in vessel transits 40,000/yr 12th busiest in commercial transits 7,500/yr Supports $1.2 billion in economic activity Tide-free, freshwater environment reduces maintenance costs and prolongs vessel life for 700 commercial and roughly 4,000 recreational vessels Economic Value (cont.) Indirectly supports an estimated $785 million in seafood exports 2016: 271 vessels 40'+ made ~1,600 transits of Locks 200+ homeported in Washington ~40% of active North Pacific fishing vessels over 58' moored and/or serviced annually inside the Locks Vessels that transited the locks earned over $500 million in 2016 One of Seattle's most popular visitor attractions 1.25 million visitors annually $38 million in visitor-related economic activity Environmental and Public Infrastructure Value Locks, spillway, and fish ladder safeguard $125+ million in salmon habitat protection and restoration The only point of access and egress for salmon migrating in/out of the Lake Washington/Cedar/Sammamish watershed Controls water levels in Lake Washington and Lake Union to maintain SR 520, I-90, and 75 miles of shoreline in lakes and canal Access point for major infrastructure projects including 520 floating bridge and Ballard/Wallingford stormwater tunnel Tribal Obligations Locks are key to meeting federal responsibilities under treaties with Muckleshoot and Suquamish tribes. Muckleshoot fishing boats use the Locks annually (range of 20-80 vessels/year). Muckleshoot biologists work in partnership with USACE to monitor and manage fish runs. Coho (21k/year) Sockeye (115k/year) Chinook (11k/year) Public Safety Rapid access between lakes and Puget Sound saves money and increases effectiveness for Seattle Fire Department, Seattle Harbor Patrol, U.S. Coast Guard, and King County Sherriff A major Locks failure due to earthquake or flooding could jeopardize billions of dollars in public infrastructure and threaten human life Full extent of safety impacts currently under study by USACE Report anticipated in Fall 2017 Locks Traffic Recreational vs. Non-Recreational Vessels, 2015 Non-Recreational Vessels by Type, 2015 Cargo/ crew Other, 25 boats, 604 Nonrecreational vessels Gov't, 792 7,471 Passenger Towboats, boats/ 3,414 ferries, 1,094 Recreational vessels Commercial 33,087 fishing, 1,542 Source: USACE Total Vessel Transits: 40,558 Locks Shipments Sand and Gravel vs. All Other Commodities, KT, 2015 Commodities other than Sand and Gravel, KT, 2015 Fab. Metal Products, 13 Other, 25 All Other Cement & Manufac. Commodities, Concrete, 16 Prod., 47 250 Sand and Gravel, 838 Pontoon Fish, 46 Pipe, 22 Machinery, Bulkheads, Ships & 39 Boats, 40 Source: USACE Total Tonnage: 1,088 KT Major Types of Locks Beneficiaries Marine services and manufacturing Washington and Alaska fishing fleets Marine transport companies Passenger cruise companies Yacht sales and marinas Scientific research vessels Recreational visitors Property owners Recreational boaters General public BUSINESSES DEPENDENT ON THE BALLARD LOCKS LOCKS ECONOMIC lMPACT AREA The Ballard Locks generate nearly $1.2 billion in annual economic benet. Areas impacted by the locks include the Lake Washington Ship Canal and adjacent properties, Lake Union, Lake Washington, Lake Sammamish and rivers and streams owing into the lakes. The locks also have an economic nexus with the Lower Duwamish Waterway. Locations of maritime industrial activities and vital infrastructure are shown below and at right. Lake Sammamish neurons mm m ' '45ch 331mm": " .93 EUEJIEIEEIE ' .. Boat/Ship Maritime Maritime Education Ocean Transport . Services & Supply Industrial Sh'Pyade .M. Ballard-Interbay Northend oCommercral Fishln' ' ' Key '3 Maritime. . ' . . ll'Ifrastructure Manufacturing Industrial Center Related Industries9 0 Fuel Supply @Moorage Rail Economic Impact Analysis Locks serve as critical infrastructure that historically has: Spurred business development that may otherwise not have occurred Provided for more efficient (lower-cost) operations for businesses that rely on that infrastructure. Today a complex web of economic activity depends on safe, efficient, and reliable Locks operations. Fully measuring all of the Locks direct and indirect economic linkages would be exceedingly complex. By focusing on key users and uses, we can make informed estimates of the scale of economic activity supported by the Locks. Gross Revenues of Locks-Dependent Businesses Commercial fishing $545 million Shipyards/ $163 million Yacht/ boat sales $150 million Freight/ shipping $109 million Total: Passenger services million $1.2 Billion $83 Construction $50 million Marinas $32 million All other $59 million Summary of Business Impacts Impacts Total annual gross revenues connected to the Locks $1.2 billion Direct locks-dependent annual payroll $120 million Total: Direct locks-dependent jobs $1.2 Billion3,000 Locks-dependent annual federal tax revenues $15 million Impacts of Locks Closure/Failure Service disruption Short, scheduled closures mostly manageable Long closures would lead to significant layoffs and business closures Timing of closure is a major factor in scale of impacts. Likely causes of extended closure Vessel collision involving miter gates Mechanical failure of multiple filling culvert valves Flood overpowering/damaging miter gates Earthquake USACE risk assessment team is studying this issue; report anticipated in fall 2017 A long-term closure would be astronomical for usContracts would be lost. All of the shipyards would shut down. We would have to lay off workers. The Locks are critical for marine firefighting and emergency response. Tug andBarge Company Without the Locks, it would significantly impact marine operations for firefighting. A three-month closure would mean laying off half of our workforce. Any Seattle Fire Department longer, we would go out of business. Shipyard Owner Honestly, we could not afford a three-month closure. I don't think it Quite frankly, if we didn't have the would be viable. We are providing a facility inside the Locks, there are not critical interstate transportation many options to do business in the service that would no longer exist. Seattle area. Tug and Barge Company ConstructionCompany Economic Impact of the Hiram M. Chittenden Locks August 12, 2016 Lake Washington Ship Canal Users Group Prepared for: Port of Seattle
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