The proposed Gateway Pacific Terminal would add hundreds of jobs to the county, but will it hurt some industries? And could it already be slowing the local economy and affecting real estate prices along the railway?
A recent study on the proposed terminal raises those questions. The study, by the PFM Group of Philadelphia, focused on trains and how the local economy would be affected by an increase in coal trains rolling through Whatcom County to Cherry Point, the proposed site a terminal that would export up to 54 million tons of coal and other dry bulk goods.
CommunityWise Bellingham paid $48,000 to have PFM perform the study. This is the third study commissioned by the nonprofit, which formed four years ago to research impacts of the proposed export facility other than those that will be included in the project’s environmental review. The environmental review, called the draft environmental impact statement, won’t be finished until mid-2016.
The study raises more questions than it answers, said David Eichenthal, one of its authors, in a presentation at the Leopold ballroom on June 16.
It presents evidence that Whatcom County has what economists call a “second paycheck” effect — easy access to mountains, forests, bodies of water and other natural amenities provide a second paycheck to residents in the form of a high quality of life.
“People here are willing to do certain things to, in effect, pay for quality of life that exists in Bellingham because of natural amenities,” said Eichenthal, who flew out from Tennessee for the presentation.
Those things include accepting a lower paying job or spending time and money to commute outside of the county for higher paying work. That may change if the coal terminal is built, according to the study.
Central to the research is the fact that job growth and population growth in Bellingham outpaced the state average from 2000 to 2010, even though the cost of living here was above the state average.
“Population and economic growth in Whatcom County and Bellingham has been based in part on the perception of an area with robust natural amenities lending to a myriad of recreational opportunities,” the study says.
Employment in the county grew three times faster than the statewide rate between 2001 to 2010, and 22.7 percent of that growth was in the leisure and hospitality sector and 10 percent was in retail trade – sectors that could be linked to natural amenities and outdoor recreation. Statewide, leisure and hospitality accounted for 7.9 percent of job growth and retail trade made up 10 percent of growth in that time period.
From 2010 to 2013, the trends reversed, and jobs and population growth in Bellingham began to lag behind the state average.
It’s impossible to know why that is, Eichenthal said, but SSA Marine’s 2011 announcement of plans to build a coal export terminal could be a factor. Even if the terminal doesn’t harm or restrict access to natural amenities, damage to Whatcom County’s reputation as an outdoor destination could harm sectors of the economy.
“As the study said, it’s affected by the perception of the Gateway Pacific Terminal just as much as the actual affects of it,” he said. “There could be stigma, justified or not, attached to the increase in rail traffic due to transportation of coal and proximity to a large coal export facility that would make some individuals less likely to move to Whatcom County or more likely to leave.”
Currently, nearly 15 trains a day roll through Whatcom County, the study said. If the export terminal is built, 18 extra trains per day — nine loaded trains headed north, and nine empty trains headed south — could chug along the water.
Gateway Pacific spokesperson Craig Cole said PFM’s study is heavy on speculation but lacking hard facts.
“This is the third time that PFM has been hired to say negative things about the project,” Cole said in an email. “Their work is in the nature of advocacy research and it is not objective.”
Cole didn’t dispute specific numbers or facts in the study, but he questioned the value of the recreation and tourist economy for working families, saying that the terminal would provide decent jobs for people who already live in Whatcom County. The sectors that grew between 2000 and 2010 don’t typically pay well.
The week following the study’s release, a panel of export terminal proponents discussed lagging wages in Whatcom County.
Hart Hodges, an economist with Western Washington University’s College of Economics and Business Research, was on that panel. Hodges questions whether the shift in the local economy in relation to the rest of the state has anything to do with the export terminal.
He said that pattern of rural counties growing slower than the state average since 2010 is playing out in other areas and not unique to Whatcom County.
But the idea that some residents accept a lower paycheck to live in Bellingham seems to hold, he said, and the question of how many people would choose not to live here or visit here is worth asking.
“I think PFM plays the second paycheck card too heavily, but that’s not a big issue for me,” Hodges said in an email. “I think PFM is trying to raise questions and I think their questions are fine.”
Railway real estate values
The PFM study pointed out one economic trend that Hodges said is likely caused by the Gateway Pacific Terminal announcement, or at least the increase in train traffic: From 2011 to 2013, the value of real estate near the railway declined while the value of real estate farther from the tracks increased.
“I don’t know if a facility at Cherry Point means more trains or just a different destination for trains,” Hodges said in an email. “If it means more trains, then I think we can expect more impacts on housing prices for houses in the rail corridor.”
Danne Neill, a Bellingham real estate broker with the Muljat Group, expressed concern for property values along the rail line, as well as new residential and commercial development along Bellingham’s downtown waterfront.
She has clients who are interested in Whatcom County for its “second paycheck,” she said.
“I see a lot of people here who are consultants who have been highly successful. They can go to Seattle or Vancouver and fly to China for work,” Neill said. “They’re here because of the quality of life.”
Estimated number of jobs
The Gateway Pacific Terminal website says terminal construction will create about 4,400 jobs and generate about 1,250 ongoing jobs once complete, including indirect and induced jobs. Those numbers were calculated by Martin Associates of Lancaster, Pennsylvania, using a jobs multiplier that’s higher than what the U.S. Bureau of Economic Analysis uses, according to the PFM study. Martin Associates used various multipliers of about 2.9. The Bureau of Economic Analysis indicates a multiplier as low as 1.8 is appropriate for Whatcom County.
Both numbers could be plausible, Hodges said.
“Different sets of assumptions can be plausible given all the uncertainty at this point in the process. We should be talking about ranges of possible job impacts, not the number we like best,” He said in an email. “Studies of other bulk cargo facilities have lower estimates than what Martin offered for GPT. Moreover, the possibility of automation in different areas of the business invite questions.”
Since the last study commissioned by Gateway Pacific Terminal, the project’s construction schedule changed from two-phases to one. Cole said that won’t change the number of jobs during construction, as it’s still expected to take 8-9 million worker hours to build the terminal.
As Eichenthal said during his presentation, PFM’s study didn’t reach any conclusions, but increased train traffic in the county in the last few years and its effect on the local economy could be a preview of what’s to come if SSA Marine does build an export terminal at Cherry Point.
Oliver Lazenby, associate editor of The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or email@example.com.