Inner BG

LTTE: Concerned about Whatcom County’s actions adding to economic uncertainty

My Ferndale News | June 25, 2020

It is impossible to overstate the degree of uncertainty that defines today’s economic landscape. An economy that was booming mere months ago has been brought to its knees, with more than 30 million Americans unemployed and the path forward still opaque at best.

It may be some time before we are able to project what the future may hold for the economy here in our own backyard, let alone across the nation. But we can say one thing with absolute certainty today: in a market like this, every single job counts. And it is imperative that we do all we can to protect and preserve the jobs that can sustain our community both during this crisis and during calmer times to come.

We can’t control market conditions. We can – and must – control the policy landscape our community creates for the employers who provide thousands of jobs across Whatcom County.

Unfortunately, the actions taken by the Whatcom County Council, currently in the midst of the most aggressive rewrite of the county’s zoning ordinances in decades, are only adding to the uncertainty already facing our economy.

The changes being pursued in Whatcom County would make it exceedingly difficult for existing businesses at Cherry Point to remain competitive, or for new enterprises to invest and grow in our community. The changes are being pursued, evidently, in the name of environmental stewardship. But even long before the pandemic began to take its toll on the market, the uncertainty and anti-business landscape driven by the Council’s actions were having a direct negative impact on the outlook here in Whatcom County.

First, it was the Green Apple Renewable Fuels Facility. Back in January, Phillips 66 and Renewable Energy Group announced that they were abandoning the permitting process that they had been navigating since announcing the project 2018. The two companies had hoped to build a massive, 250 million gallon-per-year renewable diesel facility within the existing Phillips 66 refinery. The project would have been a boon for Whatcom County, creating jobs, generating revenue, and even (ironically enough) contributing to the sustainability of operations at Cherry Point by bringing renewable fuels to the market.

Unfortunately, according to Phillips 66 and Renewable Energy Group, permitting delays and uncertainties derailed the project. Despite the clear benefits of the project, the County dragged its feet on advancing the process and requested a lengthy and costly environmental impact statement. It was enough to make the costs too high and the path forward too uncertain.

The County Executive expressed shock and disappointment at the loss of the “much needed” project. Unfortunately, it wouldn’t be the last such shock suffered by Whatcom County in the first part of 2020.

Last month, Alcoa announced that it would be curtailing production at its Intalco Works smelter in Whatcom County. In operation since 1966, the smelter employed 700 workers. And despite ongoing efforts to improve the facility in recent years, management announced in a press release that the site was no longer competitive given declining market conditions.

Economic analysts expect the loss of the facility to cost the community around 1,400 jobs when all is said and done – another devastating blow at a time when every job counts.

The closure of Intalco is a tragedy that will have a negative far reaching impacts in our County. As being formerly employed at Intalco for just over 10 years, I know many of those people and their families. Today, I work at Petrogas, also located at Cherry Point. We must have business regulations that are more effective in supporting existing employers in Whatcom County and encourages new employers to locate here.

The regulatory changes proposed by the Whatcom County Council for Cherry Point have always had questionable positive value for public safety and the environment, but amid the upheaval of the last few months, the negative impacts to our economy far outweigh the highly uncertain value of the County Council’s proposed changes.

The path forward for all businesses is fraught with uncertainty. Unfortunately, we have only seen the beginning of the economic damage done by COVID 19. There will be many businesses tethering on the edge to stay open. Our leaders must do everything they can to implement policies and regulations to prevent business closures and layoffs.

Right now, the Whatcom County Council’s actions are amplifying uncertainty for companies doing their all to continue to create jobs, revenue, and opportunity in our community.

This can’t continue. Today and for the foreseeable future, officials must focus on stability and certainty – not environmental showmanship. The stakes are too high and the potential costs of such actions are too great.

Whatcom County is a great place to live and work. Let’s do all we can to keep it that way.

Gatlin McConnell
Lynden

Coalition Members chat with Dick Donahue about Cherry Point

Whatcom Coalition for Economic Growth members Trevor Smith and John Huntley took to the airwaves to chat with Dick Donahue on KGMI 790 News about proposed regulations by the Whatcom County Council aimed at limiting business activity at Cherry Point.

Trevor Smith represents the Laborers International Union and has lived in Whatcom since 1984, and John Huntley is the owner of Mills Electric and was born and raised here. During the interview both Smith and Huntley discussed just how serious these regulations could be for the regional economy.

Listen to the full interview from KGMI here or review some notable quotes from Trevor Smith and John Huntley’s interview below:

John Huntley, President and CEO, Mills Electric

  • … we are definitely living with a great deal of uncertainty that is really out of our control … need our elected leaders to work more diligently than ever before to create certainty … at Cherry Point and for the people of Whatcom County. The Cherry Point amendments will not only affect the refineries but will affect people and families and how they are supported.”
  • “Our company now…is down 60% with the uncertainty of what is going on [because of the pandemic]. …the uncertainty of what is going on with the County Council just doubles that effect.”
  • “…we need an open and transparent and good faith process to continue and let these refineries do what they do best.”
  • “…The [Whatcom County Exec. Satpal Sidhu] is a lot more open than I had ever dreamed he would be…if we work together the way the Planning Commission has been working with industry …. I think we can all come up with a plan that will work for everyone.
  • “One example is that we had the opportunity to have a great project go out at Phillips 66, a billion dollar project that could be going on right now… with the uncertainty of our County Council and our permitting process … that project went away ….at the same time they were trying to do it here they were doing it on the east coast…the exact same unit. That is now being built with the permits in hand.”
  • “There is no doubt that industry is looking at what is going on in Whatcom County… they are not coming this way because they are not wanted which is pretty sad.”
  • “With Alco leaving, and with industry not coming in that can pay a good salary, it is just really uncertain what is going to go on in Whatcom County.”
  • “What we really need now is full transparency. We need to work together to get our companies at Cherry Point working with the County Council…”
  • “…if we work together the way the Planning Commission has been working with industry …. I think we can all come up with a plan that will work for everyone.”

Trevor Smith, Business Agent, Laborers Local 292

  • “…when we go to restart the economy the refineries are going to have to go to their parent companies to get funding for projects inside their gates, then they are going to go back to this uncertain permitting process … and it is going to be hard to move forward…”
  • “The tragedy… of having Intalco shutdown is that it is a prime example of where are we going to find those living wage jobs ….The reality is that 700 hundred families are going to have to find new ways to support themselves … and they are probably most likely going to have to go outside the county to find living wage employment.”
  • “There is a …. happy medium here where we can make this all work and get the energy and the fuels we need to support daily life and move our economy forward as well as do it cleanly and safely …. that means we need a stable regulatory process.”
  • “…let’s make it [permitting] a transparent process… be upfront about it so the companies know what they are getting into…and then they can move forward with their projects. As opposed to creating uncertainty by having a process that just says, just go ahead and build something and we will let you know what you need to do to get it done.”

ACTION ALERT: Tell the County Council You Oppose the 9th Consecutive Cherry Point Moratorium

Dear Coalition Members:

We need your help. The Whatcom County Council recently voted to introduce its ninth consecutive, six-month Cherry Point Fossil Fuel Moratorium.

Whatcom Councilmember Kathy Kershner, who voted against introduction of the ninth Cherry Point fossil fuel moratorium, said during debate that “… the ban is bad for business, particularly as the local economy is reeling from the new coronavirus pandemic, the loss of a proposed biofuel plant and the recent announcement that the Alcoa Intalco Works aluminum smelter will close soon.

The Whatcom County Council will vote on the Cherry Point moratorium on Tuesday, June 2nd at its 6:00 p.m. virtual Council meeting. Please see the links below for more details on how to join the zoom Council meeting, register to testify, and submit public comment. Also please see emails below to submit written comment.

In the meantime, we hope you and your families are well and healthy. Stay safe.

Public Hearing Notice
(Virtual Public Hearing)

Tuesday, June 2nd 6:00pm

http://www.whatcomcounty.us/3415/Virtual-Council-Public-Hearings

http://www.co.whatcom.wa.us/DocumentCenter/View/29107/Public-Notices?bidId=

Zoom Instructions:

http://www.whatcomcounty.us/DocumentCenter/View/47537/Instructions-for-Joining-Virtual-Council-Public-Hearing-WEB-OR-MOBILE-APP

Email Addresses for comment:

Whatcom County Executive: [email protected]

Whatcom County Council:

[email protected] – General

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

Calloway: Cherry Point plan is risky for Whatcom County and our region

This week, Lance Calloway, Northern District Manager, with the Associated General Contractors of Washington, authored the below commentary in AGC of Washington’s newsletter:

Cherry Point plan is risky for Whatcom County and our region  

Nothing is more important to the overall well being of a community than access to economic opportunity. For Whatcom County, there is perhaps no more crucial engine for that opportunity than Cherry Point and the businesses that call it home. This now more important than ever as we recover from the COVID 19 crisis.

The recent announcement that the Intalco Aluminum Smelter is closing costing 700 jobs is a harsh reminder we need a regulatory environment that helps large industrial employers compete but also that we need to work with our elected officials to create a regulatory environment that sends a strong message encouraging innovative forward thinking industrial employers to Whatcom County and the region.

We need to work closely with our elected leaders to create a regulatory scheme that has the proper protections for the public, workers and environment but also actively encourages existing businesses to thrive and attracts future employers to industrially zoned areas like Cherry Point.

More than 10,000 people look to Cherry Point businesses to support their families with good-paying jobs and benefits. The companies based in the industrial zone pay $200 million in taxes each year – vital funds that keep our most important public services functioning. And employees and organizations alike give back to the region via thousands of hours of voluntarism and more than $1 million in philanthropic giving.

As we address damage done to our economy by the COVID 19 crisis we must work together across the political and ideological spectrum – to help our economy evolve to a future embracing green industries. We cannot, however, afford to lose sight of the role that’s played by the companies currently located at Cherry Point. They play a critical role restoring the family wage jobs that have been lost due to the pandemic.

Whatcom County has a significant number of contractors and other companies who directly and indirectly depend on the Cherry Point businesses to be able to provide their employees their livelihood. For example, the contractors work keeps the refineries at Cherry Point running safely while also continually improving and reducing emissions impacting our environment. There are approximately 700-750 construction workers who call the Cherry Point refineries their permanent office, as they have long term maintenance contracts enabling them to earn a great living wage.  During the major maintenance turnarounds there can be as many as an additional 3000-3500 construction workers who work two to three months on major projects, with a substantial percentage living in Whatcom County.

Unfortunately, for the last four years prior to COVID 19 the Whatcom County Council has attempted to push through a new onerous regulatory framework for Cherry Point. These changes had questionable value to the public, workers and the environment prior to the pandemic and make even less sense in a the post COVID 19 economy. These changes if enacted would likely cost us jobs, tax revenue, and investment in all sectors – including renewable energy. The Whatcom County Planning Commission in it review has also pointed out many flaws that would harm the refineries at Cherry Point.

Also right before COVID 19 crisis a renewable diesel project in Whatcom County was abruptly cancelled, and one has to wonder what – if any effect – the uncertain regulatory environment at both the state and local levels had on the decision to cancel the project. The cancellation of the nearly ONE-BILLION dollar project eliminated the opportunity for an estimated 650-700 construction workers to build an environmentally friendly project over a period of two years. In talking with a local contractor, this cancellation cost them and two other contractors nearly $500 Million.

Again, if we had concerns about the proposed changes to Cherry Point regulations before now those concerns are magnified many times over.

It’s clear that the new plan would devastate refineries. The added review requirements would make it next to impossible for these facilities to invest in modernization or expansion, making it more difficult for these otherwise state-of-the-art facilities to keep pace with competition outside our area.

Also, from an environmental standpoint, since renewable energy companies at Cherry Point will also have to reckon with the same impediments to investment that traditional refiners will. On the whole, this misguided regulatory move will increase emissions rather than improving the environment.

The impacts of this proposal reach beyond the energy sector, and beyond Cherry Point at large. In considering these changes, Whatcom County officials are sending a clear and unwelcoming message to any and all companies that might otherwise look to invest in Whatcom or Washington state generally. Growing a business requires a measure of policy certainty and stability. The Whatcom County Council’s proposed changes for Cherry Point undermines that stability by making it harder to invest and expand.

Whatcom County is very fortunate to have Cherry Point to attract the family wage jobs we have recently lost. If this Whatcom County Councils continues with its proposal, the foundations of our regional economy are at risk. It is this uncertainty that concerns our business community as investors will look outside of Whatcom County to build the next production facility or plant bringing with it a trickle down impact on housing and other local businesses and schools depending on Cherry Point.

We are dealing with too much economic uncertainty we cannot control; we must increase certainty where we can. A positive regulatory scheme so businesses can thrive in our new normal is a great place to start.

Lance Calloway
Northern District Manager
Associated General Contractors of Washington

Hepner: A cautionary tale unfolds in Whatcom County

Puget Sound Business Journal | March 17, 2020

In Northwest Washington the Cherry Point Industrial Zone is the epicenter of Whatcom County’s economy.

Cherry Point and Whatcom County is a cautionary tale we should all be aware of as local governments engage on energy issues and the use of our industrial lands.

Companies at Cherry Point in Whatcom County support more than 3,000 direct jobs — family-wage jobs that pay an average of $110,000 a year. Around 11 percent of all Whatcom County jobs depend on the operations at Cherry Point Industrial Zone. Cherry Point companies generate around $240 million in local tax revenue every year.

Matthew Hepner is the executive director of the Certified Electrical Workers of Washington.

Families in Whatcom County look to Cherry Point to earn a good living that helps them support their families, put down roots and be part of the community. The economic strength and stability provided by Cherry Point is something to support and cultivate. And in a favorable business and investment environment, the opportunities at Cherry Point can and should continue to grow well into the future.

Unfortunately, changes under consideration by the Whatcom County Council threaten not just to undermine future growth, but to endanger the existing jobs, revenue and output that Cherry Point provides.

The proposed changes by the Whatcom County Council governing expansion, investment and operations at Cherry Point are currently being pushed through the county council. And while thoughtful, periodic review of the policies under which Cherry Point industry operates is worthwhile, both the process and the substance surrounding these proposed changes are poised to inflict harm across Whatcom County and the region.

The root of the problem is the increased use of “Conditional Use Permits” in the revised plan. In a break with the well-established and effective regulatory framework currently in place, the new plan would require Cherry Point refineries to hold off on potential facility expansion and upgrades to wait on deliberation and judicial action and approval.

This is a major break from the permitting processes that typically govern such facilities — and it represents a huge disincentive for companies looking to expand in Whatcom County. The proposed revisions pose an uncertainty in both timing and approval prospects. Consequently, the proposed new regulations will make investment in Whatcom a much harder sell and have a regional ripple effect in the development of such projects.

This concept is inherently flawed and self-defeating. No governing body truly representing its constituency should set out to eliminate good-paying jobs and hundreds of millions in tax revenue.

The technical aspects of the changes are also confusing and complex. The language of the changes uses subjective criteria to determine approval or denial that is far from clear. This is a major problem, and a strong argument in favor of taking more time to understand the full impact of these changes before taking action.

The Whatcom County Planning Commission in its review of the county council’s proposed changes has listened to industry and made a good faith effort to rework the council’s proposed changes. As a result of the Planning Commission review, it’s become apparent that the county council is attempting to re-regulate very complex issues within an industry they don’t understand.

If enacted as written, the proposed changes will significantly erode the business climate in Whatcom County and the region. In seeking to replace a well-functioning, existing framework with an ill-conceived and flawed plan, the county council is sending a bad message to both businesses and would-be investors.

If a business can’t bank on regulatory stability and certainty in a community, they are far less likely to place their bets there.


Matthew Hepner is the executive director of the Certified Electrical Workers of Washington — IBEW.

My Ferndale News: County Council’s Cherry Point Plan is Killing Growth in Whatcom County

Andrew Gamble, a Marine and Safety Operations Advisor to Petrogas as well an Energy Industry Representative on the Whatcom County Business and Commerce Advisory Committee, recently wrote an op-ed for My Ferndale News speaking out against the County Council’s proposed changes for Cherry Point and the devastating impact they’d have on the county.

The changes “would be among the most radical and sweeping regulatory revisions in decades,” Gamble wrote in the piece. “And while the Council may seek to portray their efforts as narrowly targeted and impacting only the refineries at Cherry Point, the fact of the matter is that this proposal’s impact would be felt far beyond one critical sector.”

Gamble also discusses the air of uncertainty for business investment in Whatcom created by their proposed changes and the eight times Council has passed interim moratoriums on new fossil fuel projects at Cherry Point in the last two years.

“My experience working for operators at Cherry Point who have made substantial investments in this community, has taught me that an uncertain regulatory environment causes unintended ripple effects with negative impacts. Take for example, the recent cancellation of a huge renewable diesel project at Cherry Point that, while maybe not a direct result of the proposed Cherry Point amendments, they absolutely add to the general regulatory uncertainty that has permeated Whatcom County over the last few years,” Gamble wrote.

Added Gamble, “The new plan will make it next to impossible for these companies – which employ thousands – to keep up with their competitors outside Whatcom County who don’t have to bear the burden of such radical requirements.

Cherry Point operators would have no reasonable expectation to receive permit approvals of permit applications even for improved environmental technologies that could make operations more efficient or competitively sustainable, and therefore there will be no future investments that lead to more jobs and higher tax revenues.

And against this backdrop, the notion of any new energy companies throwing their hat in Whatcom County’s ring is laughable. The new regulations would also apply to the renewable energy operations present at Cherry Point. They, too, would face rising costs, restricted investment, and non-existent growth and expansion if the revised plan moves forward. Hardly the most effective way to transition to a cleaner energy future.”

Click HERE to read the entire op-ed in My Ferndale News.

Not All Employers are Created Equal

When discussing job creation, it is clear that some jobs are far more beneficial to the general welfare than others.

That’s the hard-nosed economic conclusion of the independent 2019 Cherry Point Economic Impact Study conducted by Western Washington University’s Center for Economic and Business Research. This research updated the 2014 study previously conducted by Western Washington University and the University of Washington.

Commissioned by the Whatcom Business Alliance and released on March 19, 2019 at a WBA breakfast encouraging fact-based public dialogue on community economic policies, especially those affecting the Cherry Point heavy industrial zone in Whatcom County.

Commissioned by the Whatcom Business Alliance, the study focuses on the economic impacts of 8 companies operating within the Cherry Point zone, which includes the Phillips 66 and BP oil refineries, Alcoa’s Intalco Works aluminum smelter, and several smaller companies, and will serve as a useful reference for other communities examining the merits of heavy industry on their economy. While there are over 7,000 employers in Whatcom County, those 8 Cherry Point businesses and their at least 3,320 employees have a disproportionate affect on the County’s economy, because of the significant “multiplier effects” of business purchases and the spending of high-wage employees.

  • The median home price in Whatcom County was $345,900 in 2017 and has increased since then, while the annual household income required to afford that home is $51,575.
  • The businesses in Cherry Point paid more than $370 million in state and local taxes and $15 million in property taxes of the overall property taxes in the County, 11% of property taxes for County Road Fund, 15% of the Ferndale Schools, and 21% of the Blaine Schools.  The large tax contributions of these industries effectively reduce taxes for everyone else.
  • The businesses in the region donated more than $1 million to local charitable organizations in 2018. This, at a time when local non-profits are in need of support in order to serve the growing poverty rates.
  • Jobs within the Cherry Point zone represent 3.75% of the County’s employment, but support (directly or indirectly) 11.2% of the overall jobs in the County and 17% of all wages.
  • Cherry Point industrial area jobs pay an average of $110,690 per year, 243% more than the average County wage of $45,491.

You can download and read the full study here.