Creating a visionary future for Terminal 46 and Seattle's southern downtown

"Condos vs. containers." "Jobs vs. condos." "Blue-collar workers who drive our economy to be replaced by latte sippers talking on their cellphones!"

Great headlines maybe, but they hardly address the true issues surrounding the future of Seattle's waterfront.

The issue we are raising is whether Terminal 46 — that vast, 88-acre cargo terminal west of Pioneer Square — should ever be converted to a higher-density use.

We call our plan "Vision 46." And the accurate characterization would be "jobs and condos." Plus, work-force housing and sustainable office spaces; hotels, restaurants and parks; and cruise ships, coffee houses, galleries and a trade conservatory.

And, most important, more jobs, more tax revenue and more public access to Elliott Bay.

The current jobs of longshoremen and others at Terminal 46 would not be lost or even replaced by Vision 46, so let's get past the hyperbole.

These jobs could be relocated tomorrow to more efficient and accessible locations on Harbor Island, the east shore of West Seattle, or just south of their current location. The Port of Seattle, which so far has opposed our plan, has more than enough capacity at either Terminal 5 or 18 for all the cargo activity that is now — or ever could be — at Terminal 46.

And thousands of additional blue-collar jobs would be created by the decades of redevelopment activity on Terminal 46.

So it's not jobs vs. condos. It's about planning the future that we want as a region.

I'm part of a group of South Downtown property owners who two years ago started a dialogue on a broad "South Downtown Vision." Among the questions we addressed was how to turn the 88 publicly owned acres of core downtown waterfront into a higher use that contributes more to our regional economy, while still keeping the cargo activity and related jobs in Seattle.

We used our own private funds to hire architects to showcase our ideas. We set aside our normally fierce competitive natures to focus on what is best for the community, united in our view that enormous potential was being overlooked.

Our vision is of higher-density-use areas around the football and baseball stadiums, Pioneer Square, Chinatown/International District and Terminal 46. It's exactly what the state Growth Management Act requires, and the city's urban village and comprehensive plans envision. Vision 46 is but one element of that broader outlook and deals specifically with Terminal 46.

We presented the overall concept to dozens of groups, including employers, employees, neighborhood associations, elected officials and city staff during the past year and a half. The reaction was overwhelmingly positive.

However, the process faced two difficulties.

The first came when longshoremen were asked by the media if they were willing to give up their jobs to make way for condos.

The other difficulty involved the Port of Seattle's lease of Terminal 46 to the cargo shipping firm Hanjin. That lease goes to 2010, with Hanjin holding an option to renew until 2015. No landlord (including the Port) wants to upset a tenant with talk about possibly asking it to move when the lease runs out.

However, if we are to conduct a public dialogue about our downtown waterfront to coordinate with the Alaskan Way Viaduct project and in time to harvest the benefits by 2015, we have to do it now.

The latest rallying cry by critics is that the Port is spending $71 million for Terminal 46 upgrades for Hanjin. Since when is honoring the terms of a lease agreement a reason to stop dialogue?

Another recent cry is that Terminal 46 is a rare deep-water berth that shouldn't be wasted on condominium development. I respond that cruise ships need deep water, too.

The Port recently issued an economic impact study on Terminal 46. Here are some findings from the study and recent Port press releases.

If Terminal 46 operated at full capacity of 4.5 sailings per week — rather than its current 3 per week — the Port estimates that Hanjin creates 1,366 jobs in total. The Port estimates these jobs create $73.4 million in annual income that flows through the economy, generating $23.4 million in tax revenue.

Yet, the Seattle Industry Magazine has said the Port spends $20 million yearly to subsidize Terminal 46 operations.

Also, the Port has spent more than $600 million in recent years to modernize Terminals 5 and 18. These terminals have numerous advantages over Terminal 46 — such as onsite railroad access.

Currently, containers are required to be moved off Terminal 46 on trucks to another nearby facility to be loaded onto railroad cars. This inefficient and expensive operation negatively impacts the industrial area and traffic flow, as well as increasing costs to Hanjin.

Terminals 5 and 18 can accommodate more than 3 million containers each year — yet less than 1.5 million containers went through the entire Port last year!

Even with huge investment in facility upgrades, our terminals currently handle only about 3,000 containers per acre. By comparison, Hong Kong handles 20,000 containers per acre. Would it make more sense to consolidate container operations, creating better efficiencies to lower costs?

Given the current state of the global marketplace, no shipping expert we contacted believes the world's 45th largest port would double its container capacity in the next few decades. An independent industry forecast suggests the Port's container traffic will grow at a 2.6 percent rate during the next decade, resulting in 1.8 million containers flowing through the Port in 2014. It would take 30 years before 3 million containers flow through the Port.

Other industry experts state that these estimates are even too high because of the large structural impediments facing the Port when compared with other West Coast mega-ports. The recent surge in container traffic is due to massive imports from China, which cannot be sustained without damage to our economy, and current inefficiencies in California ports. Let's not be fooled into thinking the Port's container troubles are in the past.

While the Port has an enviable deep-water facility, the transportation system serving these facilities, both road and rail, are inadequate and expensive to improve.

Moreover, the West Coast mega-ports are ramping up. The 7,500-acre Port of Los Angeles/Long Beach recently invested $2.4 billion in the Alameda rail corridor, and over $1 billion more in structural improvements. It has hundreds of additional acres available for low-cost new terminal development. Tacoma and Vancouver, B.C., have similarly lower-priced land, better transportation options and more efficient layouts.

The Port of Seattle's ability to attract additional major shipping lines with vacant, low-priced land or lower operating costs and/or increased productivity is limited by comparison.

What Seattle lacks in these areas, however, is offset by what most other ports lack — natural beauty and adjacency to downtown.

The Port of Seattle recognizes this fact. Thus, it competes well in the lucrative cruise-ship business. The Port estimates that cruise ships will pump $208 million into the local economy this year, providing $59 million in local payroll. We believe the Port should do more to capitalize on this business and not dump passengers deep in the industrial area in a temporary warehouse.

How does Vision 46 compare?

One recent survey estimates only 1 of 8 workers in downtown Seattle lives in Seattle. Our vision includes the creation of thousands of work-force housing units in South Downtown so these workers can move into the city, closer to their jobs (reducing transportation demands).

An independent study of our proposal by Paul Sommers, an economist at Seattle University's Albers School of Business, projects that Vision 46 could create directly more than 8,800 permanent jobs. Those jobs could generate an annual payroll of $516 million. That's seven times the number from current Terminal 46 operations.

Redevelopment as a result of Vision 46 would peak at about 5,400 blue-collar construction jobs, generating an annual payroll of $58.5 million.

The project would indirectly create another 25,000 permanent jobs. The more than 33,850 total jobs created by the project would generate $189 million in annual tax revenues and more than $610 million during the construction phase alone. That tax revenue could go a long way toward education, social needs and improving infrastructure (think Alaskan Way Viaduct replacement).

Assuming the Port continues owning the land in trust for the public, annual rent to the Port by developers would exceed $50 million.

Have other port authorities had success with this type of redevelopment? Yes, the Port of San Diego is reaping benefits from this kind of vision.

Competition from the Port of Los Angeles/Long Beach limited cargo traffic in San Diego. Consequently, the Port of San Diego allowed the redevelopment of downtown waterfront into a major convention center, hotels, housing and more. The Port of San Diego receives nearly $8 million in annual revenue from just one hotel alone. That hotel occupies 1 acre out of 2,500 the Port owns. Total economic development activity in 2002 was $3.3 billion from Port property.

Forward thinking like that in San Diego is what we propose with Vision 46.

If Hanjin relocates to Terminals 5 or 18 (or vacant Terminals 23-30), productivity would improve, resulting in lower costs to shippers — with no loss of current jobs.

Keep current jobs. Drive down operating costs for the shipping companies with more efficiency. Increase revenue to Port of Seattle and taxpayers. Eliminate current taxpayer-funded operating subsidies. Provide many times the amount of employment opportunities at Terminal 46, and capitalize on the beauty and revitalization of neighborhoods along the Seattle waterfront.

That's the vision we have for Seattle. Is it up to us, or future generations, to capitalize on this potential?

Benefits of Terminal 46 redevelopment
Comparison	Current Use	Vision 46
Permanent Jobs-Direct	Not Broken Out	8,111
Permanent Jobs-Total	1,366	33,855
Temporary Construction Jobs	Not Applicable	Up to 5,400
Annual Personal Income-Direct	$73,400,000	$516,000,000
Annual Personal Income-Total	$186,658,000	$1,384,800,000
Annual Personal Income-Construction	Not Applicable	$58,500,000
Annual Tax Revenue-Direct	Not Broken Out	$64,000,000
Annual Tax Revenue-Total	$23,400,000	$189,000,000
Annual Leasehold Income	$6,800,000	Over $50,000,000
Source: Paul Sommers

Kevin Daniels is president of Nitze-Stagen & Co., a Seattle commercial real-estate firm that is proposing Vision 46.