Cascadia Report

Category: Business

  • Trade agreement sparks new questions

    Now that a trade agreement with the U.S. is in place, Canada’s lumber producers face a perplexing question: what to do with too much money?

    The agreeement calls for the return of billions of dollars in duties on imported Canadian lumber that the U.S. collected since 2002. Canfor, West Fraser and Interfor are in line to receive about C$550 million, C$285 million and C$70 million, respectively. Some companies reportedly haven’t decided whether the money should fund expansion into the U.S., special dividends, or just paying down debt

    The fact that there’s a question of what to do with the windfall, which could shore up otherwise troubled companies operating in a depressed market for lumber, is another sign of how distorted the trade agreement is.

  • Sale of Seattle biotech a loss for region

    The sale of Seattle-area biotechnology firm Icos will likely result in the loss of many jobs. The question is whether the region will gain from the sale.

    In the last five years, the leading firms in Seattle’s biotech field have been swallowed by rivals, leaving just one such firm with a market worth of more than $1 billion. “If Icos had made it, it would have made us a center for the industry,” Charles Hill, a University of Washington business professor and former Icos shareholder, told the Seattle Times. “It’s a huge loss for the region, and a huge missed opportunity.”

    The current CEO of Icos said the $2.1 billion that Ely Lilly is paying for the smaller company is proof of its success. The fact that Icos, a startup in 1990, could be sold for that price proves that the region is a fertile place for biotech investments and should encourage more startups, he said.

    It will be interesting to see if professionals from Icos, which employs 700, take their paychecks and start new businesses in the region.

  • Traffic shifting away from Seattle’s port

    The number of containers passing through the Port of Seattle dropped again in September as traffic continued shifting to California and to other Cascadia ports.

    Last month Seattle traffic dropped 7.6 percent, the seventh monthly drop so far this year. Port officials blame the decline on the draw of the large southern California market and say that cruise ships and other business will help Seattle weather the downturn.

    The numbers underscore the need for investment in efficient infrastructure in order to hold onto trade-related business. Vancouver’s port has continued to grow by investing in better on-shore transportation links, and Tacoma is poised to become the largest Puget Sound port this year. Seattle reportedly has the capacity to double its traffic to 4 million 20-foot containers a year by 2013, and Tacoma — which has more space — says it will be able to handle 6 million by 2025.

  • Why Washington property measure isn’t ‘only fair’

    Campaign signs are popping up across Washington saying “I-933, It’s Only Fair.” But that’s not the impression a spokesman for the measure left at a recent Seattle forum.

    Initiative backer Steve Hammond, a former King County Council member, confirmed the issue is about fighting government. Speaking at an election forum last week in the Eastlake neighborhood, he said the measure would prevent the sort of oppression he felt a few years ago when the county passed restrictions on rural development.

    washington sprawlApparently rural landowners need a blunt instrument like a statewide initiative because they don’t have the numbers to change the state’s leadership.

    “Why not just vote for new representation? Because you need representation that represents you,” he said, noting that during the council’s vote he was the only of 13 council members who was personally affected by the land-use rules. “If they vote (on issues) outside urban growth boundaries, they need to live outside urban areas.”

    According to the voter’s guide, Initiative 933 would require government to compensate property owners when “regulation damages the use or value of private property.” Hammond agreed that the government wouldn’t have the funds to compensate landowners. Instead it “would be forced to act differently,” he said. Such a rule would turn back the clock on community planning, essentially giving rural property owners the right to dictate development of the state’s open land.

    Indeed Hammond explained that small landowners currently bear most of the cost of the state’s land-use rules. He told Eastlake residents who worry about gutted development laws that their urban neighborhood would be mostly unaffected. In other words, voters should let rural property owners do whatever they want with the land, regardless of the consequences.

    It’s true that policy needs to be fair, consistent and not hurt the little guy. That’s a good reason to reopen debate in the legislature about land-use laws — but not to support I-933.

  • Picks from Sunday’s papers

    1. A Seattle Times poll found that 51 percent of Seattleites want to rebuild the waterfront viaduct freeway. One-quarter each wanted a tunnel, a surface-street option or hadn’t decided. Unfortunately the poll simply confirms the obvious because cost was apparently the main factor presented to the 400 people who were questioned. An efficient surface-street and transit package would win support if people were told of the construction hassles and massive size of a proposed new aerial viaduct.

    2. The strength of British Columbia’s economic boom may depend on what the Canadian central bank does with interest rates. The Bank of Canada is expected to leave rates unchanged at 4.25 percent on Tuesday but could indicate plans to cut them in the future. Central Canada’s economy is on the ropes, thanks partly to the slumping auto industry. Could a sign of lower rates to help the rest of the country overheat B.C. and Alberta?

    3. Polls suggest that Republicans may take the governorship in Oregon, a trend bolstered by a pair of profiles in The Oregonian. Democratic Gov. Ted Kulongoski, who won in 2002 by 3 percentage points, comes off as a technocrat who doesn’t have much to show for his four years in office. Republican Ron Saxton, a Portland school board leader, says a governor needs to take on teachers’ unions in order to improve education. Saxton has raised more money to fund his TV ad campaign and could benefit from voter frustration.

    4. Seattle-area rental costs are soaring — a subject Cascadia Report has experienced first-hand. Some neighborhoods have a vacancy rate of less than 1 percent, according to a real estate survey. Rents rose 7 percent in the last year and are expected to climb another 4 percent this year. Blame job growth, a slowing market for new homes and condo conversions for the trend.

  • Maybe Seattle’s policy isn’t so liberal after all

    Seattle’s political leaders rage against President Bush and the support liberal events. But their way of governing, which effectively delivers spoils to their buddies and corporations, isn’t liberalism.

    So says Ted Van Dyk in the Seattle Post-Intelligencer. He decries the big-government land grabs by local transit agencies, massive subsidies to companies like Boeing and perennial blackmail in order to raise taxes.

    “No city, even our Emerald City, can govern itself this way without in time becoming New Orleans or Jersey City,” he writes. “Grandiose public works projects go hand in hand with payoffs and public corruption.”

    He’s mostly right. The area needs activists who are willing to question the status quo way of doing business. For example, someone needs to hold the Port of Seattle accountable for financial misses, mismanagement and waning competitiveness.

    But Van Dyk misses a key point. Cascadia and the Seattle area need to invest in better infrastructure in order to cope with growth, and that means steppingon some toes. The region also needs a tax structure that encourages companies to expand here and makes it easier for start-ups to fluourish. The key is picking competent representatives who will do this in the most efficient way.

  • Vancouver gets major building boost

    Canada’s prime minister committed C$321 million to a series of transportation projects in the Vancouver area, aiming to make British Columbia the crossroads of choice for trade between Asia and North America.

    The investment underscores the importance of smarter development in the Puget Sound region. Current projects, such as a regional mobility plan and Seattle’s freight mobility program, may not be enough to benefit from surging growth in and through Cascadia.

    The Canadian funding is part of C$591 million already pledged for the Asia-Pacific Gateway project, which aims to complement projects at the Vancouver port and to prepare for the 2010 Olympics. Among the first steps are a highway link to the Deltaport container facility, a new South Fraser perimeter highway and a series of road and rail overpasses.

    Other investment will go to improving border shipments and to developing the port in Prince Rupert. It’s unclear how much of the money — if any — would go to improving passenger rail service between Vancouver and the international border, which is currently the main choke point for improved service to Seattle.

  • Waterfront business worries and a sensible fix

    Businesses along Seattle’s waterfront say they would be devastated by construction of a tunnel to replace the dangerous viaduct. Luckily there’s growing support for a less-disruptive option than a costly tunnel.

    Businesses of the Seattle Historic Waterfront Association say the loss of parking, removal of sidewalks and visual clutter during construction of a cut-and-cover tunnel would cut their sales by 85 to 90 percent. They want to up to one-third of the total cost of the project devoted to mitigation.

    Their protest lends support to another option that would replace the viaduct sooner with extensive improvements to roads and transit. Here’s an excellent summary of the opportunity Seattle has to get this project right.

  • Ex-governors try to stop land-use initiative

    Washington Governor Chris Gregoire and six of her Democratic and Republican predecessors came out against I-933, the so-called property rights initiative on next month’s ballot.

    Their logic wasn’t new: the measure, which requires government to compensate landowners for restricting development, would cost too much and tie up land-use planning in the courts.

    Yet bipartisan opposition may not halt the measure. Four living and former Oregon governors opposed a similar measure in that state in 2004 but it passed with 61 percent of the vote. In 2002, a Washington roads and transit package, referendum 51, was soundly rejected despite bipartisan support from politicians, labor and business.

    Proponents of I-933, of course, couched the latest measure as a way for citizens to restrain an unruly government. “It’s political, and government officials are opposed to an initiative that will hold government officials and politicians accountable,” Dan Wood, a spokesman for the initiative and the Washington Farm Bureau, which backs the measure, is quoted as saying.

  • Alaska Airlines could be in play

    Alaska Airlines could be a merger partner for a larger airline, according to a report over the weekend.

    Cascadia’s dominant airline has long been considered a takeover candidate because of its route network and relatively low operating costs. There’s no evidence that such a combination is imminent, but the latest report comes amid continued financial strain and poor operating performance by the Seattle-based carrier.

    Last week the federal government said Alaska’s on-time performance deteriorated, with only 68.5 percent of its flights arriving within 15 minutes of schedule during August. Many late flights experience long delays; the Seattle-to-Burbank flight was late 87 percent of the time during the month, with an average delay of 55 minutes.

    Alaska also announced that it would quit providing snack sandwiches on longer flights and instead sell food for $5. Other changes include switching to lighter beverage carts that would save jet fuel. The moves would reportedly save several million dollars a year.