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Read an expert economist's comments on the Port's misleading and speculative job creation predictions.
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| Published Comments on Port Economic Impact on 05/18/04 |
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May 18,2004
I have completed my preliminary review of the information that you have provided regarding the potential economic impacts of the proposed West Complex Development Plan. This includes reviewing information regarding potential job generation contained in the DEIR, the Port Development Plan, and the Navy's Environmental Assessment. In addition, I have reviewed various newspaper clippings on port activities as well as Port of Stockton Annual Reports. In summary, based on my review of the materials mentioned above, the information regarding the proposed project's potential benefits in regard to generating jobs to benefit the local community is confusing, misleading, and not supported by any facts or evidence in the EIR or supporting documentation. I have found little information to back-up claims that the project will increase jobs significantly above the current employment levels; I have found scant detail regarding the actual nature of the jobs that would be created (i.e., part-time vs. full-time, descriptions of occupations and skill requirements, availability of qualified local labor force to fill the jobs, wage levels and benefits, etc.). The term "family-wage jobs" is used frequently in the materials describing the proposed project; however, I have found no definition of what a family-wage job would actually entail at this location, nor have I found any information indicating whether such jobs would be available to local residents versus commuters from outside the area. Additionally, it appears that the Port Development Plan is quite speculative in its estimates of the potential demand for the its maritime facilities and for its non-maritime business park facilities, and the Port's ab ility to successfully compete for a share of that demand. This means that any significant economic benefits associated with this proposed project should also be considered speculative until the Port provides further documentation and analysis to verify these claims. Based on the relatively small net increase in net new maritime jobs indicated in both the Navy Environmental Assessment and the Port Development Plan, and based on the distinct possibility that the proposed project's new non-maritime jobs would simply be relocated from other locations within San Joaquin County where there appears to be a very ample supply of land to accommodate new business park tenants, the economic benefits of this project seem relatively small. Moreover, however small the number of net new jobs created at this location may be, commuters rather than Stockton residents will likely fill a large number of those jobs, meaning the benefits of those jobs will not be felt by local residents, but local residents will experience the impacts associated with the jobs, including the environmental effects of the port activities and the increased commuting from outside the city. Of those jobs left for Stockton residents, it is not clear what occupations, wages, and benefits would be offered and whether those jobs would be full- time, part-time, temporary, or permanent. Following are some specific observations regarding official documents released to the public regarding the proposed project. Navy Property Transfer Environmental Assessment, December 1998 The Navy Property Transfer Environmental Assessment (EA) says that Port of Stockton redevelopment would provide approximately 200 new jobs, which would be a net increase. of approximately 80 jobs, which is considered "less than significant" (EA FONSI statement, page 2). Given this finding that the increase in port jobs would be insignificant, it is difficult to see an economic justification for the adverse environmental and social impacts that the proposed project would bring. The EA anticipated that the time for full utilization of the property is 20 years, through 2018 (EA, p. 2-2); however, it is unfortunate that the EA only considered what would happen in first five years of reuse and did not disclose the potential impacts upon the environment and the community from the other three-fourths of the project's build out period. Ultimately, the EA said that the potential reuse is anticipated to bring 1,500 permanent full-time employees plus 300 part-time employees (EA, p. 2-3); however, it appears that it did not analyze the potential impacts of this larger amount of development activity. The EA stated that between 60 and 70 percent of Station employees lived in Stockton and the rest commuted. This was affected by on-site housing provided for some employees. (EA, p. 3-16). This information suggests that if similar commuting patterns prevail as the proposed project is implemented, it can be expected that people living outside of Stockton will fill at least 30 to 40 percent of the net new jobs created. The number of commuters will probably be higher, since the redevelopment plan does not include the provision of the on-site housing for workers. Thus, any purported economic benefits of the proposed project for the local community must be discounted accordingly. The EA says that the Port had 80 to 150 regular employees and tenants employed an average of 650 full-time employees. It also stated that "average" Port salaries "range" from $8.42 to $40-60 per hour (EA, p. 3-17). This type of information is confusing, because in the case of the full-time port employees, it provides such a large range in the number of actual jobs and also, it does not tell us what proportion of the jobs are closer to the low-end of the scale versus the high end of the wage scale. In most organizations, the lower-paid positions make up a disproportionately large share of the overall employment. Port Development Plan, February 2001 The Port Development Plan assumes a growth of 50% in bulk commodities over IO years, plus container traffic and automobiles (page 4.40). Although the Port Development plan does provide some background on general maritime shipping trends, it does not provide an analysis of what factors would drive demand for increased shipments through the Port of Stockton and other competitive ports and what competitive assets the Port of Stockton possesses that other ports do not. It does not explain what factors would enable the Port of Stockton to be successful in capturing the anticipated quantity of new shipping activity. In regard to the non-maritime business park portion of the proposed project, the Port Development Plan provides some current information on real estate market conditions but, again, does not contain an evaluation of the Port's competitive position and its ability to compete for a share of demand relative to other available business park sites. For example, the Port Development Plan lists business parks containing over 7,400 acres of land in San Joaquin County that could accommodate users similar to those targeted for the West Complex (page 4.20). The Port Development Plan seems to suggest that the West Complex's large size is an asset and that this will make the property attractive to users; however, with a median size of 400 acres, the other business parks listed on page 4.20 of the Plan would be able to accommodate users of almost any foreseeable size. Even if the Port is successful in capturing as large a share of countywide demand for business park space as that assumed in the Port Development Plan, it is likely that this would come at the expense of demand that would otherwise be captured by one of the many other existing business parks in the region. Therefore, the net impact on San Joaquin County employment opportunities is likely to be minimal, because the proposed project would simply relocate these jobs to a different location. If this is the case, then it is difficult to see how the increase in jobs at the site of the proposed project could be used as an economic justification for the adverse social and environmental impacts that the proposed project would create at that particular location. The Port Development Plan assumes the proposed project would generate 478 jobs directly in the Port and transportation systems, and 987 jobs statewide. (page 4.41); however, page 4.44 calls into question the validity of the economic model used to estimate output for various functions related to port activity, so these figures must be viewed with caution. For example, referring to differences in the output produced from the economic model software using a prior version model versus the model used for the Port Development Plan study, page 4.44 states, "The dramatic increase (up to four fold) for container transportation costs again makes one question the validity of the model's database." Additionally, page 4.44 contradicts page 4.41 by indicating on Chart 4.32 that by 2015 the Port would generate only 350 jobs, instead of the 478 jobs quoted just three pages earlier in the same document. Finally, these figures appear to mean gross jobs, not net new jobs, as the number of jobs appears to be estimated based on the Port's total anticipated revenues. The document's internal contradictions, apparent reliance on a flawed model of economic impacts, and its failure to provide any backup documentation or support for its assumptions render its conclusions about job creation almost meaningless. West Complex Development Plan DEIR, November 2003 Table 4.13-5 on page 4.13-4 indicates that the overall citywide employment growth for Stockton between 2000 and 2015 is 13,061 jobs. Page 4.13-4 also indicates that hourly wages for freight, stock, and materials handlers ranges from $6.25 to $10.00 per hour. As mentioned previously, publications tout the creation of "family-wage" jobs as one of the proposed project's benefits; however, I have not seen this term defined in the context of jobs associated with the proposed project. In its publication titled Hardships in America, the Economic Policy Institute calculates basic family budgets as the amount of money a family needs in order to pay for a safe and decent standard of living. These family budgets are adjusted based on the number of adults and the number of children. For the Stockton-Lodi area in 1999 the Economic Policy Institute estimated the annual income necessary to provide for basic family budgets as follows: One Parent, One Child $25,727 One Parent, Two Children $31,648 One Parent, Three Children $41,920 Two Parents, One Child $30,039 Two Parents, Two Children $35,505 Two Parents, Three Children $45,795 (See Hardships in America, Appendix tables A4. I -A4.6) For one-parent families, this means that based on a 50 weeks of work per year, and 40 hours per week, the average wage would need to range from a low of $12.86 per hour (one child) to $20.96 per hour (thee children). For two-parent families, assuming that both parents are working, each parent would have to average from a low of $7.51 (one child) to a high of $11.45 per hour (thee children). Again, it should be noted that these requirements are expressed in 1999 dollars, thus, considering the effects of inflation, the required wages in 2004 dollars would be significantly greater than the figures just quoted. Based on this information, it is clear that if Port labor wages are expected to be in the range of $6.25 to $10.00 per hour in present dollars, only a small portion of the jobs might be adequate to support limited family configurations (e.g., two parents working at the higher end of the wage range) at income levels necessary to meet basic family budget requirements in the Stockton area. Page 4.13-8 of the EIR asserts that full development of the proposed project would generate between 15,000 and 20,000 direct jobs and additional indirect and induced jobs would be generated. This contradicts page 4.13-4, which suggests that the overall citywide employment potential, in all employment categories, is only about 13,000.jobs through 201 S. Additionally, the range of 15,000 to 20,000 jobs is eight to eleven times greater than the figure of 1,500 full-time and 300 part-time employees stated in the Navy Environmental Assessment for full build out of the proposed project. We have been unable to find any documentation to support job creation assertions in the EIR. Based on our review of the Port's response to your Public Records Act request for "all documents relating to the number, type, wages, and source of workforce of jobs projected to be created by. the West Complex Development Plan," it appears that the Port does not possess any such documentation. The absence of such information is particularly troubling, because the Port has made numerous, often contradicting, assertions about the number of jobs this project will create. However, because the Port apparently does not have any such documentation to support its claims and stated that it could not provide you with any, it is impossible to meaningfully evaluate its claims of job creation. _____________________________ I Boushey, Heather, Chauna Brocht, Bethney Gunderson, Jared Bernstein, Hardships in America Econonmic Policy Institute, Washington, D.C. 2001. Conclusion In conclusion, the EIR's claim that the proposed project will create 15,000 and 20,000 direct jobs and additional indirect and induced jobs is entirely speculative. Moreover, the projection is inconsistent with various other claims made by the Port, most notably the job creation prediction in the very Development Plan the EIR purports to analyze. Based on the information available to us, which, based on the Port's response to your Public Records Act request, we understand to be the same information that is available to the Port, it is essential impossible for the Port to quantify the job benefits of the proposed project. The assertions in the EIR regarding the number of jobs that will be created by the Project are not supported by any evidence or analysis. Please do not hesitate to contact me in my firm's Davis office if you have any questions about this letter, or if the Port provides any additional documentation of the proposed project's economic benefits that you would like us to review. Sincerely, Matt Kowta, M.C.P. Principal Bay Area Economics Sacramento Region Office 803 Second Street, Suite A Davis, CA 95616 530 750-2195 fax 530 750-2194 bae1@bae1.com bayareaeconomics.com Matt Kowta, M.C.P., Principal Mr. Kowta, manager of BAE's Sacramento area office, specializes in economic development and redevelopment, public finance, fiscal impact, and affordable housing. Through his work, Mr. Kowta has pioneered innovative techniques in urban economic analysis to meet the challenges of contemporary urban development. He has worked for BAE for over thirteen years, and he established BAE's Sacramento Region office in 1995. Mr. Kowta has managed numerous economic studies for projects located throughout the Sacramento Region, including the economic analysis for the Sacramento Riverfront Master Plan update, the public facilities financing plan for The Villages of Zinfandel, an 820-acre mixed-use project in Rancho Cordova, a revitalization strategy for the Florin Road Corridor shopping district, and comprehensive economic development strategies for the Cities of Citrus Heights and Woodland. BAE has been at the forefront of economic analysis for transit-oriented development in the Sacramento region, including the economic analysis for Sacramento Regional Transit's landmark Transit for Livable Communities study, and the Downtown/Natomas/Airport Light Rail Alternatives Analysis study. Other studies conducted for a diverse range of project types located throughout northern California include real estate market analysis and development feasibility analysis; fiscal-impact analysis; affordable housing needs studies and strategies; incorporation advisory services for the establishment of new cities; and numerous other specialized economic analyses tailored to the unique needs of BAE'S clients. Mr. Kowta also brings perspective to local projects from ongoing experience managing projects in locations ranging from the San Francisco Bay Area, the Reno/Tahoe area, Oregon, Washington State, and Colorado. His experience spans the full continuum of the development process, from long range planning and pre-development through redevelopment and revitalization. Mr.Kowta provides expert witness and litigation support services to public agency and private sector clients, including sworn testimony on behalf of property owners for cases involving First Amendment access to private property for expressive purposes. He has also supported ongoing litigation over revenue sharing arrangements for a newly incorporated community. Mr. Kowta earned a B.A. in Geography from U.C.L.A. and a Masters in City and Regional Planning from U.C. Berkeley. He has lectured at U.C. Berkeley, and has been a featured speaker for U.C. Davis, the California Downtown Association, the California Local Agency Formation Commission, and the Urban Land Institute Real Estate School. He is a member of professional organizations including the Urban Land Institute, the American Planning Association, the International Economic Development Council (MDC), and the California Association for Local Economic Development'. Mr. Kowta currently serves on the Board of Directors of the Davis Downtown Business Association, a California Main Street Community. |
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