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Ports can fuel growth – Two cities (Butte, MT and Lewiston, ID) cite benefits from having port district

If an inland port is created in this area, the idea’s supporters envision it being an economic development gem that would boost the Gate City’s chances at recapturing some of the more than 1,500 good-paying jobs that have disappeared in recent years.

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Editor’s Note: This is part one of a three-part series examining ports. A bill going through the Legislature would give Idaho cities such as Pocatello the ability to establish port authorities. The former Astaris site has been named by many as such a spot. Journal business reporter Sean Ellis traveled last week to Lewiston and Butte, Mont., where two inland ports are located, to examine what could be in store for Pocatello.

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By Sean Ellis – Journal Writer

Some people undoubtedly will argue pinning such high hopes on an inland port authority is a pipe dream, something too far-fetched to visualize.

Plus, as they would doubtlessly focus on, creation of a port would mean another taxing district.

With that in mind, here’s a report on the track records so far of the Port of Lewiston and Port of Montana, located in Butte, Mont. – two cities with more than a few things in common with Pocatello.

Port of Lewiston

According to a June 1997 study by the University of Idaho, more than 1,800 jobs can be attributed to the Port of Lewiston.

That port, established in 1958 by Nez Perce County voters, became a working port in 1975 and remains Idaho’s only port.

A bill introduced recently in the Legislature would allow other Idaho cities and counties to create inland ports.

Lewiston, located at the confluence of the Snake and Clearwater rivers, has a population of 31,000 and is the final stop on the nation’s second-largest water transportation highway, the Columbia/Snake River system.

According to Port of Lewiston Manager Dave Doeringsfeld, the port’s primary mission is creating jobs through economic development and expanding trade opportunities.

"Whatever we do – how we govern projects, how we expend funds – we look at how it is applicable to our primary mission of creating jobs and diversifying the economy of Nez Perce County," Doeringsfeld says.

The port authority has purchased industrial sites, developed infrastructure and built business incubator buildings.

Local officials say these actions encourage private capital investment opportunities which broaden the tax base and provide new jobs for Nez Perce County.

The port includes a 150,000-square-foot warehouse and containerized freight-shipping center. The port has two industrial areas under development and acquires land to lease to industrial-type businesses.

The Port of Lewiston collects $522,000 annually in property taxes from residents in Nez Perce County. That translates to $16 per year on a home valued at $100,000.

The rest of the revenue that funds the port’s $2.4 million annual budget comes from revenue derived from container yard operations and companies leasing warehouse space and land.

Doeringsfeld says the port’s existence has led to lower transportation and shipping costs across the state and has affected rail rates in Montana and southern Idaho.

The port’s presence has not only attracted new businesses, but it has made existing businesses such as Potlatch Corp., a forest products company, more competitive, Doeringsfeld says.

"It gives (Potlatch) a good, competitive advantage over other inland paper mills," says Lewiston Mayor Pro-Tem Kevin Poole, a Pocatello resident from 1975-94.

"I seriously don’t think we would have Potlatch here" without the port, Poole says. "I think the port is the big reason they have been able to be competitive on the world market."

"We definitely benefit from the port," says Potlatch spokes-man Mark Benson. Benson says the port provides the company access to Pacific Rim countries.

Forty percent of products made at the company’s paperboard mill in Lewiston are shipped to Asia.

Swift Transportation, one of the country’s largest trucking companies, located its regional trucking headquarters next to Doeringsfeld’s office 12 years ago and now has about 350 trucks based out of Lewiston.

Port officials helped recruit the company, and Doeringsfeld says more than 300 jobs in the area are associated with Swift.

"If it wasn’t for the Port of Lewiston, you can bet Swift Transportation wouldn’t be here," Doeringsfeld says.

"The port has really become an integral part of the local economy here over the last 25 years."

Port of Montana

The Port of Montana opened in 1988, six miles west of Butte, at the intersection of Interstates 90 and 15 and two major railroads, Burlington Northern and Union Pacific.

According to economic development officials in that area, 300 jobs in the area are directly tied to the port’s creation.

The port provides intermodal transportation services for Montana’s forest products, mining and agriculture, domestic and international shippers and provides customers with direct forwarding capability.

The port includes more than 85,000 square feet of warehousing space for storage.

About $130,000 per year in property taxes from Butte residents goes toward the port’s $1.6 million budget. For a home valued at $100,000, the port costs $6.33 per year.

The rest of the money comes through the services the port provides.

According to Evan Barrett, director of Butte Local Development Corp., the port has had several major impacts. Not only have a number of trucking firms moved in, he says, but it solidified and increased traffic on the previously shaky Union Pacific spur line there.

Barrett says Burlington Northern changed its tariff schedules because of the port, saving Montana farmers millions of dollars each year.

Port of Montana General Manager Bill Fogarty says better access has led to lower shipment rates and increased competitiveness.

The port’s presence was a major factor in Union Pacific’s decision to locate a General Motors regional distribution center there two years ago, Fogarty says.

"Maybe UP would have put it here anyway … but the port was basically an advantage for us," Fogarty says.

Fogarty says if it wasn’t for increased rail traffic created by the port, it’s possible UP jobs would have left the area, because traffic on UP’s line from Idaho Falls north had declined dramatically. "If the traffic was much lower on that line, they probably weren’t going to continue to operate it," he says.

Fogarty says area lumber company officials say the port has saved it more than $1 million in freight bills per year.

Since the port has been built, he says, more than $20 million in transportation infrastructure has been installed.

"We’ve used the port as kind of an enhancement to economic development to attract new businesses or keep businesses here," he says.

"The port is bringing economic development to the City of Butte," says Butte’s chief executive, Judy Jacobson. "Our port has done very well as far as moving goods in and out. They’re thriving out there, especially since they got the General Motors contract. It was a real grab."

Jacobson says she wouldn’t go as far to say some businesses wouldn’t be there without the port, "but they’re certainly enhancing some of the businesses that are here."

"It’s been a real plus," Fogarty says. "It’s been the thing that’s made UP stay here and the thing that’s made some of the lumber companies survive, because they have markets they didn’t have before and they’ve got rate competition."

Sean Ellis covers local government and business for the Journal. He can be reached at 239-6001 or [email protected].

Tribal participation could affect prospects for inland port

POCATELLO – The former FMC site is considered a prime spot for an Inland Port Authority, but some Shoshone-Bannock officials believe a bill winding through the Legislature that would allow inland port authorities on tribal land isn’t necessary for that location.

Tribal Planner Darrell Shay said because the reservation is considered a sovereign nation, the Shoshone-Bannock Tribes have the right to create special tax districts and the ability to deal directly with the U.S. Department of Commerce.

"I believe the Tribes could probably form a port authority on Tribal land," said Ray Burstedt, executive director of Bannock Development Corp. "This (legislation) doesn’t preclude them from doing that."

Shay said the Tribes are not opposed to an inland port authority, but they want to know they will have some control over their land.

"They kind of went around the Tribes," Shay said. "We just have some concerns about it."

Shay said Indian tribes also often have preferential treatment when government contracts are awarded, and a tribally-owned inland port authority would be able to take advantage of that.

– Emily Jones

http://www.journalnet.com/articles/2003/03/09/news/local/news01.txt

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Port Authorities: A Journal Special Report

Question: What is a port, and how can one survive and thrive in a land-locked area?

Answer: Simply put, a port district is a taxing entity with a board of commissioners and the ability to levy a property tax of up to .1 percent and issue revenue bonds.

If the maximum .1 percent were levied, that would cost $100 per year for a home with a taxable value of $100,000.

Advocates say ports can pay big dividends

So, what would we get for the money?

Revenue would be used to develop or enhance industrial infrastructure to improve transportation services and facilities for moving cargo in and out of the region.

Translation: Jobs, and savings to shippers.

A port could also create revenue by leasing warehouse space and land. An inland port would encompass the transportation facilities, services and related activities involved in moving freight within, into and out of the area.

Taken together, it’s all aimed at giving a boost to the local economy.

A bill introduced in the Idaho Senate last week would allow municipalities to create an inland port. The Port of Lewiston is currently Idaho’s only port, as state law allows the designation only along a contiguous waterway.

Lewiston is located at the confluence of the Snake and Clearwater rivers, and provides water access to the Pacific Ocean.

The Senate is expected to vote on the bill Monday. If passed, the bill would allow ports to be established; it does not create one.

"I’m very much in favor of it," says Bannock Development Corp. Executive Director Ray Burstedt, who testified on the bill’s behalf before a Senate committee.

Port supporters believe it would benefit existing businesses and help attract new ones by providing better access to national and international markets, making transportation more efficient and meeting increasingly demanding freight logistics requirements.

"I think it could bring in jobs, if it’s done right," says Power County Commissioner Ken Estep. Power County officials are writing to state senators supporting the concept.

"Where we lost FMC, we all need to get some businesses into this area," Estep says. "We need jobs as much as Pocatello does."

The bill allows a county or city to propose a port district. However, voters in the affected cities or counties would have to hold an election and approve the measure by a majority.

The port would be a municipal corporation of the state.

If the port is located in more than one county or city, voters in each city or county would have to give approval.

The port’s operations would be run by a port authority governed by three elected commissioners who serve staggered six-year terms.

Burstedt says creating a port would allow access to federal funds for infrastructure improvements and put the port on the list for available excess federal properties.

– Sean Ellis

Customs area, foreign trade zone are options

POCATELLO – While it’s not a necessity, an inland port can include a customs area or foreign trade zone.

A customs area would enable companies to bring goods into the Pocatello area before passing customs.

A big advantage of doing that is avoiding congestion at large coastal ports, says Bill Fogarty, general manager of the Port of Montana in Butte, one of two ports in that state.

It also usually costs more to clear customs on the coast, he adds.

An FTZ would enable a business to import parts from various countries, assemble them in the zone, and export the finished product to a foreign country, without paying tariffs.

If the company sells the product in the United States, it would pay tariffs, but not until it was shipped out of the zone. That would give the company the advantage of not paying taxes until the last moment.

"That allows people to position their stuff deep in the market … and hold it until it’s sold," says Dave Swindell, Pocatello’s chief financial officer. "You don’t get out of paying the tax, but … you don’t want to have to pay the tax until the last possible moment."

Fogarty says the greatest need with an FTZ is a large anchor tenant to make it cost-effective. Borrowing from the chicken and egg argument, he says, you probably need an FTZ to attract an anchor tenant.

Dave Doeringsfeld, manager of the Port of Lewiston, says it’s better to find the anchor tenant first.

"There are a lot of upfront costs that, unless you have that business that is going to utilize it, are usually cost-prohibitive to just jump into it and hope something is going to develop," he says.

"I would make sure you had a fairly large tenant that could make good use of a foreign trade zone," Fogarty says.

Neither Butte nor Lewiston have foreign trade zones.

http://www.journalnet.com/articles/2003/03/09/news/local/news02.txt

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