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The story behind the “rad” benefits of a warehouse project

In a document addressing questions about the Panattoni Lease Option, the Port used findings by the Thurston Economic Development Council (EDC) to present the lease as a highly attractive economic opportunity:

any potential future development is estimated to have an economic impact of 942 jobs, $142 million in labor income, $365 million in total economic production for Thurston Co. and $12.7 million in state and local taxes.

When Kidder-Matthews VP Amy Evans first saw these astonishing numbers, she sent an enthusiastic email to the Port’s Development Director: “Pretty rad!”

Maybe a little too rad. The EDC staffer who prepared the figures got his data from Panattoni’s agent. (In fact, it was Amy Evans who suggested they work together.) The EDC researcher plugged the data into an input/output model that measures only benefits, and in one day he was able to report the “impacts.” Finally, while the EDC staffer stressed that his numbers did not represent impacts beyond the construction period, the Port and the EDC presented them as applying to “any potential future development…”

All of this is beside the point. It would take only two Port Commissioners to approve the project and they were on board from the first. “Economic impact” estimates are not meant to be scrutinized. The purpose of such figures is to eliminate debate and reinforce the idea that development brings only benefits.

Yet there is much about this proposed development and the terms of the lease that deserved a lot more objective scrutiny. An attempt by Port Commissioner EJ Zita to present key questions for discussion was rejected. The mayor of Tumwater, where the project would be sited, wanted time to investigate environmental issues and other higher value options. The Port dismissed concerns raised in more than 38 pages of public testimony by saying that the developer would comply with regulations. Pro-commissioners claimed that as an “option agreement” the Port’s commitment was limited – ignoring the fact that the “10-year option” was at the sole discretion of Panattoni, who could unilaterally extend the terms of the lease and commit the Port for 55 years.

A further word on the “rad” economic impacts

The favorite models to predict the impact of developments don’t measure total economic impact but only benefits—expanded by various multipliers. And it’s all about the multipliers. A criticism of the IMPLAN model, for example, says that the most disturbing thing about it is “the wildly unreasonable values it allows for multiplier effects.”

Those “rad” numbers cited by the Port for jobs, labor income, and total economic output for the Panattoni project construction phase? They were created by multipliers:

The beauty of this process is that no one knows how it works, nor how valid any of the estimates are – even if they were correctly treated as lasting only as long as the construction phase of this project. No one will ever be able to verify what actual impacts this warehouse development had – and whether benefits of another use of the land would have been greater.

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