Anacortes' ferry terminal: case study for how NOT to do a public-private partnership

Such partnerships are all the rage in times of lean budgets, but they can run into roadblocks, as this project illustrates. For one thing, the state is a partner with no money.

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It could be awhile before the Anacortes ferry terminal gets new life.

Such partnerships are all the rage in times of lean budgets, but they can run into roadblocks, as this project illustrates. For one thing, the state is a partner with no money.

The Washington State Ferries (WSF) terminal in Anacortes leads a life of quiet uncertainty. Since its construction in 1959, the unassuming, low-slung building alongside the dock has fulfilled its task of moving millions to and from the San Juan Islands and Vancouver Island effectively. But the structure is aging, and plans to replace it have bubbled up from time to time.

The most recent scheme depends on a public-private partnership (PPP) — and appears to be going nowhere.

“Dead in the water,” says Jeff Doyle, director of PPPs at the Washington State Department of Transportation (WSDOT). “We’re finding [that private developers] seem interested, [but] the state doesn’t have any cash to contribute to the construction.” For the prospective private investors, the construction costs are “just too heavy of a lift.”

In addition to the lack of state funds, he cites two other factors working against the Anacortes PPP.

“It’s not a good time for development, commercial or retail. And our [ferry] terminals are by and large not in highly populated areas, to help carry all those construction costs” through the promise of return on adjacent, private commercial investment.

The case serves as an example of why public-private partnerships often have trouble getting off the ground.

In the Anacortes case, WSDOT recently sought letters of interest from prospective developers. By last winter's submission deadline, three respondents had demonstrated to the state's satisfaction that they'd be equal to the project's challenge, but the state has not issued a request for actual proposals in view of “prevailing market conditions,” Doyle says.

A 2009 “project pre-design study” for the Anacortes terminal building and its site found the preferred development alternative to be a 17,000-square-foot building costing $23 million. The accounting, whose bottom line is in fact $38 million, also includes $15 million for “construction documents” — which, according to Tim Smith, WSDOT's director of terminal engineering, refers to all the planning documents that past proposals for the terminal's improvement or replacement have generated. Of course, at least some of those documents — architect's designs, for example — are completely useless at this juncture.

Although it did set up a fund to finance at least one new 144-car ferry, this year’s legislative session appropriated nothing to prime the Anacortes project's pump. Crews at the terminal recently completed rehabilitative work on the facility's boarding walkway, and roof repair on the terminal awaits. But beyond that, it's going to be the same old terminal for some time.

The 2009 study carried a big price tag for the 17,000-square-foot replacement building, which would more than triple the current structure's size. The document contains at least a couple of dubious statements that leave one wondering about the plan's dimensions. It states that “in the off-season about 200 passengers currently access the terminal building. Thus the current number of passengers waiting at the terminal can range from 200 in the off-season to upward of 700 in the summer months.”

I have used the terminal frequently year-round and have witnessed far smaller numbers in and around the building. The study also claims that “long lines are a common occurrence throughout the year” at the women’s restroom, a phenomenon I likewise have never witnessed. Smith says that the statements are based on the facility's “operational history.”

Why do public-private partnerships seem to run into frequent problems?

One reason could be that they start off with over-dimensioned plans and price tags that scare off the businesspeople once they've done their arithmetic. WSDOT's Doyle responds that in a place like Anacortes, “I don't know if that price tag is inflated. Projects of that magnitude in towns of that size — it's very difficult to expect the local retail community to contribute to a project of that magnitude.”

He remains convinced that PPPs have a future, even if the first P in the partnership didn’t ride to the rescue with any green stuff this spring in Olympia. “There's plenty to be done in this state. We still keep kicking over stones, trying to find some spare change.”

PPPs seem all the rage, and have yet to suffer the fate of urban renewal, fallout shelters, the MX missile, and many another public initiatives now relegated to history. Earlier this month, in the other Washington, Republican leaders, with considerable eclat, recently rolled out a plan aimed at applying PPPs to far-ranging improvements in rail service along the entire 457 miles of Amtrak's Boston-Washington corridor.

In Washington state, as a bright spot in the PPP picture, Doyle points to a partnership aimed at development of electric-vehicle charging stations. According to Tonia Buell, project development manager in Doyle's office, that project is thriving on the strength of federal stimulus funding aimed at developing infrastructure for electric motoring. The office expects to award a $1 million contract later this month for the installation, operation and maintenance of chargers along I-5 and U.S. 2. Asked what will happen when the stimulus fund dries up, she said, “As more people start driving electric vehicles, businesses will be installing their own charging stations — so we're really just jump-starting this new industry.”

Bruce Agnew, director of the Seattle-based Cascadia Center for Regional Development, ticks off a number of initiatives outside Washington state, where so-called tax-increment financing (TIF) has facilitated PPPs. One example of how it might work: The TIF concept could allow a local jurisdiction to devote its portion of receipts from increased property taxes on commercial development to retiring bonds on adjacent transit infrastructure. However, the formula for the just-enacted TIF legislation in Washington applies only to cities of more than 22,000 within the central Puget Sound region — leaving out the more remote Anacortes, with its population of 17,000.

Applauding the concept, Agnew feels it could be expanded in next year's legislative session to include the Skagit County city. A consulting firm working under a legislatively mandated contract is just beginning what the Legislature intends to be “a long thoughtful look” at the potential of PPPs, he reports.

Like Doyle, he terms transit-oriented development an ideal target for PPPs, at least in theory.

Asked if the word tax might scare people away from the concept, Agnew notes that TIF has “gone more elegantly by the term community development financing,” and that the mechanism in any case affects only the increase in the value of commercial real estate.

In Anacortes, and on the San Juan ferries, the political discussion seems far away, however. Veteran travelers have heard all this before. One encounters a bit of skepticism, but few complaints, about the facility. The ferries keep running and, for now, the terminal continues its yeoman service.


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