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BUILD Grant: Mills to Maritime Cargo Terminal Project

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EXECUTIVE SUMMARY      |       PROJECT SUPPORTERS       |       PROJECT SCHEDULE

Overview

PROJECT DESCRIPTION 

The Mills to Maritime Cargo Terminal Project supports national and regional economic vitality, leverages federal investment, provides unique opportunities for innovation through innovative financing, brownfield redevelopment experience and permitting expertise, and can meet the federal obligation requirements and perform on its intent. 

The Port recently acquired the 58 acre (45 upland and 13 in-water) former Kimberly-Clark International mill site on the Everett waterfront. The site is located between two federally secured facilities – the Port of Everett and Naval Station Everett. The Port of Everett is seeking to develop this strategic property in an effort to: 

• support and enhance maritime commerce on the National Freight Network in Snohomish County, the fastest growing county in the state, 

• restore the brownfield property back to productive maritime freight uses, 

• meet the upland space requirements to be designated a Strategic Seaport; and 

• ensure compatible land use with Naval Station Everett to prevent encroachment concerns. 

The Project Scope includes the following: 

• Development of an approximate 33-acre maritime cargo terminal yard, including all necessary elements such as site design, engineering, permitting, environmental review and construction, including but not limited to, filling/grading, utilities, stormwater, lighting, and paving. Exact acreage to be determined as project design evolves. 

• An integrated regulatory and development strategy: The site-wide terminal pavement is integrated with the cleanup strategy for the site where it will double as a state approved environmental cleanup cap, following comprehensive cleanup actions by the prior property owner. 

See Appendix C for more details 

Meeting the Maritime Commerce Needs 

The development of a new terminal is necessary for the Port to meet cargo demand and to serve the greater national and regional good in support of freight movement and maritime commerce in the fastest growing county in Washington State. 

The Port of Everett is a special purpose government tasked by the State Legislature with economic development and is ideally suited and proven in maximizing job growth in the region. Trade facilities are essential to the prosperity of the region and Washington State, as 1 in 3 jobs are associated with trade in Washington. In Snohomish County, where the Port of Everett is located, 60% of jobs are tied to trade. Further, of the 75 ports in Washington State, only 10 have natural deep-water shipping terminals – like Everett. As the third largest container port in the state in the fastest growing county, this project is essential for efficient and effective goods movements in our growing manufacturing base in our county, particularly at the Cascade Industrial Center to the north. 

At the Port of Everett, and at ports throughout the nation and world, we live and breathe transportation and maritime facility investment; as we see first-hand how it impacts our business’ decisions to site companies and invest in our region. Opportunities to increase maritime facility capacity in the United States is a rarity. The Port of Everett specializes in over-dimensional, high-value cargoes that support the construction and manufacturing base of our region – predominately to support the local aerospace industry. This Project will allow the Port to continue to efficiently keep freight moving and support the growth demand of our growing county and region. 

Our community has one of only 10 deep-water ports in the state, which has proved time and time again to be an asset for our region. A healthy surface and maritime transportation system is critical for competition, safety and quality of life, and to move cargo quickly and safely throughout the nation. The fact is, our maritime transportation system is no longer keeping pace with the growth in our region, and this investment is necessary to ensure additional upland capacity to support trade and economic growth in our region. 

Further, this project is located on the city of Everett’s and Port of Everett’s freight corridor (West Marine View Drive/Highway 529), which is slated to start a nearly $36 million freight and goods movement improvement project in 2022. 

Right now, our dependence on Interstate 5 is failing us with congestion, long wait times and increased costs. Having the upland capacity to handle freight destined north of Seattle cannot come soon enough. Because of our geography, this type of movement of freight opportunity comes around but once in a lifetime. 

The economic value of Snohomish County’s lone industrial port is critical to our continued national dominance in the aerospace and advanced manufacturing sectors. This is one of the reasons why this project has such broad-based local, regional and statewide support. 

In addition, just five miles north of the Port of Everett, the cities of Marysville and Arlington (which qualify as rural under the federal guidelines), recently approved a new Manufacturing Industrial Center known as the Cascade Industrial Center (CIC) encompassing more than 4,000 acres for light industrial use and job creation. Development of the new terminal, combined with the Port’s existing maritime freight facilities to the south of the Project site, creates an opportunity for the CIC to be served via the Port of Everett rather than trucking all cargo to or from the Ports of Seattle and Tacoma. Secondly, new terminal capacity allows the Port to reposition some of its current deep-water port landholdings to support new maritime users, the expansion of our soon-to-be military qualified shipyard and an enhance our Foreign Trade Zone. 

A new terminal will ensure the public’s interest is served by a maritime use that generates high paying jobs, that takes advantage of the natural deep water, which is located on a federal navigation channel (for which the Port is the Local Sponsor for the U.S. Army Corps of Engineers’ maintenance work) and creates an opportunity to improve intermodal freight capacity on the National Freight Network. 

Federal investment to assist the Port in construction ensures the continuation of a vibrant working waterfront, allows us to reposition some of our current land holdings to support a shipyard on-site, which would reduce federal costs to the U.S. Navy and Washington State Ferries by providing a local option for ship repair, in turn ensuring more competitive pricing. These entities have limited options for local ship repair. It also creates the capacity and flexibility to support an expanded U.S. Coast Guard presence in Everett. Currently, Everett is a finalist for the siting of the new Offshore Patrol Cutters. 

The requested $17.75 million in federal investment in the initial $35.95 million project, would accelerate the construction timeline, putting the site into full productive maritime use 10 years ahead of the Port’s current capabilities. Currently, there are no utilities, stormwater improvements, paving or other infrastructure to put the site back into productive use as an intermodal freight facility. Further, the completion of the terminal will support and enhance the federal investment in the Port’s Seaport Modernization Project located to the South of the Project site by providing additional upland capacity for the regional transportation’s system performance and capacity. Please see Appendix J describing the Seaport Modernization Project.

More upland cargo capacity creates an opportunity to accept more cargo in Everett from ships including Boeing cargo, this in turn, helps improve the cost effectiveness of shipping for the nation’s largest exporter – The Boeing Company. This new terminal also has the potential of opening up new cargo markets to the region, by discharging additional cargo volumes in Everett from our existing shipping lines in Everett. 

Property Description and Condition 

The Port recently purchased the vacant former Kimberly-Clark pulp and paper mill site; Kimberly-Clark shut down operations in 2012. The site is highly contaminated and is undergoing a major environmental cleanup by the previous property owner, who is required to complete an approximate $20 million state mandated environmental cleanup by December 31, 2020. The pavement section is a perfect fit for the cleanup and development strategy, where it will double as a state approved environmental cleanup cap and a terminal operating surface – a win-win for the environment and the economy. 

The Port acquired the property with the purpose and goal of restoring jobs lost as part of the mill closure, to ensure land use compatibility and growth for Naval Station Everett and to support the efficient movement of freight. The property is well-suited for a cargo terminal, as it is located in an urban deep-water port on a federal navigation channel that is maintained in partnership with the U.S. Army Corps of Engineers and the Port of Everett. It is situated between two federally secured facilities, the Port of Everett and Naval Station Everett, and is located on the National Freight Network and the BNSF Mainline to Chicago. All of the site infrastructure was removed from the property when Kimberly-Clark demolished the site in 2012, with the exception of a 360,000 square foot warehouse, rail easements and some over-water dock structures that remain intact. Aside from the barge dock, all other marine facilities are in a state of disrepair. See Appendix G for more information 

PROJECT NEED 

The closure of the mill in 2012 and the loss of nearly 700 jobs on the waterfront created an economic hardship for the community. It also had secondary effects with the closure of many restaurants, marine businesses and other support functions for industrial users. Restoration of maritime use of the property will create new capacity to the marine highway system, providing more options for shippers, and reducing costs for manufacturers. 

Maritime Commerce (Public Investment) 

The construction of this new cargo terminal, named Norton Terminal, will support the movement of maritime commerce and expand the Port’s Foreign Trade Zone. With 60 percent of the jobs in Snohomish County tied to trade and the growth of the Cascade Industrial Center just five miles to the north of the deep-water seaport, the additional maritime capacity is in demand and is essential to support industrial job growth for U.S. exports and the economic diversification of our region. 

Strategic seaport designation (Public Investment) 

On June 12, 2018, at the request of the Maritime Administration, the Port Commission authorized Port Staff to submit a letter to the United States Maritime Administration formally requesting that the Port be considered for designation as a Commercial Strategic Seaport. Currently, Everett is an alternate strategic seaport. MARAD is looking to add capacity on the West Coast, and currently there is only one port in Washington state with those capabilities and designation (Port of Tacoma). The Commercial Strategic Seaports program, administered by MARAD, is intended to establish and maintain relationships with commercial ports to ensure rapid response to defense needs in times of crisis or war while minimizing disruption to commerce. Adding additional cargo terminal footprint to the Port’s infrastructure portfolio is critical to earning and effectively supporting this designation. 

Military shipyard expansion (Private Investment) 

Navy Region Northwest, which includes Naval Station Everett, is the 4th largest employer in Washington state. For nearly two years, the Port, in partnership with the City of Everett and Snohomish County, led an effort to secure a military-capable shipyard in the Everett harbor. In November 2019, the Port secured Everett Ship Repair, a sister company of Nichols Brothers Boat Builders, as a tenant. They are currently sited on approximately five (5) acres at the Port of Everett’s existing Seaport facilities to the south of the Project site. They operate a more than 500-foot drydock that is capable of supporting up to destroyer class vessels. The shipyard expansion is limited by the presence of the Port’s current Foreign Trade Zone, which will be moved to the new cargo terminal once the construction is complete to allow the shipyard to double in land footprint. The expansion will be necessary to meet and support the U.S. Navy’s intent to grow its fleet from a 270 vessel Navy to a 355 vessel Navy by 2025-2026. 

Light industrial tenant recruitment (Private Investment) 

Adjacent to the new cargo terminal, and as part of the recent acquisition, the Port is working with a private partner to adaptively reuse an existing three-story, 360,000 square foot warehouse located on the southern end of the property. The Port has received multiple requests from light industrial users that require warehouse space adjacent to deep-water access. This large warehouse, which is rare to find in metro Everett, would be the first asset to begin generating jobs. The targeted user for the warehouse is a manufacturer to support food production and maritime commerce, a $16 billion industry in Washington State. In the event the targeted user is not able to complete this adaptive reuse, the Port has a number of other parties interested in the warehouse. 

Synergies with Seaport Modernization & Future Dock Rehabilitation Project 

The Port of Everett has invested more than $100 million in its deep-water terminal shipping facilities over the past 10 years, but the one element that has hindered the economic vitality of these improvements is the lack of upland intermodal capacity to support modern seaport operations. With connectivity to the existing terminal, this new cargo terminal will provide the flexibility to enhance our current seaport investments, attract new freight to the Everett waterfront and ensure property land use compatibility for our neighboring strategic military assets. Future investment in this terminal would come by way of the rehabilitation of 1,800 lineal feet of shoreline for maritime commerce. See Appendix J.

Environmental Need 

The state-regulated environmental cleanup of this property has been underway since 2012 at a significant expense to the former property owner and legacy user, Kimberly-Clark International. As part of the Port’s requirements of the purchase and sale agreement with Kimberly-Clark in 2019, Kimberly-Clark must execute the final push to remove contaminated soil and debris from the property. As required in the legal agreement, this work is required to be complete by December 31, 2020. This work is currently underway and on schedule. Once this is complete, low-level residual soil contamination will remain throughout the property. The residual contamination is being left in place, and the Washington State Department of Ecology is seeking to reduce stormwater infiltration to further stabilize the site and protect the Puget Sound. The pavement section is a perfect fit for the cleanup and development strategy, where it will double as a state approved environmental cleanup cap and a terminal operating surface – a win-win for the environment and the economy. 

WHY INVEST IN EVERETT 

The Port of Everett is the third largest container port in Washington State, the state’s major commodity ports. The Port of Everett Seaport provides critical infrastructure in our regional transportation network that supports more than 35,000 jobs and $373 million in state and local tax revenue. The redevelopment of this property is expected to add an additional 800 direct jobs to the waterfront, and more than 1,800 indirect jobs (See full economic benefits in the BCA section). Everett’s seaport is a strategic port that specializes in high value, overdimensional cargoes. The Port of Everett has also been identified as a recovery port in the region in the occurrence of a man-made disruption or natural disaster near the consumer ports of Seattle and Tacoma (Northwest Seaport Alliance). It also serves as backup support for the U.S. Army’s 833rd Transport Command. 

In order to provide resiliency for the region and to ensure global competitiveness, the Port needs to create additional upland capacity to support the various and diverse uses of the working waterfront. This redevelopment to put the property back into productive use will meet all the criteria outlined in this grant.