Tax benefit claimed by Cherry Point coal port stirs debate

The debate over the potential tax revenue from Gateway Pacific Terminal reveals a lot about the complexity of the property tax system and the role that industry plays in Whatcom County's tax base.

Gateway Pacific backers stirred up the debate earlier this week by releasing a report from FCS Group Consultants indicating that the Cherry Point coal and bulk cargo terminal proposed by SSA Marine could go on the property tax rolls at a value of about $665 million, making it the second-largest taxpayer after the BP Cherry Point refinery at about $829 million.

Assessed at that amount, Gateway Pacific would pay about $7 million in annual property taxes to the state and local governments, with the state share estimated at $1.7 million. There would be millions more in sales tax revenue.

"Any way you cut it, becoming the second-highest property tax payer in the county is a big deal," said Gateway Pacific spokesman Craig Cole. "It's more money in the system."

But critics of the proposed coal terminal question whether the project would be a net benefit to local governments.

"There's nothing to suggest that the revenues will be the same size as the increased costs," said Shannon Wright, executive director of Communitywise Bellingham.

That group has not taken a position for or against Gateway Pacific, but has issued some of its own studies questioning the economic benefits that backers have promised. One such study suggests that Gateway Pacific could do economic damage if it deters tourism and other waterfront development.

"If we are going to look at the full benefits, we need to look at the full costs," Wright said.

Wright notes that a big percentage of the property tax revenue would go to the Blaine and Ferndale school districts. The Gateway Pacific property just south of the BP refinery includes land in both districts.

The terminal's estimated tax payment would be $1.4 million per year for Ferndale and $824,000 for Blaine - but those school districts would not necessarily be faced with added costs as a result of the new terminal.

The biggest costs might be for railroad overpasses in Bellingham and elsewhere in the county, Wright said. And while the county could use some of its added property tax revenue for that purpose, Bellingham wouldn't receive any property tax revenue from the project, although the city could see some sales tax increases if some of the Gateway Pacific payroll money is spent in the city.

Matt Krogh tracks the coal export issue for RE Sources for Sustainable Communities, a Bellingham environmental group. He says one study has estimated the public cost from increased coal train traffic along the rail lines from Wyoming's Powder River Basin to the West Coast could be as high as $5 billion. As he sees it, the costs of coal exports outweigh the benefits.


Whatcom County Assessor Keith Willnauer says the impact of a major new industrial taxpayer on other taxpayers would be varied.

Some portions of a taxpayer's bill cover special levies that can raise no more than a fixed amount. Example: school district bond issues. If Gateway Pacific became a taxpayer in the Blaine and Ferndale school districts, other taxpayers could expect to see a small but noticeable reduction in that portion of their tax bill.

General property tax levies, which are not limited by dollar amount, might not be affected, Willnauer said, A taxing district would have the legal option of just collecting the additional revenue from Gateway Pacific without lowering anyone else's property taxes.

Gateway Pacific would add about $730,000 to the county's current expense fund, according to the FCS analysis. Even if the tax bills for every other property owner got a share of that money in the form of a reduced tax rate, the impact on any individual taxpayer would be small.

Willnauer said a lot of people have tried to convince him that Gateway Pacific and the resulting increase in rail traffic - as many as nine loaded trains and nine empty trains through Ferndale and Bellingham every day - would reduce other property values and tax revenue substantially. Willnauer is not convinced.

"Railroad tracks have been around for a long time and trains have been on them for a long time," he said. "The market values of those properties have already assimilated proximity to the railroad tracks."

While Willnauer acknowledged that additional trains wouldn't be a positive for nearby property values, major damage to those has not yet been demonstrated, in his view.

"If it's going to make it (property) less desirable, by what factor or by how much?" he asked. "It's hard to quantify that. ... The tendency with these things politically is to overexaggerate the impact."

After the 1999 pipeline disaster in Bellingham, Willnauer recalled widespread speculation about a plunge in property values along the pipeline route through the city. But it didn't happen.

"It was almost imperceptible," he said. "We determined that there were, in fact, not really any impacts on property values. ... If you have a bunch more trains on the railroad track, are peoples' property values going to plummet dramatically? I'm not anticipating that. I'd be surprised if there were that impact. ... It doesn't help the public discussion if people overexaggerate some of these things."

Assessed values for tax purposes are based on market prices, Willnauer said. The assessed value of a given home is based on actual sales prices for similar homes.

Willnauer does have one concern about Gateway Pacific's potential tax impact: If the coal terminal opens for business and becomes a significant part of the tax base for the two school districts and Whatcom County, its shutdown could disrupt their finances. He wonders if anyone can say for sure how long the Asian demand for U.S. coal will persist.

"If you want to wave the Golden Fleece because of these (tax) numbers, yes, they are dynamic," Willnauer said. "But the durability is important. ... The durability of property tax has been critical in maintaining most of the services that we are all still enjoying. Property tax as a revenue stream has been very stable in a rough economic time."

Gateway Pacific's Cole brushed aside that concern. He noted that the terminal could shift to export of other cargoes if the demand for coal fades.

"This is why the facility is designed to accommodate more than one commodity," he said. "The investors are not willing to depend on just one commodity."

He also argued that tax revenue from Gateway Pacific would be a net benefit to local governments, even if they don't last forever.

"Whatever it (tax revenue) is, it's going to be more tax revenue than it is today," Cole said.


Two of seven "scoping meetings," to determine what environmental and economic impacts should be studied for Gateway Pacific Terminal, will be in Whatcom County:

-- 11 a.m. to 3 p.m. Saturday, Oct. 27, at Squalicum High School, 3773 E. McLeod Road, Bellingham.

-- 3 to 7 p.m. Nov. 29 at Ferndale Events Center, 5715 Barrett Road.

People also can send comments about the scoping to comments@eisgatewaypacificwa.gov.