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The Murky Waters Of The Port Of Seattle (Part 1)

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Did you ever wonder what the Port of Seattle really does? They seem to be very important. Important enough to warrant so much attention and hand wringing from many of our local news sources that proclaimed the proposed Stadium District Seattle Arena was "dead" even before the draft EIS was released, solely due to is proximity to the Port of Seattle. After the hearing on March 15, 2016, anger pushed me to do some research on the Port. And what I found out surprised me.

Ron Wurzer/Getty Images

EDITOR NOTE: Catherine is the newest member of our staff. You may recognize her from the comments section as catdawg2. Please join us in welcoming her aboard.

I'm not an investigative reporter or an expert on world trade. I do have a background in accounting and economics. I can read financial statements and their footnotes to gain a better understanding of actual operational results (beyond the more puffy management discussion and analysis). This is where I started on the evening of March 15, 2016. From there, I dove into the oceans of the world where an estimated 75-90%* of all goods and services travel before finally making their way to their end destination. I found the excellent website of the Brookings Institute and the extensive research they have done on our US ports. I compared it to the data posted by the Port of Seattle on their website, promotional publications, and public hearing documents, and then to what other related entities and organizations also publish (e.g., ILWU, Ports of Los Angeles/Long Beach, USDOT, AAPA, and a lot more, there are lots and lots of port related commissions and alliances out there). I also sought articles written about ports outside of Seattle (the Los Angeles Times does a great job in providing information).

Did you notice the asterisk I used in the 75-90% stat above? That's where the murky waters come in. Until very recently, it was incredibly difficult to accurately assess the data and statistics coming out of Ports in the United States. Why? Because there was no consistent reporting mechanism for Ports. Each are different in what they report and how they operate. They are governed differently and track different statistics, volumes, and data. The one statistic that is used most consistently for seaport operations is the tracking of TEU's (twenty-unit equivalent units, more on this later).

Enter technology and the 21st century. Where now there is the ability to validate some of the statistics and estimates and more importantly, use published data outside of the Ports to piece together their actual impact on the local, regional, and national economy. This is where the research done by the Brookings Institute and others is so helpful. Where before we would have accepted that what the Port(s) said was based on truth, it's now scrutinized as part of the wider web of all freight/goods movement across the United States and throughout the world.

So first, What is the Port of Seattle?

According to their 2014 audited financial statements (the 2015 audited financial statements have not yet been made public):

The Port of Seattle (the "Port") is a municipal corporation organized on September 5, 1911, through enabling legislation by consent of the voters within the Port district. In 1942, the local governments in King County selected the Port to operate the Seattle-Tacoma International Airport (the "Airport"). The Port is considered a special purpose government with a separately elected commission of five members. The Port is legally separate and fiscally independent of other state or local governments. The Port has no stockholders or equity holders. All revenues or other receipts must be disbursed in accordance with provisions of various statutes, applicable grants, and agreements with the holders of the Port’s bonds.

Who governs the Port? The people and local governments of King County. It was the local governments of King County who first enabled the creation of the Port of Seattle, then allowed the voters of King County to elect the Commissioners who are responsible for keeping an eye on the Port's activities.

The Port is an independent government entity, responsible for the operations and infrastructure of SeaTac and the seaport operations. Pretty straightforward. Essentially its purpose is to serve the people and businesses of King County by assuring goods and people who fly or sail in or out, move smoothly and safely. It's supposed to be fiscally independent as well.

How does the Port do this?

Through hiring employees (1,780 were directly employed by the Port as of December 31, 2014) and working with businesses that directly need SeaTac and the waters/terminals controlled by the Port of Seattle. Businesses such as Alaska Airlines and Hanjin Shipping Holdings (which owns Total Terminals). These businesses lease the land and/or operate terminals owned by the Port of Seattle. The Port of Seattle in turn provides the financial infrastructure support for things like bigger cranes, new runways, and other capital improvements and acquisitions to assure that companies like Alaska Airlines and Hanjin will continue to use the Port's facilities and real estate.

Yeah, yeah, so what does this have to do with bringing back the Sonics?

Because the Port says that the location of the arena in the Stadium District will cause unbearable traffic issues which will cause a loss of businesses and jobs. They say that these projected traffic issues will mean the big container ships will choose to use other ports like the Port of Vancouver or other west coast ports because of the traffic problems, and this in turn will have a devastating impact on the local, regional, and statewide economy. Or another argument, that the development caused by the arena will cause existing industrial/small business to be pushed out because the arena and all the new business will drive up rents. Or worse, that when the existing businesses leave, they'll be replaced by retail and hospitality businesses which don't pay as much (even though they employ more) than the industrial jobs lost.

This is where the water gets murky again.

The various statistics released by the Port of Seattle

So how does directly employing 1,780 somehow allow the Port to claim they're responsible for upwards of 194,000 jobs in the State of Washington (and that's just one of the many employment numbers they and others have batted around). Or for the people who are concerned about losing more industrial land to cities like Kent and want the SoDo area protected, how can they claim the importance of businesses currently in SoDo? Well, here's how it seems to work.

You buy a plane ticket to visit your Mom in Denver. You call a taxi to come pick you up to take you to the airport. While at the airport, you check your bags and hand them to the baggage collector, then you go through security where you show your id and ticket, once through security you purchase a coffee and magazine, then hand your ticket to the flight attendant, board the plane which is controlled by a few pilots. The food/snacks for the plane are loaded up by employees of the snack services...

You get the picture. There are a lot of people that are involved in the daily operations of SeaTac airport. It's not just the 856 direct employees of the Port of Seattle who work for the Aviation Division (SeaTac), it's all those other people/companies who work in and around SeaTac but for private and publicly held companies. But the Port wants you to believe that those jobs are directly related to what it does. Do you see how messed up that is?

The Port doesn't manage Alaska Airlines and its employees but it wants credit for the jobs Alaska Airlines creates. This is critical to understand because it's an extremely easy number to blow-up to make a business, or Port, look ultra important to the local, regional, and national economy.

Since 2009, the Port of Seattle, through various handouts, promotional brochures, and public comments, has stated that anywhere from 33,000 to up to 80% of the jobs in Washington State are directly, indirectly, and induced through its operations. That's pretty substantial if it wasn't for the that rather inconvenient fact that it's not the Port of Seattle that creates those jobs (and the many tangents), it's their customers like Alaska Airlines and Hanjin and the people who buy the plane tickets and purchase the goods that are shipped on the big container ship.

In essence, the Port is a conduit, not a creator.

A few more Port of Seattle facts to help with the remainder of this article

The Port is split up into four divisions: Aviation (SeaTac), Seaport (water/seaport ops), Real Estate, and Other. It's important to remember this because it's easy for the Port to combine all four of it's divisions when it comes to its statistics, making the waters murky yet again because by its own numbers, it's the Aviation division that is the largest provider of jobs and commerce to the the region. The Aviation division is far south of the Stadium District.

Here's a page from their 2014 financial statements that shows the breakdown of employment over the past 10 years:

Port of Seattle Employment

It's a bit foggy (screen shot) but essentially back in 2008 when the Port was recovering/restructuring itself from some management public relation issues, they decided to delineate their employees to better address the primary divisions they served. As you can see, Seaport operations underwent a major adjustment. Most of the jobs were switched to Real Estate and Other. Other being corporate and capital development (or: overhead and taking over treasury operations from King County).

Summary

You now have a basic understanding of the origins of the Port and what they do. Remembering this will help you in the next section when you learn more about the amount of land and money the Port controls (including the payroll and benefits for their 1,780 or so employees).

Remember, the point of this article is to see if the Port is credible and legitimate when they bring up all the doom and gloom scenarios when it comes to Seaport operations and how the arena will create untold horrors on economy of Seattle and King County. Because that's their concern, right? It's not about Key Arena, it's not about public dollars (because as you'll see in the next section, they sit on and spend an awful lot of public dollars without anyone writing a peep about it), it's about jobs and traffic. The Port and the Mariners say this is the only reason why they are against the arena, because of Port jobs and traffic problems.