Fantasy Island

Victor Viets and Mayor Charlie Hales have a lot in common. Both used to work for large engineering firms in Portland and both are boating enthusiasts who have lived in Columbia River condos near where  Interstate 5 crosses Hayden Island.

Hales—who has so far spent most of his rookie year working on the city's budget—will soon turn his attention to an issue that's vexed the city for years: Should the city annex the western part of Hayden Island so the Port of Portland can spend $130 million to prepare the ground for new marine terminals?

It's an issue that has vexed Viets, too. But he has one big advantage over Hales: Viets knows the port's proposal inside out.

Viets, who lives on nearby Tomahawk Island, over the past five years has served on two committees looking at the port's plans. He's heard repeated claims about the jobs that would be created if the city of Portland allows the port to transform 300 of Hayden Island's 825 woodland acres into terminals for bulk commodities and vehicle imports.

"They say this will create thousands of jobs," Viets says. "What they leave out is that the project won't lead to any manufacturing or involve products that have anything to do with Portland."

Most of the current debate about West Hayden Island has been about how the port would make up for environmental damage caused by its terminals.

Meanwhile, city officials have barely debated the port's claims all that public spending will pay off.

Viets is the retired former head of the Portland office of URS Corp., an international engineering firm. URS does infrastructure projects around the world, including big jobs for the ports of Los Angeles, Long Beach, Calif., and Portland, so Viets is no stranger to the rosy projections that government agencies use to justify spending. 

Although port officials say West Hayden Island could generate more than 1,000 new jobs, Viets is skeptical. Competing ports in Canada and the U.S. have deeper water, cheaper land and better labor relations. Viets adds that bulk commodities passing through Portland do little for the local economy. 

"We are talking about a no-value-added business," Viets says. "The economic argument they are making just does not make a lot of sense."

Where does Viets get the information to draw these conclusions?

The port's own numbers.

Ever since the port bought West Hayden Island from Portland General Electric in 1994, the port has sought to develop the land. In 1997, it announced plans for a $700 million development project that would include new terminals for grain and container ships.

The port abandoned that plan in 2000, but brought back a revamped plan in 2008. In 2010, the Portland City Council asked the Planning and Sustainability Commission to evaluate moving forward with a 300-acre development, while preserving the rest of the island as a wildlife refuge. That decision came at the height of politicians' willingness to greenlight any project that promised jobs. 

The $130 million in public money would cover environmental mitigation and basic infrastructure, such as roads, to prepare the site. The port is hoping that terminals—ideally paid for by shipping companies—would be built later.

The result was an analysis of the port's marine operations he presented to the Portland Planning and Sustainability Commission meeting May 7. 

"The Port of Portland is not growing," Viets said in written testimony. "With the exception of their Terminal 5 bulk minerals tenant, the port has actually been losing business for the last 32 years."

And the decline, he says, has occurred for reasons that a new terminal at West Hayden Island would not fix.

Grain exports are 10 percent lower than they were 30 years ago and 20 percent below peak levels in the mid-1980s and 1990s. Automobile imports have grown at an annual rate of 0.4 percent. 

The shipping of containers—the 20-foot-long steel boxes that can hold any number of products—is a dying business in Portland. Viets notes that port figures show container exports have declined steadily for 18 years, and are now at the same level they were in 1989.

The one bright spot in port figures—the export of bulk minerals, mostly Canadian potash—is a mixed blessing. Shipping potash creates few jobs. Mile-long unit trains roll down from Canada and deliver their cargo into ships, a largely mechanized process.

Port officials see the numbers differently.

Josh Thomas, a port spokesman, says grain and bulk mineral exports terminals are operating at full capacity and undergoing expansion. 

“The long-term trend is that a lot of commodities will flow down the Columbia River,” Thomas says. 

But ECONorthwest, a local consulting firm, echoed some Viets' concerns in a study the city paid for last year.

"The goods currently expected to flow through West Hayden Island (autos, grain or dry bulk) will not come from local firms or end up in local stores," ECONorthwest wrote in June 2012. "As currently envisioned, [West Hayden Island] will generate few local user benefits."

ECONorthwest also noted that the port has enough existing capacity to more than double vehicle imports, although that is one of the operations the port would like to place on West Hayden Island.

Susie Lahsene, the port's manager of transportation and land-use policy, says even if the new terminals move primarily bulk commodities, there would be 1,000 new direct jobs on West Hayden Island. She adds there would be many more indirect jobs created for legal, financial and other service providers who would work to support the new terminals. 

Lahsene says critics and the public may not understand the port's role in assembling industrial land that provides a place for private companies to make profits. 

For example, Columbia Grain operates on port property, sending millions of tons of grain abroad every year. Those shipments provide economic benefits to far-flung farmers, railroad workers, tugboat crews and a variety of others whose paychecks don't show up in the port's financial statements but are a benefit to Oregon's economy. 

"We are a facilitator," Lahsene says of the port's role. "We create jobs and revenue for the community."

Viets, however, sees the push for the development of West Hayden Island in the context of other expensive and risky projects the port promoted that turned out to be costly missteps.

In the early 1980s, for example, the port subsidized a coal export terminal on its property, which turned out to be a fiasco. So, too, did its big investment in a dry dock at Swan Island and an airport maintenance facility, called PAMCOR, at Portland International Airport. 

More recently, the port promoted the dredging of the Columbia River channel to deepen it to 43 feet. The port claimed a bigger generation of ships would ply the Columbia, but the project has not yet had a major effect on the port's fortunes.

The port's Lahsene agrees that investing port resources in future commodity trends is a risk. But she notes that even when the port gets it wrong, it's been able to see some benefit despite the losses: The port's old shipyard is thriving under private ownership, the failed coal dock is now a bulk mineral terminal, and Boeing is leasing the aircraft maintenance facility.

"We are in a long-term business," she says.

But Viets sees another parallel at work. The debate before the city has been about how the port would mitigate the environmental harm caused by paving nearly half of the natural area on West Hayden Island. The lengthy, convoluted process echoes the proposed Columbia River Crossing, the planned replacement of the Interstate 5 Bridge between Oregon and Washington. Years of public debate focused on the design of the bridge while obscuring basic questions about whether the tolling and traffic projections justifying the project were correct. (They were not.)

Viets says an 825-acre island located in a city is "irreplaceable" and not suitable for what amounts to land speculation.

Viets says Hales spent a half-hour on his doorstep when campaigning for mayor. If he gets a chance to talk to Hales again before the council votes on annexing West Hayden Island, he says he will offer simple advice: “I’d say we just don’t need it.” 

WWeek 2015