Tech boom benefits leaking through county’s retail sieve

The benefits of a booming tech economy are leaking out of Whitman County.

A new report by University of Idaho economist shows Whitman County as the “engine” of the regional economy for Whitman, Asotin, Latah and Nez Perce counties.

Dr. Steve Peterson briefed county officials on his economic study on the regional economy, and the impacts made by the Port of Whitman County, at the port commission’s regular meeting Sept. 5.

Employment in the manufacturing sector, primarily driven by Schweitzer Engineering Laboratories in Pullman, has jumped 152 percent in the last 10 years, providing high-paying jobs for Whitman County.

With the reduction in operations at Clearwater Paper in Lewiston, nee Potlatch, Schweitzer is now the top employer in the Quad-Cities region.

“For me, that is jaw-dropping,” said Peterson. “It is really showing what the wave of the future is.”

Dr. Peterson, though, noted that because of an “underdeveloped” retail sector, $100 million to $300 million of the disposable income from those jobs is being spent somewhere else.

“Retail trade acts as a sponge to soak up income that comes from export and manufacturing businesses like Schweitzer Engineering,” said Peterson. “If you don’t have that sponge, the income goes elsewhere.”

Peterson’s study showed Whitman County has one-third the retail sales per capita of Nez Perce County, home to Lewiston’s retail hub. Pullman records about $203 million in sales per year, just a notch above the $198 million in sales made in Clarkston, which has one-third the population.

“Whitman County is like a sieve,” said Peterson.

Dr. Peterson’s study was based off data from the 2007 economic census which does not record the impact Wal-Mart has had on Pullman’s retail economy. Nor does the study show how much of Whitman County’s disposable income is spent in markets outside the Quad-Cities like Spokane or online markets.

Commissioners Pat O’Neill and Greg Partch said Peterson’s study shows the need for retail developments to boost the county’s tax coffers.

“That’s it. He said it all,” said O’Neill, currently embroiled in an election with challenger Dean Kinzer of Pullman, who won the primary by 19 percentage points. “We’re sending all of our money outside the county. That can’t keep happening.”

The primary centered on the pair’s decision in January to boost a commitment to build infrastructure at Boise-based Hawkins Companies’ long-proposed 714,000-square-foot shopping center in the Pullman-Moscow corridor on the Whitman County side of the state line.

“My entire goal when I came into office 12 years ago was to build up the county’s tax base,” said Partch, whose loss in the three-way District 1 primary ended his stint on the county commission. “This project is so important because it captures that money that is just flowing out of here. This is the sponge.”

Jeff DeVoe, project manager for Hawkins, said that “sieve” is exactly what his company saw when it first eyed Whitman County for a shopping center.

“This county’s had a great deal of industrial growth,” he said. “But now, the people that are in the county have few options but to take their money somewhere else to spend it.”

But the Great Recession crushed commercial property values, he said. That makes it harder for development firms like his to recoup their expenses through higher rents.

“In today’s economy, the tenants will not pay enough rent per square foot to pay for the cost of putting in the infrastructure and the cost of building the development,” said DeVoe.

Which is why Hawkins asked the county to fund as much as $15 million worth of roads and water and sewer lines.

If the land is not developed and valued as retail property, said DeVoe, the firm’s lenders would not secure Hawkins the funding the company needs to build the shopping center buildings.

Having Whitman County’s commitment to build the infrastructure turns Hawkins’ property from a piece of farm land to a commercial property, upping its value.

Some citizens worry the county could be on the hook for its $15 million if Hawkins begins construction before the county secures funding.

DeVoe said that would not be an issue.

“We don’t get our financing unless the county gets its financing,” he said. “So we can’t build.”

Peterson’s report also noted businesses set up at Port of Whitman facilities are responsible for more than one-fourth of the four counties’ gross regional product.

In 2011, 2,414 people were employed at firms set up on port property, primarily at the Pullman Industrial Park, which was once proposed as the site of the Palouse Empire Mall. That is a steep tick up from the 744 jobs in port-based industries in 1996.

Dr. Peterson’s full report is available for review on the Port of Whitman’s web site: http://www.portwhitman.com.