berk study 1 - anacortes, wa

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City of Anacortes: Economic Study Phase I

August 2006


Introduction

This economic and fiscal profile of the City of Anacortes is designed to serve as the analytic foundation of a broader fiscal/economic strategy development process. The ultimate outcome of this process will be an economic development and land use strategy that will assist in establishing a course for the community’s long-term fiscal sustainability.

An important first step in developing a comprehensive fiscal and land use strategy is to assess the nature and extent of the sustainability challenge. This entails developing a long-term forecast of revenues and costs the City will face if it pursues the path it is on today. Once the extent of the fiscal challenge is understood, the City can develop options for a fiscal strategy that will enable the City to forestall the anticipated revenue gap.

Another important component of the fiscal/economic strategy is to ensure that the City aligns its land use policies and investments to foster a strong revenue base, while simultaneously ensuring that development is in keeping with the vision of City residents. Developing optimal land use and investment policies requires the City to understand the market for, and fiscal implications associated with, different kinds of development. With this context in hand, the City can then weigh the fiscal implications against other, non-fiscal considerations that contribute to a development’s attractiveness.

This economic and fiscal profile summarizes the results of the status quo forecast of City revenues and costs and the baseline market research findings. The report is organized into the following sections:

• Overall Summary of Findings

• Long-term Fiscal Outlook

• Demographic and Employment Profile

• Analysis of Taxable Retail Sales Base

• Anacortes Landbase Analysis


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Summary of Findings

Anacortes seeks to promote patterns of land use and development that are consistent with the City’s vision. A the key component of this vision is the development of a downtown that (1) provides opportunities for commerce, (2) provides services and amenities that will benefit residents and attract visitors, and (3) provides a common center of focus for the Anacortes community. In addition, the City also seeks to promote land use patterns that will provide the Anacortes with a strong tax base, to ensure that, over the long term, the City has the financial means to provide services that residents desire.

Cities in Washington State are currently faced with multiple fiscal and planning challenges. For example, the pursuit of optimal land use policies require the City to understand the market for, and fiscal implications associated with, different kinds of development. Armed with this information the City can go on to weigh fiscal implications against other considerations that contribute to a development’s attractiveness. Ultimately, cities seek to ensure that the City’s land-use policies encourage development that achieves the City’s vision, while ensuring that that vision also reflects residents’ desires regarding levels of service and tax burdens.

In reality, optimizing land-use policies and fiscal sustainability go hand-in-hand. A city’s fiscal strategy includes a series of policy considerations, including:

• Land use policy; • Tax and fee structure;

• Levels of City services; • Mix of services provided;

• Service delivery structure; • Capital investment strategy;

• Programs to attract tax dollars from those outside the City; and

• Programs to reduce “leakage” of local retail tax dollars.

Long-term Fiscal Outlook

Given current challenges in Washington State’s tax structure, most Washington cities face a future where expenses have the potential to outstrip revenues in the medium- to long-term. The combination of (1) increasing costs of doing business, (2) long-term erosion of the real (inflation-adjusted) value of the cities’ property tax levy, and (3) loss of revenue sources such as Motor Vehicle Excise Tax distributions has a compounding effect that prevents the use of “traditional” ways of balancing budgets. Washington cities will find it increasingly difficult to make ends meet with each passing year.

The first step to achieving fiscal sustainability is to have a realistic understanding of where the city stands. For this analysis, expense and revenue projections for the City of Anacortes were compared in a municipal financial plan format to model the potential fiscal gap that the City might expect to see in coming years if current trends were to continue. The analysis concentrated on the core revenues and core operating expenses that these revenues support.

Considering the effects of future population and employment growth and the impacts of I-747, the core revenues are forecasted to grow at an average annual rate of 3.8% over the next twenty years. At the same time, due to the increasing costs of doing city business, the expenditures are projected to grow at 4.8% annually. Total revenue growth between 2005 and 2025 is estimated at 109% while expenses are estimated to increase by 155% over the same period.


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Summary of Findings

As expense growth outpaces revenue growth (and assuming no changes in policy), Anacortes would likely post its first operating deficit in approximately seven years (2012). When the City’s general fund balance is factored into the analysis, the first unfunded deficit is estimated to appear around 2019. It is important to reiterate that this analysis assumes continuation of current trends and does not account for changes in policy or any actions that may come out of the current economic planning efforts.

Another factor that was not considered in the base analysis was the potential effect of forthcoming changes in sourcing rules as a result of sales tax streamlining. In general, these sourcing rule changes will redirect sales tax revenue on sales of items that are delivered to the purchaser. Currently, in most cases the sales tax accrues to the location of the shipper. Under the new rules the tax will accrue to the point of delivery. For example , in the case of a major appliance purchased in Burlington but delivered to a home in Anacortes, the local portion of the tax would shift from Burlington to Anacortes under the new rules.

The Department of Revenue has estimated that the net impact of these rule changes for the City of Anacortes is a net gain of approximately $44,000 per year, suggesting that on balance the shift to the point of delivery will be beneficial to the City’s tax base. In comparison, Burlington, which is home to a number of businesses that deliver products is expected to experience an estimated net loss of $1.1 million per year.

The principal factor driving the differential in revenue and expense growth rates in the base case analysis is the impact of Initiative 747’s 1% cap on the City’s regular property tax levy. By limiting the growth of a key component of the tax base to less than the rate of general inflation, the tax burden gradually shifts to other components of the tax base such as the retail sales tax and utility taxes.

This conclusion is not surprising, given the structural changes in local government finance resulting from voter-approved initiatives. However, the fact that the first unfunded deficit is not expected for more than 10 years gives the City time to enact policies and pursue strategies to improve the fiscal outlook. Most cities do not have the luxury of time, leaving many to pursue tax increases such as levy-lid lifts or changes in utility tax rates as the means to address impending shortfalls.

Market and Economic Analysis

Given the long-term baseline fiscal outlook, the City’s ability to continue to provide services at current levels without increasing taxes will depend largely on growth in the City’s tax base, particularly the taxable retail sales base. The analysis of the economic and market conditions suggest that there are reasons to be optimistic that local economic development opportunities will lead to further tax base diversification and improvement in the overall fiscal balance of the City. The following are the key findings from the analysis of market and economic conditions.

Strengths

• Diverse and stable employment base. The City enjoys a relatively stable and, for a smaller community, diverse

employment base. There is a strong manufacturing base including marine and petroleum products whose

markets extend far beyond the City or region.


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Summary of Findings

• Strong taxable retail sales base. From a fiscal perspective the City enjoys higher than average taxable retail

sales per capita, suggesting some importation of outside dollars to support local services. In general there

is a solid base of locally-supportive uses that are augmented by three key component that contribute

beyond the scale for a City the size of Anacortes. These are auto dealers, manufacturing activities, and

boat dealers which all contribute more than typical shares on a per capita basis. The expected changes in

sourcing for sales tax (sales tax streamlining) are unlikely to alter this finding, though there may be some

impact on the manufacturing sectors sales tax contribution.

• Demand for housing. The City has experienced strong demand for housing, which has shown up in a

significant increase in the number of property sales in recent years and a healthy rate of growth in

housing units and population. This suggests that there are important quality of life factors and community

attributes that are attracting people to the area.

• Demographics. The demographics of the community is generally an asset, with high rates of owner-

occupied housing and average incomes that are higher than other peer-communities, such as Port

Townsend and Port Angeles and a well educated population base. In fact, the proportion of residents

with a college degree or higher increased from 15.1% in 1990 to 27.8% in 2000. The share for Skagit

County overall in 2000 was 20.8%.

• Attractiveness of area and location within tourism industry. The City enjoys many natural advantages in

terms of its tourism potential including: the natural beauty of the area, the small-town charm, and the

marine-related activities including fishing, boat building and recreational boating. Adding these features

to the fact that Anacortes is the gateway to the San Juan Islands offers a solid base from which to

consider opportunities to attract visitors.

• Marine-related industries. A core element of the City’s economic base the diversity of its marine-related

industries, which include fishing, fish processing, boat sales, boat building and repair, boating supplies

and hardware and marinas catering to both recreational and commercial vessels.

Potential Areas of Opportunity

• Tourism and visitor spending. The analysis of taxable retail sales by industry sector suggests that the City

of Anacortes is not getting a significant boost from visitor spending. For example total spending on hotel/

motel and restaurants on a per capita basis is roughly in line with overall statewide per capita averages,

offering an indication that tourism is not a significant feature of the local economy. Compare this finding

with Port Townsend which gets more than twice the statewide average sales per capita for both lodging

and restaurants. Given the strengths listed above this would appear to be an area with some potential for

development.


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Summary of Findings

• Eating and drinking places. The City currently supports an eating and drinking sector roughly in line with

its population base. Given an expected population increase of approximately 5,000 over the next 10-20

years (a 33% increase) it is reasonable to expect that the additional disposable income will translate

to greater capacity in this sector. Any potential to increase tourism spending will also support additional

restaurant development.

• Smaller scale niche retail shops. In keeping with the theme of more housing development and the

possibility of increasing tourist spending, the market for additional niche retailers should also present

opportunities.

• Redevelopment opportunities along SR 20 and within downtown area. The landbase analysis suggests that

there are opportunities for greater investment along SR20 and within the downtown area which could

lead to redevelopment pressures.

Underserved markets with significant obstacles

• Larger-scale retail development, in particular apparel. While the City of Anacortes is clearly an underserved in

some retail categories, particularly apparel and general merchandise sales, the competition from regional

retail centers (Burlington in particular) suggest that it is unlikely that these areas will grow significantly in

the future.

Potential Elements of a Fiscally-Sustainable Economic Strategy

On the basis of the market and economic analysis, the following might be considered as potential key focus areas in any subsequent work toward a comprehensive land use and fiscal strategy.

1. Continued revitalization of downtown. A key to achieving a number of the City’s objectives will likely revolve around the continued revitalization of the downtown and waterfront areas. Many cities in the state are focusing their economic development strategies on the development, enhancement and protection of the “town center” as a viable core. There is an opportunity to focus the potential growth in housing, retail, and restaurant in the downtown area increasing the potential to draw additional visitors.

2. Tourism and visitor spending. The analysis suggests that the City is not getting as much as it could from its tourism potential. One of the best ways to improve this situation is to increase the number of rooms available for overnight guests. As it stands now, the City’s lodging base is in line with the population base. A community with a greater focus on tourism would be expected to have a much higher lodging to population ratio. The biggest impact from additional lodging is the spill over to restaurant and retail.

3. Maintain strength and diversity in employment base. A real strength of the community is the diversity in the employment base. Strategies should be considered that would support existing industries with


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Summary of Findings

growth needs. Maintaining a strong and diversified local economy will support the housing market, improve tax diversity and allow the City to withstand cyclical fluctuations within each industry with a minimum of disruption in revenues.

Leveraging Strength in the Residential Market

As the City discusses its options for moving forward, it is worth considering the potential role of housing in any land use strategy designed to achieve long-term fiscal sustainability. There is a perception that residential growth and housing development lead to increased fiscal challenges, which would seem to be at odds with the goal of improved fiscal balance in the City. The reality is somewhat more complicated than the conventional wisdom. In fact, housing can be an integral component of a long-term fiscally-balanced economic strategy.

As discussed previously, one of the key strengths that the City can build on is the continuing demand for new housing in the area. In recent years, the City of Anacortes has seen very strong and sustained demand for residential development. Given this strength of demand and the potential focus areas identified above, a central question that the City faces is:

What role might residential development play in helping the City of Anacortes achieve its broader economic and

fiscal goals?

The question of whether the demand for housing in Anacortes can be leveraged toward achieving some of the City’s other land use and economic development goals comes down to the following issues:

• How residential development may fit into Anacortes’ broader goals for its commercial center; and

• What fiscal implications could the City expect to see if it was to allow such residential development.

Overall, our assessment suggests that development of residential uses in the City and in particular in or near downtown Anacortes could help the City achieve its goals for the downtown area. If executed properly, development of housing would likely improve the overall attractiveness of downtown to residents and visitors alike, thereby improving Anacortes’ overall competitive market position. From a fiscal perspective, it also appears that development of housing in or adjacent to downtown would generate clear benefits for the city.

Role of Citywide Residential Growth in Commercial Development

For the City of Anacortes as a whole, continued residential development is likely to play an important role in the city realizing its vision for downtown. Currently, Anacortes’ retailers, restaurants, and service providers are supported by a combination of:

(1) the city’s existing 15,000, plus residents,

(2) other full- and part-time households who live on the islands and in the surrounding community on the mainland, and

(3) visitors—both those who come to Anacortes as a destination and those who pass through the city on their way to points beyond.


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Given the inherent attractiveness of Anacortes, and given the volume of travelers who pass through the city in the span of a year, Anacortes has a clear opportunity to capture additional visitor spending. Perhaps the best chance Anacortes has to capitalize on this opportunity is for the city to leverage the current expansion of its residential base, to develop a downtown with the critical mass, the amenities, and the level of street activity that will make the city more attractive to visitors.

Capitalizing on Residential Growth

Each new resident in Anacortes translates to new demand for restaurants, retail, and consumer services. Specifically, over the long run, each new resident in Anacortes will support well over 10 square feet of new commercial space for retail, restaurants, and services.

Given (1) the existing pace of residential growth in Anacortes, and (2) a recognition that Anacortes does not have the capacity (or the desire) to expand its residential base beyond a certain limit, the city should bear in mind two key goals regarding residential growth:

• To make sure that Anacortes captures the newly introduced demand for retail, restaurants, and

services as it emerges (as opposed to seeing the new demand captured by businesses located

outside of the city); and

• To make sure that it leverages the new commercial activity in a way that makes downtown Anacortes

an attractive and compelling experience for residents and visitors.

As decisionmakers in Anacortes know, and as most urban designers are quick to point out, creating a compelling experience means creating a center of commerce that (1) facilitates access, (2) promotes activity on the city’s streets and sidewalks, and (3) creates an environment that allows people who use those streets and sidewalks to feel comfortable and engaged.

Are Residential Uses Compatible with “Basic” Industries?

When thinking about commercial activity, it is sometimes useful to distinguish between (1) commercial activity that principally serves local markets and (2) basic industries, which sell their products in broader markets and, therefore, are less reliant on local demand conditions.

In this context, local commerce would include any firms that provide goods or services to people and business who are located in or around Anacortes (or to people who visit the area). Basic industries, on the other hand, produce goods or services that are sold into regional, national, or even international markets. Basic industries would include traditional marine-industrial activities like boat-building, and it could also include information industries like software development, information design, or financial services companies that happens to be located in Anacortes but serve clients across the region, the state, or the country.

As a city that (1) counts among its residents a large number of retired households, and (2) is frequented by a large number of visitors, Anacortes could probably exist as a nice and prosperous city even if it possessed few basic industries. It is our understanding, however, that the City of Anacortes has always valued its traditional

Summary of Findings


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Summary of Findings

marine-industial roots and, looking to the future, the city would like to maintain its identity as a real place, where people make real things, be they tangible—like boats—or somewhat less tangible—like software. Given this goal, the natural question is:

Does residential development in or adjacent to downtown conflict with the goal of keeping and attracting basic industries?

In regard to the aforementioned information industries, it would seem that the answer to this question is clearly: No. If anything, an active downtown that offers a range of amenities, in combination with all of the other assets that Anacortes brings to bear, could only help to make Anacortes more attractive to small, information-based businesses whose owners have the option of living and working wherever they want.

In regard to more traditional industrial uses, experience elsewhere suggests that it is possible for residential and industrial uses to be compatible, but challenges do exist.

When one looks at West Coast cities, it is not difficult to find examples where industrial areas have proven to be attractive for housing, offices, and consumer-oriented commerce. Districts like Georgetown, in Seattle, the Pearl District, in Portland, and the South of Market area in San Francisco are all examples of areas where housing and industrial uses have been able to coexist in relative harmony. Notwithstanding the occasional story about noise conflicts, it is clear that many industrial districts became attractive to residents and other businesses precisely because of the feeling of authenticity that traditional industrial uses are able to offer.

In fact, if one looks at the districts noted above, the challenges to industry do not revolve around compatibility. Rather, the challenges are indirect, revolving around increasing land values. As the area becomes increasingly attractive for residential, retail, and office uses (in part because of their industrial character), increased land values tend to push industrial users out of the immediate area. It is worth noting, however, that marine-oriented industrial uses have tended to be less affected by increasing land values. One reason for this is that, while the land these industries occupy may be very valuable, (unlike non-marine industries) few inexpensive alternatives exist, so the businesses in question are more likely to remain in place.

What are the fiscal implications of a strategy that relies on residential development as a key driver?

In 2006, Anacortes expects to spend roughly $13 million for provision of “core” governmental services. With an estimated city population of roughly 16,000, this translates into core expenditures per resident of about $800. In reality, however, when a city thinks about the fiscal impact of adding 100 new residents, average costs of service are not particularly helpful. In this situation, the key questions are:

1. What new revenues will those residents bring to the city?

2. What new costs of service will those residents introduce?

New Revenues. On the revenue side of the equation, new households bring with them the full slate of new revenues. They will pay property taxes and utility taxes, and they will pay sales taxes on all of their purchases (many of which will be made locally). In addition, the new population allows the city to collect additional


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revenues that are distributed at the state or county level based on the city population.

For example, each resident of a new condo complex in Anacortes (selling at $400,000 per unit) would generate $480 in city property taxes, perhaps $100 in new utility taxes and another $100 in new sales taxes. In addition, by adding another resident, Anacortes will expect to receive an additional $50 in distributed revenues (from criminal justice sales tax distributions and state-shared revenues). Combined, these four revenue sources alone would represent $730 in new core revenues for the city. Multiplied by 100 new residents, this equals $73,000 in new revenues to the city.

New Costs. In contrast with new revenues, on the cost side of the equation, 100 new residents in downtown Anacortes would probably generate only modest increases in the cost of providing city services.

It is certainly true that, all else being equal, more populous cities do cost more to serve. However, it is also true that a residential development in downtown Anacortes would have little impact on many city operations. City Hall would continue to do what it does. Public Works and Parks would probably see only the most modest differences in what they do. And the Police Department and the Medic/Fire Department would probably each see a handful of new calls for service in a given year, but since the new housing would be located very close to the City’s Police Station and the main Fire Station, the departments would be in a good position to respond to these calls.

In economic terms, these are the result of economies of scale—the notion that, with a number of fixed costs already established, the incremental cost of providing services to 100 more residents can be significantly less than the average cost of providing services to all residents.

While it is outside the scope of this analysis to provide a precise estimate of the potential cost impacts to extend services to the hypothetical new residents. Based on experience with other cities, it is likely that the costs of extending core city services to one new resident in downtown Anacortes would be less than half of the city’s $800 average cost of service—generating incremental costs of perhaps $400 or less, for each new resident.

Excess Revenues. If the above discussions of incremental revenues and incremental costs did turn out to be accurate—with new core costs of $400 or less each year for each new resident, and new core revenues of more than $700—then on an annual basis, 100 new residents would represent a clear fiscal windfall to the City.

Moreover, this discussion of direct fiscal impacts does not even take into account the potential benefits that downtown residential development could have on Anacortes’ overall market position. If such development did help Anacortes achieve a more compelling downtown, and if that success resulted in the City capturing a greater share of expenditures by locals and/or visitors, then the indirect fiscal benefits of the new residential development could far exceed the direct benefits outlined above.

Summary of Findings


Long-Term Fiscal Outlook


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An important first step in developing a comprehensive fiscal and land use strategy, the long-term fiscal outlook forecasts revenues and costs that the City of Anacortes will face if it pursues the fiscal path it is on today, i.e. relying on the same revenue sources and spending on the same types and categories of expenditures. This analysis paints a picture of the City’s fiscal future if current trends were to continue.

The analysis demonstrates that Anacortes, along with virtually all other cities in the state, is heading in the direction of future revenue shortfalls. Key assumptions that drive the projected future fiscal gap include population growth estimates and impacts of fiscal challenges that the City has already began to encounter, including Initiative 747 effects and impacts of rising costs of doing City business. With understanding of these future challenges, Anacortes can develop options for a fiscal strategy that will enable the City to forestall the anticipated revenue gap.

Population Growth

Population estimate is a key variable in the long-term fiscal outlook projections; population growth rate serves as one of the drivers for revenue and cost estimates. Currently, the Washington State Office of Financial Management puts the City’s 2005 population at 15,700 residents.

According to the City of Anacortes’ most recent Comprehensive Plan, the City has limited growth capacity and will reach complete build-out when the population reaches 19,300 people. At present, one of the options being discussed by the City is whether or not to allow some residential development in certain commercial marine zones. If the City gives the green light for this change, it is estimated that an additional 1,000 resident capacity will be allowed, bringing the population growth cap to 20,300. In the first option, where the residential development is not allowed in the certain commercial marine zones, the build-out of 19,300 would be achieved by 2016 (assuming the current high rate of growth continues). In the second option, the build-out of 20,300 would happen by 2019, again assuming the continuance of the current high rate of growth.

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Office of Financial Management Estimate

Estimated: Residential NOT allowed in marine zones

Estimated: Residential allowed in marine zones

Historical Population Projected Population

Between 1968 and 2005, the annual average population growth rate was 1.9%.

(Source: Berk & Associates)


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Fiscal Challenges

Anacortes, like many cities in Washington State, faces future fiscal challenges. Most fiscal challenges stem from the recent series of statewide initiatives that have eroded most cities’ financial support from taxes and fees. From a city’s perspective, the most damaging blows resulted from statewide passage of three initiatives: I-695 (ending collection of the State’s motor vehicle excise tax [MVET]); I-747 (limiting the growth of property tax levies on a city’s existing property to less than the rate of inflation); and I-776 (ending the collection of vehicle license fees). Combined, these initiatives have resulted in the immediate reduction of millions of dollars of city revenues, and have set up the long-run erosion of cities’ property tax bases.

Property tax revenues represent the single largest revenue source for the City; not counting the revenue dedicated to repayment of bonds, approximately $3,370,000 in property tax revenues was collected in 2005. However, with passage of I-747, the revenue a city is allowed to collect from property taxes cannot grow by more than 1% per year (excluding the effects of new construction), effectively eroding property tax revenues.

As evident from the chart, despite several factors outside the I-747 limit (voter-approved levies and taxes on new construction and building improvements), the measure’s effect has been to drive down tax rates. If property values rise by more than 1%, the only way to keep tax collections below that cap is to tax at a lower rate. Similarly, the higher the value of new construction for the given year, the lower the levy rate, and vice versa. With the value of new construction projected to be 2% of total assessed value for the City, the result is the decreasing levy rate for Anacortes.

In this “status quo” scenario, the City’s levy rate could drop from $1.99 per $1,000 in assessed value in 2005 to roughly $0.74 per $1,000 in 2025. Considering this eroding levy rate, the City’s property tax growth will likely hover around 3% annually.

The one method available to the city for increasing property tax revenues at higher rates is to commit to seeking “levy lid lifts” from City voters. If voters were to approve a series of levy lid lifts that allowed the City to maintain its current levy rate over the coming years, then property tax revenues from “built” areas of the City could increase at a faster rate (driven by overall increases in property values).

Another fiscal challenge is increasing costs of doing City business: throughout the region, personnel costs (the principal cost of providing city services) are growing at a rate that exceeds inflation. These costs are driven by (1) big annual increases in the costs of health care and (2) wage increases that exceed the rate of general inflation (driven by long-term increases in worker productivity in the private sector).

Anacortes: General Levy Rate for Property Taxes(actual through 2005, projected through 2025)

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December 2001: Initiative 747 takes effect

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General Mill rate before I-747 General Mill rate after I-747

Projected Mill Rate

INITIATIVE 747. Approved by voters in 2001, I-747 limits increases in regular property tax collections to 1% a year. This limit factor applies to the total amount a taxing district may collect only through the regular property tax. Other sources of property tax revenue remain unaffected, such as new construction, improvements to property, and increases in

the value of state-assessed property.


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($10)

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Projected Core Operating Revenues and Expenses(under 1% Property Tax Revenue Limit Scenario)

Bottom Line: Potential Future Fiscal Deficit

For most cities, the first step to achieving fiscal sustainability is to have a realistic understanding of where the city stands. In this long range fiscal outlook, expense and revenue projections were compared in a municipal financial plan format to model the fiscal gap that the City could expect to see in coming years if it were to try to maintain the status quo. The analysis concentrated on the core revenues and core operating expenses that these revenues support.

“Core operating revenues” include all General Fund revenues typically reported in municipal budgets. The revenues from the additional bond debt levy for the new library were not considered in the analysis, as they are dedicated to debt repayment under the terms of the voter-approved levy. Core operating revenues are generated from several different sources, but the majority come from property tax, utility taxes, and retail sales tax. “Core operating costs” consist of all of the City’s operating expenditures currently supported by the general fund and the property tax. Operating revenue and cost projections are based on an assessment of Anacortes’ existing operating and funding structure, historical trends, the City’s current level-of-service standards, and estimates of historical and forecast level of service demand.

Considering the effects of future population growth and the impacts of I-747, the core revenues are forecasted to grow at an average annual rate of 3.8% over the next twenty years. At the same time, due to the increasing costs of doing city business, the expenditures are projected to grow at 4.8% annually. By the same token, the total revenue growth between 2005 and 2025 is estimated at 109%; however, for the same time period the expenses will increase by 155%. As expense growth outpaces revenue growth (and assuming no changes in policy), Anacortes would likely post its first negative deficit in approximately seven years (2012). When the City’s general fund balance is considered, the first unfunded deficit will appear around 2019.

The City’s future fiscal policies should focus on maintaining and building fund balances, maintaining a healthy and diverse mix of revenues to support city services, and keeping costs in line. Anacortes will need to continue to take action to ensure this balance stays in place.



Anacortes Demographic

and Employment Profile


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Demographics: Population

Overview

Some years have passed since the 2000 Census was conducted, yet the data still provide valuable demographic information. By chronicling how Anacortes has changed in the past, it is possible to suggest how Anacortes might change in the future. The following tables and charts present demographic characteristics for the City of Anacortes between the 1990 and 2000 Censuses. Several localities are included for comparison. The cities of Mount Vernon, Oak Harbor, Port Angeles, and Port Townsend were selected because they share similarities in population size, age distribution, employment, or industry characteristics. Skagit County is also included for a comparison of county-wide trends. During the 1990s, Anacortes experienced moderate population growth. Generally, the city got younger, more educated and more affluent.

Source: US Census (1990 and 2000, SF3) and Berk & Associates, 2005

Total Population

79,555

11,451

17,647 17,176 17,710

7,001

102,979

14,707

26,297

19,905 18,472

8,325

2.6% 2.5%

4.1%

1.5%

0.4%

1.7%

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Growth Rate

1990 Census Population 2000 Census Population Annual Growth Rate (constant)

Anacortes has seen a slight decrease in the proportion of persons 65 and older as a share of total population due mostly to population increases in the younger age groups. This follows a similar trend in Skagit County. Oak Harbor, Port Angeles and Port Townsend all experienced growth in the relative share of the 65 and older population. Notably, Oak Harbor’s proportion is low due to higher levels of younger persons resulting from the presence of military personnel and their families.

Total Population

Anacortes grew by approximately 3,000 persons between the 1990 and 2000 Censuses. Assuming a constant growth rate, the city grew at roughly the same rate as Skagit County, but slower than Mount Vernon. The State Office of Financial Management estimates Anacortes’ 2004 population at 15,470.

Population 65 and Older

15.7%

21.9%

14.2%

7.2%

18.4%

19.6%

14.6%

20.5%

12.5%

8.8%

18.7%

20.8%

22.6%

1.6%

6.2%

-12.1%

-6.5%-7.2%

0%

5%

10%

15%

20%

25%


Percent of Total Population

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Percent Change

1990 Census Population 2000 Census Population 1990-2000 Proportion Change




August 2006

16

Demographics: Housing

Anacortes added approximately 1,500 housing units between 1990 and 2000 at an annual rate of 2.7%; similar to its population growth rate of 2.5%. Mount Vernon added the most housing units while Port Angeles added the least of the comparison cities.


33,580

4,992

7,1676,173

7,833

3,280

42,681

6,547

9,7237,736

8,729

4,248

2.4%

2.7%

3.1%

2.3%

1.1%

2.6%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000


Housing Units

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Growth Rate



63.6% 63.7%

54.6%

38.5%

56.5%

62.1%63.5% 64.6%

54.7%

41.2%

54.4%

60.1%

1.3%

0.2%

-3.3%-3.7%

-0.2%

7.0%

0%

10%

20%

30%

40%

50%

60%

70%


Percent of Total

-6%

-4%

-2%

0%

2%

4%

6%

8%

Percent Change


The proportion of housing units that the owner of the unit occupied the unit remained relatively unchanged for Anacortes between 1990 and 2000. At 65%, Anacortes has the highest level of owner-occupied housing for all the comparison cities. Port Angeles and Port Townsend experienced modest declines.

Total Housing Units

Owner Occupied Housing Units


August 2006

17

Anacortes had relatively no change in the average household size from 1990 to 2000 – holding steady at 2.41 persons per household. Mount Vernon had the largest ratio of 2.84 persons per household, a 12% increase over 1990. Oak Harbor, Port Angeles, and Port Townsend saw their average household sizes decrease during the same time period.


(Inflation Adjusted in 1999 Dollars)

$38,854

$36,305

$34,336

$42,381 $41,930

$37,999$36,641

$38,142

$34,285$33,165

$34,536$33,130

1.06%

0.76%

0.46%

0.65%

0.07%

-0.01%

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000


Income

-0.2%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

Growth Rate


Adjusting for inflation, the 1999 median household income for Anacortes was the highest for all the comparison cities. In real dollars, household income grew at an annual rate of 0.76%, slightly lower than the rate for the county but higher than all the comparison cities. Port Angeles experienced a slight decline in median household income.

Average Household Size1990 Census Population 2000 Census Population Percent Change

Skagit County 2.59 2.65 2.25%Anacortes 2.42 2.41 -0.32%Mount Vernon 2.54 2.84 11.94%Oak Harbor 2.84 2.70 -4.76%Port Angeles 2.41 2.29 -4.94%Port Townsend 2.30 2.13 -7.47%Source: US Census (1990 and 2000, SF3) and Berk & Associates, 2005

Median Household Income

Average Household Size

Demographics: Housing


August 2006

18

Anacortes experienced a dramatic increase in the proportion of college educated persons; a trend seen in all the comparison cities. In 2000, nearly 28% of persons over the age of 25 had a college degree or higher - an 84% increase from 1990.

Demographics: Education


(Persons 25 and Older)

16.3%15.1%

17.6% 17.4%

14.4%

27.7%

20.8%

27.8%

18.6%

22.3%

18.9%

33.1%

27.6%

83.7%

5.6%

28.3%31.3%

19.5%

0%

5%

10%

15%

20%

25%

30%

35%



0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Percent Change



(Persons 25 and Older)

19.0% 18.6% 18.2%

12.4%

20.4%

12.4%

16.0%

10.7%

21.2%

9.6%

14.9%

8.3%

16.3%

-33.2%

-27.1%

-42.4%

-15.4%

-22.9%

0%

5%

10%

15%

20%

25%



-50%

-40%

-30%

-20%

-10%

0%

10%

20%

Percent Change


In tandem with the rise in the share of higher educated persons, Anacortes also saw a dramatic decrease in the proportion of persons without a high school degree. In 2000, 1 in 10 persons over the age of 25 did not have at least a high school or equivalent education. However, this trend was not shared by all comparison cities. Mount Vernon showed a substantial increase in this regard.

Education Attainment: College and Higher

Education Attainment: Less than High School


August 2006

19

The proportion of persons living in the same house for the previous five years increased 24% from 41% to 51% of the total population for Anacortes. The increase in tenure suggests more resident stability for existing and new Anacortes households during this time period. This trend was seen in all comparison cities.

Demographics: Housing Tenure


Population Living in Same House for Previous 5 Years

44.9%

40.6%

37.2%

17.6%

42.0%43.1%

50.2% 50.6%

39.9%

31.5%

52.0%

48.3%

11.9%

24.4%

7.2%

24.0%

12.1%

78.8%

0%

10%

20%

30%

40%

50%

60%



0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Percent Change


Population Living In Same House for Previous Five Years

City of Anacortes: Economic Study Phase I 20

August 2006

Employment

Total Employment in Anacortes Area

To evaluate the economic composition of the Anacortes area, employment statistics from Washington State Employment Security Department were collected and evaluated. The data included monthly covered employment totals at the 6-digit NAICS level for the City of Anacortes, the balance of Fidalgo Island plus Guemes, Sinclair and Cypress Islands.

Total employment will be marginally understated since the ESD covered employment figures do not include sole propertorships or business owners, though this deficiency is more than offset by the value of the sector detail. The chart below shows that total employment has fluctuated between 8,500 and 9,500 jobs with most of the variability appearing to be seasonal in nature.

Total Monthly Covered Employment for Anacortes, Fidalgo, and Sourrounding Islands

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05

Em

plo

yees


August 2006

Employment: Top Ten Sectors

Top Ten 3-Digit NAICS Categories for Jobs (Accounting for 57% of Total Jobs)

0

200

400

600

800

1000

1200

1400


Em

plo

yees

Petroleum & Coal Products Manufacturing

Food Services & Drinking Places

Educational Services

Amusement, Gambling, & Recreation Industries

Food Manufacturing

Transportation Equipment Manufacturing

Executive, Legislative, & Other General Government Support

Hospitals

Specialty Trade Contractors

Nursing & Residential Care Facilities

Top Ten Employment Categories

The top ten NAICS categories in terms of Anacortes employment represent 57% of total employment. Between 2003 and 2005, most of these categories have seen little change aside from seasonal fluctuations. Jobs in Transportation Equipment Manufacturing and Food Services & Drinking Places, however, have increased substantially. Also, jobs in Petroleum and Coal Manufacturing have decreased, although none of those jobs are contained within the city limits of Anacortes. The reason behind this significant drop in employment is likely related to the completion of some major facility improvements and not any substantive change in operations.


August 2006

Employment: Top Ten Sectors

The following tables focus on the changes in employment within the top ten NAICS categories in terms of Anacortes employment. The percentage increase or decrease beyond the average level of employment in 2003 is shown in blue. In addition, for each of these key employment sectors the share of jobs that are located within the city limits is shown and the average wages are compared with the statewide average.

% of Jobs in City of Anacortes: 0%Average Wage in 2004 (Anacortes area): $88,079

Average Wage in 2004 (WA State): $84,469



















Jan-

03

Apr-

03

Jul-

03

Oct-

03

Jan-

04

Apr-

04

Jul-

04

Oct-

04

Jan-

05

Apr-

05

Jul-

05

Petroleum & Coal Products Manufacturing

-100%-50%

0%50%

100%

Food Services & Drinking Places

-100%-50%

0%50%

100%

Educational Services

-100%-50%

0%50%

100%

Amusement, Gambling, & Recreation Industries

-100%-50%

0%50%

100%

Food Manufacturing

-100%-50%

0%50%

100%

Transportation Equipment Manufacturing

-100%-50%

0%50%

100%

Executive, Legislative, & Other General Gov't Support

-100%-50%

0%50%

100%

Hospitals

-100%-50%

0%50%

100%

Specialty Trade Contractors

-100%-50%

0%50%

100%

Nursing & Residential Care Facilities

-100%-50%

0%50%

100%


August 2006

Employment: Other Sectors of Interest

Other employment categories, while smaller, have seen large-scale percentage changes in employment between 2003 and 2005. Jobs in Health & Personal Care Stores, Postal Service, and Nonstore Retailers all saw sharp increases followed by plateauing. Jobs for Merchant Wholesalers (Durable Goods), while seasonal, also increased substantially over the years. Employment in Justice, Public Order, & Safety Activities has fluctuated, but all told has decreased rather sharply.

Other Employment Movers

Employment by 3-Digit NAICS for Anacortes, Fidalgo, and Sourrounding Islands,NAICS Codes with Large Percent Changes (Positive or Negative) from Sept. 2003 to Sept. 2005

0

20

40

60

80

100

120


Em

plo

yees

Health & Personal Care Stores

Merchant Wholesalers, Durable Goods

Justice, Public Order, & Safety Activities

Postal Service

Nonstore Retailers


August 2006

Employment: Key Sectors

Three industry clusters make up a full fifth of Anacortes’ total employment:

1. Marine and Maritime

2. Fishing and Fish Processing

3. Restaurant

Marine and Maritime employment has fluctuated somewhat but has increased overall between 2003 and 2005, due in

large part to increases in Ship Building & Repairing jobs.

Fishing and Fish Processing was mostly flat between 2003 and 2005, although seasonal fluctuations do exist. Months that follow low-employment months for finfish fishing often see dramatic decreases in employment for fresh & frozen seafood processing.

Marine and Maritime Employees for Anacortes, Fidalgo, and Surrounding Islands

0

100

200

300

400

500

600

700

800


Em

plo

yees

Marinas

Ship Building & Repairing

Boat Building

Restaurant Employees for Anacortes, Fidalgo, and Surrounding Islands

0

100

200

300

400

500

600

700

800

900


Em

plo

yees

Drinking Places (Alcoholic Beverages)

Snack & Nonalcoholic Beverage Bars

Limited-Service Restaurants

Full-Service Restaurants

Restaurant jobs fluctuate quite a bit during different seasons, but there was a noticeable trend upwards for these jobs between 2003 and 2005. The segments seeing the greatest rate of growth were drinking places and snack bars.

Employment in Industry Clusters

Fishing and Fish Processing Employees for Anacortes, Fidalgo, and Surrounding Islands

0

100

200

300

400

500

600

700


Em

plo

yees

Finfish Fishing

Seafood Canning

Fresh & Frozen Seafood Processing


Taxable Retail Sales Analysis


August 2006

Analysis of Taxable Retail Sales Base

The biggest component of Anacortes’ TRS base in 2004 is the Retail category, making up more than half of total taxable retail sales. Within the retail category, the following are the key components:

o Auto Dealers make up 56% of the Retail Category.

o Another 33% of the Retail Category is made up of sales from Restaurants, Groceries, or Miscellaneous

sources.

Contracting (15% of the total) and Services (10% of total), are other important contributors.

Total Taxable Retail Sales Base

TRS by SIC Category, 2004

$172,218,547

$46,318,402

$32,345,832

$18,762,205 $18,275,794 $17,841,198

$3,907,718 $3,107,781

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

$160,000,000

$180,000,000

$200,000,000

Retail Contracting Services Transportation Manufacturing Wholesaling Other FIRES

Retail TRS Breakdown by 2-Digit SIC Category, 2004

$96,957,948

$21,275,583 $19,694,784$15,732,763

$8,749,882 $8,556,200

$833,803 $417,584

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

Auto Dealers Restaurants Misc. Retail Grocery Building Materials Furniture Apparel General Merch.

While it is important to understand where the overall TRS contributions are coming from, when looking to compare one community to another or when trying to understand the character of a local economy the TRS per capita is a better metric. By accounting for cities’ populations, it is possible to determine if Anacortes’ sales base for each TRS category is in line with those of neighboring communities.


August 2006

Total TRS per Capita in 2004$ (Average 2002-2004)

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000

Anacortes

Port Angeles

Port Townsend

Oak Harbor

State


Because of the tax structure in Washington State, taxable retail sales (TRS) is a critical component of fiscal sustainability for cities. Cities whose economic position provide higher TRS per capita will generally have more resources to meet their community’s service needs. In addition, because sales taxes apply on a wide range of goods and services, TRS analysis provides valuable insight into the economic composition of a community.

Total Taxable Retail Sales per Capita

Taxable Retail Sales per Capita 2004, Nearby Jurisdictions

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Anacortes Bellingham Burlington FridayHarbor

La Conner MountVernon

Oak Harbor Sedro-Woolley

San JuanCounty

SkagitCounty

Compared with the statewide average, the City’s TRS per capita is almost 30% higher and is similar to or greater than some other “peer” communities. The peer communities were selected because of the waterfront location, relative isolation from larger urban areas, community size and mix of services, tourism and manufacturing industries.

Total TRS per capita for the City of Anacortes compares favorably with Skagit County overall, though it its less than some nearby jurisdictions such as Bellingham, Burlington, La Conner and Friday Harbor.


August 2006


While manufacturing sector provides 5.2% of total TRS, this proportion is greater than is typically found in other cities. The chart presents the breakdown of this category into its sector components. Wood product manufacturing and boat building and repairs are the majority contributors.

Manufacturing (5.2%)

The Citiy’s eating and drinking places category appears to be in scale with the overall population base and as such is not significantly driven by visitor spending. That said, limited service restaurants account for the largest share of TRS among eating and drinking places.

The boat dealers category is another significant component of the City’s tax base and one which serves the largest market outside the City. The majority of sales coming from new and used boat sales, but another significant share coming from marine supplies and hardware.

All Other,

$1,443,744

Wood Product

Manufacturing,

$9,153,843

Boat building and

repairs, $4,975,550

Fresh and Frozen

Seafood

Processing,

$457,049

Logging, $341,700

Marine supply,

$2,203,706

New and Used

Boats, $17,206,912

Other, $170,191

Snack and

Nonalcoholic

Beverage Bars,

$2,132,349

Limited-Service

Restaurants,

$10,215,488

Full-Service

Restaurants,

$8,318,727

Marine Sales (6.2%)

Eating and Drinking Places (6.7%)

City

of A

nac

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es:

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nom

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tudy

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Anac

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2004

popula

tion =

36,7

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estim

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Sp

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by

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or

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div

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by

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Stat

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per

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ratio

. The

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, in

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Anac

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ata

are

org

aniz

ed b

y prin

cipal

indust

ry s

ecto

r fo

llow

ed b

y its

res

pec

tive

sub-

sect

ors

. The

2004 S

tate

popula

tion e

stim

ates

for A

nac

ortes

, Anac

ortes

plu

s Fi

dal

go

Isla

nd, a

nd A

nac

ortes

plu

s Fi

dal

go Is

land p

lus

San J

uan

County

are

show

n.

Ob

serv

ati

on

s

Anac

ortes

’ lar

gest

mar

ket is

the

Auto

Dea

lers

/Gas

Sta

tion in

dust

ries.

With

in t

his

sec

tor,

the

Mar

ine/

Airc

raft i

ndust

ries

reac

h a

mar

ket

size

ove

r 100,0

00 s

pen

din

g units

.

Build

ing

Mat

eria

ls/H

ardw

are

and i

ts L

um

ber

sub-s

ecto

r ar

e w

ell

bel

ow

the

popula

tion s

ize

of Anac

ortes

.

The

city

ser

ves

a la

rge

mar

ket si

ze for Fr

uit/

Vege

table

s/M

eat pro

duct

s.

Man

ufa

cturin

g an

d D

rug

Store

s re

ach s

imila

rly la

rge

mar

kets

.

• • • • •

Esti

mate

d M

ark

et

Siz

e b

y I

nd

ustr

y S

ecto

r

Pri

nci

pal Sect

or

Su

b-S

ect

ors

Sourc

e: W

ashin

gton S

tate

Dep

artm

ent of Rev

enue,

2005

City

of A

nac

ort

es:

Eco

nom

ic S

tudy

Phas

e I

31

Au

gu

st 2

006

Tre

nd

s i

n

Mark

et

Secto

rs

Anac

ortes

has

exp

erie

nce

d incr

ease

s in

mar

ket

size

fo

r Fo

od, E

atin

g/D

rinki

ng,

and P

erso

nal

Ser

vice

s ove

r th

e 1994-2

004 tim

e per

iod.

Am

ong

thes

e, th

e la

rges

t ga

ins

wer

e in

Pe

rsonal

Se

rvic

es a

nd F

ood. N

o s

ubst

antia

l chan

ges

in m

arke

t si

ze

wer

e se

en

in

Hote

ls/M

ote

ls

and

Furn

iture

/Eq

uip

men

t. Po

rt

Ange

les

had

, by

far,

the

larg

est

mar

ket si

ze for H

ote

ls/M

ote

ls; poss

ibly

, der

ived

fro

m

its loca

tion o

n S

R 3

and a

s th

e W

A t

erm

inal

for

the

Vict

oria

, B.C

. fer

ry.

• •

Cit

y P

op

ula

tio

n

0

5,0

00

10,0

00

15,0

00

20,0

00

25,0

00

30,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

FOO

D

0

5,0

00

10,0

00

15,0

00

20,0

00

25,0

00

30,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Average Spending Units

Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

HO

TELS

AN

D M

OTE

LS

0

10,0

00

20,0

00

30,0

00

40,0

00

50,0

00

60,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

EA

TIN

G/D

RIN

KIN

G

0

5,0

00

10,0

00

15,0

00

20,0

00

25,0

00

30,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

PER

SO

NA

L SER

VIC

ES

0

5,0

00

10,0

00

15,0

00

20,0

00

25,0

00

30,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

FUR

NIT

UR

E/E

QU

IPM

EN

T

0

5,0

00

10,0

00

15,0

00

20,0

00

25,0

00

30,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Sourc

e fo

r al

l char

ts: W

ashin

gton S

tate

Dep

artm

ent of Rev

enue,

2005

City

of A

nac

ort

es:

Eco

nom

ic S

tudy

Phas

e I

32

Au

gu

st 2

006

Est

imate

d M

ark

et

Siz

e f

or

BU

SIN

ESS S

ER

VIC

ES

0

5,0

00

10,0

00

15,0

00

20,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

MA

RIN

E

0

30,0

00

60,0

00

90,0

00

120,0

00

150,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

AU

TO D

EA

LER

S

0

10,0

00

20,0

00

30,0

00

40,0

00

50,0

00

60,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

MA

NU

FAC

TUR

ING

0

10,0

00

20,0

00

30,0

00

40,0

00

50,0

00

60,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

BU

ILD

ING

MA

TER

IALS

0

5,0

00

10,0

00

15,0

00

20,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

TRA

NSP

OR

TATI

ON

/CO

MM

UN

ICA

TIO

N/U

TILI

TIES

0

5,0

00

10,0

00

15,0

00

20,0

00

25,0

00

30,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Sourc

e fo

r al

l char

ts: W

ashin

gton S

tate

Dep

artm

ent of Rev

enue,

2005

Tre

nd

s i

n

Mark

et

Secto

rs

Anac

ortes

has

th

e la

rges

t es

timat

ed

mar

ket

size

fo

r M

arin

e in

dust

ries.

The

tren

d a

ppea

rs c

yclic

with

an

in

crea

se in

1994 to

1998 bef

ore

fa

lling

and

reboundin

g in

2000 to 2

004.

Anac

ortes

has

als

o s

how

n g

row

th in

the

mar

ket

size

fo

r M

anufa

cturin

g, T

ransp

ortat

ion/C

om

munic

atio

ns/

Util

ities

, and A

uto

Dea

lers

.

The

Auto

Dea

ler

tren

d r

eflec

ts t

he

1999 a

nnex

atio

n

of la

nd in

to the

city

whic

h the

dea

lers

hip

s re

side.

The

estim

ated

mar

ket si

ze for

Build

ing

Mat

eria

ls a

nd

Busi

nes

s Se

rvic

es h

as rem

ained

rel

ativ

ely

stab

le o

ver

the

anal

ysis

per

iod.

• • • •

City

of A

nac

ort

es:

Eco

nom

ic S

tudy

Phas

e I

33

Au

gu

st 2

006

Est

imate

d M

ark

et

Siz

e f

or

AP

PA

REL

AN

D A

CC

ESSO

RIE

S

0

5,0

00

10,0

00

15,0

00

20,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

WH

OLE

SA

LIN

G

0

5,0

00

10,0

00

15,0

00

20,0

00

25,0

00

30,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

FIN

AN

CE/I

NSU

RA

NC

E/R

EA

L ESTA

TE

0

10,0

00

20,0

00

30,0

00

40,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

DR

UG

STO

RES

0

10,0

00

20,0

00

30,0

00

40,0

00

50,0

00

60,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Est

imate

d M

ark

et

Siz

e f

or

CO

NTR

AC

TIN

G

0

5,0

00

10,0

00

15,0

00

20,0

00

25,0

00

30,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004


Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Esti

mate

d M

ark

et

Siz

e f

or

FU

EL D

EA

LER

S

0

10,0

00

20,0

00

30,0

00

40,0

00

50,0

00

60,0

00

70,0

00

80,0

00

90,0

00

100,0

00

110,0

00

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Anac

ort

es

Port

Ange

les

Port

Tow

nse

nd

Oak

Har

bor

Sourc

e fo

r al

l char

ts: W

ashin

gton S

tate

Dep

artm

ent of Rev

enue,

2005

Tre

nd

s i

n

Mark

et

Secto

rs

Estim

ated

m

arke

t si

zes

for

Whole

salin

g,

Finan

ce/

Insu

rance

/Rea

l Est

ate,

Dru

g St

ore

s, a

nd F

uel

Dea

lers

hav

e post

ed m

odes

t ga

ins.

The

mar

ket fo

r Appar

el a

nd C

ontrac

ting

in A

nac

ortes

has

dec

lined

slig

htly

ove

r th

e an

alys

is p

erio

d.

• •


August 2006

Consumer Survey FindingsSHOPPING LOCATIONS

Items that residents are purchasing largely in Anacortes:

• Groceries • Banking services

• Medical/Dental services • Postage/Shipping services

• Dining out (breakfast was the highest with 90% saying they most frequently eat in Anacortes, Dinner was the second-highest at 83.6%, and lunch followed with 81.6%)

Items that residents are purchasing at high percentages outside of Anacortes (and where)

• Gasoline (30.2% in Mount Vernon area) • Clothing (74.1% in Mount Vernon area)

• Electronics (54.2% in Mount Vernon area) • Other Services (17.1% in Mount Vernon area and 13.0% in Other locations)

• Theater (16.2% in Mount Vernon area and 15.1% in Seattle)

• Other Entertainment (22.3% Seattle, 9.4% Mount Vernon area and 9.4% Other locations)

FESTIVALS

Those that many residents report attending

• Arts Festival (72.5%) • Shipwreck Day (63.4%)

• Waterfront Festival (61.3%)

Those that many residents report not attending

• Christmas Parade (67.3% do not attend) • Jazz Festival (81.3%)

• Fall Festival (85.8%) • Kids R Best Fest (86.8%)

PERCENT OF MONEY SPENT IN ANACORTES

Items that many residents report 80% or more of their total spending occurs in Anacortes

• Groceries (54.7% of residents spend 80%-100% of total spending)

• Pharmacy (59.4%) • Post Office (79.8%)

• Beauty Services (58.2%) • Financial Services (58.4%)

• Doctor/Lawyer Services (65.3%)

Items that many residents report 20% or less of their total spending occurs in Anacortes

• Apparel (82.7% of residents spend 20% or less in Anacortes)

• Furniture (63.5%) • Electronics (65.7%)


August 2006

How Many Months Out of the Year Do You Live in Anacortes?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1-3 months 4-6 months 7-9 months 10-12 months

Consumer Survey Findings

What is Your Age?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

below 30 30 to 45 46 to 55 56 to 65 over 65

Where Do You Work?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

In Town Out of Town Retired

Where Do You Most Frequently Shop for the Following Items?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Grocery

Hardware

Thrift Store

Antique Store

Gas

Art Store

Electronics

Clothing

Other Seattle Bellingham Burlington/Mount Vernon Anacortes

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Post/Ship

Banking

Med/Dental

Other

Spa

Other Seattle Bellingham Burlington/Mount Vernon Anacortes


August 2006

Roughly What Portion of Your Spending Do You Spend in Anacortes Each Year?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Post Office

Barber, Beauty, Etc

Doctor/Lawyer

Financial Services

Insurance

Drug Stores

Movies, Art/Theater

Groceries

Hardware/Lumber

Other/Misc.

Furniture

Electronics

Restaurants

Apparel

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

How Frequently do You Do Use the Following Services in Anacortes?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Shopping

Post Office

Dining

Entertainment

Beauty services

Financial services

Professional services

No response 3-5 x Week 1-2 x Week 1 x Month 1 x Year Never

Consumer Survey Findings


Anacortes Landbase Analysis

City

of A

nac

ort

es:

Eco

nom

ic S

tudy

Phas

e I

Au

gu

st 2

006

38

GUEMESCHANNEL

BURROWSBAY

FI DA L

G OB A

Y

Wash

ingto

nPark

Cap

Sante

Park

PreliminaryDiscussionDraft

Anacortes

FerryTerm

inal

2.5

orless

2.6

-5.0

5.1

-10.0

10.1

-15.0

15.1

-25.0

25.1

ormore

AssessedLandValue

(Dollars

pers.f.ofland)

00.5

1

Miles

Sourc

e: S

kagi

t C

ounty

Ass

esso

rs O

ffice

, Nove

mber

2005

Assessed

Lan

d V

alu

e b

y P

arc

el, 2

005

The

most

val

uab

le la

nd in

Anac

ortes

is c

once

ntrat

ed a

long

Hig

hw

ay

20 a

nd w

ater

front

area

s. T

he

dow

nto

wn c

om

mer

cial

corrid

or

and

Skyl

ine

nei

ghborh

ood

ove

rlooki

ng

Burrow

s Bay

st

and

out

with

co

nce

ntrat

ions

of

hig

h v

alue

land. H

igh v

alue

par

cels

are

the

most

lik

ely

to a

ttra

ct a

dditi

onal

inve

stm

ent

and f

ace

dev

elopm

ent

mar

ket

pre

ssure

s.

City

of A

nac

ort

es:

Eco

nom

ic S

tudy

Phas

e I

Au

gu

st 2

006

39

GUEMESCHANNEL

BURROWSBAY

FI DA L

G OB A

Y

Wash

ingto

nPark

Cap

Sante

Park


Anacortes

FerryTerm

inal

0.1

-5.0

5.1

-10.0

10.1

-15.0

15.1

-20.0

20.1

-25.0

25.1

ormore

AssessedBuildin

gValue

(Dollars

pers.f.ofland)

00.5

1

Miles

Assessed

Bu

ild

ing V

alu

e b

y P

arc

el, 2

005

Build

ing

valu

e per

s.f.

of

par

cel

is a

n i

ndic

ator

of

the

inte

nsi

ty a

nd

valu

e of

impro

vem

ents

on a

giv

en p

iece

of

pro

per

ty.

The

grea

test

in

tensi

ty o

f build

ing

inve

stm

ent ca

n b

e se

en in

res

iden

tial c

lust

ers

in

Skyl

ine,

Old

Tow

n a

nd C

entral

Anac

ortes

. As

Anac

ortes

’ dev

elopab

le

land b

ecom

es s

carc

er, p

arce

ls w

ith lo

wer

val

ue

build

ings

on rel

ativ

ely

hig

her

val

ue

land w

ill li

kely

fac

e dev

elopm

ent pre

ssure

.

City

of A

nac

ort

es:

Eco

nom

ic S

tudy

Phas

e I

Au

gu

st 2

006

40

GUEMESCHANNEL

BURROWSBAY

FI DA L

G OB A

Y

Wash

ingto

nPark

Cap

Sante

Park


Anaco

rtes

FerryTe

rmin

al

Public

Use

Land

00.5

1

Miles

worthless

than

$10per

s.f.

oflandan

dlandworthm

ore

than

$10per

s.f.ofland

Parcels

withbuild

ings

LandValue>$10pers.f.

ofland

Buildin

gValu

e<$10pers.f.ofland

Selectin

gonly

parcels

with:

Sourc

e: S

kagi

t C

ounty

Ass

esso

rs O

ffice

, Nove

mber

2005

Parc

els

wit

h H

igh

Lan

d V

alu

e a

nd

Lo

w B

uil

din

g V

alu

e, 2005

GGG

Parc

els in

des

irable

loca

tions an

d c

lose

to a

men

ities

will

attra

ct d

evel

opm

ent

pre

ssure

, par

ticula

rly i

f th

ey h

ave

rela

tivel

y lo

w-v

alue

impro

vem

ents

on

them

. Th

is m

ap h

ighlig

hts

par

cels

wher

e th

e cu

rren

t la

nd v

alue

is m

ore

th

an $

10 p

er s

.f. a

nd the

build

ing

valu

e p

er s

quar

e fo

ot of la

nd (

mea

sure

of in

vest

men

t in

tensi

ty)

is le

ss than

$10 p

er s

.f.

The

hig

h lan

d v

alue/

low

build

ing

valu

e par

cels

are

dis

trib

ute

d a

cross

the

city

with

a s

lightly

hig

her

conce

ntrat

ion found in

Dow

nto

wn A

nac

ortes

and

along

Hig

hw

ay 2

0 e

nte

ring

the

City

.

City

of A

nac

ort

es:

Eco

nom

ic S

tudy

Phas

e I

Au

gu

st 2

006

41

GUEMESCHANNEL

BURROWSBAY

FI DA L

G OB A

Y

Wash

ingto

nPark

Cap

Sante

Park


Anaco

rtes

FerryTe

rmin

al

Public

Use

Land

00.5

1

Miles

worthless

than

$5pers.f.

oflandan

dlandworthm

ore

than

$10per

s.f.ofland

Parcels

withbuild

ings


ofland

Buildin

gValu

e<$5pers.f.ofland

Selectin

gonly

parcels

with:

Sourc

e: S

kagi

t C

ounty

Ass

esso

rs O

ffice

, Nove

mber

2005

Parc

el

wit

h H

igh

Lan

d V

alu

e a

nd

Lo

w B

uil

din

g V

alu

e, 2005

This

map

build

s off t

he

pre

vious

map

but

low

ers

the

build

ing

valu

e cu

toff t

o $

5 p

er s

.f. o

f la

nd.

The

resu

lting

sub s

elec

tion o

f par

cels

, fo

und in

sm

all c

lust

ers

in the

Skyl

ine

nei

ghborh

ood a

nd c

om

mer

cial

co

rrid

or,

is w

her

e th

e le

vel of

build

ing

inve

stm

ent

is e

ven m

ore

out

of st

ep w

ith the

under

lyin

g la

nd v

alue.

City

of A

nac

ort

es:

Eco

nom

ic S

tudy

Phas

e I

Au

gu

st 2

006

42

F ID A

L GOB A

Y

Cap

Sante

Park

AssessedLa

ndValue

(Dollars

pers.f.ofland)

PublicUse

Land

00.2

50.5

Miles

F ID A

L GOB A

Y

Cap

Sante

Park


10.0

-15.0

15.1

-20.0

20.1

-25.0

25.1

ormore

00.2

50.5

Miles


ofland

Buildin

gValu

e<$5pers.f.ofland

Selectin

gonly

parcels

with:


ofland

Buildin

gValu

e<$10pers.f.ofland

Selectin

gonly

parcels

with:

Com

mercialZones

Sourc

e: S

kagi

t C

ounty

Ass

esso

rs O

ffice

, Nove

mber

2005

Do

wn

tow

n P

arc

els

wit

h H

igh

Lan

d V

alu

e a

nd

Lo

w B

uil

din

g V

alu

e, 2005

When

the

sele

ctio

n is

lim

ited to

those

par

cels

w

ith b

uild

ings

worth les

s th

an $

5 p

er s

.f. o

f la

nd,

man

y of

the

resi

den

tial

par

cels

dro

p

off a

nd p

rimar

ily p

arce

ls i

n t

he

com

mer

cial

zo

nes

ar

e le

ft.

Thes

e par

cels

hav

e th

e gr

eate

st p

ote

ntia

l to s

ee d

evel

opm

ent m

arke

t pre

ssure

s.

F ID A

LLL

Thes

e m

aps

show

s th

e sa

me

sele

ctio

ns

of

hig

h

land

valu

e/lo

w

build

ing

valu

e par

cels

but

with

a f

ocu

s in

the

Dow

nto

wn

com

mer

cial

corrid

or an

d O

ld T

ow

n.

F ID A

L GOB A

Y

Man

y co

mm

erci

al

par

cels

al

ong

Hig

hw

ay

20

and

resi

den

tial

par

cels

w

est

and

south

of

Hig

hw

ay

20

hav

e th

e pote

ntia

l to

se

e fu

ture

in

vest

men

ts

as

the

under

lyin

g la

nd

valu

e bec

om

es

incr

easi

ngl

y out-

of-st

ep

with

th

e le

vel

of

inve

stm

ent in

build

ings

.

City

of A

nac

ort

es:

Eco

nom

ic S

tudy

Phas

e I

Au

gu

st 2

006

43

GUEMESCHANNEL

BURROWSBAY

FI DA L

G OB A

Y

Wash

ingto

nPark

Cap

Sante

Park


Anacortes

FerryTerm

inal

YearBuildin

gs

Were

Built

00.5

1

Miles

1930orearlier

1931-1950

1951-1970

1971-1990

1991-2000

2001-2005

PublicUse

Land

Sourc

e: S

kagi

t C

ounty

Ass

esso

rs O

ffice

, Nove

mber

2005

Bu

ild

ing Y

ear

Bu

ilt

by P

arc

el, a

s o

f 2005

The

City

of Anac

ortes

has

dev

eloped

fro

m e

ast to

wes

t w

ith m

ost

of

the

old

er b

uild

ings

clu

ster

ed a

round O

ld T

ow

n a

nd t

he

Dow

nto

wn

com

mer

cial

co

rrid

or.

More

re

cent

dev

elopm

ent

has

occ

urred

in

re

siden

tial n

eigh

borh

oods

in c

entral

Anac

ort

es a

nd S

kylin

e.

City

of A

nac

ort

es:

Eco

nom

ic S

tudy

Phas

e I

Au

gu

st 2

006

44

GUEMESCHANNEL

BURROWSBAY

FI DA L

G OB A

Y

Wash

ingto

nPark

Cap

Sante

Park


Anacortes

FerryTerm

inal

Most

Recent

Sale

Date

00.5

1

Miles

2001

2002

2003

2004

2005

Public

Use

Land

Note:Pa

rcelswithasa

leprice

less

than

$25,000

areexc

luded

Sourc

e: S

kagi

t C

ounty

Ass

esso

rs O

ffice

, Nove

mber

2005

Mo

st

Recen

t Sale

Date

by P

arc

el, 2

001-2

005

GUEEE

Ove

r th

e pas

t fiv

e ye

ars

ove

r hal

f th

e par

cels

in

Anac

ort

es h

ave

bee

n s

old

. Sin

ce 2

001 s

ales

hav

e in

crea

sed fro

m a

bout 600 to o

ver 1,0

00 in

eac

h

of

the

pas

t tw

o y

ears

. Sa

les

hav

e bee

n e

venly

dis

trib

ute

d

acro

ss

the

city

w

ith

no

sign

ifica

nt

clust

erin

g pat

tern

s.

Parc

el

Sale

Co

un

ts

594

726

948

1,2

61

1,0

49

2001

2002

2003

2004

2005

berk study 1 - anacortes, wa

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