Three Cents. (Or: What really annoys me about the ferry consultant)

On September 12, 2024 we voted 4-3 to approve renewing Peter Philips ferry consulting contract.

I would encourage everyone, regardless of their POV on the ferry, to watch the above portion of the meeting because one of the most common questions I get from residents is that they aren’t sure where my colleagues land on various issues. I think this 20 minutes represents the philosophy of each of us very clearly–at least when it comes to ‘economic development’. It’s the ‘debate’ a lot of people have told me they wish they could see before they voted.

The Contract and the Conference

There were many reasons for me to be dis-chuffed.

• His current fee is $5,500 a month and as of this year, his billed fees have passed $200k. But we are also paying another consultant $3,000 a month to write grant applications to promote the concept. So really, we’re spending something like $85,000 this year on two ferry consultants.
• This new contract expands his portfolio from ‘ferry consultant’ to general ‘economic development’. I don’t recall the Council or the Economic Development Committee discussing this.
• Mr. Philips wrote a letter to the Council defending his character, which he feels has been unfairly attacked. Here it is: Peter Philips to Traci Buxton on Ferry Consulting.

“…The connection between Des Moines and Artemis, and my role in that connection is to encourage Artemis to locate their US production facility here, providing local jobs, and investing in local workforce development…”

News to me! The Council has never had any discussion concerning any negotiation to bring Artemis (a Northern Ireland company) to Des Moines.

• The City argued that extending his contract is fine because the City moved the funding out of the General Fund. I don’t care which fund it comes from–and neither should you. Is a bad purchase made from one credit card any better than a bad purchase from another? IT’S ALL YOUR MONEY, DES MOINES!
• It is, in fact, coming from the Lodging Tax fund, which is usually used for events (eg. Fourth of July), not lobbying–which is exactly what his contract is about. But again, I don’t care which fund it comes from.
• However, I do care that Mr. Philips was listed as a member of that same Lodging Tax committee as of December, 2023. And he neither lives in Des Moines or has a business located in Des Moines. So. Not. Cool.

All that ‘good government’ jazz aside, there is also the small matter that the whole thing has always been, and continues to be, insane.

There is also this…

• Did you know that Mr. Philips is sponsoring a Ferries Conference in Seattle where the builder of the proposed ferry will be attending? Cool! So I asked if members of the Council could attend. I was told, “No, we have no money for that.” I was also told that it is ‘inappropriate for councilmembers to ask for free tickets’. WTF? It’s inappropriate for the Council to talk to the developer of the ferry that we’re proposing to bring here? At the one time he’s actually here in Seattle and not in Belfast, Northern Ireland?
• And in a September 14 Letter in the Waterland Blog, Mayor Buxton writes: “in a couple months we will be receiving the results an economic impact study based on the data from our pilot in 2022.” Seriously? We’re using a $160,000 grant to study a single seventeen week trial run, and use that to make long term planning decisions on the viability and benefits of a ferry My guess is that is why the City was so eager to renew his contract now. My guess is that people will reject its findings as bogus, just as they did the initial market demand study we paid for in 2020. Which was also totally bogus. In fact, that was no legitimate reason not to postpone renewal of his contract ‘…a couple of months’.

That 2020 Diedrich RPM Passenger Ferry Research Report was more like a ‘how to market the idea of a ferry’, not a true demand analysis. There have been demand analyses by King County and PSRC, and they have all demonstrated that the demand is simply not there.)

Tens Of Thousands Of Tourists

From the City’s fiscal point of view, a ‘vibrant downtown’ can be boiled down to one word: tourism. Every dollar we spend on ferries and Steps and alleys and so on should be measured against the money it will generate and on what time scale. That sounds complicated but it’s not. Here’s almost everything you need to know about our downtown. Three cents.

It takes $1,000,000 in retail sales for the City of Des Moines to retain $30,000 in sales tax. Three cents on the dollar. So a restaurant has to sell $1,000,000 in food to generate $30,000 for the City. Simple.

But the real question is, how much money should the City invest to increase that retail activity, and what do we get in return? That too is simple. Here are some examples:

• Example: The $200,000 we’ve already paid Peter Philips over the past four years will take $8,000,000 in retail sales to recoup. That is the benefit a ferry needs to provide just to repay his contract.
• Example: Now triple that and you have the amount it would take to recoup the full cost of that two year ‘ferry pilot program’.
• Example: Now do the same math on the $300,000 we spent to underground utilities in the new Backstage Alley. $10,000,000. The theatre would need to be running at full capacity, seven nights a week for a decade to recoup just that money.
• Example: Now do the same math on the $9,000,000 we are paying for the Marina Steps. $300,000,000.

Here’s another stat: The total amount of ‘restaurant’ sales tax the City collected in 2023, not just in the downtown but in the entire City? $415,000.

That’s about one percent of the amount we’ve already spent on downtown redevelopment. It will take 100 years to recoup our costs.

Starting to get the picture? If you’re counting on tourism to create long-term fiscal solvency, it is a fool’s errand. It is impossible.

In 2019, Councilmember Mahoney said this:

In 2021, the Council voted to give SR3 $75,000 of ARPA money during the pandemic. But using the three cents formula, it would take $2,500,000 in ‘eco-tourism’ to recoup just that money.

It will take about $350,000,000 in retail sales to recoup just the money the City has already spent on the Ferry, Backstage Alley, SR3, and the Marina Steps. That’s not a typo. That’s over Three Hundred And Fifty Freakin’ Million dollars of retail sales!

So even if SR3 had (or will) bring ‘tens of thousands of eco-tourists to our downtown’. Even if the ferry does everything supporters hope it will Even if the Marina Steps is a beloved upgrade to the Marina. Even if the theatre is constantly rocking. And even if the magic developer fairy swoops down from Valhalla and plops a different and engaging type of restaurant onto every empty bit o’ property and provides convenient underground parking (using her magic boring tool) the cumulative effect will never pay for itself or bring the City of Des Moines budget into the black and guarantee the recommended 16.67% Reserve Balance!

Why it’s so easy to fool people

That’s easy. All of the above are fun! It’s easy to talk people into believing something that they really, Really, REALLY, want to believe. And who wants to vote against seals and theatres and ferries and splash pads?

For some people ‘Edmonds in Des Moines’ is as irresistible as decaf as good as the real thing. Or a Diet Coke that tastes like a Mexican Coke. Or how ‘a sensible diet and walking will make all those extra pounds just melt away? THEY DON’T! IT’S IMPOSSIBLE! GET OVER IT! 😀

All you have to do to sell people is to not provide the above numbers. Dreams are wonderful. Numbers are a total buzzkill.

Mayor Buxton spoke about a concept called place making. At the September 12 meeting she pulled out her phone and exhorted the audience to type ‘placemaking economic development’ into their browser’s search.

In fact, please do ‘Google’ those keywords and let me know what you think. But fwiw… here’s one of the first page results I got. I assume no relation. 😀

Placemaking as an Economic Development Strategy – Blog (buxtonco.com)

$350,000,000 is an awful lot to ask of ‘placemaking’.

And I object to her mentioning former Councilmember Susan White’s support of a ferry program back in the 2000s. I remember it well. What Mayor Buxton failed to mention is that both the State and the County and the PSRC have repeatedly been highly critical of passenger ferry service in Des Moines. The demand just isn’t there. If the County now wants to use Des Moines as a beta-test for electric ferries at some point in the future for whatever reason, groovy! But stop talking about it as some big ‘economic driver’. At best, a ferry would be no more of an economic driver than the 635 shuttle bus. Nice. But not exactly a game changer.

Will the real restaurauteur please stand up?

Nobody wants a great downtown more than me. I’m pretty sure I’m the only member of the Council in living memory that’s actually owned a restaurant.

But to get to where people want to go, we need money to balance the books every year. And to get some, we have to stop thinking of ‘tourism’ (which is what ‘ferry’ and ‘steps’ and ‘placemaking’ are really about) as being crucial to our economic or transportation success. It can’t be.

Instead, we have to look elsewhere for the recurring revenue to balance the books.

Ironically, finding better sources of funding will allow us the freedom to create a for-realz local business development plan. Such an approach has worked successfully for Burien, Ballard, and Columbia City, among others. None of those programs required any magic bullet. They just required the tools of bottom-up business recruitment, marketing and retention. Not “If you build it they will come” magical thinking.

The Steel-man argument

On the other hand, maybe I’m being totally unfair. So I’ll try to make the steel-man argument for the majority. Maybe placemaking is about far more than just tourism or the downtown. Maybe restaurants are the appetizer and not the entree. Maybe if we invest in the ferry, the theatre, SR3, the Steps, etc. the whole will be greater than the sum of the parts. Given enough time, by doing all these projects, maybe we will reach a ‘tipping point’ that signals to major developers, people who previously avoided us, to now look at Des Moines in a whole new way! For example, as he wrote in that letter, maybe Peter Philips can convince the ferry builder in Belfast to locate a U.S. factory in Des Moines! Maybe in the new ‘Innovation District’! And maybe this new factory will employ hundreds of people! People who buy houses in Des Moines! And maybe all those employees will head down the hill into the downtown every day to eat lunch! Just like they’ve been doing since the FAA building opened!

NOT. 😀

Sorry, I tried playing it straight for as long as I could. But this is exactly the pitch former Mayors used to sell the Des Moines Creek Business Park– a total loser, both for the City, our environment, and for local businesses. But even if all that magical thinking turned out to be true? We’re still talking decades down the road. And we need revenue streams now.

Which is where I started in opposing the ferry.

I have no objection to any of these very fun things, so long as they are not distractions from the real work we’ve needed to do for a very long time. As we’ve learned, we are extremely limited in resources funds and we must use those resources to their greatest advantage.

I resent wasting so much time, energy, and money on ideas that have been  based on fibs, have no business plan, little chance of ever meeting our broader economic development needs, and most importantly: no chance of paying off in the near future. It’s the same movie I’ve seen many times before.

And it’s especially infuriating given the fiscal urgency of the moment.

Summary

All these fun things are great. But they can’t even pay for themselves let alone fund the City. At some point we need to say “Stop with all the distractions!” We need business revenue solutions now.

Over the past two decades, the City has played on various longstanding dreams and vanities of the community to avoid building that business revenue. We have approached economic development like a much wealthier community than we actually are. Instead, we should be approaching economic development using the bottom-up strategies that have actually worked for other communities.