HomeMy WebLinkAboutPlanning 2014-07-22 Item 5 - 2015 Comprehensive Plan - Attachment B2 : Economic Development Element Background MemoCOMPREHENSIVE LAND USE PLAN
ECONOMIC DEVELOPMENT ELEMENT BACKGROUND MEMO
2015 GROWTH MANAGEMENT ACT
UPDATE to the COMPREHENSIVE PLAN
1. Introduction
The City of Tukwila is committed to the economic well -being of its residents, property owners, and
businesses because an adequate tax base is necessary to help achieve the City's vision for the future.
Cities in Washington State have a limited authority in encouraging economic development. The most
obvious role is for the City is to provide adequate services and infrastructure to complement the retail,
manufacturing uses, offices, and residences that are located in the City. The City's plans, programs,
policies, taxes, and service levels can encourage economic activity.
Historically, the City of Tukwila has had a diverse and growing economic base primarily because of:
1. Its location;
2. Commercial and industrial properties located on level land;
3. Access to regional and global transportation network;
4. Lack of a Business and Occupancy Tax; and
5. Small responsive government.
Tukwila has a major concentration of retail and services businesses. In the past, Tukwila also had a large
concentration of manufacturing in the City; however, manufacturing in the City is declining. Tukwila's
proximity to Sea -Tac Airport allows it to have a strong and growing lodging industry. Tukwila has a
significant job and retail base, much larger than the City's nighttime population.
Tukwila's economic well -being is also facing some challenges.
Tukwila's median income is lower than the median for King County and Tukwila residents' median
incomes are not keeping pace with inflation. While King County as a whole is well educated, Tukwila's
residents have a level of income below the average education attainment for the County. This puts
Tukwila residents at a disadvantage for attaining higher paying jobs. The City has also seen a gradual loss
in sales tax market share to surrounding cities.
In 2012, Tukwila created a Strategic Plan and one of the five goals and objectives was "A Diverse and
Regionally Competitive Economy." The City's economic development efforts will continue to be multi -
pronged, addressing three aspects of the City's economy:
1 Economic Development Background Memo
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1. Protecting the City's role as a strong regional retail center and preparing for the retail market of
the future.
2. Supporting the retention and expansion of the City's commercial and industrial businesses.
3. Cultivating the success of the City's entrepreneurs and small businesses, including businesses
owned by refugees, immigrants, and non - native English speakers.
11. Demographic Overview
A. Current Population
120,000
100,000
80,000 -
60,000
40,000 -
20,000 -
0
Total Population (including annexations) of Select South King County Cities.
41,688
37,960
11.874
1990
Kent
118,200
Renton
92.590
79,524
50,052
31,881
•
25,,495_
17,181
2000
47,660
27,110
•
19,050
Burien
SeaTac
Tukwila
2011
Source: City of Tukwila's Strategic Plan. Note: the cities of SeaTac and Burien became cities in the mid -1990s so population data for 1990 is
unavailable.
As indicated in the chart above, Tukwila has experienced a very low growth rate. The chart below shows
the annual growth rate of select south King County cities and the County as a whole.
2 Economic Development Background Memo
4.5%
4.0
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Burien
Source: City of Tukwila's Strategic Plan.
Kent
Renton
Tukwila
SeaTac King County
Tukwila's annual growth rate is slightly higher than the County's annual growth rate, but is significantly
lower than most of the adjacent cities. While Tukwila's population increased nearly 60% from 1990 to
2011, the populations of Kent and Renton were up 210% and 120% respectively. Both Kent and Renton
completed major annexations during this time, but those annexations do not account for the majority of
the growth.
B. Daytime Growth
For every one person that lives in Tukwila, seven to eight people visit the City every day to work or shop.
Tukwila's daytime population is estimated to be between 150,000 to 170,000 persons, including
approximately 16 million shoppers a year to Westfield Southcenter, the largest mall in the Pacific
Northwest.
3 Economic Development Background Memo
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33.7%
3.6%
3.1%
0.9
0.6%
0.8%
Burien
Source: City of Tukwila's Strategic Plan.
Kent
Renton
Tukwila
SeaTac King County
Tukwila's annual growth rate is slightly higher than the County's annual growth rate, but is significantly
lower than most of the adjacent cities. While Tukwila's population increased nearly 60% from 1990 to
2011, the populations of Kent and Renton were up 210% and 120% respectively. Both Kent and Renton
completed major annexations during this time, but those annexations do not account for the majority of
the growth.
B. Daytime Growth
For every one person that lives in Tukwila, seven to eight people visit the City every day to work or shop.
Tukwila's daytime population is estimated to be between 150,000 to 170,000 persons, including
approximately 16 million shoppers a year to Westfield Southcenter, the largest mall in the Pacific
Northwest.
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C. Housing
Tukwila and King County Rental- Occupied Housing Unit, 1990 -2010
70% -
61%
60% -
50% -
40%
30% -
20%
10% -
0%
58%
41%
40%
57%
479
King County
1990 2000 2010
Source: City of Tukwila's Strategic Plan.
The percentage of Tukwila's residents who choose to rent is higher than the rate in the County and
other south King County cities. Nationwide more Americans are choosing to rent homes than buy'.
Tukwila's population is still very mobile, with nearly 24% of households relocating within one year.
Compared to South King County overall, Tukwila housing is relatively affordable, particularly for
purchasing a home. However, renting is far more affordable across income categories rather than
purchasing a home. Just under half of Tukwila homes are affordable to purchase for residents earning at
least the median income, while less than a quarter of homes are affordable for residents earning less
than 80% of the median household income. Nearly all of Tukwila rental units are affordable for residents
earning at least the median household income, while 63.2% of rental units are affordable for residents
earning under 80% of the median household income.
111. Land Value
Tukwila's land values continue to increase, with land near major transportation corridors having the
highest values. Tukwila's commercial land values are comparable with other south King County areas.
Tukwila's land prices continue to be lower than most areas of Seattle and Bellevue. The total King
County assessed value for the City in 2012 was $4.6 billion, up nearly 40% since 2003, when the total
King County assessed value was $3.3 billion. This increase likely reflects major new projects in the City
such as the Westfield Southcenter Mall Expansion and Southcenter Square development.
1 http: / /www.marketwatch.com/ story/ more - people- choosing -to- rent - not - buy- their - home - 2011 -02 -08
4 Economic Development Background Memo
2006
Land Value per Square Foot 2006 and 2011)
if -
Assessed Land Value Square Font)
$5.00
$i.01 $$1non
I $10.01- $151x1
515.01- 520.00
520.01 - $30.00
1 ■
-,9'-'11
Source: City of Tukwila's Strategic Plan.
IV. Employment
2011
Assessed Land Value/Square Fiat
x5.00
$,-1 n1 $trs.au
$10111 $10.1141
X515.01 -$20 X00
• $20.01. -$30.00
One area of continued concern is that total employment in the City has continued to fall for over ten
years. Tukwila's job decline actually began before the Great Recession and the rate of decline increased
with the onset of the recession in 2008.
People from throughout the region come to Tukwila to work. A significantly larger number of people
work in Tukwila than actually live in the City. In 2010, Tukwila had 43,126 jobs; however, the City only
had 7,989 housing units. Tukwila's 5.40 job to housing ratio in much higher than the County average and
that of other south King County cities.
Employees who work in Tukwila live throughout the central Puget Sound region, with south and west
Seattle, Renton, and Kent having the highest concentrations of Tukwila employees. Residents of Tukwila
work primarily in Tukwila and surrounding cities or in downtown Seattle and Bellevue. Tukwila's
residents continue to make less than the County average and median income as fallen, when adjusted
for inflation. The median household income in the City in 2010 was $44,271 and is below King County's
median income of $66,174. Adjusting for inflation, Tukwila's median income fell between 2000 and
2010. Tukwila's 2000 adjusted median income (in 2010 dollars) was $53,127. Thus, real median income
in the City fell 16.67 percent from 2000 to 2010.
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Where People Who Work in Tukwila Live Where People Who Live in Tukwila Work
Home Location Density
n 4':g
;OW
Bainbridge
Island
Li
Work Location Density
Bainbridge _
Bland
Tacoma
attic
FIL
i, rI
Redman i �^
KING
FCder7.I
Way _r
Source: City of Tukwila's Strategic Plan.
Employment within the City is distributed among a number of different sectors. In 2010, the service
industry accounted for the largest sector, followed by manufacturing; retail and warehousing,
transportation, and utilities. One noticeable trend that has been occurring over the last 15 years is the
decline of manufacturing jobs in the City. In 1991, 56 percent of all jobs in the City were related to
manufacturing. In 2002, the number of jobs in manufacturing dropped to 28 percent. Manufacturing
continues to decrease in the City. This trend likely reflects the diminished presence of jobs with Boeing
and other manufacturing firms in the City industrial areas. Manufacturing jobs tend to pay higher than
jobs in the service and retail sectors.
Employment in the City is largely clustered in the Southcenter area of the City and the North Tukwila
Manufacturing Industrial Center (MIC).
Major Employment Districts of the City
District
Acreage
% of Total
City Area
Total # of
Businesses
Total
Number of
Jobs
% of jobs
in the
City.
Jobs Per
Acre.
Job Losses
and Gains
between
2000 and
2010
Southcenter
847 acres
13.9%
771
17,399
40%
20.54
-2,548
Area
North
961 acres
15.8%
147
13,499
31%
14.04
93
Tukwila MIC
Source: PSRC's Regional Centers Monitoring Report, 2013 Edition.
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Economic Development Background Memo
The City has the capacity to accommodate an additional 38,620 jobs in the City. Nearly 60 percent of
these jobs will be located in Tukwila South, which was just annexed into the City in 20102. After Tukwila
South, North Tukwila MIC and the Southcenter area have the highest capacity to accommodate future
job growth3. The City has sufficient capacity to accommodate its share of regional job targets.
V. Retail Sector
Tukwila has been the center of commerce and trade for over a hundred years. In 1967, with the
opening of Southcenter mall, the City became a dominant retail center right on the edge of the City of
Seattle.
As shown in the map below, the Southcenter area of the City is one of the largest clusters of retail space
in south King County. In the City as a whole, there is over 4.85 million square feet of retail space in the
City.
Despite major new developments, such as Westfield Southcenter Mall Expansion and Southcenter
Square Development, the City has been losing market share in total taxable retail sales, when adjusted
for inflation. In 1994, the City of Tukwila generated just over $1.5 billion (adjusted to 2010 dollars) in
taxable retail sales. Prior to the Great Recession the City's total taxable retail sales had declined below
$1.5 billion despite the fact that many of the City's competitors (Lynnwood, Renton and Issaquah) saw a
significant increase in total taxable retail sales. By 2010, taxable retail sales were down $300 million
when compared to adjusted 1994 taxable sales. The loss of market share is also compounded by the fact
that the area's population has consistently risen every year. Not only is the City losing market share in
taxable retail sales, but the City is also not capturing new sales.
2 City of Tukwila's 2006 Buildable Lands Report, updated in 2014.
3 These numbers show capacity only and do not reflect actual projected growth.
7 Economic Development Background Memo
43
44
Retail Square Footage in south King County, 2009
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Retail Square Feet
•
Up to 10,000
• 10,001 - 25,000
• 25,001 - 50,000
• 50,001 - 150,000
• 150,001 +
Market Pop: Electronics/Appliances
Market Pop: Apparel/Accessories
8 Economic Development Background Memo
•
•
VI. Office and Industrial Sectors
Office Square Footage in south King County
Office Square Feet
• Up to 25,000
• 25,001 • 50,000
• 50,001 - 100,000
• 100,001 • 500,000
• 500,001 +
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Tukwila has not had an active office market in several years, but it has shown some improvement as
vacancies have decreased over the last few years. In 2004, Tukwila had 600,000 square feet of vacant
9 Economic Development Background Memo
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office space. By 2012, the number had been reduced to just over 300,000 square feet. Office space
within Tukwila is concentrated in the north end of the City. Expanded office presence may occur in the
south part of the City as the Tukwila South project moves forward and as the Southcenter Plan begins to
be implemented. Overall, there is a large amount of office space of all classes in south King County.
Much of it is located in Renton and the Kent Valley.
10 Economic Development Background Memo
i
Industrial and Warehouse Square Footage in South King County, 2009
Building Square Feet
Up to 25,000
25,001 - 100,000
C.! 100,001 - 350,000
350.001 - 750,000
7) 750,001
Building Type
• Industrial
▪ Warehouse
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Tukwila, and the rest of the Duwamish and Kent Valleys, is a center for industrial and warehouse uses
within the Puget Sound region. Industrial buildings within Tukwila are larger and clustered in the north
end of the City, by Boeing Field, rather than in the Duwamish Valley. Warehouse uses are more
concentrated in the southern portion of the City.
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VII. City Revenue
The City of Tukwila relies on various source of revenue to fund services and capital expenditures in the
City. Included as an attachment to this report are several pages from the City's Comprehensive Annual
Financial Report (CAFR) that provides various financial information for the City.
Overall, the City's total revenue has remained nearly consistent over the last nine years just over $51
million. The best year during this period was 2011 when the City's collected just over $68 million in total
revenue. The worst year was 2008 when the City collected just over $49 million in revenue. The
decrease in 2008 can likely be attributed to the Great Recession and pullback in consumer spending.
General Governmental Tax Revenues by Source
2003 -2012
Fiscal Year
Property
Sales & Use
Utility
Excise
Business
Other
Total Taxes
2003
$ 9,854,007
$16,171,756
$ 1,591,922
$3,500,318
$ 431,188
$ 437,031
$31,986,222
2004
$10,493,728
$16,293,960
$ 2,309,787
$4,068,110
$ 530,725
$ 451,863
$34,148,173
2005
$10,627,410
$16,887,845
$ 2,646,356
$3,222,936
$ 408,798
$ 831,530
$34,624,875
2006
$11,018,846
$17,591,260
$ 2,930,332
$4,938,515
$ 402,784
$ 920,077
$37,801,814
2007
$11,177,532
$19,355,867
$ 3,666,079
$4,124,168
$ 405,973
$ 931,173
$39,660,792
2008
$11,245,973
$17,709,319
$ 3,934,210
$3,003,438
$ 475,500
$1,089,344
$37,457,784
2009
$12,190,219
$14,585,015
$ 6,172,569
$2,824,407
$ 738,341
$ 656,730
$37,167,281
2010
$13,188,942
$14,251,312
$ 6,134,494
$2,488,357
$ 727,151
$ 301,867
$37,092,123
2011
$13,427,139
$16,113,584
$ 5,424,643
$1,780,294
$ 667,064
$ 622,955
$38,035,679
2012
$14,072,015
$15,441,683
$ 4,001,385
$3,201,098
$2,497,6064
$2,288,822
$41,502,609
% Change
From Start
Year to
End Year
42.8%
-4.5%
151.4%
-8.5%
479.2%
423.7%
29.8%
The table above shows the City's revenue by source and year. As was discussed earlier, the taxable retail
sales in the City have been in decline. This decline can also been seen in the 4.5% reduction in sales tax
collected in 2012 versus 2003. The City's sales tax rate of .84% has remained constant since 2003. Sales
tax still makes up a large portion of the City's total revenue; however, its total share has been
decreasing due to loss in taxable sales market share and increase in revenue generated by other
sources.
4 The increase in revenue collected represents the City's enactment of the RGRL.
12 Economic Development Background Memo
Sales Tax Collected by Industry, 2012
Major Industry
Amount Collected
Percentage
Retail Trade - Clothing and Accessories
$ 2,082,930
13.85%
Retail Trade -GM
$ 2,000,865
13.30%
Retail Trade - Miscellaneous
$ 1,703,741
11.33%
Retail Trade - Furniture /Home Furnishings
$ 1,537,143
10.22%
Retail Trade - Resturants
$ 1,472,343
9.79%
Wholesale - Durable /Non - durable goods
$ 1,077,613
7.16%
Construction and Contracting
$ 961,125
6.39%
Service Industries - Business
$ 928,610
6.17%
Retail Trade - Automotive /Gas
$ 690,076
4.59%
Retail Trade - Building Materials
$ 516,861
3.44%
Service Industries -Hotel
$ 487,977
3.24%
Transportation, Communications and Utilities
$ 432,608
2.88%
Manufacturing
$ 390,252
2.59%
Other
$ 381,693
2.54%
Service Industries -Other
$ 234,870
1.56%
Finance, Insurance and Real Estate
$ 143,792
0.96%
Total Retail Sales Tax Collected
$ 15,042,499
The table above shows sales tax collected by major industry type. Retail Trade industry generates the
most taxable retail sales of any industry in the City. A year by year breakdown since 2003 is provided in
in the CAFR pages provided.
Property taxes collected in the City continue to rise. Boeing and Westfield Southcenter pay the most in
property taxes per year. Complete property tax information in the CAFR pages provided.
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VIII. S. W.O.TAnalysis
A SWOT Analysis is fairly common practice in the private sector in examining the Strengths, Weaknesses,
Opportunities, and Threats to a business, product line, or strategic plan. Economic Development staff,
working with the City's business community, put together the following SWOT table as part of the City's
Comprehensive Plan Update. It is important to note that these strengths, weaknesses, opportunities,
and threats, are perceived and, at this time, are not supported by specific analysis. Perception of
strengths, weaknesses, opportunities, and threats can influence decisions as much as actual issues. It is
also important to note that an issue can be considered is several categories. For example, Tukwila Pond
is listed as a strength, weakness, and opportunity.
Strengths: Weaknesses:
1. Fabulous Location (access to freeways)
2. Proximity to SeaTac Airport.
3. Tax and Regulatory Structure
4. Seattle Sounders and Starfire Sports
5. Westfield Southcenter Mall, largest mall
in the Pacific NW.
6. Tukwila South
7. Best destination for large furniture
stores (big draw)
8. Tukwila Pond -could be strength
9. Transit Stations
10. Accessibly to City Staff and Elected
Officials
Opportunities:
1. Crime and the perception of crime.
2. Visual appearance of the City.
3. Superblocks in the City's Southcenter
Area
4. Tukwila Pond
5. Lack of Chamber Signage
6. Lack of rooftop area
7. Evening population, lack of a nightlife
1. Seattle Sounders and Starfire Sports.
2. Tukwila Pond
3. Community Colleges
4. Boeing
5. Washington Youth Soccer
6. Grow the Tukwila name
7. Trails along Green River -bike
pedestrian bridge
8. Take advantage of the River as an
amenity
9. Partner with adjacent cities (we need to
work together versus compete)
10. Clustering of businesses
Threats:
1. Traffic Congestion
2. Perceived Threat, Howard Hanson Dam
3. Insurance costs associated with flood
insurance
4. Lack of productivity
5. Minimum wage increase
6. Connective notion of surrounding cities
14 Economic Development Background Memo
IX. Economic Development Activities
Policy 2.1.3 of the City's Comprehensive Plan states the City "[should] identify a single contact point and
information source for the business community." In 2004, the City hired its first staff person to focus
solely on economic development activities and to serve as a contact person for businesses. In 2014, the
Mayor, with support of the City Council, reorganized staff in the Mayor's Office and transferred a Senior
Planner from the Department of Community Development to provide more resources for economic
development activities. The coming years will be very exciting time for the Economic Development Work
Group as it gets fully established and organized. The following outlines some of the economic
development activates that are currently taking place or that will be occurring in the near future.
A. Soundside Alliance
The City of Tukwila is a member of the Soundside Alliance group, which includes the cities of SeaTac,
Burien, Normandy Park and Des Moines. Additionally, Highline College, the Southwest Chamber of
Commerce and the Port of Seattle are also members. The Alliance focuses on marketing and
economic development activities for the southwest area of King County. The Alliance current major
project is completing a Workforce Study.
B. Tukwila Tourism Promotion Area
Earlier this year, Economic Development staff negotiated an interlocal agreement with the cities of
SeaTac and Des Moines to form a Tourism Promotion Area among the three cities. The TPA will be
funded by a per night room fee in certain hotels and motels. Funds generated will be used to
support additional tourism marketing efforts. The funds will be administered by a Public
Development Authority set up by the City of SeaTac.
C. Seattle Southside Visitor Service
Economic Development currently oversees the Seattle Southside Visitor Services (SSVS). SSVS, using
lodging tax funds, conducts various activities to increase tourism activities in the cities of SeaTac,
Tukwila, and Des Moines. Earlier this year a visitor center opened in the Westfield Southcenter Mall.
Other activities include operating a shuttle connecting SeaTac hotels /motels to Tukwila's Urban
Center. Most of SSVS activities will be merged with the TPA discussed above.
D. Tukwila Village
The development of the Tukwila Village site has been led by Economic Development. A ground
breaking for the project is scheduled for August 1, 2014.
E. Small Business Development
The City of Tukwila, along with other Soundside Alliance cities, supports the Small Business
Development Center (SBDC) at Highline College. SBDC provides support and guidance for individuals
wishing to start a business as well as support for existing small businesses.
F. Southcenter Marketing Partnership
As was discussed above, over the last 15 years the City has seen a decline in market share for
taxable retail sales. To combat the loss in market share, the Economic Development group will be
launching the Southcenter Marketing Partnership whose purpose is to market the Southcenter area
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as a whole. Many of the City's competitors, such as Downtown Seattle and Downtown Bellevue
already have similar programs.
G. Workforce Development
Economic Development has started to work with regional partners to improve the "employability"
of Tukwila residents.
16 Economic Development Background Memo