An international shipping company continues to eye the Port of Coos Bay on the Southern Oregon Coast as the future home of its newest terminal to handle container cargo.

But APM Terminals North America has slowed the process in light of a struggling global economy that has caused shipping companies to record huge losses.

Marine traffic at Coos Bay is down 50 percent this year and is expected to remain at that level in 2010, said Jeffrey Bishop, executive director for the Port of Coos Bay.

“There is no rush to add capacity to the system,” Bishop said.

The general plan, however, hasn’t changed, he said.

Bishop said he is barred from naming the development company that’s under contract with the Port of Coos Bay. But Oregon Sen. Joanne Verger, who represents the coastal area, has confirmed that the port is working with APM, and the shipping company has stated in trade publications that Coos Bay is being considered for a new terminal.

The terminal being proposed by APM would give the Port of Coos Bay an advantage in handling container traffic in Oregon, which is currently dominated by the Port of Portland.

APM is talking about building a terminal capable of annually handling 2 million 20-foot unit equivalent containers, the industry standard. By comparison, Portland managed 245,459 containers in 2008. The Coos Bay terminal also would mean an infusion of construction jobs to build a facility expected to cost between $400 million and $700 million.

Josh Thomas, spokesman for the Port of Portland, said the port generally considers projects like the one proposed for Coos Bay as benefiting the overall region. He noted that the Port of Portland’s marine business isn’t exclusive to containers. The port also handles cargo like auto transport ships, dry and liquid bulk shipments and grain.

“It’s a well-diversified portfolio,” Thomas said.

Wayne Plaster, district manager with Northwest Container Services Inc., remains skeptical that a major terminal as proposed by APM would work in Coos Bay.

“The only reason a major steam ship line would call (on the Port of Coos Bay) is if they had direct rail connection running inland because you don’t have a local consumption base,” he said.

The port in March bought the 111-mile-long rail line that stretches from the coast to the Willamette Valley, but the route needs drastic repairs. The port is currently using $2.5 million in federal stimulus money to repair a tunnel. Bishop said the port hopes to have the rail line operating within the next 15 months, but acknowledged work is already behind schedule.

Bishop said the port’s business is closely tied to Japan’s economy. The container business would allow Coos Bay to diversify its business and give shippers an alternate destination rather than the larger West Coast ports.

“Our focus with both railroad and water side development is to focus on any intermodal development,” Bishop said.

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When federal stimulus money came rolling into Oregon, legislators decided to use it to plug some holes – and not just those in the state’s roadways.

Oregon used $1.4 billion from the American Recovery and Reinvestment Act, about half of the total pot the state received from the program, to fill gaps in the state’s biennial budget.

The effectiveness of the patch job, however, depends on whether tax revenue will return to pre-recession levels, a recovery that relies in part on a new tax increase going into effect in Oregon in January. And anti-tax groups have already launched an attack to repeal increases that target corporations and high-income individuals.

Legislators, who are meeting in January for a special budget session, say the corporate and individual tax increases will raise about $733 million a year. If that money fails to materialize, they warn, Oregonians can expect more cuts in services and the potential reshaping of its government.

Bill Lunch, a political science professor at Oregon State University, sketches out a more extreme scene for the immediate future. If the repeal initiative hits the ballot in January, he says, the state is in for a class war and months of uncertainty regarding Oregon’s economy.

“The state Legislature and governor crossed their fingers hoping that the revenue will return,” he said.
Lunch said Oregon is better off than many states, including California, despite the short-term uncertainty. Oregon’s two-year budget cycle gives lawmakers some breathing room to make adjustments, he said, and lawmakers stashed some of the state’s federal stimulus money in savings.

Government in Oregon is essentially funded from two pots. The first pays for dedicated services like transportation. The other is the general fund, which gets its money from personal income and corporate taxes, and primarily pays for schools, human services and public safety. The general fund also is the most flexible in terms of how the Legislature can shift funding.

By early 2009, Oregon had the second highest unemployment rate in the country, which helped gouge an $862 million shortfall in the $15 billion general fund. To soften that blow, the Legislature cut $311 million in costs. The state Department of Environmental Quality, an agency already working on a shoestring budget, lost $2.2 million, for example. Meanwhile, the Department of Forestry lost $2.3 million. Small businesses also suffered a blow when the Oregon Economic and Community Development Department lost $4.1 million in general and lottery money used to provide grants to help emerging businesses get established.

Legislators then filled the hole that remained with $401 million in federal stimulus money and $150 million in reserves and other savings.

For the 2009-11 budget, another $978 million in federal stimulus money was used to offset revenue shortfalls. The Legislature also approved a tax hike for corporations and people who earn more than $125,000 a year and joint filers with incomes of more than $250,000. The increase is expected to generate $733 million and is the linchpin in the Legislature’s plan to fill the revenue gap.

Former Oregon Sen. Margaret Carter sees serious restructuring of state government coming if the anti-tax groups get their two initiatives on the ballot and voters repeal the increases in the January election.

“Either our initiatives pass to be able to fill in the millions (of dollars) or we go to the cutting table, plain and simple,” said Carter, a Democrat from Portland who recently announced she was resigning her senatorial seat to take a job with the state Department of Human Services.

Tim Duy, an economics professor at the University of Oregon, agrees with Carter in part. He sees a fundamental flaw in that there’s insufficient money in the general fund to pay for basic services. He said the Legislature has used stopgap measures like government employee furloughs, federal money and cutting school funding to balance the budget.

“How long can you keep doing that?” Duy said.

He doesn’t think the solution is easy. He said part of the answer might come by moving school funding decisions to the local level and making better use of reserves to offset more volatile business cycles.

Any talk of change to Oregon’s budget structure, however, is couched in subtle terms, rather than monumental shifts. The lack of big ideas for government change appears rooted in the belief that lawmakers approached the federal money with eyes wide open.

“The reality is that all recipients knew the funding was for a two- to three-year period,” said Courtney Warner Crowell, spokeswoman for Gov. Ted Kulongoski‘s economic stimulus team.

She said the Legislature picked programs that needed help bridging that time period, and targeted many one-time capital projects.

For instance, Multnomah County‘s human services department is spending $845,000 of its stimulus money to serve 5,000 more people at its health clinics, $2.3 million to renovate seven clinics and $4.8 million to improve weatherization at hundreds of homes.

Madeleine Mader, staff assistant to Multnomah County Chair Ted Wheeler, said county commissioners wanted to use the money only on programs that could be sustained or completed within a short time frame and provide lasting benefits.

State senators and representatives used the same reasoning for crafting the 2009-11 budget, said Rep. Peter Buckley, a Democrat from Ashland and the co-chair of the Ways and Means Committee. He said the goal was to keep the budget at the current revenue levels. By doing that, he said the state could still function when the federal stimulus dollars are exhausted.

“We had to make choices that were sustainable even if the revenue picture was less than positive,” he said.

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A ventilation systems trade group warns that its industry may be a bigger contributor to the spread of infectious diseases, a revelation that takes on greater importance as the threat looms of another outbreak of the H1N1 flu virus.

The American Society of Heating, Refrigerating and Air-Conditioning Engineers issued a report this summer that suggested ventilation systems could spread droplets infected with the flu when someone sneezes or coughs. While those systems already use filters and other methods to scrub the air clean, the study suggested building owners, managers and construction groups could improve air quality through ventilation protections, room pressurization and ultraviolet germicidal irradiation.

Schools, hospitals and clinics are preparing for the upcoming flu season and the unknown impact of the new H1N1 swine flu virus. But those plans stop short of equipping ventilation systems with specialized equipment because at this point the potential benefits don’t outweigh the costs.

“There are studies showing that building airflow can be an important mechanism, but in terms of quantifying a change in ventilation systems reducing the transmission rate is tougher,” said Andrew Persily, an indoor air quality expert and a former vice president of ASHRAE.

Instead, building operators are turning to simpler preventive measures.

Susan Steward represents owners of 29 million square feet of office space from Vancouver, Wash., to Salem as executive director for the Portland office of the Building Owners and Managers Association. She said the flu season is on the minds of BOMA‘s members, but instead of a revamped air system, hand sanitizer is being liberally distributed throughout buildings.

“Most of us feel (the H1N1 threat) is overblown,” Steward said.

Matt Shelby, spokesman for Portland Public Schools, said the district is mindful of air quality and ensuring enough fresh air is pumped into schools. The district’s preparedness efforts for flu are more focused on keeping students home that show flu-like symptoms.

Beaverton School District has adopted a similar stance, according to district spokeswoman Maureen Wheeler. She said officials are concerned with keeping buildings clean, but flu prevention is more focused on the personal level. Hand sanitizer is being liberally dispensed in classrooms.

The pending flu season is an especially hot topic in the medical field.

Hospitals and clinics in the Legacy Health system already are designed to guard the spread of disease.

Brian Terrett, director of public relations for Legacy, said the organization’s biggest challenge is managing its waiting rooms. He said patients shouldn’t be surprised to see staff wearing face masks and eye protection, especially in emergency room and clinic waiting areas.

Even though the upcoming flu season might not trigger major building upgrades, Persily said building owners and managers are reexamining ventilation systems. Those maintenance checks often result in air filters being changed, which may reduce the spread of viruses.

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The flood of summer work that swamps many union halls in the Portland-metro area has been nothing more than a trickle this year as a stagnant commercial and industrial building market has left plumbers, pipe fitters, sheet metal workers and others idle.

Union leaders and contractors say the biggest reason for the slump in work is a scarcity of money to pay for projects.

Frank Wall, executive director for the Plumbing and Mechanical Contractors Association, said one of its 200 members was ready to start work on five commercial projects until the dollars disappeared.

“He employed 100 plumbers, and has 20 now,” Wall said.

The plight of unions drew national headlines in the spring as the United Auto Workers union reversed course and agreed to a number of concessions with automakers. Nobody is suggesting the situation in the Portland area is as bad, and union contracts remain intact.

“We did wage rollbacks in the ’80s, but it didn’t get us any more work,” said Len Phillips, business manager, financial secretary and treasurer for the Sheet Metal Workers Local 16.

But the sluggish market does mean more people in the trades are without work. Also, future contract negotiations could be altered and apprenticeship programs may suffer.

Wall said his association and United Association of Plumbers and Steamfitters Local 290 in March agreed to a two-year contract that gave the union’s 3,000-plus members a $1.60 hourly increase. But 20 cents of that went to health and welfare costs, and the remainder to shore up pensions, which have lost up to 28 percent of value from a year ago.

Phillips said there have been no adjustments to the sheet metal workers union’s contract, which expires in 2010 and covers 2,300 members. He said approximately 200 members are not working; that figure has doubled from six months ago.

The International Brotherhood of Electrical Workers Local 48 has 4,000 members, 2,800 of whom are in the construction industry. Clif Davis, business manager and financial secretary for the local, said the construction segment of its membership has a 15-percent unemployment rate and many more people are working part-time. He expects to finish 2009 with the union’s members working 10 percent to 12 percent fewer hours than in 2008.

The lack of jobs is now trickling down to the apprenticeship programs. Graduation is being delayed as students struggle to book enough hours of work to meet requirements, and unions fight to find that balance point of accepting new students to replace retirees without creating a glut of idle apprentices.

Davis is countering the stagnant market by increasing marketing. The union has rented billboards, increased advertising, lobbied the Legislature and produced a video designed to reach contractors that emphasizes the professionalism of its workers. The hope is that builders will think of Local 48 when it comes time to hire.

But while Davis and other union representatives eagerly await an end to the current economic crunch, they don’t expect to see a quick recovery.

“We’re going to remain at lower-than-normal levels,” Davis said.

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Jim Mark, CEO of Melvin Mark Cos., knew he would commit to Earth-friendly practices for the renovation of his company’s 30-year-old Columbia Square office building in downtown Portland.

After all, Melvin Mark was one of the first Oregon companies to use the U.S. Green Building Council’s Leadership in Energy and Environmental Design practices when it developed Salem’s transit center in 1997.
But rather than follow LEED, Mark chose the Green Building Institute’s Green Globes certification process.

“For existing buildings, Green Globes was a better fit for us,” Mark said.

The Green Globe, more popular in Canada, is a third-party evaluator like LEED. Mark said his biggest reason for choosing Green Globe was to increase the involvement of the company’s in-house engineering and green teams in the project to update the 313,000-square-foot Columbia Square building.

LEED remains the benchmark for green building standards, and Mark intends to keep using the certification for new projects. But the emergence of alternative third-party evaluators gives engineers, architects and developers options to meet sustainability goals.

LEED, Green Globe and the International Living Building Institute’s Living Building Challenage will push the building industry to new standards as each organization refines its goals and establishes new trends in green building.

The U.S. Green Building Council and the International Living Building Institute are already updating their certification requirements, and preliminary drafts give some hints as to the coming trends. Those changes are expected to help boost the green market in nonresidential construction from 2 percent in 2005, to between 20 and 25 percent by 2013.

One way the U.S. Green Building Council expects those figures to increase is by updating its five-year strategic plan to capitalize on the attention now being given to green building. Some of the issues it wants to address from 2009 to 2013 include: removing roadblocks to a growing demand for green building by increasing the number of LEED qualified people in the building trades; addressing the need for green practices within existing buildings; and giving building owners and occupants the education needed to manage, operate and inhabit green buildings.

The International Living Building Institute also is updating its Living Building Challenge, an ambitious attempt to spur development of buildings that internally generate power and treat water. While the U.S. Green Building Council gives developers a checklist to achieve certain LEED standards, the Living Building Challenge uses LEED as a baseline and lets architects creatively design buildings that generate their own power and handle their own water, said Bruce Hostetter, outreach director for the challenge. The next user guide for meeting the challenge will be unveiled in November.

To date, no building has reached the Living Building standard, but Hostetter said two projects – one in New York and one in Missouri – are being reviewed and are expected to hit the standard.

Hostetter said that while studies show that building to meet a LEED silver standard costs the same or slightly more than not, achieving the Living Building Challenge will cost more – anywhere from 5 to 50 percent more. That cost increase remains one of the biggest hurdles to achieving the Living Building Challenge.

“It’s refreshing to know there are those folks out there willing to take that kind of financial risk,” Hostetter said. “They’re not doing Living Building because it’s fashionable.”

Mark puts his company in that category, saying sustainable practices have been part of Melvin Mark since the 1990s. Updating the Columbia Square building included installation of a $500,000 chiller. The investment is expected to generate a $35,000 annual savings in heating and cooling costs. Melvin Mark also implemented a program for tenants to recycle paper, metal, leftover food and construction debris.

“I think there could be multiple levels for other rating systems,” Mark said. “As long as it’s achievable and it makes sense. That will drive the process.”

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