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MEMA Rept Final

MEMA Rept Final

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Published by David Harry

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Published by: David Harry on Sep 23, 2013
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09/23/2013

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Economic Impact Report 
The Economic Impact on South Portlandand the Greater Portland Regionof the “Waterfront Protection Ordinance”Proposed in the City of South Portland, Maine
For:
Maine Energy Marketers
 From: Planning Decisions, Inc.477 Congress Street, Suite 1005Portland, ME 04101-3406
 
September 23, 2013
 
 
 2
Executive Summary
South Portland’s wholesale oil products storage and distribution system iscritical to the City’s and the Greater Portland region’s economic health:
 
Directly, it maintains taxable assets of over $85 million, provides 85 jobsand spends nearly $38 million annually in the local economy, includingnearly $9 million in pay and benefits and approximately $7 million incapital improvements;
 
Indirectly, this spending becomes nearly $26 million in sales to hundredsof area vendors supporting an additional 250 jobs;
 
The industry’s total commercial impact on South Portland and its regionaleconomy amounts to over $64 million in sales supporting 335 jobs earningover $20 million in pay and benefits.Beyond its direct commercial impacts, the terminal industry serves as the anchorfor the entire Port of Portland, accounting for 84% of the port’s cargo vessels and94% of its total cargo. Loss of this business would be a devastating blow to theport, vastly reduce its size and thus its ability to maintain the level of supportand safety services now available. This loss would, over time, seriously impedethe Port’s efforts to expand bulk cargo and container shipping and put at riskrecent investments in the Ocean Gateway terminal and the International MarineTerminal and delay or make less likely proposed investments in marinas and boat repair facilities.Finally, replacement of the current waterborne-based oil product distributionsystem with a new truck and highway system that would have to be developedwould increase energy costs drastically and cost South Portland, its larger regionand the state as a whole thousands of jobs. Over a ten-year period, Maine wouldlose approximately 5,600 jobs producing a net reduction in annual earnings ofapproximately $252 million. This income loss would translate into a loss ofapproximately $12 million to local governments across the state andapproximately $18 million to state government.
 
 3
Introduction & Purpose
 
The purpose of every business enterprise is to respond to unforeseen changes incosts, technologies and regulatory conditions in order to deliver to its customersthe goods and services they want in the most cost effective manner. When thecost of responding exceeds the return from sales, the business can’t longcontinue. Some oil terminal operators have stated publicly that the “WaterfrontProtection Ordinance” proposed for the City of South Portland would so restricttheir operational and investment flexibility that they could not continue tooperate their businesses in a compliant and effective manner. If the ordinancepasses and is upheld by the judicial system, they would be forced to undertakethe orderly closure of their businesses.The purpose of this report is not to evaluate such a decision—that is the rightand responsibility of business owners. It is, rather, to trace the likely economicconsequences of such a decision out from the docks of South Portland throughthe City and its taxpayers, on to the Port of Portland, the Greater Portland regionand out to energy consumers throughout the State of Maine.Wholesale distribution—be it of general merchandise through the WalmartDistribution Center in Auburn, of food through the Hannaford centers in SouthPortland and Scarborough, or of beverages and candies through the Pine State,Nappi and Seltzer & Rydholm centers across the state—is not a glamorous business. But it is a critical business for consumers who rely on the products itprovides. And any radical change in wholesale distribution will have farreaching effects.Part 1 delineates the businesses directly affected by the proposed ordinance—theoil products wholesaling and distribution business. Part 2 examines the indirectlinkages of this business through its vendor supply chain and its workerspending patterns. Part 3 examines the scale and shared facilities effect on thePort of Portland. Part 4 examines the energy cost effects on the broader stateeconomy of replacing a wholesale distribution system based on waterbornetransportation with one based on truck and highway transportation.

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