None too soon, the Port of Bremerton commissioners decided to take a second look at the Sustainable Energy and Economic Development project (SEED).
While there are people who support SEED with an almost religious fervor, it is probably safe to say that most people are reluctant to foot the bill on faith alone.
Touting a “clean energy” or “clean technology” concept that may create many hundreds of jobs in the future here in South Kitsap is not the same as justifying the expenditures.
Building a modern-day temple of Apollo in the hope that it will act as an irresistible lure for government grants and private investment is not much of a business plan.
SEED has been portrayed as a way to invest our capital to build a better future, but it is not an investment of capital. It is an expenditure of our income after it is taken by the port district’s property tax.
Venture capitalists have capital — accumulated wealth — which they seek to invest in productive activities to earn a return on their investments.
There is clearly a difference between them and taxpayers whose current earnings are taken by taxes, but let’s consider SEED as though we are venture capitalists with excess earnings to invest.
The threshold question was stated by port Commissioner Larry Stokes when he said he is unwilling to gamble with public funds.
Is SEED a gamble or an investment?
An investment could be described as an expenditure under circumstances making it probable that a return will be earned. There is usually a risk of loss, but the probability of a return makes it an investment.
A gamble is no more likely to succeed than betting on a roll of the dice. If SEED has a 50 percent chance of success — or less — then it is a gamble.
After years of searching, the port seems to have learned that SEED facilities would be built on speculation. Finding companies willing to sign long-term leases before the port constructs one or more SEED buildings seems impossible.
If we must build on speculation, then it is hard to believe that there is a significant market demand for the facilities SEED would offer. And, where there is little market demand, there is little probability of a return on the money spent.
When considering whether to make a significant expenditure on construction, one ought to have a reasonably certain idea of the total cost of SEED and to know how all the money would be obtained.
The port district has taxing authority and the ability to borrow by issuing bonds, but it is not a bottomless pit of money.
Without voter approval, the port’s debt ca-pacity is limited to one-quarter of 1 percent of the assessed value of all taxable property within the taxing district.
Right now, that amounts to about $27.9 million.
Also without voter approval, the port’s levy lid allows an annual property tax for general port purposes and payment of bond debt totaling about $3.2 million.
The port is using all of its current levy authority and most of its debt capacity, so what amount could the port raise by issuing bonds without voter approval — and how does that compare to the money needed for SEED?
Supposing the taxpayers behaved like venture capitalists, what would it take to persuade them to agree with the expenditure or to approve higher taxes needed to pay the bond debt?
The Washington Technology Industry Association has posted online a description of its upcoming investment forum, where com-
panies can present their ideas to venture capitalists.
One point seems obvious from the information about that investment forum. The venture capitalists want to know what product or service the companies propose to sell and when they may be ready to sell it.
On that point, SEED proponents apparently cannot provide a suitable explanation, since no company, product, or service has been identified.
Instead, the taxpayers are expected to pay for the facilities that may lure the companies that may, in turn, have products or services that could be ready for market some day.
And to the extent SEED could assemble and pay a team of experts to advise and assist budding entrepreneurs, this team would act as an additional lure for prospective businesses that are nowhere near being ready for market.
It seems that SEED involves a higher de-gree of risk than the type of investment venture capitalists ordinarily make, but that doesn’t necessarily mean it is a gamble rather than an investment.
During this second look at SEED, the port district needs to come up with persuasive reasons for believing that it would be an investment — or drop it and find something that actually is.
There is no shortage of demand for taxpayers’ money, so significant expenditures like those needed for SEED have to be justified.
Robert Meadows is a Port Orchard resident.
