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Sunday, February 2, 1997 - Page updated at 12:00 AM

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Hoquiam: Orphan In A Booming Economy

Seattle Times Olympia Bureau

Away from the I-5 corridor, away from Spokane, this state has pockets where unemployment runs over twice the state average, and social problems seem to grow as fast as the work forces at Boeing and Microsoft. Hoquiam in Grays Harbor County is one of those areas. As its fishing and timber jobs disappear, it struggles to avoid being the town that time forgot.

HOQUIAM - A recent visitor struggling to describe this depressed timber town is given quick warning: "If you start saying it looks like Beirut no one is going to talk to you," advises state Sen. Jim Hargrove, D-Hoquiam.

Don't think domestic despair, either.

"People really hate the Appalachia thing," said Charles Sundberg, a supervisor at the Grays Harbor Career Transition Center.

OK, no Beirut, no Appalachia. But, frankly, the collapse of the timber and fishing industries has taken its toll. Downtown buildings here and in neighboring Aberdeen are boarded up and decaying; action at the once-thriving Grays Harbor port seems to move at half-speed and at low-volume; remaining mills struggle to stay open. And unemployment, suicide, alcoholism and domestic violence all are on the increase, local officials say.

The situation stings all the more because much of Washington state prospers today. It's a boom economy fueled in part by the Legislature's recent round of generous business-tax breaks. But Hoquiam and the state's poor communities continue to struggle while programs designed to help them have been diluted by the Legislature.

With much fanfare, new tax incentives for business were approved for depressed counties three years ago. But two years ago - the fanfare quiet now - many of the enticements disappeared as lawmakers extended the same benefits to businesses locating anywhere in Washington.

Hoquiam residents will be in Olympia this legislative session fighting to extend state aid to their area. While tax breaks getting credit for the boom along the I-5 corridor are permanent, aid programs widely used by Hoquiam's unemployed are set to end this year.

"Grays Harbor has just been forgotten about," said Clarence "Lucky" Russell, 33, a Hoquiam native and former mill worker training for a new career as a social-services counselor.

Here, even the good news underscores the depth of the problem.

The headline in last Monday's Daily World:

Banner year for building

in Hoquiam

8 new homes most in 20 years,

city reports

There are good things about Hoquiam, too, and residents repeat them like a mantra. Crime is low, traffic thin, the beach and the rain forest a short drive away. People here care about their town. Voters have never rejected a school levy.

"We have a very nice community," said George Donovan, scion of a Hoquiam timber family. "No matter what the politicians do to us, it's a nice place."

But reminders of hard times season everything.

HELP, NOT HANDOUTS, WANTED

The career center, full of former timber workers looking for new ways to make a living, sits adjacent to the rubble of a demolished hardwood mill. A mill closing several years ago was soon followed, locals say, by the suicides of three of its former workers.

Lucky Russell has daily reminders of tough times as he struggles with supporting a young family, caring for his terminally ill mother, facing the impending end of his unemployment benefits and wondering why someone would break into his truck and steal his chain saw.

It's tough going for a guy known as Lucky, even if he got the tag for being born on Friday the 13th.

"It's been real tough. I guess we go through these things to make us stronger," he says.

If that's true, Hoquiam should be plenty strong.

It's difficult to quantify the despair here. But last week, local residents gathered in a former beer warehouse that now houses a food-bank distribution center. They told the tale of the growing numbers.

"We serve 11,270 families," said Jan Jackson, director of Harbor Churches Community Outreach. "Last year, it was 6,978; 2,700 the year before that; then 800 and 600," Jackson said.

Last year, the Grays Harbor Pacific County Food Bank Distribution Center moved 1.5 million pounds of food to help feed 17,000 families in four counties, said Director Jim Coates.

Grays Harbor County's unemployment rate, 11.7 percent, is twice the state average.

A year's worth of rental and mortgage subsidies for Grays Harbor County - $122,840 - was gone in a week, said Gary Berrell, executive director of the Re-employment Support Center in nearby Raymond.

Hoquiam schools Superintendent Stanley Pinnick said about 65 percent of elementary school students are on free lunch programs.

Pinnick said the school district needs help. But he is hesitant to go to Olympia to ask for it.

"It seems like when we are going up to lobby we are lobbying against the other needs. We're all in competition," Pinnick said of the group gathered at the food bank. "We have to find a way to protect what we have before it's too late."

It was into a scene like this that Gary Locke sent a group of advisers in the week before he was sworn in as governor. The small group flew into town last month and met business leaders, social-service providers and other community leaders.

"We go around the table and it's sob story after sob story," remembered Bill Marler, Locke's chief fund-raiser, "and all of a sudden, this one guy says: `What are you thinking about us? Are you thinking we are just a bunch a whiners?' "

No, Marler told them. He saw a group of business and community leaders with an impressive commitment to their hometown despite serious economic hardships.

But Marler couldn't stop thinking about the meeting. As a native of Bremerton, he is proud of his Washington roots. As a successful attorney, though, he admits to a bit of insulation in his "Bainbridge to Seattle" lifestyle.

"Just to hear how many mills had closed and how many people are out of work, I was shocked. It's sort of like Appalachia," Marler said, apparently unaware of the town's chin-up warnings. "It really is. I don't mean that in a disparaging way because these people really, really, don't want a handout. They don't want anything but some help."

Marler said that when he next saw Locke he made a personal plea for the new administration to help communities like Hoquiam and not be lulled into complacency by a thriving Puget Sound economy.

Local leaders say they have heard such talk before. In the early 1990s, King County Executive Tim Hill was quoted in the local papers here promising to help steer new businesses to Grays Harbor County to help lessen the strains of growth in King County.

"That lasted about a year," said Tami Garrow, executive director of the Grays Harbor Economic Development Council.

"The challenge for us and the challenge for the Locke administration is to come up with a plan for stimulating development in the other Washington."

STATE RELIEF DIDN'T WORK

Helping "the other Washington" - the part in the grip of economic depression even as statewide, economic statistics look good -is the goal of the state's Distressed Areas Program.

It was begun in 1985 and attracted businesses to economically depressed counties by giving businesses deferrals on sales taxes that would normally be paid on the construction of new buildings and the purchase of new equipment.

A distressed county was defined then as one with an unemployment rate for the previous three years at least 20 percent higher than the state average.

Beginning in July 1994, the incentive was strengthened when the Legislature changed the deferral to an outright exemption. That change spurred activity in even the most depressed counties, including $6 million of new business investments in Grays Harbor County in the year following the change.

But the incentives may have worked too well. In lawmakers' efforts to replicate the economic development throughout the state, the law was changed in 1995 so businesses opening in any county would get the sales-tax exemption on new equipment.

The only incentive remaining to help depressed counties was on the construction of new buildings. And that exemption was extended to include poorer zones of well-to-do cities, and counties where the median household income is less than 75 percent of the state average.

The result has been development like Intel's new $51 million plant in DuPont, Pierce County - well within the booming I-5 corridor - which qualifies for $4 million in "distressed areas" tax breaks as long as the company hires 75 percent of its new work force from Tacoma's inner-city neighborhoods.

Since 1995, new industries have continued to take advantage of tax incentives, but for the most part, they've stayed clear of the most depressed counties - those with three-year unemployment rates of more than 10 percent.

Department of Revenue records show that among such counties only Yakima has found great success attracting new industry in the past two years. Most of the worst-off counties have landed no new businesses since the 1995 changes.

"In some ways, the distressed-areas program is a victim of its own success," said Department of Revenue spokesman Mike Gowrylow. When much of the program was expanded to cover the entire state, he said, "The thinking of the Legislature was we need to do something for the whole state to keep the jobs we have and attract new ones. By that measure, it has been a success."

Grays Harbor County has had mixed results with the companies that have taken advantage of the incentives.

The successes have been with existing companies that expanded. But there have been disappointments, too. Gilco, a modular-home-building company closed last year after less than a year in operation. The company still owes back port fees. Fandrich Piano lasted just three years.

The county's experience also shows the limitations of tax incentives. Taxes are not the sole consideration of businesses looking to relocate. Garrow, at the Economic Development Council, said companies considering a move also ask about the size and quality of the area's work force, access to transportation and quality of life.

PRISON PLAN IS WELCOME NEWS

The best news on Hoquiam's horizon is the state's decision to build a new medium-security prison outside of town. Garrow also is excited about the possibility of redeveloping the site of the never-opened Satsop nuclear plant.

"I really feel our time is coming," Garrow said, "although we may just have to wait until some of the other areas (of the state) are filled up."

Hargrove said he will propose new incentives this year to help his hometown and other depressed areas. He hasn't drafted specific legislation yet, but said his plan could include "meaningful" tax cuts as well as exemptions from regulations to encourage development.

But he will also have to fight to save assistance programs Hoquiam residents have had to rely on.

The 1993 Workforce, Employment and Training Act expires this year. Business lobbyists object to the continued use of unemployment taxes to pay for the $30 million-a-year program.

Social-service organizations in the county see a need for increases in an emergency rent-, mortgage- and food-assistance program that has been receiving a flat $350,000 a year despite massive increases in the number of people needing help.

The county's boosters say it will be hard to sell such programs in Olympia.

"There is a feeling that Boeing is doing well so we don't have a problem in the state," said Rick Anderson, manager of the career center.

Whatever lobbying campaign Grays Harbor County launches will reflect a debate here about how much attention should be brought to local problems.

"You can't send the message that everybody here is poor and ain't it awful," insists Garrow of the Economic Development Council.

But the organizations that feed, clothe and house the growing number of poor people don't want to downplay the problems.

"We understand where they're coming from," responds food-bank distribution Director Coates. "They're selling the town on its best merits. . . . We're saying, `What do we have left?' "

Copyright (c) 1997 Seattle Times Company, All Rights Reserved.

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