September Retreat Minutes

Attendees

Guests / Staff

Economic Impact of Tourism on the Treasure Valley

Bill Drake thanked the Partnership for the opportunity. He and his firm have expertise in the field of travel and recreation.

Travel and recreation is one of those industries that can be transparent. In Idaho, tourism is a big deal. We have 32 million person trips coming to Idaho every year, annually. This represents about one percent of the national market. Day travelers and overnighters spend about $2.7 billion in Idaho. 84% of this travel into Idaho is for leisure purposes.

The Tourism industry, state-wide generates about 43,000 jobs. It adds up to about 500 million in wages paid per year. Most of our visitors to Idaho are from the nearby states of Washington and Utah. Most of the visitors come in the warmer months from April – October. 14% of these visitors come by air and the bulk of the rest come by single passenger auto.

The travelers to Idaho are primarily families and we have a very small percentage of seniors that travel here. As a result, our visitors tend to middle income and we don’t tend to have the high income jet-set coming to Idaho. Typically, it is Ma and Pa and the kids and they have a fishing pole and bike strapped to the top of the car.

David said, they had recently spent seven days at the Idaho Center Horse Park. According to the projections, $5 million came with this group and up to a $10 million impact was a result of this event.

According to the research, Bill stated that these visitors come and the shop, eat, drink and play. The average number of nights these travelers spend is 2.7. Additionally, on average, per trip and per person, they are spending $128.00.

The overnighters spend only about 30% of their total on lodging. Their expenditures are all over the board and affect a broad segment of our economy. They go to retail shops; they buy souvenirs and spend their money in a variety of ways.

The multiplier effect is real good with this industry. It affects 26 industries across the board.

All this spending by travelers into the State means jobs. They have been working with the department of labor this past year to generate the data on the jobs side as affected by the travel and tourism industry. It affects 26 different categories of employment. There are 31,000 direct jobs that are in the industry. There are another 12,600 jobs that are called indirect jobs. An example is the guy that drives the truck that delivers the beer to the restaurant. This amounts to about 4% of all the jobs within the State.

When you look state-wide, 30% of all the jobs created by travel and tourism are in the Treasure Valley. And if you look at the state as a whole, a bulk of the employment is based in population centers.

In the study, they compared the numbers to identify how important the travel and tourism industry is to the overall economy. According to the data, Boise County benefits greatly from the travel and tourism industry as a comparison. In Ada and Canyon Counties, the economy is more robust and the travel and tourism dollar is not as important as it is in the rural parts of the State.

In the Treasure Valley, we have about $810 million spent by travelers each year. A little less than 15,000 jobs are directly tied to the industry. There are $191 million in wages paid for this industry in the Treasure Valley. There are just a little less than 600 establishments that directly serve this industry in the Valley. Out of that, there are 107 lodging properties.

So, you can see that if we get a meeting or convention with 5000 attendee’s, we are going to be maxed out with respect to the ability of the lodging industry to handle something of this size.

There are some interesting tax implications from all of this. Conservatively, the sales tax on this industry amounts to about $4 million. In Ada County, for every job that is directly tied to travel and tourism, there is .41 of another job. In Canyon County this figure is .30.

In the Treasure Valley, the travel and tourism industry has big employment and spending numbers as well as a big multiplier. As this industry grows, it is also going to propel other employment. And this industry is quick to react.

The future of the travel and tourism looks bright. The State is projecting a 5% increase in room tax collections for this next fiscal year. The Treasure Valley has a real opportunity to grow in this industry. There is a lot of room for more lodging properties and there appears to be good demand. We think we could really stimulate sales by increasing this market.

Bill stated that the Valley has been very relaxed when it comes to going after what is called the FIT traveler (Free and Independent Traveler). We think there is a real opportunity for the valley to get a larger share of this national market.

Essentially, the generation X and Y individuals, as they mature and start making money are going to be looking to spend. This group doesn’t really care about “stuff”, they are all about experiences. And because we only have a 1% share, he believes we can potentially grow that share rather quickly. The other factor that is driving this industry is that these two generations are all about authenticity. They want real stuff. When you look at real travel, coming to a place like the treasure valley is real vs. a place like Disney land.

David asked what we could do to help activate the travel and tourism industry. Bill stated this industry is a quick ramp-up. When the people around the Tamarack Resort lost their logging mill, Tamarack started ramping up. However, this did not work out as they had planned. However, this county (Valley) continues its shift from natural resource based industries to those based on tourism. There have been several new motels spring up like the Ashley Inn and these people are finding that this industry works for them.

Tammy asked if the Department could do a little better job of sharing what that bed tax does. Nampa has tried to get the Auditorium District and has tried to educate on what this does to help build the tourism industry. She stated that you don’t see this information very often and she believes the public doesn’t get it.

Bill stated that part of the reason for him coming here is the Department has got a full-court press about the economic impact of tourism. We have real numbers we can work with. The second part of their research project is working with EMSI out of Moscow to work on spending and tax data and spread it across counties in more detail.

Then they will really be doing some major education to make sure that people really understand the power of the industry. The States program is a 2% room tax. The law says that 45% of that tax that is generated at the State level, must be distributed back out to the regions that generated it. This is the number that can drive the marketing programs.

John asked who receives this distribution. Bill stated it is distributed out in a granting process. Tammy added that it is a matching grant. So, communities that don’t have the bed tax, loose out on the dollars.

Tom stated that is one of the reasons they have been pushing so hard to get the auditorium district. It would be real important if Bill could come and speak with a gathering of the hoteliers and share the data and information he just has. Dave suggested that a 20 minute overview at a Chamber of Commerce function would also be helpful.

Dave said you are really battling some misconceptions and legislative problems. He remembers when they ran the auditorium district vote to get the expansion funded, one of his wife’s co-workers said she was going to vote against it because she has a lot of rooms in her home. So, this is the kind of thing that you will battle. Another thing that Nampa have, even if you pass it, the Pocatello case says you cant spend it unless you have an auditorium.

Tom added that another misconception was highlighted by the local paper. They did a great story on the Auditorium District right before the election, but the headline read, “Does Nampa Need Another Tax”.

Brad asked Bill if he could tell us what we could do as community leaders to start helping the marketing effort. His community of Greenleaf is uneducated about the impact of tourism. He does business all across the U.S. and when he talks to people that have visited here, they want to come back. But, as community leaders, and councils, they are not ready for company. They don’t have the mindset.

Bill said in SW Idaho there is a travel organization that aggregates the appeal. It is called the SW Idaho Travel Association. It receives travel council grants to promote the area. So if each of your communities could get involved with this group that would be a good thing. You could ensure that your community’s message is included.

Second, he would be happy to come speak to City Council or Chamber meetings to explain what the tourism industry does. Part of what we have in the treasure valley is a rural mindset. That rural ness does have appeal. For example, in San Jose, California, the idea of touring the wine industry in Idaho and do some fishing is real appealing.

Economic Development in the Treasure Valley, Clark Krause and Lane Packwood Lane introduced himself as the Economic Development Administrator with the Idaho Department of Commerce. The Dept. of Commerce is a small department with only 53 employees. This includes the Tourism office, Commercial Innovation, Marketing and International.

When your constituents think about economic development and what Commerce should be doing. That is basically what they do. They provide support to Idaho businesses, helping businesses to expand, helping to retain businesses, answering questions of entrepreneurs. His Division is also the one that CDBG grants for the State. And of course they recruit businesses as well.

Recruiting is not the most important economic development function of the State. This function is a very public one. From the State level, recruiting activity is increasing. They have seen a 400% increase in site visits. There is no other way to interpret this other than just good news. How many jobs has this generated recently? About 1,300 state-wide. We got 60-70,000 people unemployed so were not even close to seeing numbers like we want.

There are 4 people working on recruiting on the state level. There are no expense accounts and the entire operating budget for this program is five figures. The only reason he kept it at five figures, they have cut other budgets. All in an effort in a subsistence level to go on the road and meet people.

Tammy asked what they learned. In 2010, they had 25 visits and no announcements. In 2011, you had 39 visits with 8 announcements. Why are we starting to land on some of these recruiting efforts?

Lane said to think of announcements as lagging indicators of business. The 8 people that decided to come to Idaho in 2011, came in 2010. It in reality it becomes a two year sales cycle and businesses can and do come to them numerous times for every possible incentive, deal and guarantee.

This bodes well as we can assume more announcements as we have had more visits. What is interesting is the sample sizes are so small and it is hard to identify any trends. Those eight announcements encompassed are all very different companies, industries and each of them is unique.

We are doing well in attracting food packagers and processors. We are also getting data centers and he expects to continue to get these as we have cheap power. It is a real job to close these jobs business relocations..

Dave what is the highest priority of the Department of Commerce? Lane stated the highest priority of the department will be to servicing and supporting the businesses we have to keep the doors open and keep them happy. Business retention and expansion is the number one priority. It doesn’t reflect in the budget or the amount of time they spend, but if there is a stated priority, it is to help the businesses we have.

Tammy complemented the Department. Everybody blames the big fish. They were on a company visit with Sentsy and their comments were, here we are and we are going to be expanding and nothing has been offered to us at all. We are really good at providing information to businesses that are coming in on the programs and help available. However, she believes we fall short of working with the existing businesses. She has several businesses that are growing campuses. The Dept. of Commerce has really worked well them to put together the same kind of package they would for a business coming in.

Lane said that when people come to Idaho to “check us out”. We can compete as we do have a low cost business environment. We are however not rich enough to have large cash incentives up front like Wisconsin. We do not have those tools that can incentivize the deal.

Lane stated there are some communities that are better at site visits than others. What can you do at the local level to maximize the impression? There are two things. The broadest is that you control how you “brand” your community. What is it about and how is it communicated. Is it quality of life, best schools? How does this impact the business community?

Second, you can control the impression the community makes as a united front with a problem solving attitude. It is a very intangible quality that happens on these site visits. When the visit happens, can the community fill the room with the appropriate stakeholders?

Tammy stated that it is the fiber companies that we need at the table. It has been frustrating to not have constructive participation from our bigger fiber optic companies when we are having a site visit.

The last thing you can do. There are tools that we can use that involve risk. Idaho is a State that has a strong community of people that are willing to criticize the functions of government. For example, exempting property taxes on projects of $3 million or more is a good tool. But to do this represents political risk. The other tool you have is Urban Renewal Districts. It involves risk as well.

David said we need to let people know the incentives we have. For example, they recently had a meeting with the Agri-business industry and asked them what we need to do to enable them to do a better job. Their recent trip to the Ag Expo was as a result of one of the meetings. But they have been able to relay information on incentives to this industry just like they would for someone coming in.

Brad said that what is good for Boise and Nampa is good for Greenleaf. Can us as TVP communicate with Century Link and Idaho Power and say, we need better representation from you at our meetings we are having with site visits. Can we coordinate and be a little more proactive than just letting Idaho Power send Mr. negativity to these meetings. He has sit in on two meetings in Greenleaf and the Idaho Power guy is not cooperative at all.

Lane indicated that at the Policy level of Idaho Power, their attitude is pro business. So, we need to make the call to ensure that their representative is going to portray a pro business attitude. In regards to Century Link, there is chaos over there. The merger and other concerns have them off keel. He does see them as pro business and a call just needs to be made to get them at the table.

Dave said with regards to Urban Renewal Districts, you have the urban renewal piece, blight driven traditional urban renewal that people have a sense of. Then you have the economic development piece. These two have very little in common with one another. Is there any thought of pulling these pieces and separating them more?

Lane stated there is clearly a difference in philosophy. There are people that see the economic development side of URD’s as governmental overreach. That will exist. He is hopeful that there is not much attention to URD’s in the legislature this year.

URD’s are a political risk. You are putting your legacy and cities reputation out there. There is no other way than to deal with the pack of rabid people that are out there harping on these issues.

Keith stated has served on the Western Treasure Valley Electrical committee and the Hemingway-Boardman committee. Almost everybody he met from Idaho Power in these meetings was very positive and trying to bring more power into the area. Their problem, just like ours, is the citizens that only complain about where they are going to put the pole. Idaho Power is doing the best they can to bring in more power.

Clark added that some of this is communicating back to Idaho Power, just what is happening in the market place so they are more prepared to digest the need for new users. He had gone in and talked to them about Data Centers and that we weren’t actively recruiting them, but they are coming any way. Idaho Power said, we can absorb more data centers but anything more than 10 raises some concerns. He indicated they try to pre-load before the site visit meeting so they don’t have those tragedies of an uncooperative Idaho Power representative.

Clark stated he has done economic development work in Utah. There is a lot of local cooperation in Utah compared to here. He means, in Idaho, the legislature seems to be against local communities, and is always seemingly burdening communities so they can’t get things done. This is counter productive and hurts our ability to attract new businesses.

Clark stated that when he first started, the board of BVEP told him he would not be spending much time fund raising. He has been fundraising since the day he came on board. He can’t thank the communities enough for sponsoring BVEP. With regards to fund-raising, they are going to be at about $3.6 million for the next five years. The reality is, he feels they have about two years to prove them selves and deliver.

They are right on target for meeting their approx. 150 companies they were to visit this year. He just got back from Minneapolis where they had 14 sales appointments. While they were there, 3M indicated they need a building that was 80,000 sq. ft. and was equipped for medical services. Low and behold, the valley has such a building and they have been able to get involved with attempting to fill their needs. He indicated this was a perfect example on why you have to go on the road. This need was an unexpected opportunity that turned up because they were there knocking on 3M’s door.

Clark said that when he started, he assumed that the valley was well known. He is being surprised by the fact the companies he is visiting, really do not know the valley and they practically have to take a map out at the start of each company visit.

So far, the sales missions have been going well. They have had three wins this year. Two that haven’t been announced are in Meridian and Boise.

He has been involved with getting together a state-wide contingency of economic developers together. Their goal is to formulate some policies that would be good for the whole state. Their hope is that some meaningful legislation will emerge from their efforts this legislative session. This group has an upcoming meeting with the Governor where they will introduce him to four pieces of legislation to get his feedback.

His point is that what they would have done for Sorrento in New Mexico would be shocking. Some of New Mexico’s offerings would have included a 20-30 tax incentive, at least $3 million cash to help with the substation and $12-$15,000 cash for each job they brought in. This would have been their incentive package for a company already in the community.

Their goal is to put together a legislative package that will help with pre-existing businesses as well as recruitment.

David stated that Canyon County and Nampa collaborated a on Sorrento’s behalf. They looked at the area they were going to grow in and rezoned in order to enable the expansion to happen. Tom added that this collaboration carried with it political risk. They got highly criticized for rezoning in this instance to enable Sorrento to grow and expand.

Clark stated that the local leaders need to put together a portfolio, if you will, of stories of how they have helped a business in your community today. If you can give businesses that sense of comfort that there is local support for getting to the finish line, then you stand a better chance of closing the deal. What businesses are looking for when they come to do a site visit, is finding a way to eliminate you. They are looking for objections. So, as a community leader you have to watch them during the site visit so you can identify what their objections might be. Then be able to offer something that alleviates that objection.

Another key on site visits is to show prospective businesses how your community has responded to something. These special stories are going to resonate with them as they are on the airplane back home. This is one of our most important weapons. Because unlike other States, we cant give them cash.

Tammy asked Clark if he is getting everything he needs to do his job effectively. Clark stated that he needs concrete things from the community leaders that identify what a win looks like. He needs concrete things that communities are willing to do for prospective businesses. This gives him a tool chest that he can use to recruit businesses. For example, if a prospective business is going to produce 100 jobs paying $40,000 per year and they are going to have a $10 million investment in the community, what are you willing to do? The answer to this question is what they want to know. If he can tell prospective businesses the specifics of what they can obtain from our communities, the better off he is going to be when he is on the road.

Dave mentioned that some of the members have been talking about a branding effort for the valley. He asked if this is something there might be funds for from the state or other entities. Lane stated there is a state level marketing effort and their support would probably consist of in-kind types of contributions to a branding effort.

Dave stated that when he travels around the country, there is still some bad stuff out there with respect to the image of the state. For example, there still are some residual impressions due to the Aryian Nations activity in the past. He said, everybody collectively needs to get behind building a positively branded image of our communities and our state.

Dave said he feels there is traction to a local option initiative. Recent polling has indicated that 60% of Idahoans will support a local option for transportation. 62% will support a local option for anything. He would like to see us continue to work on this and keep the options open. Because if you narrow the scope of a local option to say, just transportation, you miss out on the economic development possibilities. Clark responded that if you look at Texas, they have a chest of funds to use to help retention, expansion and attracting new businesses. When you go into Texas today, they have $9.5 million available to aid in economic development.

Tom said, these are the stories we need to be able have on hand when we are talking about a local option tax. People need to understand the power of what these funds could mean if used to attract and retain businesses.

Dave said he would like to see 30 people in a room to come to a consensus on local option taxes and he would like someone from Lane’s shop to be involved. He continued that the two things people want are public transportation and economic development. We do need a public transportation system throughout the valley. This will be a large chunk of the local option.

Budget Outlook for 2011-2012, Robert McQuade and Keith Reynolds

Bob said this issue is real squishy. He pointed to an article in the Idaho Statesman that day. The Article said that values are going down and tax rates are going up. And this article really sets the stage for today’s discussion.

What they do is not science; it is more art than anything. When the market is going up they are accused of driving market values up and in a down market they are accused of driving market values down. Values are really seasonal. It is coincidence that it would appear values are going down when there assessment notices go out. The timing of analyzing assessments and analyzing sales in a year happens in February the following year. So they look at things in a retrospective way. Any such perception that their assessments drive the market is wrong because they are looking at data from the previous year.

Bob stated that in Ada County they have a bunch of different markets. The Boise Foothills, the Boise River always seem to hold up real well. In Eagle, they saw a real fast decline and they were the first to drop. But this last year they have seen an increase. However, other areas like Star are still seeing the effects of the drop in values.

Tom asked if “short sales” are included in the average value listings. Bob stated that yes, they are treated as any other sale. In fact, this year the International Association of Assessing Officers required that any time short-sales are 20% of the market, they have to be considered. In their office, if the predominant sales are the short-sales, they give them more weight.

Bob showed a chart that detailed the values in Ada County compared to levy’s. Up until 2005, values were going up but levies were pretty much stable. Something really big happened in 2005 and 2006. Values have been going down and levies have been going up. We do have taxing authorities that are reaching their maximum levy limit.

Keeping in mind we still have 1/4th of the calendar year to go here are some of the raw statistics. In Ada County, unemployment is at 8%. Bob doesn’t see that changing and until it does, he does not really see any upside for housing values. There has been a little rumbling about new employers coming in but these are smaller numbers. Dave added that he understood that H-P’s employment level will remain the same at around 4,100.

Bob stated that there is economic talk of a double-dip recession and this brings a large degree of uncertainty in the near future. As far as the finance side of things, there are still a ton of people under water. He has heard figures of 25%. As long as people are under water on their house, they will be staying still. Tammy added that in an earlier discussion we talked about construction workers. They are not leaving but staying around and they are working doing remodels. She felt that people can’t afford to sell their house, but are improving where they are living. They are seeing that in their building permits. Most of the others in the room indicated they are seeing an increase in building permits.

Bob stated that another concern is that 5-year arms are coming due and this could affect foreclosures. John stated that the same thing is happening on the commercial side of things. Bob agreed. However it seems like banks are more willing to negotiate with commercial lenders than jump into foreclosure, than they have been before. Banks used to start proceedings if you were 3-4 months behind on your mortgage, now they are waiting up to two years.

In Ada County they had 2,300 distressed properties sold between January and August. This was 50% of the total. In July alone there were almost 500 new foreclosures. In the news recently the number of homes that received their initial default notice went up 33% in August. This tells him that there is really nothing there that is going to get those values moving in a positive direction.

He stated the price change on construction has also hurt things. There has been a 35% increase in the cost of construction for a single family residence. And new construction sales are down to ½ of what they were a year ago. However, the cost of land has gone way down and this is spurring some new construction.

Bob stated that the number of days on the market for a home is down. This is a good sign. Also, the sales price as a percentage of asking price is improving and in some cases more than the asking price. This is an indication that the market is starting to firm up a little bit. Also, in Ada County, inventory level of homes on the market has dropped from 3,300 to 2,600 during the calendar year so far.

Rental rates are a real indicator of what is going on. If rental rates go up, you will see more people trying to buy a house. If they are going down, less people will be trying to buy a house. Right now, rental rates are holding steady so there is not a lot of pressure either way.

If you go to the MLS and can see that sales are 10% off for the year. He sees that this will reflect in a reduction in revenues. For sure, at the very best case, values will remain the same as they were last year. However, the decrease is slowing down and he sees any were from a 2.5% – 7% decrease this year. Dave asked if this would be the effect throughout the county. Bob said that he Kuna and Star will be hit hard again this year. Boise will probably be fairly flat compared to last year.

Keith Reynolds said that the bottom line message from the State perspective is pretty good news, compared to the state of property values. Everything that has happened from the housing bubble to the financial markets boils down to employment and this is where the state gets a bulk of its revenues. 90% of State revenue is from income tax withholding and sales tax. And they each represent about half of this share. We are seeing a jobless recovery to the recession. If you look at non-farm employment, projected out to 2014, you will see total employment equal to the level in 2007. When it comes to housing starts, state-wide, we are seeing just a slight increase this year and predict it will improve for the next several years.

With respect to personal income around the state, there are a few counties with positive growth but a lot of counties are still operating with a negative growth of personal income. The state just got done experiencing the first two years in a row where there was a declining general fund growth. However, we are starting to see that rebound and are going to be experiencing a little growth.

Revenue exceeded projections by $85 million, expenses were higher but we were able to have a carry over of $68 million. For Fiscal year 2012 they are expecting an increase in income and will have the ability to carry over $165 million. They are projecting an increase in both personal income and corporate income tax revenues. In addition, sales tax revenues are up slightly as well.

The priorities for the budget will overwhelmingly be education. They have expenditures that they know are coming. For example, PERSI needs to get a rate increase that has been postponed for several years. There is also a 3% withholding expense for all vendors they need to administrate. They need to replace one-time money and rainy day funds that have been depleted. There are capital expenses of the State that need to be paid attention to. And there have not been any pay increases for several years.

Looking toward the future,

Idaho has made it through the worst recession since the Great Depression by making tough decisions, living within our means, and not raising taxes.

FY 2012 appropriation is the “new base” for state government operations – there will be no “backfilling” of the reductions experienced over the last four years While the economy is recovering, Idaho anticipates a slow growth rate for the foreseeable future. Despite this year’s revenue receipts coming in ahead of the official forecast, there is no budget surplus Our first priorities for new revenues must be education and replenishing our rainy day funds

NPDES Certification, Susan Poulsom, Dave Tomten

In EPA Region X, they work with the four states of Washington, Alaska, Oregon and Idaho. The role of the office of water is to improve TMDL’s, and the water quality standards that the State of Idaho develops. They also write the NPDES permits for the State of Idaho and oversee the permitting in the other states. Permits are written for five years. The upfront part of the permit has the specific affluent limits and monitoring requirements that are specific to the facility.

There are technology based limits and water quality based limits. The technology based limits for water treatment plants are in terms of biological oxygen demands, total suspended solids and PH. Everything else is based on water quality standards. They develop the permit limits to meet the water quality criteria of the receiving water.

Keith indicated the City of Marsing spends over $20,000/year on testing. If you are in compliance, why can’t this be spread out to reduce the costs to the municipality? Susan indicated that most of the testing is spread out to a monthly basis. However bacteria samples are taken weekly to be able to provide a geometric mean for the month.

Tammy stated that their largest concern is the single-point contributors to the river are 8% of the problem. When are you going to start holding non point source polluters responsible? It doesn’t seem right that single-point contributors are being asked to provide 100% of the solution when they are only 8% of the problem. Tom added that this is the concern of all of the people around the table, particularly when it comes to phosphorous. With phosphorous, the point sources are only 2% of the total as to what collects at Brownlee Reservoir. He continued, if all the point sources got down to the .07 figure on phosphorous, he has heard that it would reduce the phosphorous collecting at Brownlee by ½ of 1% of the total that comes down the Snake River drainage.

When you start adding it up, the City of Nampa is looking at costs upward to $200 million over the next 10-15 years. When you just look at the some of the larger municipalities, you are looking at over $1 billion to reduce the total load of phosphorous by ½ of 1%. And in reality, 98% of the load of phosphorous is exempt.

Brad stated he is in the middle of building his plant to get to the .07 figure. As it is, he is looking at sewer rates for his citizens of around $88.00/month. If the City of Boise had to do what they are, per population, you would be looking at a project of over $900 million. Tammy added that we want to be part of the solution. But the municipalities are not the only solution. And the solution that the municipalities are coming to is miniscule compared to the size of the problem. It is real hard to tell the story of the costs to the citizens of why we need to meet these compliance levels.

Tammy stated that some of the regulations that are part of these permits are stifling the creative approaches to being part of the solution. Whether it is using reclaimed water or water trading, it really limits some of these approaches when you are trying to meet the goal of clean water. These are some of out overarching concerns when it comes to the NPDES permitting requirements. When we look at bringing our NPDES permits up to date, we want to make sure we are looking at the right thing. And the costs we are going to have to pass on to rate payers are justifiable. Tom added that this is just part of the story. We are loosing jobs in the valley because of these regulation requirements. Businesses are finding it untenable to meet the requirements and are pulling out.

Susan stated that they have authority to regulate point sources and they don’t have the regulatory authority to regulate agricultural drains. We see the first step in getting the agricultural part of this involved is through scientifically defensible approved TMDL’s. There is not a TMDL on the Boise River. When a TMDL is developed and approved, the beauty of it is it assigns load allocations to everybody, not just the point sources. Although they don’t have the authority to regulate the agricultural drains, through the TMDL, it will shed light on what their contribution is. The State actually does have authority to regulate the best management practices for the agricultural drains.

Keith stated that he believes you shouldn’t be regulating the farms. What should happen is the tests should be performed in say February when farms are not operating.

Tom said that if the State had Primacy, he has heard that they could be a little more scientific and flexible than the EPA on a lot of interpretations of the regulations. Susan said that EPA is very supportive of Primacy for the State of Idaho. She said there is flexibility with the EPA. They are looking at the Dixie Drain project with the City of Boise and offsets as well as water re-use. They are spending a lot of resources investing the Dixie Drain project. It shows a lot of promise. They see the best way to do offsets with the communities is through the TMDL process.

Brad asked how we can set up trading for phosphorous. Susan stated that right now we have a pilot project in the Dixie Drain. We may be able to use this as a guide for other trading projects. But it is still in its infancy. We haven’t agreed upon the discharges coming from the city of Boise and those that will be coming out of the Dixie Drain.

Dave Tomten stated that there is flexibility in the permitting. Trading and offsets are one of the flexibilities. Compliance schedules and reuse are some others.

John said that the evolution of the standards is one of the things that is impacting all the point sources. From our perspective, these standards have accelerated. The science is also progressing at a fast rate. So, you set up a standard, make an investment to meet requirements and then the science improves and this drives the evolution of tougher standards. Is there a point where water quality is good enough? Dave agreed. As they have been working on the Dixie Drain project, there is uncertainty that is hanging out there that this project may not be enough, because the standard will change.

Another part of this is that when a law is enacted, the federal agency has carte blanche to create the rules. Therefore, the stability is out of the hands of the electorate.

Brad asked what the temperature limits on discharges into the Boise River. Susan stated that temperature is a concern as well. Brad said that his water dumps into a canal and eventually ends up in the river, but there is no way to determine what the temperature is supposed to be because they are dumping into a man-made water way. He continued, that if want to take “natural” readings on the Boise River, you need to go back before there waere dams. In the late summer months, the flows in the river would not be what they are now and, the water would be warmer.

Susan stated that there options out there, to lower the temperature. It is challenging. You would hope there would be a TMDL for temperature. This could then be addressed through a TMDL. John said that Susan keeps mentioning TMDL as a vehicle to address some of the issues. She said it is a way to look at all the contributions (point and non point sources) and the watershed on a basin-wide basis. This assigns load allocations to all the sources, not just point sources. Once a waste load allocation is in an approved TMDL, the permitting becomes easier.

Michael McIntyre said he can remember starting on the TMDL on the lower Boise in 1992. Since then they have went through iterations of doing and not doing a TMDL. Working through the WAG (Watershed Advisory Group) the TMDL, never came to fruition. If the TMDL on the Boise were complete, they could look at all the different point and non point sources and write the permit based on contributions. Since there is no TMDL, the .070 has to be met and each point source is judged on this. If we had the TMDL, it would afford more flexibility in terms of the permit writing. It also provides for trading. So, on the DEQ side and the EPA side, the environment we find ourselves with these permits would potentially be more manageable.

They did get the green light from the WAG to do a TMDL for nutrients starting in October.

401 Certification, Mike McIntyre, Lance Holloway

Typically, DEQ gets a copy of the draft NPDES permit prior to public notice. Depending on the permit itself, you might have a 30 day or longer public participation process. One of the things they can do is ask for an extension on this process.

One of the things they can do, is if they see an option that will make the permit less stringent, they can put this in the permit after negotiations with EPA.

John asked what DEQ’s role in the TMDL and how that compares with EPA’s. Mike indicated that it is not an easy thing to get to. Under the Clean Water Act the State is under the obligation to produce a TMDL for the water bodies that are determined to be impaired for what ever reason. Basically, what the TMDL is it sets a water quality target and apportions a load to the entities. If the State does not complete the TMDL then EPA is compelled to do it for the State.

In the State, they have created six Basin Advisory Groups (BAG’s). They have an overarching responsibility. The day-to-day responsibility for creating a TMDL comes down to the WAG. In the case of the lower Boise, the WAG got started in 1992. In some instances, it works well and in other’s it doesn’t. We have a 20 year history with the WAG on the lower Boise with no TMDL.

John asked if it is ok to assume that this WAG process is not just a scientific process. And, if EPA doesn’t like they can disapprove of the TMDL. Mike said that this is correct. They have cases where it went smoothly and other’s that the approval through EPA took quite awhile. They have had a good relationship with the EPA and only received their first disapproval of a WAG on Jordan Creek just recently. Once disapproved, the EPA has 60 days to come up with there own TMDL and another 60 days to do the public notice.

The TMDL is supposed to be based on science and be data driven. But there is still interpretation of rules and laws and so there is some politics involved.

Meeting adjourned