A century ago, a dozen mills on Fidalgo Bay employed 1,000 workers and earned industrious Anacortes the title “City of Smokestacks.”

Those businesses fell one by one as forests gave out and industry conditions changed. The economic picture grew so serious by 1966 that the community condemned an entire neighborhood near the old mill sites between the bay and R Avenue to create an industrial park that promised new jobs for future generations.

The city initially hoped to attract massive corporations, and for more than a decade the area was primarily vacant. When it became clear big companies were not coming, the door was opened for smaller firms in 1986. That’s when things began to take off in the urban renewal area.

Today, industry in the urban renewal area is not as visible as the old smokestacks, and to a casual observer passing by on R Avenue the area can appear downright deserted. But a closer look shows that the neighborhood’s sacrifice was not in vain — the area has become vital to the city’s economy, employing as many people at living-wage jobs as the mills once did. Most work in a marine industrial cluster that brings an estimated $50 million a year in taxable revenue into the city.

“There’s a whole lot going on down here that people don’t know about,” said Dave Malseed, president of the Anacortes Marine Trades Association. “It’s humming down here. They need to come down and see it in action.”

Despite calls by some eager to see something — anything — happen on the remaining 44 acres of undeveloped industrial land, Mayor Dean Maxwell said rezoning any of it would be a mistake.

“There is pressure from people new to the community, (who ask) why is this land sitting vacant? There is a comprehensive plan behind this. There are hours and hours of community discussions. That’s why Anacortes is as it is. To sell that short would be a mistake and a travesty,” he said.

“It’s got a long way to go, but it’s come a long way. Some of those vacant lots down there, they represent opportunity.”

The urban renewal area’s transition from a quiet residential neighborhood with dirt streets to a busy industrial area hasn’t been easy, and maintaining and building on that success will take more work. Malseed and other members of the Anacortes Marine Trades Association say the industry needs four things to stay afloat in today’s market: Strong zoning, room to expand, proximity to training programs for skilled workers and launch and service dock facilities for bigger boats.

But the future looks bright and, except for room to expand, the industry is lined up to get everything on its wish list soon.


Washington’s community renewal law, adopted in 1957, empowered cities to carry out community renewal projects to eliminate blight. Cities, working with the U.S. Department of Housing and Urban Development, were allowed to make loans or grants to create or retain jobs.

Urban renewal started gaining traction in the region in 1963, when the Anacortes American reported that redevelopment of the Fidalgo Bay waterfront could create 500 to 700 jobs. The concept was popular around the country: The same year, Seattle approved the demolition of the Public Market under the banner of urban renewal.

According to federal standards, the area near the old mills qualified as blighted and undesirable for residents, the American noted. In 1965, a 179-acre industrial park was proposed for 20th to 34th streets and R Avenue to the bay, and 67 of 144 homeowners there signed a petition opposing it.

Tim Weatherbie, a former resident, said his family was among that narrow minority.

“We didn’t want it,” he said.

But many others liked the promise of jobs or the chance for a new start, and the City Council approved a $6.8 million urban renewal plan in 1966. Arthur Hartmann, who was allowed to personally set fire to his home at 605 25th St., told a reporter he was “tickled pink.”

Infrastructure improvements began in 1969 and the first sale was approved to a mobile home builder. By 1974 the last shingle mill, Pioneer Shingle Co., had closed. The urban area was still struggling to get started, although 40 acres was promised to two other mills, 15 acres to a seafood processor and 30 acres to Snelson-Anvil. Only the latter followed through and was a major employer in town for a few years building North Slope oil modules.

Most companies never followed through, and in 1978 the city began to repossess land from those that hadn’t build promised improvements.


Things only began to change after Ian Munce became planning director in the late 1980s and was put in charge of jump starting the industrial area.

“Ian was very instrumental in putting this together,” said Howard Bean of North Harbor Diesel & Yacht Services.

Munce said a land swap had consolidated ownership in the renewal area. The city’s holdings were east of R from 29th to 34th streets, and Snelson-Anvil owned 17th to 29th streets. Land cost $3 per square foot, and there were no paved roads or utilities.

“When I came on board there was nothing happening,” he said.

Munce started by addressing the lack of services.

“I was able to convince Mayor Rice to borrow $3 million,” he said. The money was used to pave 30th Street down to the water and install utilities. Later the city put in a barge dock and haul-out dock that accommodate 50-ton vessels, giving the area badly needed water access.

“They put in the ramp for the boat building. That was the right thing,” Bean said.

The next step was to get some businesses going.

“Jim Rice went down to San Francisco and wooed Sugiyo to town,” Malseed said.

“We sold a parcel to Sugiyo for 60 cents a square foot,” Munce said. “That got things started.”

Sugiyo, a seafood processing plant that makes surimi products, is one of three fish processors operating in the industrial area.

Malseed took note of the deal, which was controversial.

“You could hardly sell to the Japanese and not sell to the home town boys at the same price,” he said. “I was operating in my garage out in Skyline at the time. I had one employee. I was busting at the seams.”

Malseed approached Munce, who told him to sit tight until the city set a precedent with Sugiyo. After that sale was approved, Malseed pled his case at the next City Council meeting.

“They sold it to me at the same price,” he said.

“Things started moving after that. That actually broke the log jam,” Bean said.

This time there was a catch — performance standards to ensure development took place.

“They learned their lesson,” Malseed said. “I had to be up in a year. I had to bust my hump.”

Others quickly got on board, including Bill Wooding, Vito Ruzich and Pat Ballenger, he said.

“This resurgence of boat building just took off,” Munce said.

Malseed, whose company was Anacortes Refrigeration, started with a building at 30th and T. His operation grew to serve marine and large industrial clients such as Sugiyo, and he still rents out property in the area.

Bean started out in a tiny space rented from him. Malseed said Bean is proof of the American dream, where a smart person can work hard to build a successful business that employs 40 skilled workers. North Harbor Diesel provides mechanical and electrical services for power boats and yacht maintenance services such as bottom painting, and it sells everything from parts and supplies to entire yachts.

Bean said businesses have grown, although the city made some mistakes along the way.

“When they put in the Fidalgo boat yard they leased the travel lift dock to one user,” Bean said. “That’s a choke point because they controlled the dock.”

Fidalgo Boatyard contracted to launch and haul boats for anyone at a fair and equitable rate. Later the interest was sold to Cap Sante Marine and Maureen Dickson.

The haulout price went up to almost $19 a foot, according to Anacortes American archives. When efforts at compromise failed, businesses sued to enforce the city lease and eventually won.

To get around the “choke point,” Bean worked with Herb Krause of Krause Manufacturing of Bellingham to develop a remotely operated hydraulic boat trailer. The result was the KMI Sea-Lift, now used extensively by North Harbor Diesel and several other firms to lift boats from the water and transport them to upland storage or repair sites.

“With the advent of the Sea-Lift, it has caused this area to really explode,” Bean said. “We have two. You have three businesses that are essentially in business because of that.”

The device allows the companies to launch and haul out bigger boats and boats with deep drafts from the city’s commercial boat ramp. But more is needed.

“Right now we’re limited to the 65-foot boats,” Bean said.

This prohibits expansion, because pleasure boats over 80 feet are the fastest-growing segment of the market. In addition, the ramp can’t be used at low tide.

Berk & Associates’ 2007 Northwest Washington Marine Industries Cluster Study recommended assessing the demand for a heavy boat haul lift, and pointed at Port Townsend, with its 350-ton travel lift, as a potential model.

“This capital investment has been a critical factor in helping the marine businesses in Jefferson County grow their work in vessel construction, repair and retrofit,” the study noted.

Malseed and Bean said a bigger lift is needed to compete with Port Townsend and La Conner, which has a 100-ton travel lift.

“We’ve got infrastructure they don’t have,” Malseed said. “It’s good foresight to increase our capacity.”

Munce said Granville Marine, North Harbor Diesel and Cap Sante Marine expressed interest in jointly purchasing and installing a 100-ton travel lift if the city upgrades the ramp and dock. The city has received a shoreline permit to lengthen and widen its 30th Street boat ramp and plans to increase the capacity of the barge dock to accommodate 100-ton vessels. Public Works Director Fred Buckenmeyer said the city has budgeted $72,000 in 2009 to do preliminary work while looking for grants.

“It was pretty much Ian’s vision to improve the capacity of the dock,” Malseed said.

While the businesses would like an even-bigger travel lift, he said there’s no way to build anything larger than 100 tons without help from MJB, which owns the only feasible site. The developer’s south barge dock is an ideal location for a lift in the 250-ton range, he said.

Marine trades members have been vocal about the need for a nearby marine skills training center. The group’s support helped Skagit Valley College decide to locate such a facility here and in 2007 the Legislature approved $6.6 million for its construction.

“The skills center is a vital piece of this. We need a constant supply of trained people,” Malseed said. “It’s a very, very important aspect to our industry.”

High school and college students who complete the program can be certified by the American Boat and Yacht Council as technicians.

“They’ll come out with ABYC ratings and immediately go into a good-paying job,” Malseed said.

Experienced workers will also use the center to expand their skills.

“We’re going to do co-operative training. We’re going to be vitally involved,” Malseed said.

Munce said recent tallies identified more than 30 businesses with more than 1,000 employees in the urban renewal area. The parcel sold most recently fetched $6 a square foot. The area is described by consultants and analysts as a “boat building cluster,” and Munce said the revitalization of the marine industry has been an important part of growing the city’s economy.

Malseed said skilled marine employees earn $40,000 to $60,000 a year.

“The wage scale is very substantial,” he said.

The Anacortes Marine Trades Association estimates the industry pays 50 percent more than retailers and twice as much as tourism-related businesses. As much as 20 percent of the town’s workforce is tied to marine industry, according to the association.

While some people claim homes, shops and hotels are the highest use of property near the Fidalgo Bay, the marine trades group said owners of land with low-bank access to waterways have an obligation to develop high-paying, water-dependent jobs that cannot exist elsewhere.

“Anacortes’ navigable working waterfront is a precious resource: Once it’s gone, it’s gone forever,” the group said.

Malseed said more than half of the city’s marine business just sails into the community.

“This is new money coming into town,” he said.

Every new dollar coming in recycles as many as six or seven times — from the customer to the marine business to its employees or contractors, then to businesses in town and around again, he said.

Malseed said the impact of retail sales and hospitality services for tourists can’t compete with an industry where a paint job on a 50-foot boat brings in about $40,000.

“It takes a hell of a lot of trinkets and beads to generate $40,000,” he said.

Manufacturing, including wood products and boat building, makes up 5.2 percent of the city’s taxable retail sales base, according to a 2006 Berk & Associates retail study. The study said marine sales — supplies and hardware as well as new and used boat sales — made up 6.2 percent of taxable retail sales in the city. In comparison, eating and drinking places made up 6.7 percent of taxable sales.

According to figures from the Washington State Department of Revenue, the ship building and repair, boat building and other marine support activities generated $18.4 million in taxable revenues in 2006 and $11.6 million in 2007.

The Marine Trades Association estimates the impact is greater than Revenue figures suggest because additional tax-exempt boat sales can total $15 to $25 million annually. Much of this is pumped into the local economy through salaries and the purchase of local supplies.



One of the marine industry’s most urgent needs is room to expand. Almost every available site in the industrial area has been developed and occupied, with one notable exception — large undeveloped parcels that belong to MJB Properties Inc. The company acquired 42 percent of the land in the Fidalgo Bay industrial district in 1990, when it bought the Snelson-Anvil site. Vacant land appears plentiful, but the owners have declined to build industrial facilities on it.

“We’re running into the brick wall of MJB’s intransigence,” Malseed said.

Of the original 179 acres in the renewal area, 44 acres remain undeveloped, according to Anacortes GIS Coordinator Rob Hoxie. This includes a 7.9 acre parcel at R Avenue currently being developed for boat storage and another 2.1 acre site, both owned by Bill Wooding. The rest belongs to MJB.

In 1996 MJB proposed a retail center with a Haggen grocery store southeast of R Avenue and 22nd Street. The City Council initially approved the project, but reconsidered when citizens, many of them who had been displaced by urban renewal, were outraged. In an advisory election, voters turned the project down.

In 2005 MJB tried again. This time the proposal was for a resort and hotel complex with many condominiums between 17th and 22nd streets. That project was withdrawn when MJB did not get the conditions it sought from the City Council, although the council did OK limited mixed use in the area for the first time. Munce has said this greatly increases the value of the land.

During a public hearing on the issue, Malseed testified against allowing residential units adjacent to marine industry. He still opposes such a change. Malseed said neighbors would soon start complaining about smoke and noise during long work days that start before dawn and go well into the night.

“Housing will be the first nail in the coffin of the Anacortes marine business,” he said.

As the city approaches build out, some people have set their sights on MJB’s vacant land as the best place for large-scale retail development.

Howard Bean said he doesn’t worry whenever someone proposes rezoning industrial land for condos or big box stores, because displaced residents won’t stand for it.

“I don’t have to do anything because I know the people who used to live here and their children will not allow it,” he said.

Many former residents, such as Don Yankacy, are vocal on this topic. Yankacy said he strictly favors employment opportunities for youth.

“We want jobs where they said they were going to put jobs,” he said.



Malseed said there have been some reasons for optimism. MJB has continued to move forward with efforts to build a marina on its waterfront property.

“We applaud marinas. Where there’s boats there’s work,” he said.

MJB also recently started upgrading some of its existing facilities, including those used by BMW Oracle to build its America’s Cup trimaran. Maxwell said the company could have decided to build the state of the art yacht anywhere in the world.

“Without that property available we wouldn’t be on the world stage,” Maxwell said. “They could build those things anywhere.”

MJB also recently upgraded boat-building facilities now used by Northern Marine and leased some acreage for use as boat storage.

“That was encouraging to us,” Malseed said.

He said the marine group hopes to work with the developer so both can get what they need.

Meanwhile, Malseed said higher tax assessments will make holding vacant property less affordable.

“Recent sales of land have forced the valuation of vacant land up. That’s got to have their attention,” he said.

For the past two years MJB itself has been quiet about its future plans in Anacortes, and the company did not respond to a request for an interview for this article. MJB representatives who have attended occasional Anacortes City Council meetings have said only that the company does not want to spend additional money on planning until the city’s zoning and development regulation update is completed.

Maxwell said he expects local manufacturing to continue making a comeback as shipping costs increase, and said a diverse economy, based on a mix of land uses, is a stronger one.

“We need to have an inventory of land that’s available for light manufacturing. We shouldn’t be putting all our eggs in one basket,” he said. “I think it’s going to be more and more important as time goes on.”

The mayor said there is no reason to rush land development decisions.

“I don’t think Anacortes will ever forget its past, and that’s a good thing. There were a lot of sacrifices people made. They did it for the right reasons and the community has benefited from it,” Maxwell said. “If we are patient there will be even additional benefits.”

And while the city has been flexible about the area north of 22nd Street, the mayor said industrial land is sacred.

“My own personal opinion is everything south of 22nd Street needs to stay industrial. I’ll go to my grave making sure that happens. I think it’s especially important in these strained economic times,” he said.