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					                                      SUMMER 2007 ● Volume XXVIII

SPONSORED BY:

Kitsap County Consolidated Housing Authority
9307 Bayshore Drive NW, Silverdale, WA 98383
Phone: (360)535-6100 * Fax: (360)535-6105
E-mail: kccha@kccha.org
Web: www.kccha.com

Home Builders Association of Kitsap County
5251 Auto Center Way, Bremerton, WA 98312
Phone: (360)479-5778 * Fax: (360)479-0313
E-mail: info@kitsaphba.com
Web: www.kitsaphba.com

Kitsap Regional Economic Development Alliance
4312 Kitsap Way, Bremerton, WA 98312
Phone: (360)377-9499 * Fax: (360)479-4653
E-mail: edckc@kitsapeda.org
Web: www.kitsapeda.org

Kitsap County Association of Realtors
3689 Munson Street NW, Silverdale, WA 98383
Phone: (360)692-8896 * Fax: (360)692-8862
Email: governmentaffairs@kitsaprealtor.org
Web: www.kitsaprealtor.org

Christy Lubovich
TRENDS Editor
345 6th Street, 5th Floor
Phone: (360)337-5600 * Fax: (360)337-7155
E-mail: lubovichc@kccha.org




Kitsap County                                                                    1
TRENDS Report                                   Spring/Summer 2007 ● Volume XXVIII
TRENDS COMMITTEE, SUMMER 07
Kitsap County Consolidated Housing Authority
      Norman McLoughlin, Executive Director & TRENDS Committee Chair
      Sarah Lee, Director of Public Affairs

TRENDS Editor
     Christy Lubovich, KCCHA Public Affairs

Kitsap Regional Economic Development Alliance
      Kathy Cocus, Executive Director

Home Builders Association of Kitsap County
     Art Castle, Executive Vice President

West Sound Housing Office
      Mike Fagan, Housing Director
      Darlene Reysack

Kitsap County Association of Realtors
      Michael Eliason
      Dennis Morrow, Prudential Real Estate

Kitsap County
      Jim Avery, Kitsap County Assessor


And...
         Jim Adrian, Puget Rental Owners Association
         Ken Attebery, Port of Bremerton
         Glenn Crellin, Director, WSU Center for Real Estate Research
         Patty Dupre, Dupre + Scott Apartment Advisors, Inc.
         David Olson, Harrison Hospital
         Gary Gartin, Bradley Scott Commercial Real Estate
         Patti Hart, Publications Coordinator, Harrison Memorial Hospital
         Dick Hayes, Executive Director, Kitsap Transit
         Jennifer Hayes, Communications Director, Olympic College
         Gary Lyman, Richards & Associates
         Brent Marmon, Pacific Northwest Title
         Ned Palmer, Bank of America
         Marsha Walker, Washington State Ferries Planning Department
         Elizabeth Wilson, Port Blakely Kitsap Lake Project
         Cathie Knox-Browning, Kitsap Transit
         David Smith, Central Highland Builders
         Patrick Farley, Olympic Property Group
         Tess Camilon, Washington State Employment Security Department




Kitsap County                                                                         2
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
TABLE OF CONTENTS
Community Web Sites                                                               4-5
Executive Summary                                                                 6-7
Business Climate                                                                 8-11
Employment
      Top Employers of Kitsap County                                            12-13
      Bremerton/Kitsap Employment                                               14-17
Commercial/Community Developments
      Bremerton Revitalization                                                  18-19
      Olympic Property Group                                                       20
       Port of Bremerton                                                        21-24
Harrison Medical Center                                                         25-26
Real Estate
      Single Family Building Permits/ Average Prices                            27-31
      Single-Family Lot Availability
             2006 Lots                                                          32-33
             2007 Lots                                                          34-35
      Custom Homes & Housing Market                                                36
      Housing Market & Affordability                                            37-42
            July 2007 Affordability Snapshot                                       43
      Kitsap County Home Sales                                                     44
       Single Family Vacancies                                                     45
       Apartment Vacancies/ Average Rents                                       46-47
      Commercial Real Estate                                                    48-54
      Assessed Property Values                                                  55-56
Community Information
      Population Trends                                                         57-60
      Consumer Price Index                                                         61
Education
      School District Enrollment                                                   62
      Olympic College                                                           63-64
Transportation
      Ferry Ridership                                                              65
      Kitsap Transit                                                               66
The Navy in Kitsap County                                                       67-68

Map                                                                                69




Kitsap County                                                                       3
TRENDS Report                                      Spring/Summer 2007 ● Volume XXVIII
COMMUNITY WEB SITES
Bus Schedules (Kitsap Transit)       Home Builders Association of Kitsap
www.kitsaptransit.org                County
                                     www.kitsaphba.com
Chambers of Commerce
     Bainbridge Island               Hospitals
     www.bainbridgechamber.com            Harrison Hospital
                                         www.harrisonhospital.org
         Bremerton
         www.bremertonchamber.org         Naval Hospital Bremerton
                                          nh_bremerton.med.navy.mil
         Gig Harbor
         www.gigharborchamber.com    Kitsap County Government
                                     www.kitsapgov.com
         Kingston
         www.kingstonchamber.com     Kitsap County Association of Realtors
                                     www.kitsaprealtor.org
         Port Orchard
         www.portorchard.com         Kitsap County Consolidated Housing
                                     Authority
         Poulsbo                     www.kccha.org
         www.poulsbochamber.com
                                     Kitsap Peninsula Visitor & Convention
         Silverdale                  Bureau (VCB)
         www.silverdalechamber.com   www.visitkitsap.com
                                     www.golfkitsap.com
Cities
                                     Kitsap Regional Economic Development
         Bainbridge Island           Agency
         www.bainbridgeisland.com    www.kitsapeda.org

         Bremerton                   Navy Web Sites
         www.ci.bremerton.wa.us           Commander Navy Region Northwest
                                          www.cnbs.navy.mil
         Kingston
         www.kingstonwa.com                Commander Submarine Group 9
                                           www.csg9.navy.mil/html/top.ssi
         Port Orchard
         www.portorchard.com               Naval Base Kitsap
                                           www.nbk.navy.mil
         Poulsbo
         www.cityofpoulsbo.com             Naval Hospital Bremerton
                                           nh_bremerton.med.navy.mil
         Silverdale
         www.silverdale.net                Naval Undersea Warfare Center
                                           Division Keyport
Ferry Schedules                            www.keyport.kpt.nuwc.navy.mil
www.wsdot.wa.gov/ferries


Kitsap County                                                                4
TRENDS Report                            Spring/Summer 2007 ● Volume XXVIII
COMMUNITY WEB SITES (continued)
Navy Web Sites (Continued)               School Districts (Continued)
    Puget Sound Naval Shipyard                 North Mason School District
    & Intermediate Maintenance                 www.nmsd.wednet.edu
    Facility
    www.psns.navy.mil                          Shelton School District
                                               www.sheltonschools.org
Newspapers
     Kitsap Peninsula Business                 South Kitsap School District
     Journal                                   www.skschools.org
     www.kpbj.com
                                         Washington State Department of Revenue
        Bainbridge Island Review         www.dor.wa.gov
        www.bainbridgereview.com

        Bremerton Patriot                Washington State Employment Security
        www.bremertonpatriot.com         Labor Market & Economic Analysis Branch
                                         www.wa.gov/esd/lmea
        Central Kitsap Reporter
        www.centralkitsapreporter.com    Washington State Ferries (Schedules &
                                         Fares)
        North Kitsap Herald              www.wsdot.wa.gov/ferries
        www.northkitsapherald.com
                                         Washington State Labor Market Analysis
        Port Orchard Independent         www.access.wa.gov
        portorchardindependent.com
                                         Washington State Office of Financial
        Kitsap Sun                       Management
        www.kitsapsun.com                www.ofm.wa.gov
Olympic College                          Washington State University, Washington
www.oc.ctc.edu                           Center for Real Estate Research
                                         www.cbe.wsu.edu/~wcrer
Port of Bremerton
www.portofbremerton.org

School Districts
      Bainbridge Island
      www.bainbridge.wednet.edu

        Bremerton School District
        www.bremertonschools.org

        Central Kitsap School District
        www.cksd.wednet.edu

        North Kitsap School District
        www.nksd.wednet.edu


Kitsap County                                                                      5
TRENDS Report                                 Spring/Summer 2007 ● Volume XXVIII
EXECUTIVE SUMMARY
                                             By
                         Ned Palmer, Retired Senior Vice President
                                     Bank of America
                                      (206) 818-4744
                              Email: palmer-bi@comcast.net

Employment in Kitsap Strong
A look at the past year from April 2006 to April 2007 reveals a net loss of 100 jobs. Since
April 2006, the number of total non-farm jobs experienced a net loss of 100 jobs (a 1%
decrease) but job growth is already starting to pick up as 700 new jobs were created in April
2007 alone.

The net loss is due mainly to a decrease of 600 federal government jobs as a naval carrier
was moved out of state. Despite the loss of these federal jobs, Kitsap County job growth in
other sectors remains strong. Since April 2006, 200 new local government jobs were created.
In addition, the leisure/hospitality, manufacturing, and professional/business service
sectors each experienced a net increase of 100 new jobs. Construction-related jobs grew the
most with a 7.4% increase since April 2006 as 400 new jobs were created.

Kitsap County Has Low Average Growth Rate
While Kitsap County’s population growth rate jumped from .4% in 2005 to 1.2% in 2006,
Kitsap County’s growth rate is historically lower than Washington’s statewide growth rate.
Kitsap County’s average growth rate from the year 2001 through 2006 is .95%, which is
lower than Washington and Oregon State’s average of 1.3 % and California’s average of 1.6%.

Private Bremerton Renewal Project Bringing More Retail and Residents
Plans are underway to transform the site of the old J.C. Penney’s building in downtown
Bremerton into a nexus of residential units, grocery store, specialty bookstore, public
gathering spaces and underground parking. Bellevue-based Metrovision purchased the
block-wide site, which is currently serving as a parking lot. Transformation of this building,
in the center of the renewal area, is a key component to Bremerton’s nationally recognized
renewal effort and will bring more retail and residents downtown.

City of Poulsbo Meets Demands of Growing City
The City of Poulsbo is reviewing proposals for the development of a new city hall. The new
city hall is planned to be located downtown to enhance downtown’s vitality and to
accommodate growth. Poulsbo City Council will decide on a developer for the new building
later this year.

The State Route 305 Highway project is underway to relieve traffic congestion and improve
pedestrian and bike access along a vital transportation link. The improvements will result in
two new traffic lanes that will be designated for High Occupancy Vehicles during peak
traffic times.

Kitsap County’s Condo Market Booming
According to Richards & Associates, in Kitsap County, condo sales are gaining momentum
while single family house sales are starting to lag. Houses stayed on the market longer last
year – an average of 66 days compared to the 57 day average in 2005. 2006 also saw a
decrease in the number new and used house sales – 3,961 houses sold in 2006 compared to

Kitsap County                                                                               6
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
EXECUTIVE                            SUMMARY                             (continued)

4,521 in 2005. However, single family house prices continued to appreciate across the
county by 9.1% (compared to 21.6% in 2005).

However, Kitsap County’s condo market continues to boom. While the number of single
family house sales decreased by 10.75% in 2006, the number of condo sales increased by
9.12%. Since the year 2000, the number of condo sales has continued to increase from 134
sales to 407 sales.

Kitsap Home Prices
According to the Washington Center for Real Estate Research, Kitsap County median home
prices increased 10% in 2006 compared to 20% in 2005. Kitsap County’s median home price
increased 10% in 2006 which is lower than both King County’s median home price increase
of 13.6% and the statewide increase of 12.6%.

Kitsap County’s 2006 median home price of $275,000 is also noticeably lower than King
County’s median home price of $425,000.

Community Land Trust Model Expands the Effort to Increase Bainbridge Island’s
Affordable Housing Options
Housing Resources Board on Bainbridge Island founded a new program to create and
preserve affordable housing. This program, the Housing Resources Trust uses the
community land trust model in which families buy homes on land leased from the trust.
Over time this housing stays affordable since the lease restricts the price at which the house
can be resold. This retains the affordability of the housing regardless of increases in market
prices.




Kitsap County                                                                               7
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
BUSINESS CLIMATE


                                  Information Provided By
                             Kathy Cocus, Executive Director
                          Kitsap Economic Development Alliance
                                4312 Kitsap Way, Suite 103
                               Bremerton, WA 98312-2446
                           P (360) 377-9499 / F (360) 479-4653
                                 Email: info@kitsapeda.org
                               Website: www.kitsapeda.org


Labor Summary and Opportunity for Kitsap County
Over the year, total non-farm employment showed a slight decline of 100 jobs – from 86,600
in April 2006 to 86,500 for April 2007. This represents a shift from the continued and
stable upward trend for jobs (+9500) in Kitsap County from 2001 to 2006. Natural
Resources, Mining and Construction still remained in first position with a 400 job-gain, or a
7.4 percent annual increase. Retail Trade, which accounts for about 14.0 percent of total
employment for the month, did not do much for the local coffers by remaining flat for this
period. However, both the Professional and Business Services, and Leisure and Hospitality
sectors compensated for this lack of performance and contributed 100 jobs apiece. In
terms of the unemployment rate, the Bremerton MSA rate of 4.2 percent was a tenth of a
point lower than the statewide rate of 4.3 percent.

The Government sector registered a drop of 600 jobs from last year. This was specifically
evident in the Federal Government employment, which had a considerable 700 job-loss from
April 2006. The decline in the naval contracts and the move of one carrier out-of-state may
have contributed to this performance. However, as the saying goes: Hope springs eternal.
(see military impact – below)
Kitsap is strategically located to attract new opportunities – most notable are the
revitalization of downtown Bremerton, new West Park Business Park (Bremerton), College
Place (Poulsbo), and Silverdale’s bustling retail and professional haven.

Variety of Businesses
Home to almost one quarter million people, Kitsap has a rich economic, social, and cultural
fabric. From certified organic vegetable farms and wineries, specialty and big box retail to
technology-driven companies, defense contractors, manufacturing, and health, finance and
architectural professional services there is something for everyone. Intellectual capital
abounds and new businesses are being created at a record level. One example is Kitsap’s
first biofuel company that started operation this year.

The Kitsap SEED (Sustainable Energy and Economic Development) Project is seen as an
integrated technology center that would enable the start up of clean-energy businesses,
support them with high-tech research and testing, and give them a place to grow as
warranted by market conditions. The governor has embraced clean-energy technology as a
growth sector that Washington State is ready to capture.
Kitsap County                                                                              8
TRENDS Report                                       Spring/Summer 2007 ● Volume XXVIII
BUSINESS CLIMATE (continued)
The proposed business park is planned for 75 acres owned by the Port of Bremerton across
from Bremerton National Airport. Two types of complementary businesses are showing
interest in the initial phase of the project. One would produce ethanol from household
garbage collected in Kitsap County and the other would manufacture fuel cells to produce
electricity from hydrogen gas.

When the project is fully built out, it is expected to provide 2,000 high-tech jobs with
average annual salaries of nearly $50,000.

Entrepreneurial Community College
With two campuses in Kitsap County, Olympic College (OC) utilizes the latest technology to
provide a wide range of educational programs and services. These include on-site and
distant learning access to four-year degree programs at four different partner universities.
OC is continually changing to meet the needs of employers and fill future skill-gaps in the
community. Many local employers work with OC for customized skills training, continuing
and contract education services.

Labor Market Strength
With such a low unemployment rate, in general the availability of workers is seen to be
somewhat strained. However, our large commute-out work force — estimated at 30% of the
employed labor force — can readily be tapped by growing businesses. The access to East
Sound jobs requires a significant enough commute that workers may be willing to accept
lower but competitively salaried jobs and stay in the community. In addition, retiring
military offer a wide range of skill sets to employers in our area and with Olympic College
now offering a 4-year nursing degree and Bryman College specializing in health care careers,
our options are increasing.

Military Impact
Kitsap County is home to Naval Base Kitsap whose activities include SubBase Bangor, Puget
Sound Naval Shipyard, Keyport Undersea Warfare Center, and the Naval Hospital. About 55
percent of all economic activity of Kitsap County is directly or indirectly linked to the
personnel and procurements at these bases. Total impacts of the major bases in Kitsap
include employment of 37,880 and an additional 15,000 retirees on the payroll, and labor
earnings of $1.8 billion. The impact is expected to increase with two new submarines
arriving summer 2007 and January 2008 respectively, increasing the community by 290 new
families.

Land for Development
There is approximately 200 acres of land for sale and ready for development in Kitsap
County and additional 6 acres at the Port of Bremerton pad ready for lease. Another 2,000+
acres of land are available and zoned for industrial use. Of particular note is the South
Kitsap Industrial Area (SKIA), a master planned Urban Growth Area adjoining the Bremerton
National Airport. It provides 1,850 acres of flat, well buffered, and highly desirable acreage.
A master zone overlay will enable industrial development throughout SKIA in a series of
business parks served by inter-local agreements regarding needed infrastructure. This
inventory will augment existing development opportunities on leased land at the Bremerton
National Airport. Both the Suquamish and Port Gamble S’Klallam Tribes have business park
sites for lease.

Kitsap County                                                                                9
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
BUSINESS CLIMATE (continued)
Telecommunications
Telecommunications provides a necessary component for business development. Basic
infrastructure in the Kitsap region equals that available in the eastern Puget Sound region.
Embarq (formerly known as Sprint) has installed a point-of-presence (POP) on the Internet in
Poulsbo, making it competitive with major metropolitan areas. Embarq has provided ISDN
service at significantly reduced rates to businesses and residences in the greater Poulsbo
region. Downtown Bremerton is heavily wired as a result of the Navy presence and now
includes free WiFi in the downtown Harborside area. Several sonet rings already exist.

Comcast Cable and Wave Broadband have entered the market with some of the most
advanced cable infrastructure in the region. Qwest is constructing a number of
neighborhood-specific DSL nodes throughout the county. CenturyTel is similarly providing
DSL services in the northern and southern ends of the county. Additionally, Embarq
continues to upgrade DSL offerings in the Poulsbo area.

Fiber Optic Backbone
Of particular importance is the Kitsap Public Utility District’s ongoing creation of a fiber
optic backbone throughout the county. This provides wholesale access to the Bonneville
Power grid. In the language of telecommunications, this is a 144-strand fiber optic network
that brings an additional OC-48 worth of connection from outside and will deliver it through
an OC-48 sonet and gigabit ethernet.           This high-capacity, redundant fiber optic
telecommunications system offers competitively priced and qualitatively outstanding
service to institutions and businesses throughout Kitsap County. Private firms have also
created fiber connections to many parts of Kitsap County.

Transportation & Ferry Service
The Washington State Ferry System provides regular service to and from downtown Seattle
from Bainbridge Island and Bremerton, and between Port Orchard and West Seattle. There is
also a ferry connection between Edmonds and Kingston. Kitsap remains within 35 minutes
of Seattle’s metropolitan center and within an hour of SeaTac Airport via the Tacoma
Narrows Bridge. Bremerton National Airport provides a convenient means for the shipment
of goods; an expediency augmented by its adjacent rail line. This operating freight
connection to a deepwater port at Grays Harbor cuts at least one day off the time of
shipping large goods to Asia, as compared to shipment from ports inside Puget Sound.
Commuting within Kitsap County is swift and unimpaired with a four-lane highway
connecting most employment centers.

Kitsap 20/20 Project: The New Face of Economic Development in Kitsap County
Originated by the Kitsap Regional Coordinating Council (KRCC), the Kitsap 20/20 project
was a cross-community effort led by a steering committee made up of public and private
sector leaders with a purpose of generating a vision for sustainable economic development
for all of Kitsap County.

Industry sectors identified for growth and recruitment include clean tech, high tech,
tourism, lifestyle and life services, defense contracting, manufacturing, agriculture,
construction and development.



Kitsap County                                                                            10
TRENDS Report                                       Spring/Summer 2007 ● Volume XXVIII
BUSINESS CLIMATE (continued)
The 20/20 process produced a collection of economic development goals, a strategy, a set of
new initiatives and a new organizational approach to economic development. Most
importantly, it generated a new awareness and a broad commitment by both the public and
private sectors. Businesses looking at Kitsap County as a possible location will find a
vibrant support network of both private and public sector individuals working together and
eager to assist in their business development efforts.




Kitsap County                                                                           11
TRENDS Report                                      Spring/Summer 2007 ● Volume XXVIII
TOP EMPLOYERS
                                     Information Provided By
                                          Becky Newton
                         Kitsap Regional Economic Development Alliance
                                         P (360) 377-9499
                                    Email: info@kitsapeda.org

The KEDA conducts an annual survey of Kitsap County employers in the federal, defense
sector, state, county, city, school districts, and other public and private sectors. This survey
is voluntary and not all Kitsap County employers are represented.

                              Kitsap County 2006 Top Employers
          Our Top Employers Survey counts employees that are employed in Kitsap
         County only. Many of the employers listed below have additional employees
                                  outside Kitsap County.

         Top Private Employers
         Company                                        Total   FT      PT      Contract
         Harrison Medical Center                        1795    610     1185       31
         Walmart (all locations)                        979     709     270         0
         Port Madison Enterprises (Clearwater Casino/   768     664     104        0
         Suquamish Tribe)
         Safeway (All Kitsap Stores)                    713     160     553        0
         TeleTech Holdings Inc.                         695     695      0         0
         Albertsons                                     480     178     302         0
         Laurier Enterprises (McDonald's)               480     156     324        0
         The Doctor's Clinic                            480     480      0         0
         Martha & Mary Lutheran Services                450     293     157        0
         BAE Systems (formerly Tracer)                  388     349      39        0
         Lockheed Martin Bangor - Space Systems         360     350      10         0
         Haselwood                                      348     335      13        1
         Crista Ministries                              343     113     230        36
         Town & County Markets (Central Market)         335     187     148        0
         Encore Communities                             330     224     106        1
         Kitsap Mental Health                           323     242      81        8
         Group Health Cooperative                       309     190     119        0
         Amsec LLC                                      301     128     173         0
         Kitsap Federal Credit Union                    279     245      34        0
         Costco Wholesale                               277     132     145        0
         Courtesy Auto Group                            251     191      60        0
         Ace Paving                                     225      75     150        0
         The Kitsap Sun Newspaper                       210     157      53         0
         Port Gamble S'Klallam Tribe                    200     150      50        30
         Sound City Food (Burger King)                  185      35     150         0
         Kitsap Bank                                    175     165      10         0
         KPS Health Plans                               161     158       3        0



Kitsap County                                                                                12
TRENDS Report                                             Spring/Summer 2007 ● Volume XXVIII
         Top Private Employers (cont.)
         Company                                        Total       FT           PT        Contract
         Sage Fly Fish                                  152         150            2          0
         Home Depot                                     151         128           23          0
         Sound Publishing, Inc.                         150         133           17          0
         Watson Furniture                               150         148           2           3
         Target Corporation                             145         20           125          0
         Ostrom Management (Belmont Terrace,            140         120           20          0
         Ridgemont Terrace, Stafford Suites)
         West Bay Auto - Parts Plus                     135         130          5            0
         American Marine Bank                           133         111          22           0
         Parr Ford                                      126         120          6            0
         Olive Garden                                   120          80          40           0
         Trulife (formerly Seattle Systems)             120         120          0            0
         West Sound Bank                                120         117          3            0
         Dimension4                                     117         117          0            0
         eAcceleration                                  117         109          8            0
         Red Lion Silverdale                            115          80          35           0
         Mary Mac's Restaurant                          104         20           84           0
         Messenger House Healthcare Center              102         88           14           0
         (Soundcare)
         Waste Management - Brem-Air Disposal           102         100           2           0
         Forest Ridge Health & Rehabilitation Center    100         100           0           0
         Stirrett-Johnsen Inc.                          100         100           0           0



         Top Government Employers
                                                                  Civilian-
         Naval Base Kitsap                             Military     DoD       Contractor   Retirees
         Bangor                                         6100       2600         1350
         Bremerton                                      5200       10600       10000
         Keyport                                         30        1400         600
         Area retired personnel (USN/USMC/USCG                                              15000
         only)

                                                        Total       FT           PT        Contract
         Central Kitsap School District                 1610       1053          557          0
         Kitsap County                                  1225       1189           36         217
         South Kitsap School District                   1196        861          335          0
         Olympic College                                1007        358          649          0
         North Kitsap School District                    996        558          438          0
         Bremerton School District                      732         456          276          0
         Bainbridge Island School District              512        271           241         17
         Kitsap Transit                                  408        302          106          0
         City of Bremerton                               398        347           51          0




Kitsap County                                                                                         13
TRENDS Report                                              Spring/Summer 2007 ● Volume XXVIII
BREMERTON / KITSAP EMPLOYMENT
                                              Data Obtained from
                                     Washington State Employment Security
                                   Labor Market & Economic Analysis Branch
                                Tess Camilon, Kitsap Regional Economic Analyst,
                                     Website: www.workforceexplorer.com


                       Annual Kitsap County Labor Force and Unemployment

     Year        Labor Force            No. Employed           No. Unemployed            Unemployment Rate
     2007*         123,200                 117,400                  5,700                      4.70%
     2006          122,400                 116,600                  5,800                      4.80%
     2005          121,500                 115,300                  6,200                      5.10%
     2004          119,000                 112,100                  6,900                      5.80%
     2003          114,700                 107,000                  7,700                      6.70%
     2002          111,600                 104,100                  7,500                      6.70%
     2001          105,500                  99,200                  6,300                      6.00%

     *as of June 14, 2007 (not official annual report)

Kitsap County’s Unemployment rate remains low compared to previous years. 2007
numbers represent an average of January to May 2007 unemployment data recorded for the
Bremerton MSA.
Source: Washington State Employment Security Department, June 2007
www.workforceexphttp://www.workforceexplorer.com/admin/uploadedPublications/1886_laus_historical.xlslorer.com

Industry Growth
The chart below show how jobs in Kitsap County’s main industries have grown from 2000
through 2006. Total Nonfarm column represents the total growth among all sectors since
2000 while the other columns show how much of that growth has been captured within
Kitsap County’s main industries.
                                          Industry Growth from 2000 through 2006
                   13,000
                  (17.6%)




                                                             1,800         1,800                        1,900
                                  1,400                                                  1,200
                                                            (17.6%)       (28.6%)                      (7.2%)
                                 (33.3%)        300                                     (16.7%)
                                              (16.7%)

                Total Nonfarm    Nat. Res.,     Mfg.      Retail Trade     Prof. &      Leisure &       Gov.
                                 Mining &                                 Business      Hospitality
                                  Constr.                                   Serv.
                        Source: Employment Security Department, Labor Market and Economic Analysis Branch
Kitsap County                                                                                                   14
TRENDS Report                                                         Spring/Summer 2007 ● Volume XXVIII
BREMERTON / KITSAP EMPLOYMENT (cont’d)
Kitsap County Job Growth
The chart below shows Kitsap County’s total nonfarm job growth from Jan 2006 through
May 2007. The increase in June 2006 shows a 1,000 job gain across many sectors that
month. The decline of 2,300 jobs in Jan 2007 shows a decline in all of Kitsap’s economic
sectors. Most notably, the Construction sector was down 200 jobs, Retail Trade was down
500 jobs, and Leisure and Hospitality was down 100 jobs. With the loss of a navy ship, the
number of Naval Contractors declined and contributed to the 300 jobs lost in the
Professional and Business Services sector and 700 jobs in the Government sector.
    * See table on next page for the complete data set.

                                                  Kitsap County Job Growth
                     89.0


                     88.0


                     87.0
         Total Job




                     86.0


                     85.0


                     84.0


                     83.0
                                      ar
                             Jan Feb M Apr M                        ov            ar
                                            ay Jun Jul Aug Sep Oct N Dec Jan Feb M Apr May
                             06 06 06 06 06 06 06 06 06 06 06 06 07 07 07 07 07
                                                                 Month/Year

Natural Resources, Mining, & Construction is one of Kitsap County’s strongest sector.

                                                      Jan 2006- May 2007
                                        Nat. Res., Mining, & Construction Job Grow th


                      6
                     5.8
                     5.6
                     5.4
                     5.2
                      5
                     4.8
                     4.6
                            Jan Feb Mar Apr May Jun   Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
                             06 06 06 06 06 06        06 06 06 06 06 06 07 07 07 07 07
                                                           Month/Year


Kitsap County                                                                                            15
TRENDS Report                                                             Spring/Summer 2007 ● Volume XXVIII
BREMERTON / KITSAP EMPLOYMENT (cont’d)
                                                   Nonagricultural Wage and Salary Employment in
                               the Bremerton-Silverdale Metropolitan Statistical Area (Kitsap County), 2006-2007Revised
                                                Not Seasonally Adjusted/*UPDATED WITH ***QCEW DATA: December 2006
                                                                         2006                                                          2007
**NAICS INDUSTRY (numbers in
                                   Jan    Feb     Mar    Apr    May    Jun      Jul    Aug    Sep    Oct    Nov    Dec    Jan    Feb    Mar    Apr   May
thousands)
TOTAL NONFARM 1/                  85.1   85.1    85.8   86.6   87.2   88.2   87.3     87.0   86.9   87.1   87.2   87.1   84.8   85.2   85.7   86.1   86.8
TOTAL PRIVATE                     56.6   56.7    57.3   58.0   58.6   59.2   58.9     59.3   59.1   58.6   58.5   58.4   56.8   57.1   57.7   58.5   59.0
GOODS PRODUCING                    7.1    7.2     7.3    7.4    7.7    7.8    7.9      8.0    7.9    7.9    7.8    7.8    7.7    7.7    7.8    7.9    8.0
  NAT. RES., MINING, & CONST.      5.1    5.2     5.3    5.4    5.6    5.7    5.8      5.9    5.8    5.8    5.8    5.7    5.6    5.6    5.7    5.8    5.9
  MANUFACTURING                    2.0    2.0     2.0    2.0    2.1    2.1    2.1      2.1    2.1    2.1    2.0    2.1    2.1    2.1    2.1    2.1    2.1
SERVICES PROVIDING                78.0   77.9    78.5   79.2   79.5   80.4   79.4     79.0   79.0   79.2   79.4   79.3   77.1   77.5   77.9   78.2   78.8
  PRIVATE SERVICES
PROVIDING                         49.5   49.5    50.0   50.6   50.9   51.4   51.0     51.3   51.2   50.7   50.7   50.6   49.1   49.4   49.9   50.6   51.0
  TRADE, TRANSP., WAREHSG,
UTIL.                             14.2   14.1    14.2   14.3   14.5   14.6   14.5     14.6   14.5   14.6   14.8   14.8   14.1   14.1   14.1   14.3   14.5
    Retail Trade                  11.8   11.7    11.8   11.9   12.0   12.0   12.0     12.0   12.0   12.0   12.2   12.3   11.8   11.7   11.8   11.9   12.1
  PROF. & BUSINESS
SERVICES                           7.9    8.0     8.0    8.1    8.1    8.2    8.0      8.1    8.1    7.9    7.9    7.8    7.9    8.0    8.0    8.2    8.3
  LEISURE and HOSPITALITY          8.0    8.0     8.2    8.4    8.6    8.8    8.9      8.8    8.6    8.3    8.2    8.1    8.0    8.0    8.3    8.5    8.7
  GOVERNMENT                      28.5   28.4    28.5   28.6   28.6   29.0   28.4     27.7   27.8   28.5   28.7   28.7   28.0   28.1   28.0   27.6   27.8
    Federal Government            15.0   14.9    14.9   15.0   15.0   15.1   15.0     15.0   15.0   15.0   15.1   15.1   14.7   14.5   14.3   13.9   14.1
    State Government               2.3    2.3     2.4    2.3    2.3    2.3    2.0      2.0    2.2    2.3    2.3    2.2    2.2    2.2    2.2    2.2    2.2
    Local Government              11.2   11.2    11.2   11.3   11.3   11.6   11.4     10.7   10.6   11.2   11.3   11.4   11.1   11.4   11.5   11.5   11.5
Workers in Labor/Management
Disputes                           0.0    0.0     0.0    0.0    0.0    0.0    0.0      0.0    0.0    0.0    0.0    0.0    0.0    0.0    0.0    0.0    0.0




Kitsap County                                                                                                                                               16
TRENDS Report                                                         Spring/Summer 2007 ● Volume XXVIII
BREMERTON / KITSAP EMPLOYMENT (cont’d)
Kitsap County Job Growth Snapshot: April 2006
Over the last twelve months, the number of total non-farm jobs experienced a net loss of
100 jobs (a 1% decrease) since April 2006 but job growth is already starting to pick up as
700 new jobs were created in April 2007 alone (See chart below).

The net loss is due mainly to a decrease of 600 federal government jobs as a naval carrier
was moved out of state. Federal jobs are expected to increase as two new submarines arrive
in July and January.

Despite the loss of these federal jobs, Kitsap County job growth in other sectors remains
strong. Since April 2006, 200 new local government jobs were created. In addition, the
leisure/hospitality, manufacturing, and professional/business service sectors each
experienced a net increase of 100 new jobs. Construction-related jobs grew the most with a
7.4% increase since April 2006 as 400 new jobs were created.

                         April 2007 Nonagricultural Wage and Salary Employment in
                    the Bremerton-Silverdale Metropolitan Statistical Area (Kitsap County)
                   Not Seasonally Adjusted/*UPDATED WITH ***QCEW DATA: December 2006
                                                                                               Change
                                                                                             Mar-
                                                             Prelim   Revised   Revised             Apr-06
                                                                                              07
                                                                                             Apr-
    INDUSTRY TITLE (numbers in thousands)                  Apr-07      Mar-07    Apr-06             Apr-07
                                                                                              07
    TOTAL NONFARM 1/                                           86.5      85.8      86.6       0.7     -0.1
    TOTAL PRIVATE                                              58.5      57.8      58.0       0.7      0.5
    GOODS PRODUCING                                             7.9       7.8       7.4       0.1      0.5
      Nat. Resources, Mining and Construction                   5.8       5.7       5.4       0.1      0.4
      Manufacturing                                             2.1       2.1       2.0       0.0      0.1
    SERVICES PROVIDING                                         78.6      78.0      79.2       0.6     -0.6
      Private Services Provided                                50.6      50.0      50.6       0.6      0.0
      Trade, Transportation, Warehsg, & Utilities              14.2      14.1      14.3       0.1     -0.1
              Retail Trade                                     11.9      11.8      11.9       0.1      0.0
      Professional & Business Services                          8.2       8.1       8.1       0.1      0.1
      Leisure And Hospitality                                   8.5       8.3       8.4       0.2      0.1
      Government                                               28.0      28.0      28.6       0.0     -0.6
             Federal Government                                14.3      14.3      15.0       0.0     -0.7
             State Government                                   2.2       2.2       2.3       0.0     -0.1
             Local Government                                  11.5      11.5      11.3       0.0      0.2

Source: Washington State Employment Security Department, www.workforceexplorer.com




Kitsap County                                                                                                17
TRENDS Report                                                Spring/Summer 2007 ● Volume XXVIII
BREMERTON REVITALIZATION
                                Information Available at:
                             Website: www.ci.bremerton.wa.us

Bremerton’s downtown renewal effort continues to attract new private development.
Current projects such as Harborside and the 400 Condominiums — downtown’s catalyst
waterfront projects — are receiving finishing touches while the new waterfront park (with
unique landscaping and water features) is attracting visitors from Seattle every day.

Results of Bremerton’s downtown boom are visible everywhere and visitors are amazed as
they see the changes for the first time. Success in Downtown Bremerton is also attracting
national attention as one of the “top 5 up and coming ‘hot’ cities” in the country as ranked
by Money Magazine.

Bremerton’s Incentives Pave Way for New Businesses
From tax credits to workforce training and low interest rate loans, Bremerton’s unique
business incentives lower business start-up and construction costs, which makes moving a
business downtown both easy and affordable.

Up to $40 million in New Markets Tax Credits –– which have already attracted a
professional Seattle based company to come downtown — are still available for businesses
developing, buying, or remodeling downtown. Investors in this program receive 39% tax
credits over seven years.

Bremerton also offers property tax abatement for multifamily housing or mixed use
developments. This means those who construct, renovate, or convert a building into
condominiums may be eligible for a ten year exemption from city property taxes for that
building.

Downtown Bremerton is also one of four areas designated by the Washington State
Legislature as a Community Empowerment Zone. This incentive gives manufacturing,
computer-based, and research companies up to $4,000 in credits on Business and
Occupation tax.

New Mixed Use Private Project to Bring Downtown Grocery
Metrovision, a renowned Bellevue development company, is bringing more residents and
retail downtown by transforming an existing block-wide, three level parking garage on
Burwell Street into a mixed use development to include a major grocery store, book store,
apartments, a nexus of public gathering spots and underground parking. The new private
development will be located just across the street from the new waterfront condominiums
and future expanded marina and boardwalk.

Marina Expansion & Tunnel Construction
Expansion of the Port of Bremerton Marina begins this year. The wave-attenuating
breakwater, which protects the marina from turbulence caused by weather and the ferry, is
being floated and tested this July, and will be barged into Bremerton by early August. The
concrete breakwater will be 25 feet wide and ten feet high — large enough to host water
festivals and events.


Kitsap County                                                                            18
TRENDS Report                                       Spring/Summer 2007 ● Volume XXVIII
BREMERTON REVITALIZATION (continued)
Construction on the downtown underground tunnel began this year. The tunnel will protect
pedestrians and preserve downtown Bremerton’s walkable quality by directing vehicle traffic
from the ferry underground. This will also allow for uninterrupted vehicle flow.

Bryman College
Bryman College just opened its new location to bring quality, personalized job training to
250 new students in the downtown Bremerton Harborside District.




Kitsap County                                                                           19
TRENDS Report                                      Spring/Summer 2007 ● Volume XXVIII
OLYMPIC PROPERTY GROUP
                                  Information Provided By:
                                  Olympic Property Group
                                      Business Manager
                                        Patrick Farley
                                  Olympic Property Group
                                     pfarley@orminc.com

Port Gamble and Pope Resources; 7,000 acres North Kitsap Rural Lands
Port Gamble is the last company owned mill-town in Puget Sound and is a National
Landmark District. For the last 5 years Olympic Property Group (OPG), a wholly owned Pope
Resources subsidiary, has been restoring the 120 acre waterfront town by bringing in new
visitor related business, weddings, and events. Behind the scenes, the company has begun
assembling the studies necessary to bring forth a redevelopment plan that will include more
housing, hotel, conference.

Port Gamble is part of an 8,000 acre portfolio owned by the company in North Kitsap
County, 7,000 acres of which are zoned for rural residential development. The company has
begun a public dialogue to better understand the potential of this portfolio to provide for
regional off-road bike trails and housing.

Arborwood (Kingston)
OPG is planning the 350-acre residential property 1 mile south of the Kingston ferry and
adjacent to the White Horse residential and golf course community. The project will
include over 50% open space, trail connections to the North Kitsap Heritage park, and up to
750 homes. Initial project applications should be submitted to Kitsap County later in 2007.

Chatham (Hansville)
OPG is developing a 19-Lot residential gated community off of Hansville Road with estate-
size. Lots ranging in size from 3- to 10-acres. OPG is partnering with local high-quality
home builders to deliver superior properties to buyers seeking a serene retreat with access
to trails, plenty of space for equestrian uses, and close proximity to local shopping and
services.

Wright Creek Business Park (Bremerton)
OPG plans to complete construction of Phase 1 of a 63-acre business park adjacent to
Pendergast Regional Park in late-Summer with great freeway access and ideally situated to
serve Kitsap, Pierce, and King Counties. Phase 1 Lots are available in size from 20,000-
80,000sf with Phase 2 Lot combinations suitable for up to 10-acre development sites. The
Industrial Park zoned property allows for a variety of uses including light industrial, office,
retail, medical and more. The finished Lots are truly “pad ready” with ample underground
power, high-speed internet connectivity, City water, City sewer, on-site storm water
detention facilities, and SEPA completed for compatible plans and uses.




Kitsap County                                                                               20
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
PORT OF BREMERTON
                                            Contact:
                            Ken Attebery, Chief Executive Officer
                                       Port of Bremerton
                         P (360) 674-2381 ext. 21 / F (360) 674-2807
                                      Ginger Waye, ext. 12
                             Email: gingerw@portofbremerton.org
                         Web Site: http://www.portofbremerton.org

VISION
The adopted vision of Port of Bremerton is to build, operate and maintain world class
facilities providing recreation and economic development opportunities for aviation, marine
and business facilities.

The Port of Bremerton’s jurisdiction covers portions of the west and south half of Kitsap
County, Washington.

Bremerton Marina
The Port of Bremerton is constructing an enlarged Bremerton Marina to coincide with the
City of Bremerton’s downtown waterfront revitalization plan. The expanded marina will
include a new wave attenuating breakwater and moorage space to accommodate more than
100 guest and 230 permanent moorage spaces. Marina services, including restrooms,
showers and laundry facilities, are located in the Harbormaster’s office in the lower level of
the Kitsap Conference Center building adjacent to Boardwalk. The new marina will be open
in early 2008.

Boat owners who purchase their home at the new Harborside Condominiums have the
option to pre-lease their moorage slip at Bremerton Marina as available.

The revitalized core of the City of Bremerton offers many shopping and entertainment
opportunities within walking distance of Bremerton Marina. The promotion of tourism is a
major part of the Port’s economic development mission, and statistics show that guest
boaters in the new marina will bring in more than $2 million to the local economy every
year.

Port Orchard Marina
The Port's award winning Port Orchard Marina provides state-of-the art accommodations
and utilities for permanent and guest boaters. Amenities also include Wi-Fi internet and
cable television connection. The Port Orchard Marina draws high numbers of guest boaters
every year, and accommodates a number of boating rendezvous, including the national
Chris Craft Rendezvous. The adjacent Port Orchard Marina Park provides access to the
beach and is a popular location for family and community events. The City of Port Orchard
and the Port together support many community events on the waterfront such as Concerts
by the Bay, the Mustang Car Show, the Cruz Classic Car Show and street fair, the Fathoms of
Fun festival and July 4th celebration, Christmas Lane and the Festival of Chimes and Lights,
and a Farmer’s Market.


Kitsap County                                                                              21
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
PORT OF BREMERTON (continued)
Bremerton National Airport
Serving corporate and general aviation, Bremerton National Airport is ideal for general
aviation and corporate hangars, aviation business and maintenance operations. Adjacent to
Olympic View Business and Industrial Park, Bremerton National’s 6,000-ft. runway is
equipped with an instrument landing system, pilot-controlled approach and runway/taxiway
lighting and a non-directional beacon, and is capable of accommodating most corporate
aircraft. There are over 600 acres of land available for development of corporate and
maintenance business operations. The airport master plan calls for a number of
improvements to the airport over the next 20 years. Over the next five years, plans include
runway overlay, drainage improvements, new roads and additional infrastructure for
development of hangars and expanded ramp parking for larger corporate aircraft.

Bremerton National is the regional hub for aircraft activities and is home to 206 aircraft.
Aircraft hangar and tie-down spaces are available as well as a full service restaurant. Avian
Flight Center is the airport’s Fixed Base Operator (FBO), offering Avgas (truck and 24-hour
self-service) and Jet A fuel, pilot training services, aviation supply store, scenic flights,
aircraft rentals, car rentals and corporate services. Avian Aeronautics provides aircraft
engine repair services.

Bremerton National Airport anchors the South Kitsap Industrial Area (SKIA), a 3,400-acre
“regional industrial center” and is a major asset in the economy of West Puget Sound.

Olympic View Industrial Park
The Port of Bremerton’s Olympic View Industrial Park located west of Bremerton National
Airport on State Highway 3 offers 560 acres of zoned industrial property. Rail access is
available. The existing infrastructure, including fiber optic cable, will accommodate 30 more
acres of development. Additional regional Stormwater facilities requiring significant
funding will be the primary focus of the Port’s work in coming years to make the remaining
acreage fully available for development. The industrial park and airport are located in an
urban growth area and are zoned industrial.

The park is a catalyst to the diversification of the economy by attracting new industries to
Kitsap County. 37 businesses occupying 75 acres and 342,000 sq. ft. of building space and
employing over 700 now call Olympic View Industrial Park home. Included among the
businesses in the industrial park are FedEx and UPS, providing convenient shipping
resources. Competitive operating costs, combined with a supportive building permitting
process, assistance with industrial development revenue bonds, developer services and
aggressive lease practices are some of the economic development tools and benefits offered
by the Port.

The industrial park’s NE Campus division has fully infrastructured lots available for lease.
Current private development on leased property within the NE Campus includes two 8,000
sq. ft. and one 12,000 sq. ft. buildings. Three of six lots in the campus have been leased.
The Port of Bremerton and Port of Grays Harbor, located in Aberdeen, have formed a
partnership that would link Olympic View Industrial Park to Grays Harbor’s deep water


Kitsap County                                                                              22
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
PORT OF BREMERTON (continued)
marine terminals via Puget Sound and Pacific Railroad. Grays Harbor is the closest multi-
modal port to the Pacific Rim. Local businesses would be able to utilize a multimodal
freight system owned by Waste Management in the industrial park capable of loading freight
onto rail cars. Port of Bremerton is also just 10 minutes by air to Sea-Tac International
Airport and 1 hour by interstate highway and ferry systems to East Puget Sound region, and
to the deep water ports at Seattle, Tacoma, and Olympia.

Olympic View Business Park
Olympic View Business Park, with spectacular views of the Olympic Mountains, is an
excellent setting for technology-oriented businesses. The Port, partnering with Kitsap
County and Karcher Creek Sewer District, is currently working with Sustainable Solutions, an
alternative energy research and development consortium to develop the Kitsap SEED Project
(Sustainable Energy Economic Development), made up of a campus incorporating
environmentally sound construction practices and for the alternative energy industry. Over
$2.3 million in grant funds have been awarded the Port for SEED project development to
date. Adjacent to Bremerton National Airport and the industrial park, development plans
call for an infrastructure and roadway system to accommodate office and high tech
development, including extension of broadband fiber optics located at the entrance to
Olympic View.

South Kitsap Industrial Area
A Port-led effort with its public and private partners brought about the creation of the South
Kitsap Industrial Area, or SKIA. SKIA, made up of approximately 3,400 acres including and
surrounding Bremerton National Airport, was adopted into Kitsap County’s comprehensive
plan, and is endorsed by public and private owners. Puget Sound Regional Council, made up
of representatives from Kitsap, King, Pierce and Snohomish Counties, designated SKIA as
Kitsap County’s “Regional Industrial Center”. The Regional Industrial Center has the
potential of becoming home to over 9,000 jobs within the next 20 years.

Foreign Trade Zone Designation
Over 500 acres of land at the Port's industrial park and airport are designated by the US
Department of Commerce as a foreign trade zone (FTZ). Users can benefit from delayed and
reduced duty payments and in some cases, no payments on a wide variety of import and
export activity. Warehousing, repackaging, assembly, and manufacturing activities can
benefit financially from use of the FTZ.

The Port of Bremerton has a strong relationship with its neighbors and local government.
The Port plans projects and infrastructure that encourage today’s businesses to flourish and
future businesses to become established in Kitsap County.




Kitsap County                                                                              23
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
PORT OF BREMERTON (continued)

                Future Bremerton Waterfront and Expanded Marina:




Kitsap County                                                               24
TRENDS Report                                Spring/Summer 2007 ● Volume XXVIII
HARRISON MEDICAL CENTER
                                   Information Provided By
                             David Olson, Director of Planning
                            P (360) 792-6509 / F (360) 792-6515
                            Patti Hart, Publications Coordinator
                            P (360) 792-6769 / F (360) 475-8520
                             Website: www.harrisonhospital.org

Harrison’s Master Facilities Plan Has an Eye on the Future
Facilities planning, a vital component of Harrison Medical Center's strategic plan Vision
2010, is gaining focus. The plan outlines the steps necessary to achieve the organization's
goal of becoming the region's premiere medical center.

Since August 2005, Harrison has been working with Seattle architects NBBJ and Bremerton's
Rice Fergus Miller to create a master facilities plan, a comprehensive look at our current
facilities and how they must change to meet the community's future healthcare needs. As a
result of the master facilities plan, Harrison will continue to operate and gradually expand
its facilities in Bremerton, Silverdale, and Port Orchard instead of building a 400-bed
hospital in a new location.

In addition, Harrison’s future plans include extending services to North Kitsap and
Bainbridge Island.

At the main campus in Bremerton and facilities in Silverdale and Port Orchard, Harrison
offers a comprehensive range of services, including OB/GYN and pediatrics; cardiology,
including open-heart surgery; orthopedics; oncology; diagnostic imaging; laser, laparoscopic,
and retinal surgery; rehabilitation; home health; mental health; emergency and primary care.

Open-Heart Surgery
Based on patient outcomes, Harrison’s cardiac surgery program has been ranked No. 1 in
the state for 2007 by HealthGrades. This measure by the leading healthcare quality ratings
company places Harrison among the top 10 percent in the nation for cardiac surgery.

Our open-heart surgery program offers immediate critical support to the area’s growing and
aging population, while laying the groundwork for the hospital’s future. More than 400
patients annually receive cardiac bypass and other heart surgeries and procedures who
otherwise would have to travel for these services at a time when they are medically fragile
and anxious, and family care and bedside education are crucial.

Harrison’s cardiovascular services—long recognized as a Center of Excellence—continues to
serve the Kitsap and Olympic Peninsula region. The team includes the region’s finest
cardiologists, vascular and cardiothoracic surgeons, a nationally renowned chest-pain clinic,
two catheterization labs, and the latest diagnostic and treatment tools featuring
echocardiography and angiography. The newest addition to our cardiovascular services—an
electrophysiology lab—is the site for lifesaving procedures that restore the heart’s rhythm,
such as implanting pacemakers and automatic defibrillators.




Kitsap County                                                                             25
TRENDS Report                                       Spring/Summer 2007 ● Volume XXVIII
HARRISON MEDICAL CENTER (continued)
State-of-the-Art ER
The design of Harrison’s new $13 million emergency room reflects the best of what the
design team saw around the country. Combining patient comfort and privacy with enhanced
functions, efficiency, and high-tech equipment resulted in a true state-of-the art department.

A rooftop helipad offers 7-minute access to Seattle’s Harborview, the Level 1 trauma center
serving a four-state region.

Harrison Emergency Services staff treats more than 57,000 patients annually, making the
department one of the busiest in the region. Some 40,000 of these patients are treated at the
main campus in Bremerton, which serves the region with Level III trauma services. Harrison
Silverdale ER—also offering 24-hour care—services 17,000 patients annually.

Radiation Oncology Center
Harrison’s Radiation Oncology Center, located at the main hospital campus in Bremerton,
provides world-class cancer care. One step in development of a regional cancer program, the
center is both high-tech and high touch—along with the latest linear accelerator and
aggressive treatment options, there is also an emphasis on education, humor, family and
friends.

Harrison was recently accepted into the Radiation Therapy Oncology Group. This nationally
prominent research group affords our patients the opportunity to participate in National
Cancer Institute clinical trials, along with 250 of the major research institutions in the
United States and Canada.

Harrison Silverdale
Mother/baby care, outpatient surgery; rehabilitation services, and 24/7 emergency care are
the cornerstones for Harrison Silverdale. Advanced imaging services—including an open
MRI—combined with a large array of physicians' offices complement patient care at this
award-winning facility.


Harrison Clinic and Urgent Care
Harrison Clinic and Urgent Care in Port Orchard offers full-service medical care with
extended hours of service for our South Kitsap residents, along with walk-in urgent care for
minor injuries. This campus also offers an array of other services, including rehabilitation
and home health and is home to physicians’ offices, a pharmacy and a kidney dialysis
center.




Kitsap County                                                                              26
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
SINGLE FAMILY AND BUILDING PERMITS
                                       Information Provided By
                                            Gary Lyman
                                        Richards & Associates
                                P (360) 479-2332 / F (360) 479-2353
                             Email: RichardsAndAssociates@comcast.net

New home construction declined in 2006 while prices continued to climb. Key components
of the market are summarized below:

    1.)   Number of residential building permits issued in 2006 declined 8.6%.
    2.)   Home sales through the MLS declined in 2006, while condominium sales increased.
    3.)   Average home prices hit all time highs in all market areas.
    4.)   Days on Market (DOM) increased slightly.
    5.)   The inventory of homes for sale increased substantially.

Construction of New Dwelling Units Decline
As indicated in Table #1, new residential units permitted in 2006 were down nearly 32%
over the prior year, and were at their lowest level since 2002. The vast majority of the
decline occurred within the multifamily category. Single family home permits totaled 1,216
units which was down 8.6% over the prior year.

                          Table 1. Bremerton MSA Residential Building Permit Units
                      Single Family         Multifamily          Mobile Home               Total
            Year      No.      %           No.      %           No.        %               Units
            1984        986 47.7%           462 22.4%             617 29.9%                 2,065
            1985        976 48.3%           454 22.5%             591 29.2%                 2,021
            1986      1,020 59.8%           110    6.4%           576 33.8%                 1,706
            1987      1,056 50.2%           511 24.3%             537 25.5%                 2,104
            1988        995 56.1%           258 14.5%             522 29.4%                 1,775
            1989      1,326 57.2%           370 15.9%             624 26.9%                 2,320
            1990      1,910 61.1%           457 14.6%             761 24.3%                 3,128
            1991      1,731 60.1%           440 15.3%             707 24.6%                 2,878
            1992      1,947 66.4%           295 10.1%             690 23.5%                 2,932
            1993      1,623 67.2%           260 10.8%             533 22.1%                 2,416
            1994      1,766 61.4%           573 19.9%             539 18.7%                 2,878
            1995      1,384 65.2%           292 13.8%             447 21.1%                 2,123
            1996      1,374 66.3%           256 12.4%             442 21.3%                 2,072
            1997      1,030 66.6%            71    4.6%           445 28.8%                 1,546
            1998        970 68.2%            38    2.7%           415 29.2%                 1,423
            1999      1,132 75.2%            20    1.3%           354 23.5%                 1,506
            2000      1,107 72.6%           103    6.8%           315 20.7%                 1,525
            2001      1,069 72.2%           111    7.5%           301 20.3%                 1,481
            2002      1,144 77.8%            65    4.4%           261 17.8%                 1,470
            2003      1,359 80.8%            75    4.5%           247 14.7%                 1,681
            2004      1,252 75.9%           147    8.9%           251 15.2%                 1,650
            2005      1,331 61.2%           713 32.8%             131    6.0%               2,175
            2006      1,216 82.4%           140    9.5%           120     8.1%              1,476

            Total   29,704 64.1%             6,221 13.4%            10,426 22.5%            46,351
              Source: HUD, Seattle Regional Office (1984-1995); Richards & Associates (1996-05)
Kitsap County                                                                                        27
TRENDS Report                                                   Spring/Summer 2007 ● Volume XXVIII
     SINGLE FAMILY AND BUILDING PERMITS
     Home Sales Through The MLS Decline While Condominium Sales Increase
     Home sales volume through the Multiple Listing Service (MLS) are detailed in Table #2 and
     totaled 4,368 units (including condominiums) in 2007. This is the lowest number of sales to
     be conducted through the MLS in the past four years and represents a 10.75% decrease over
     the prior year. Condominium unit sales were at their highest level in the past ten years,
     however, and totaled 407 units. This represents a 9.12% increase over the prior year.




                     Table 2. Number of Residential Sales by Area - Multiple Listing Service
MLS Area                   1997    1998    1999    2000    2001    2002    2003     2004       2005     2006
South Kitsap (141-
144)                        671     819     919      914   1,095   1,005   1,249     1,321     1,313        1,217
Silverdale (145-147)        382     477     465      480     471     502     558      569        546         455
W. Bremerton (148)          240     304     321      359     349     389     425      484        486         488
E. Bremerton (149)          131     182     215      232     215     228     252      300        279         267
Central Kitsap (150)        288     301     326      331     413     390     450      463        480         427
North Kitsap (161-
168)                        589     712     814      705     826     828     922     1,009       972         757
Bainbridge Is. (170)        359     481     472      418     384     419     457       469       445         350
Subtotal                   2,660   3,276   3,532   3,439   3,753   3,761   4,313     4,615     4,521        3,961
Condominiums                  88     130     160     134     158     208     212       301       373          407
Total                      2,748   3,406   3,692   3,573   3,911   3,969   4,525     4,916     4,894        4,368



     New Home Sales Continue to Decline
     New home sales through the Multiple Listing Service are detailed in Table #3 (on the
     following page) and, like new home construction permits, were down in 2006. As the table
     indicates, new home sales totaled 465 units which is down 13.89% over the prior year. New
     homes represented 11.7% of the total sales conducted through the MLS in 2006, a figure that
     is nearly identical to the 11.9% that occurred in the prior year, but still below historical
     levels.




     Kitsap County                                                                                     28
     TRENDS Report                                            Spring/Summer 2007 ● Volume XXVIII
SINGLE FAMILY AND BUILDING PERMITS

                                 Table 3. Multiple Listing Service New & Previously Owned Home Sales by Location

                         2002                      2003                      2004                       2005                        2006
MLS Area         New     Used     Total    New     Used    Total    New      Used     Total    New     Used        Total    New     Used     Total
South Kitsap
                   125     880     1,005    204    1,045    1,249     206    1,115     1,321    161     1,152       1,313     157    1,060    1,217
(141-144)
Silverdale
                    40     462      502      61      497      558      52      517      569       44     502         546       43     412      455
(145-147)
W. Bremerton
                    15     374      389      25      400      425      21      463      484       25     461         486       26     462      488
(148)
E. Bremerton
                    22     206      228      14      238      252      16      284      300       25     254         279       11     256      267
(149)
Central Kitsap
                    84     306      390      97      353      450      91      372      463       49     431         480       90     337      427
(150)
North Kitsap
                   135     693      828     126      796      922     158      851     1,009    156      816         972       86     671      757
(161-168)
Bainbridge Is.
                   107     312      419      57      400      457      71      398      469       80     365         445       52     298      350
(170)
     Totals        528   3,233     3,761    584    3,729    4,313     615    4,000     4,615    540     3,981       4,521     465    3,496    3,961
                 14.0%   86.0% 100.0% 13.5% 86.5% 100.0% 13.3%              86.7% 100.0% 11.9%         88.1% 100.0%         11.7%   88.3% 100.0%




Kitsap County                                                                                                                                    29
TRENDS Report                                         Spring/Summer 2007 ● Volume XXVIII
     SINGLE FAMILY AND BUILDING PERMITS
     Average Home Prices Continue to Climb While Days on Market Increase
     Average prices for homes marketed through the MLS are detailed in Table #4 and show that
     all time highs were reached in every market of the County. The county wide average home
     price increased to $339,236 and stood at $299,427 when excluding Bainbridge Island. The
     number of Days On the Market (DOM) averaged 66 for the year and was up slightly over the
     past year. As Table #5 indicates, price appreciation averaged 9.1% overall and 10.1% when
     excluding Bainbridge Island.


                           Table 4. Multiple Listing Service Average Home Price by Area

                              2002              2003                     2004                  2005              2006
MLS Area                 Price     DOM      Price    DOM             Price    DOM          Price    DOM      Price    DOM
South Kitsap            $166,353      67 $187,687            72    $211,108       74    $257,058     55   $290,607      69
Silverdale              $188,754      65 $211,005            63    $245,459        60   $297,784     49   $341,724      63
W. Bremerton            $120,920      58 $142,763            62    $166,108       57    $208,769     50   $227,692      56
E. Bremerton            $143,652      53 $164,760            58    $188,362       48    $232,728     41   $242,138      55
Central Kitsap          $160,555      50 $184,063            54    $201,086        52   $256,889     45     $290,530    57
North Kitsap            $220,237      84 $244,927            87    $270,521        84   $327,540     64   $359,653      70
Bainbridge Is.          $423,115      95 $478,979            99    $550,910       103   $669,309     91   $749,945      88
County Avg              $203,134      70 $227,661            73    $255,662       71    $310,997     57   $339,236      66
  w/o Bainbridge        $175,554           $197,875                $222,263             $271,878          $299,427



                            Table 5. MLS Single-Family Average Price Appreciation Rate

       MLS Area            1997    1998    1999       2000        2001     2002     2003      2004   2005      2006
       South Kitsap        0.8% 12.2%      1.2%    -0.1%          6.4%     4.6%    12.8%     12.5%   21.8%    13.1%
       Silverdale          6.1%    2.3%    1.9%       4.0%        5.2%     6.2%    11.8%     16.3%   21.3%    14.8%
       W. Bremerton       12.9%    -3.4%   0.8%    10.8%          -2.3% 14.2%      18.1%     16.4%   25.7%     9.1%
       E. Bremerton        2.8%    8.8%    -1.7%      7.2%        3.8% 11.4%       14.7%     14.3%   23.6%     4.0%
       Central Kitsap      6.1%    4.6%    4.9%       1.1%        6.6%     7.4%    14.6%      9.2%   27.8%    13.1%
       North Kitsap        3.2%    6.4%    9.9%       0.8%        6.1%     9.1%    11.2%     10.4%   21.1%     9.8%
       Bainbridge Is.      3.0% 13.1%      12.4%      9.1%        4.3%    -2.7%    13.2%     15.0%   21.5%    12.0%
       County Avg.         7.0%    8.6%    4.9%       1.4%        2.7%     6.2%    12.1%     12.3%   21.6%     9.1%
       w/o Bainbridge      5.1%    6.2%    4.3%       0.8%        6.0%     7.3%    12.7%     12.3%   22.3%    10.1%




     Kitsap County                                                                                                 30
     TRENDS Report                                                       Spring/Summer 2007 ● Volume XXVIII
   SINGLE FAMILY AND BUILDING PERMITS
   Average Prices for New Homes Increase in all Markets
   The previous data details average Multiple Listing Service sales prices for new and
   previously owned homes combined, while Table #6 (on the following page) summarizes
   new homes only. As expected, new home prices increased in all market areas and ranged
   from a low of $293,017 in the West Bremerton market to $875,265 on Bainbridge Island.

                                         Table 6. Average "New Home" Price by Area

MLS Area             1998         1999         2000      2001      2002           2003      2004     2005          2006
South Kitsap     $160,975 $175,148 $178,600 $207,873 $196,518 $225,278 $260,651 $329,038 $346,808
Silverdale       $150,575 $151,007 $158,461 $167,758 $202,549 $208,028 $331,929 $420,161 $504,748
W.
Bremerton        $142,056 $133,085 $163,146 $163,326 $173,692 $203,342 $221,815 $271,700 $293,017
E. Bremerton     $132,042 $140,328 $151,613 $183,592 $186,975 $254,466 $232,834 $338,460 $350,185
Central
Kitsap           $131,533 $134,652 $144,947 $164,573 $171,200 $195,307 $193,165 $308,743 $333,734
North Kitsap     $182,576 $202,517 $214,040 $227,973 $275,937 $287,153 $295,727 $369,748 $427,269
Bainbridge
Is.              $348,819 $382,306 $410,050 $453,023 $481,114 $559,698 $653,693 $750,209 $875,265
County           $195,220 $226,200 $232,136 $240,117 $269,881 $264,249 $309,029 $406,559 $429,932

   Inventory of Homes for Sale Increases Dramatically
   As detailed in Table #7, the average monthly inventory of homes for sale increased roughly
   40% in 2006 to 1,525 units. This is the highest monthly average since 2000 and is
   consistent with an increase in Days On Market to sell a home.

                            Table 7. Average Monthly Inventory - Multiple Listing Service

          MLS Area          1997     1998       1999    2000    2001      2002      2003    2004   2005     2006

         South Kitsap       636          532     531    504     421       361        425    341    319      484
          Silverdale        336          276     233    205     175       152        151    122    116      180
         W. Bremerton       231          176     163    155     117       115        109     92    106      149
         E. Bremerton       130          98      93      93      68        59        59      54     58       84
            Central
            Kitsap          230          162     137    131     107        83        87      75    85       108
         North Kitsap       547          419     348    360     376       423        367    276    261      357
         Bainbridge Is.     278          227     202    204     234       242        212    172    142      163
             Total          2,388    1,890      1,707   1,652   1,498     1,435     1,410   1,132 1,087   1,525




   Kitsap County                                                                                                   31
   TRENDS Report                                                       Spring/Summer 2007 ● Volume XXVIII
SINGLE FAMILY LOT AVAILABILITY
                                         Information Provided by
                                               Brent Marmon
                                          Pacific Northwest Title
                                    P (360) 692-4141/ F (360) 692-8001
                                      Email: brentm@pnwtkitsap.com

  Total Lots Created in all Geographic areas including Plats, Short Plats, Large Lots, Binding
          Site Plans and Condominiums for January 1, 2006 to December 31, 2006.


                                                                  Platted        Condominium
                                                                  Lots           Units
                         Un-Incorporated Kitsap                   73             61
                         County
                         City of Port Orchard                     37             0
                         City of Bremerton                        14             31
                         City of Poulsbo                          30             0
                         City of Bainbridge Island                51             366

                Detail information of the formal Plats only Created in 2006
                                                                                 Geographic
                                                                       Lots
                                                                                 Location
                Plat Name                            Date Filed        Created
                                                                                 City of
                                                                                 Port Orchard
                Port Orchard Industrial Park Div 2   01/03/2006        8
                                                                                 City of
                                                                                 Bainbridge Island
                Stetson Ridge II                     01/18/2006        10
                                                                                 Kitsap County
                                                                                 (South Kitsap)
                Spicewood                            04/25/2006        12
                                                                                 City of
                                                                                 Poulsbo
                Vetter Homestead Phase 1             4/26/2006         34
                                                                                 City of
                                                                                 Poulsbo
                Poulsbo Place Phase II Div 5         5/1/2006          33
                                                                                 Kitsap County
                                                                                 (South Kitsap)
                Sedgwick Place                       5/23/2006         55
                                                                                 Kitsap County
                                                                                 (South Kitsap)
                Coyote Ridge                         6/13/2006         31
                                                                                 City of
                                                                                 Bainbridge Island
                Timberbrook                          8/08/2006         11
                                                                                 Kitsap County
                                                                                 (South Kitsap)
                Rutherford at McCormick Woods        8/29/2006         51
                                                                                 City of
                                                                                 Port Orchard
                Gazebo                               9/1/2006          11
                                                                                 Kitsap County
                                                                                 (South Kitsap)
                The Ridge at McCormick Woods Div1 10/24/2006           92
                                                                                 Kitsap County
                                                                                 (South Kitsap)
                Plat of Sunrise View                 11/08/2006        12
                                                                                 Kitsap County
                                                                                 (Central)
                Plat of Pahrmann Creek               11/8/2006         7




Kitsap County                                                                                              32
TRENDS Report                                                               Spring/Summer 2007 ● Volume XXVIII
SINGLE FAMILY LOT AVAILABILITY (cont’d)
                  Detail information of the formal Condominiums Created in 2006

                                                                              Unit               Geographic
                                                           Units
                                                                              Type                Location
                 Condominium Name           Date Filed    Created
                                                                       Traditional Air Space        City of
                                                                                               Bainbridge Island
                      271 Madison           01/17/2006       1
                                                                          Polyhedron Air        Kitsap County
                                                                           Space Units
                    Meadow Wood             3/23/2006        10
                                                                       Traditional Air Space        City of
                                                                                               Bainbridge Island
                    Island Commons          4/20/2006        2
                                                                       Traditional Air Space        City of
                                                                                               Bainbridge Island
                    Island Crossings        4/20/2006        50
                                                                       Traditional Air Space      Bremerton
           Mountain View Condominiums       4/21/2006        2
                                                                       Traditional Air Space    Kitsap County
                                                                                                (North Kitsap)
           Kountry Korner Business Park     5/17/2006        2
                                                                          Polyhedron Air        Kitsap County
                                                                           Space Units          (South Kitsap)
                   Sedgwick Landing         5/30/2006        6
                                                                       Traditional Air Space      Bremerton
          Manette Shoreline Condominiums     6/2/2006        20
                                                                          Polyhedron Air            City of
                                                                           Space Units         Bainbridge Island
                Frog Rock Condominium       7/25/2006        2
                                                                       Traditional Air Space    Kitsap County
                                                                                                (South Kitsap)
                 Anderson Townhomes          8/3/2006        2
                                                         98 parking
                                                            128                                     City of
                                                         Residential   Traditional Air Space   Bainbridge Island
            Harbor Square Condominium
                                             8/9/2006     9 Retail
                                                                       Traditional Air Space    Kitsap County
                   One Maple Place          10/10/2006       9                                     (Central)
                                                          9 Retail
                    Madrone Village                          38        Traditional Air Space         City of
                                            10/10/2006   Residential                               Bainbridge
                Charleston Beach Road       10/13/2006        5        Traditional Air Space   City of Bremerton
                                                         59 parking
                                                                                                    City of
                                                             71
                                                                       Traditional Air Space   Bainbridge Island
            Harbor Square Condominium                    Residential
                     Phase 2                10/17/2006    2 Retail
                                                                          Polyhedron Air        Kitsap County
                     Bethel Valley          10/25/2006       32            Space Units          (South Kitsap)
                                                                       Traditional Air Space        City of
                     Vineyard Lane          11/13/2006       44                                Bainbridge Island
                                                                       Traditional Air Space        City of
                The Bluffs at ort Narrows   11/29/2006       4                                    Bremerton




Kitsap County                                                                                                      33
TRENDS Report                                                          Spring/Summer 2007 ● Volume XXVIII
SINGLE FAMILY LOT AVAILABILITY (cont’d)
    Total Lots Created in all Geographic areas including Plats, Short Plats, Large Lots,
       Binding Site Plans and Condominiums for January 1, 2007 to May 31, 2007.


                                                              Platted      Condominium
                                                               Lots           Units
                     Un-Incorporated Kitsap                    103              7
                     County
                     City of Port Orchard                      22                3
                     City of Bremerton                         18                70
                     City of Poulsbo                           255                0
                     City of Bainbridge Island                  24               24

                  Detail information of the formal Plats only Created in 2007
                                                                                Geographic
                                                                  Lots
                                                                                 Location
                          Plat Name              Date Filed      Created
                                                                                   City of
                                                                              Bainbridge Island
                       The Hamlet Plat           1/8/2007            5
                                                                                Kitsap County
                                                                              (East Bremerton)
                       Brandywine Plat           1/18/2007         69
                                                                                   City of
                                                                                  Poulsbo
                     Stendahl Ridge Div 1        2/5/2007         101
                                                                               Kitsap County
                                                                                (Bremerton)
                        Gerard’s View            2/13/2007         34
                                                                                   City of
                                                                                  Poulsbo
                 Plat of Vetter Homestead Ph 2   2/23/2007         59
                                                                                  City of
                                                                                  Poulsbo
                     Caldart Heights Div 1       3/9/2007          43
                                                                                   City of
                                                                              Bainbridge Island
                     Plat of Pierce Corner       3/12/2007         14
                                                                                   City of
                                                                                 Bremerton
                       Plat of New Hope          3/15/2007         18
                                                                                   City of
                                                                                Port Orchard
                         Indigo Pointe           3/28/2007         22
                                                                                   City of
                                                                                  Poulsbo
                   Poulsbo Place Ph 2 Div 6      4/12/2007         52
                                                                                   City of
                                                                              Bainbridge Island
                    Plat of Madison Ridge        5/25/2007           5




Kitsap County                                                                                     34
TRENDS Report                                                    Spring/Summer 2007 ● Volume XXVIII
SINGLE FAMILY LOT AVAILABILITY (cont’d)
                Detail information of the formal Condominiums Created in 2007
                                                                      Unit           Geographic
                                                     Units
                                                                      Type            Location
                Condominium Name      Date Filed    Created
                                                                  Polyhedron Air        City of
                  Lily Hill                                        Space Units     Bainbridge Island
                                      2/20/2007        2
                 The 400, A                                         Traditional         City of
                                                                    Air Space         Bremerton
                Condominium           4/9/2007        70
                                                                    Traditional         City of
                                                      22
                  Seabreeze                                         Air Space      Bainbridge Island
                                      4/11/2007    Commercial
                                                                    Traditional     Kitsap County
                                                      7
             Cavalon Place                                          Air Space          (Central)
                                      4/12/2007    Commercial
            Pottery Avenue                                          Traditional         City of
                                                      3             Air Space        Port Orchard
          Professional Building       4/23/2007    Commercial



                               Only Platted Residential Lots Created

                           Year         Plats Recorded          Lots Created
                           1994         24                      723
                           1995         3                       78
                           1996         25                      825
                           1997         16                      373
                           1998         16                      445
                           1999         17                      388
                           2000         7                       196
                           2001         13                      232
                           2002         18                      451
                           2003         8                       168
                           2004         14                      370
                           2005         11                      331
                           2006         13                      367
                           2007         11*                     422*

                    * data up to May 31, 2007




Kitsap County                                                                                          35
TRENDS Report                                                   Spring/Summer 2007 ● Volume XXVIII
CUSTOM HOMES AND THE HOUSING MARKET
                                 Information Provided by
                                 Art Castle, Executive VP
                         Kitsap County Home Builders Association
                            P (360) 479-5778/ F (360) 479-0313
                               Email: acastle@kitsaphba.com
                               Website: www.kitsapHBA.com

Adjusting Custom Homes for Market Analysis
It is important to note that a current analysis of the housing market does not include the
value of custom built homes. Art Castle, Executive Vice President of the Home Builders
Association of Kitsap County estimates that approximately one third of the housing market
is currently unaccounted for due to this fact. Average and median data for these new home
values can be assessed by making a series of calculations to data from the Assessor’s office.

New home values are listed at their current completion percentage. The first step is to take
the assessed values of homes at their current completion percentage and adjust it
proportionally to 100 percent. The value of this home as estimated at 100 percent
completion must then be adjusted to its market value. This is done by multiplying the new
assessed home value by the year’s multiplier.

Land value for the home can also be adjusted to market rate by multiplying its assessed
value by the year’s land multiplier.

The adjusted home and land values can be added together for the total new adjusted market
value.

This process can be carried out for the entire list of custom homes. From this information,
average and median prices can be calculated.

For more information about calculating adjusted custom home values, contact Art Castle at
(360) 479-5778.




Kitsap County                                                                             36
TRENDS Report                                       Spring/Summer 2007 ● Volume XXVIII
HOUSING MARKET & AFFORDABILITY
                                         Information Provided by
                                         Glenn E Crellin, Director
                                 Washington Center for Real Estate Research
                                        Washington State University
                                              PO Box 644861
                                         Pullman, WA 99164-4861
                                              1-800-835-9683
                                    P (509) 335-1671/ F (509) 335-7863
                                    Website: www.cbe.wsu.edu/~wcrer

SUMMARY

This analysis of housing markets and housing affordability in Washington was prepared for
the Kitsap County Real Estate TRENDS Committee by the Washington Center for Real Estate
Research at Washington State University. It is based on a quarterly report published by the
Center which examines county-by-county housing markets throughout the state. Data
estimates are based on data from the U.S. Department of Commerce, multiple listing
services, local REALTOR® associations and private data vendors.


                                   Existing Home Sales
                                                                     Kitsap County


                                                                                                                           5,830
                                                                                                                                   5,710
                         6,000
                                                                                                                   5,440

                         5,500
                                                                                                                                           5,010
                                                                                                     4,750 4,750
                         5,000
                                                                                     4,420
                                             4,330                                           4,340
                         4,500       4,140
                                                     4,010                   3,970
                 Units




                                                             3,730
                         4,000                                       3,630


                         3,500

                         3,000

                         2,500

                         2,000
                                  1993   1994   1995   1996    1997    1998    1999    2000    2001    2002   2003   2004    2005    2006




Kitsap County                                                                                                                                      37
TRENDS Report                                                                                         Spring/Summer 2007 ● Volume XXVIII
HOUSING MARKET & AFFORDABILITY
Housing Market
Housing markets in Washington State, like the remainder of the nation, cooled in 2006, but
remained stronger than many part of the country driven by strong economic fundamentals.
Unfortunately, much of the economic strength bypassed Kitsap County, resulting in less
robust housing markets than in many parts of the state. Nevertheless, home sales were the
fourth highest on records, and home prices continued to increase.

The Washington Center for Real Estate Research uses data from multiple listing systems and
other groups that monitor housing market activity throughout the state to compute
measures of existing home sales (housing resales, excluding new homes sold). Since many
sales take place outside of multiple listing systems, the data is linked to sales reported in
the 2000 Census. Because of the Census benchmark process, sales activity reported by the
Center will be higher than other measures, but should be generally consistent in terms of
percentage changes. During 2006 a total of 5,010 homes were sold in the county, a decline
of 700 units (13.3 percent) from the prior year and 14.1 percent below the record set in
2004. The housing market in terms of number of homes sold locally was consistent with
the Puget Sound area generally.

                                   Resale Housing Activity – 2001-2006
                                             Annual Totals
                                                                                        Percent   Percent
       County            2001        2002      2003      2004       2005      2006      Change    Change
                                                                                         04-05     05-06



       Benton/Franklin     3,340       3,390     3,780     4,130      4,640     4,520      12.3      -2.6

       Clark               7,060       7,440     9,390     9,490     10,540     8,630      11.1     -18.1

       King               29,030      30,410    37,450    40,360     41,130    35,850       1.9     -12.8

       Kitsap              4,750       4,750     5,440     5,830      5,710     5,010      -2.1     -12.3

       Pierce             13,700      14,520    16,870    17,800     19,890    18,260      11.7      -8.2

       Snohomish          11,340      10,850    13,130    14,370     15,640    14,620       8.8      -6.5

       Spokane             7,880       8,550     8,920     9,740     11,450    10,820      17.6      -5.5

       Thurston            4,000       4,370     4,930     5,500      6,050     6,460      10.0       6.8

       Whatcom             3,010       3,390     3,930     4,030      3,880     3,160      -3.7     -18.6



        Statewide        108,780     116,570   136,360   147,860    159,600   144,600       7.9      -9.4


Home Prices
Generally speaking the volume of home sales activity is of interest only to economists, real
estate salespeople and individuals who are actively trying to sell or buy homes. Far greater
interest is expressed over the data on median home prices and “appreciation.” Part of this

Kitsap County                                                                                               38
TRENDS Report                                                   Spring/Summer 2007 ● Volume XXVIII
HOUSING MARKET & AFFORDABILITY
interest is from individuals who want to own a home, but who have found the Puget Sound
region’s rapidly escalating housing costs diminishing their ownership potential. Others find
their homes are a considerable element in their financial portfolio, and monitor housing
prices like they would stock prices. National data suggests investor purchases of homes
slowed during 2006, consistent with reduced sales activity and slower price increases in
many markets, but still was above long-term expectations. Fewer investors bidding up home
prices means a return to market fundamentals and is good news for prospective home
buyers.

Home prices in 2006 increased by approximately 12.6 percent across Washington last year,
somewhat less than the 16.0 percent increase reported in 2005. However, this is still triple
the overall inflation rate and represents a level of price increase which cannot realistically
be sustained. Meanwhile Kitsap County saw the median home price increase 10.0 percent
last year – roughly half the increase of the year before, and a less rapid increase than in
other parts of the Central Puget Sound. Again, this is consistent with the somewhat less
robust local market.

The median home price in Kitsap County remained noticeably lower than the prevailing
price in neighboring King County, with a 2006 median of $275,000 compared to $425,000
across the Sound. Prices in Kitsap County are comparable with Pierce County, a bit higher
than Thurston County and substantially lower than in either King or Snohomish counties.

A quick note about median prices is needed. Half the homes sell for prices above the
median, half below. Both buyers and sellers are sometimes confused by these prices.
Suburban sellers often forget that there are many less expensive homes in less desirable (by
their standards) neighborhoods which help keep the medians down. Meanwhile, prospective
buyers may be frightened out of the market by the unfounded belief they can’t buy a home
for less than the median.

                                Annual Median Home Prices: 2001-2006
                                                                                          Percent   Percent
      County             2001       2002       2003       2004       2005       2006      Change    Change
                                                                                           04-05     05-06



      Benton/Franklin   $125,500   $140,300   $145,300   $147,900   $154,000   $157,200       4.1       2.1

      Clark             $152,000   $156,500   $165,500   $195,000   $236,000   $269,400      21.5      13.7

      King              $262,000   $278,500   $292,400   $324,000   $374,000   $425,000      15.4      13.6

      Kitsap            $155,000   $165,900   $184,000   $206,900   $250,000   $275,000      20.8      10.0

      Pierce            $159,000   $170,000   $178,500   $199,900   $240,000   $270,000      20.1      12.5

      Snohomish         $210,000   $220,000   $231,000   $250,000   $297,000   $345,400      18.8      16.3

      Spokane           $107,400   $109,700   $119,500   $131,100   $157,700   $181,600      20.3      15.2

      Thurston          $144,500   $154,900   $167,000   $184,900   $228,000   $252,200      23.3      10.6

      Whatcom           $152,600   $159,100   $176,700   $216,800   $265,000   $282,300      22.2       6.5

       Statewide        $179,900   $188,500   $203,800   $225,000   $260,900   $293,800      16.0      12.6

Kitsap County                                                                                                 39
TRENDS Report                                                    Spring/Summer 2007 ● Volume XXVIII
HOUSING MARKET & AFFORDABILITY

                           Housing Affordability Index
                                                  First-Time Buyers



                          100

                          90

                          80
                  Index




                          70

                          60

                          50

                          40
                                94:4 95:4 96:4 97:4 98:4 99:4   00:4 01:4 '02:4 '03:4 '04:4


                                              Kitsap                      Statewide




Housing Affordability
Affordability is calculated two ways. The “all-buyer” index assumes a purchaser selects the
area’s median price home, makes a 20% down payment, and takes out a 30-year mortgage at
prevailing interest rates. This buyer is assumed to earn a typical or median income for a
family (no one-person house-holds) in the area. The question then arises, could this typical
family afford the monthly payments on a typical home? During the fourth quarter of 2006
the answer was marginally negative in Kitsap County, as price jumps and mortgage rate
increases more than offset modest income gains, resulting in less affordability than
prevailed a year ago. The statewide All-Buyer Affordability index remained below 100 but
moved up a little at year end – the first favorable affordability sign in quite a while. The
year-end affordability measure statewide was 87.0 meaning the typical family had 13.0
percent less income than the bare minimum required to qualify for the home. This means
significant equity will be required to make the mortgage payment affordable. The all-buyer
statewide measure was another nine points below year-end 2005, but edged up 2.3 points a
year-end. In Kitsap County the all buyer index was somewhat higher, registering 97.6,
meaning a small increase in the downpayment would make the median home affordable.
Housing affordability in Kitsap County is comparable to Pierce County, more affordable than
King and Snohomish, and less affordable that Thurston. Economic development officials
locally will need to target potential employers, turning those factors to local advantage.

The real issue of affordability, however, is the ability of a household to purchase its first
home. The calculation of the “First-time Buyer Index” begins with a less expensive home
(85% of median), a 10% downpayment, and a 30-year loan with private mortgage insurance.
To account for the fact that most higher-income households are already home owners, the
comparative income level is 70% of the median household income (single-persons are more


Kitsap County                                                                                                   40
TRENDS Report                                                                    Spring/Summer 2007 ● Volume XXVIII
HOUSING MARKET & AFFORDABILITY
likely to be first-time buyers). The resulting picture of Washington is a place where it is very
difficult to buy your first home, and the declines in affordability have been striking as
illustrated in the accompanying graph.. The typical renter statewide who might want to own
a home has only 50.9 percent of the income required to qualify for a mortgage on the
typical starter home. Kitsap County’s first-time buyer affordability in the fourth quarter was
somewhat better, recording an index of 58.2. First-time buyer affordability at year end was
marginally improved from the record low observed during the prior quarter, both statewide
and in Kitsap County.

                                      Housing Affordability Conditions
                                            Last Five Quarters
          County                    All-Buyer Affordability                        First-Time Buyer Affordability

                        05:Q4     06:Q1      06:Q2     06:Q3     06:Q4    05:Q4    06:Q1      06:Q2     06:Q3       06:Q4



          Benton/         173.6    178.1     169.6      159.5     180.9    104.1    106.9      101.9       95.9      108.8
          Franklin      130.2     133.5     127.1      119.5     135.5    85.7     88.0       83.9      79.0        89.6

          Clark           106.9    102.7       97.3       94.3      98      64.9      62.5       59.2      57.4       59.7

          King             80.1     77.0       70.2       68.9     69.6     44.7      43.0       39.3      38.6       39.0

          Kitsap          103.1    103.5       95.8       92.7     96.7     61.7      62.0       57.5      55.7       58.2

          Pierce          104.0    100.9       95.5       91.7     95.6     60.8      59.1       56.1      54.0       56.3

          Snohomish        94.7     90.7       85.1       80.5     83.4     57.1      54.8       51.5      48.8       50.6

          Spokane         135.5    133.0      124.0       15.2    126.4     75.4      74.1       69.1      64.3       70.6

          Thurston        113.5    111.3      106.3     104.0     108.4     66.9      65.7       62.8      61.6       55.9

          Whatcom          83.2     90.0       82.5       81.1     85.2     46.3      50.2       46.0      45.3       47.6



            Statewide      96.0     93.3       87.6       84.7     87.0     55.8   54.3          51.1   49.5          50.9


Month’s Supply of Housing – Appreciation Potential
For most of the last two years, real estate salespersons and brokers have been complaining
that the biggest issue they faced was an insufficient supply of homes to meet the demand,
resulting in classic demand pull inflation for housing. Suddenly, however, that national
press is talking about a “glut” of homes on the market and a record unsold inventory,
especially of newly built homes – units the builders constructed on spec and those they
suddenly had available because of cancelled orders. It is important to recognize that
national trends do not describe all local markets, and the Pacific Northwest has not seen
this huge inventory surge, especially of new homes.

A primary reason that Washington has avoided this oversupply is due to the economic and
population growth which has driven this market. In addition, the challenges of getting lots
to market under the Growth Management Act has made it exceptionally difficult for builders


Kitsap County                                                                                                                41
TRENDS Report                                                             Spring/Summer 2007 ● Volume XXVIII
HOUSING MARKET & AFFORDABILITY
to produce much spec product. Nevertheless, the inventory available for sale in Washington
communities has increased over the last year. WCRER produces statistics on the month’s
supply of homes on the market. An inventory level of 5-7 months is consistent with slow
growth in selling prices. Smaller inventories result in faster price increases, which
substantially greater inventories are consistent with stable or even declining prices.

At the end of the last two years statewide the inventory was less than enough to sustain the
market for 3 months. By contrast, at the end of 2006 there were enough homes on the
market to satisfy demand for four months. The market was finally approaching balance. In
Kitsap County the inventory levels were more restricted than statewide in 2004, were on a
par with other areas in 2005 and were slightly above average in 2006. This suggests the
market will see less rapid price increases in 2007 than in the last two years. It is important
to note, however, that a 4.6 month supply is still on the low end of a balanced market. No
collapse of the local housing market and no bursting bubble of housing values should be
anticipated.


                                Month’s Supply of Homes by Price Range
                                            Year-end 2006
                                    Selected Washington Counties

   County              Under   $80,000 -   $160,000 -   $250,000 -    $500,000    Total    Total    Total
                     $80,000   $159,999     $249,000     $500,000    and above   Market   Market   Market
                                                                                           2005     2004

   Benton/Franklin       5.2         4.5          7.4          7.8         9.0      5.9      4.8      5.9

   Clark                 3.8         3.9          3.0          6.8        15.9      6.1      3.2      2.3

   King                  0.0         2.6          1.4          1.8         3.1      2.3      1.5      1.6

   Kitsap                0.7         3.1          2.7          4.7         8.2      4.6      2.3      1.7

   Pierce                0.2         2.8          2.5          4.5         9.2      4.2      2.2      2.0

   Snohomish             3.5         2.0          1.3          2.5         5.8      2.9      1.9      2.0

   Spokane               0.8         2.0          2.5          5.9        10.3      3.3      2.1      2.2

   Thurston              0.0         2.6          2.3          4.8        11.5      3.9      2.5      1.7

   Statewide             3.0         3.4          3.2          4.0         5.6      4.0      2.4      2.2




Kitsap County                                                                                           42
TRENDS Report                                                 Spring/Summer 2007 ● Volume XXVIII
HOUSING MARKET & AFFORDABILITY
Market Snapshot for June 2007
First, there is no question the real estate market is slowing. Home sales in Kitsap County
during the first quarter were taking place at a seasonally adjusted annual rate of 5,050
units. That is a sales level 4.5 percent below the opening months of 2006, but actually 12.5
percent above the closing quarter of last year. Data for the second quarter is not yet
available, but monthly MLS statistics suggest the market has slowed more significantly as we
approach mid-year. Listings available for sale have increased 71.5 percent in Kitsap County
compared to a year ago, and as of March, there were enough homes on the market to sustain
sales for 5.0 months. Based on historical data, that represents a balanced market – but with
new listings becoming available daily and sales rates declining, the markets is swiftly
changing to one favoring buyers. They can be more selective and find homes that really
match their needs. Moreover, they can often make successful purchase offers for less than
the asking price.

With sellers willing to discount their prices, it would seem likely that home prices would be
declining. Yet the median sales price in Kitsap County during the first quarter was still 10.0
percent higher than a year ago. How can these apparently inconsistent trends coexist? It is
a matter of consumer psychology. Home buyers enter the market with two perceptions –
how much they will need to spend to purchase a homes and what kind of home those
dollars will buy. When the encounter a softening market where their dollars will go further
they are caught in a dilemma. Do they purchase the kind of home they had expected to
settle for and put money back in their pocket (or take on a smaller mortgage), or do they
spend what they expected to spend and buy more home than they expected? At the
beginning of a down cycle the typical buyers will purchase more home, causing median
prices to continue to increase even though the seller feels prices are falling. Median prices
continue to rise while quality-adjusted prices – if they were being calculated – would be
declining.

Higher home prices, higher mortgage rates and sluggish income growth combine to keep
affordability challenging. The all-buyer affordability index in Kitsap County in the first
quarter stood at 96.6, meaning the median income family could almost purchase the median
price home. For repeat home buyers Kitsap County as a whole is more affordable than
elsewhere in the Puget Sound region.

The affordability problem remains critical for local first time buyers where the household
attempting to purchase their first home statistically has only 58.2 percent of tine income
required to support the purchase of a typical starter home. That is a difference which
cannot be made up with a marginally higher downpayment or a modest adjustment in
expectations. Both affordability measures are lower than a year ago and basically unchanged
from year-end 2006.

Glenn Crellin
Director, Washington Center for Real Estate Research
Washington State University




Kitsap County                                                                              43
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
KITSAP COUNTY HOME SALES
                         Data Compiled By: Kitsap County Consolidated Housing Authority

The tables below highlight closed residential home sales by area as listed in the Northwest Multiple Listing
Service (NWMLS). Area boundaries are defined by the NWMLS & may not match city boundaries.

Home sales from January 1, 2006 to December 31, 2006 and January 1, 2007 to March 31, 2007

                                 2006          2007            2006         2007          2006            2007
                Area           Total Sold     Total Sold    Avg. Days      Avg. Days    Median Days     Median Days
                                 Sales          Sales       On Market      On Market    On Market       On Market
     141-S. Kitsap W of H            300         53             73           103            58             83
     142-S. Kitsap E of H            295         46             76            98            52              83
     143-Port Orchard                367         82             57           92             42             62
     144-Retsil, Manchester          245         49             72            86            46              67
     145-Seabeck, Holly              157         18             71            82            56              60
     146-Chico                        56         10             63           85             50              63
     147-Silverdale                  240         49             60            96            42              80
     148-West Bremerton              491         76             56            76            36              72
     149-East Bremerton              262         49             55            71            42              50
     150-E Central Kitsap            420         76             59            73            39              59
     161-Hansville                    52         10             70            97            60              45
     162-Kingston                    113         22             77            81            51              62
     163-Port Gamble                  37          5             79           67             55             59
     164-Lofall                       69         11             59           91             40             63
     165-Finn Hill                   137         20             71           138            46             144
     166-Poulsbo                     210         54             78           147            51             133
     167-Suquamish                   110         17             60           103            48             79
     168-Indianola                    41          8             77           138            65             113
     170-Bainbridge Island           350         72             87           118            49             108

Home Sales from January 1, 2005 through March 31, 2007
                              2005          2006            2007            2005            2006              2007
        Area             Avg. Price        Avg. Price      Avg. Price    Median Price    Median Price      Median Price
                          (12 mo.)          (12 mo.)        (3 mo.)       (12 mo.)        (12 mo.)           (3 mo.)
141-S. Kitsap W of H     $267,976          $298,775        $331,853       $247,488        $272,213          $307,600
142-S. Kitsap E of H     $275,979          $337,074        $336,633       $262,950        $314,000          $294,975
143-Port Orchard         $220,596          $246,576        $264,763       $217,450        $241,975          $262,250
144-Retsil, Manchester   $274,685          $296,187        $334,446       $235,125        $256,313          $274,950
145-Seabeck, Holly       $259,144          $315,845        $332,597       $230,000        $242,000          $282,500
146-Chico                $342,976          $345,011        $307,145       $349,975        $327,500          $274,225
147-Silverdale           $304,969          $358,081        $327,717       $279,950        $315,000          $315,000
148-West Bremerton       $209,470          $227,953        $214,440       $181,025        $201,000          $206,200
149-East Bremerton       $231,794          $244,805        $247,444       $211,625        $231,488          $239,500
150-E Central Kitsap     $259,827          $290,332        $264,899       $243,725        $276,670          $262,250
161-Hansville            $382,793          $405,924        $385,570       $331,975        $336,200          $347,500
162-Kingston             $318,010          $394,207        $451,749       $280,000        $335,000          $397,500
163-Port Gamble          $271,755          $275,881        $245,800       $218,000        $280,000          $228,000
164-Lofall               $325,583          $323,023        $468,632       $269,725        $265,000          $390,000
165-Finn Hill            $334,776          $387,107        $410,618       $305,500        $359,900          $410,000
166-Poulsbo              $343,440          $396,081        $360,114       $330,700        $357,475          $359,250
167-Suquamish            $302,510          $239,901        $334,635       $218,000        $222,100          $273,800
168-Indianola            $337,458          $406,886        $327,875       $266,250        $274,500          $273,000
170-Bainbridge Island    $670,220          $750,805        $781,252       $566,875        $660,000          $670,000

Kitsap County                                                                                                         44
TRENDS Report                                                           Spring/Summer 2007 ● Volume XXVIII
SINGLE FAMILY VACANCIES
                                                      Information Provided By:
                                                           Darlene Reysack
                                                   West Sound Naval Housing Office
                                                      Darlene.reysack@navy.mil

Single family vacancy rates are up from previous years
Kitsap County’s single family vacancy rate this past year is higher than it has been for the
last decade.


                                                    Single Family Vacancy Rates

                Apr 06                 May 06      Jun 06    Jul 06    Aug 06     Sep 06    6 mo. Average
                12.47%                 11.43%      11.08%    11.24%    12.24%     11.63%       11.69%


                Oct 06                 Nov 06      Dec 06    Jan 07    Feb 07     Mar 07    6 mo. Average
                9.28%                  15.59%      16.04%    15.49%    15.02%     10.71        13.69%

                                                       3/06- 10.06 3/07 13.69




                                        Single Family Home & Duplex
                                                  Vacancies
                                       16
                                       14
                                       12
                     Vacancy Percent




                                       10
                                        8
                                        6
                                        4
                                        2
                                        0
                                            3/95    3/97    3/99   3/01    3/03   3/05     3/07
                                                               March Average




Kitsap County                                                                                               45
TRENDS Report                                                              Spring/Summer 2007 ● Volume XXVIII
APARTMENT VACANCIES / AVERAGE RENTS
                                            Information Provided By
                                         Patty Dupre, patty@dsaa.com
                                     Dupre + Scott Apartment Advisors, Inc.
                                      P (206) 935-3459/ F (206) 935-6763
                                             Email: apts@dsaa.com
                                           Web site: www.dsaa.com

                            APARTMENT RENT AND VACANCY DATA – FALL 2006

Kitsap County History      3/02      9/02      3/03   9/03        3/04      9/04    3/05          9/05        3/06     9/06       5 Yr Avg
% Vacancy Rate             3.1%      2.7%      9.1%   3.7%        5.6%      7.1%    4.5%          5.0%        4.0%     3.0%         4.8%
Average Rent               $659     $705      $691    $725        $731      $735    $730          $765        $770    $768         $728
% Offering Incentives      23.8%     7.5%     55.6%   11.4%       41.9%     58.1%   40.5%         32.4%      17.1%     6.1%        29.4%
% Annual Turnover          61.1%    52.8%     55.6%   55.7%       52.1%     64.9%   46.6%         57.9%      52.6%    57.5%        55.7%
Avg Days Vac                13        9        16      13          13        19      20            16          16      13            15
Proj. Avg. Rent Increase   2.8%      4.0%      3.5%   3.6%        3.6%      4.6%    3.3%          2.8%        4.4%     4.6%         3.7%


                                                            All           Studio      1 Bed               2/1 Bath   2/2 Bath    3/2 Bath
Kitsap County
                           Market Vacancy (%)           3.0%               2.2%        2.1%                2.3%        3.6%          5.4%
                           Actual Rent ($)               $768              $549        $640                $741        $864          $986
                           Act Rent per NRSF (¢)          --               99.7         95.8                85.9        87.6         83.4
                           Bldgs/Units Surveyed        51/6,185            5/94       45/2,009            43/1,730    28/1,310      28/891
Bremerton
                           Market Vacancy (%)           2.4%               0.0%        2.2%                 2.2%       2.9%         1.9%
                           Actual Rent ($)               $724              $551        $597                 $723       $841         $993
                           Act Rent per NRSF (¢)          --               96.5        91.6                 81.5        86.6         86.5
                           Bldgs/Units Surveyed        18/2,162            3/85       16/815               14/516      9/410        8/266
Port Orchard
                           Market Vacancy (%)           3.0%                           2.0%                 2.5%       3.9%         6.0%
                           Actual Rent ($)               $701                          $595                 $678       $801         $858
                           Act Rent per NRSF (¢)          --                           95.1                 82.1        80.9         77.0
                           Bldgs/Units Surveyed        13/1,525                       11/490               11/524      5/285        8/168
Poulsbo
                           Market Vacancy (%)            5.8%              11.1%          3.8%             3.2%        6.5%         18.8%
                           Actual Rent ($)               $824               $525          $703             $779        $929         $1,031
                           Act Rent per NRSF (¢)           --              109.4           97.1             91.3        92.6         84.6
                           Bldgs/Units Surveyed          9/530               2/9          7/130            7/185       5/155         3/48
Silverdale
                           Market Vacancy (%)           2.9%                           1.7%                 1.8%       3.0%          5.9%
                           Actual Rent ($)               $854                          $725                 $810       $901         $1,029
                           Act Rent per NRSF (¢)          --                          101.6                 91.8        89.6         86.1
                           Bldgs/Units Surveyed        11/1,968                       11/574               11/505      9/460        9/409




Kitsap County                                                                                                                        46
TRENDS Report                                                               Spring/Summer 2007 ● Volume XXVIII
APARTMENT VACANCIES / AVERAGE RENTS
Notes:
1. Vacancy rates exclude those buildings built in the past six months, those still in lease-up and those undergoing
    renovation.
2. Rents include all buildings, and are those in "occupied" units, not turnover rates.
3. Rents are calculated by taking the average rent times the number of respective units for each building.
4. Data presented only for 2 or more buildings, and for complexes with at least 20 units. Buildings which are subsidized,
    operated as executive suites, rental condos, or those catering to people earning 60% or less of median income are
    excluded.
5. NRSF = Net rentable square feet (excludes decks and common areas).
6. Bldgs/Units Surveyed, and "Overall" vacancy and rent includes other units (e.g., 3 Bed/1 Bath units) not shown.
7. Units shown as the "total market" change each survey due to condo conversions, duplicates, and those buildings which
    cater to those at 60% or below median income. Also removed are those rented on a weekly basis only, operated as
    executive suites, or cater only to the elderly.
8. Data collected September 2-23, 2006.

Source: The Apartment Vacancy Report, published by Dupre + Scott Apartment Advisors, Inc.


                             Please reference any of this data as follows:
            Source: The Apartment Vacancy Report, published by Dupre + Scott
                                  Apartment Advisors


**Information for Poulsbo also includes Bainbridge Island




Kitsap County                                                                                                        47
TRENDS Report                                                       Spring/Summer 2007 ● Volume XXVIII
COMMERCIAL REAL ESTATE
                                     Information Provided By
                                      Tim Arnold, President
                               Gary Gartin and Marion Brouillard
                            Bradley Scott, Inc. Commercial Real Estate
                               P (360) 479-6900 / F (360) 479-5499

The Bradley Scott, Inc. office, retail and industrial vacancy survey shows a county wide small
increase in retail vacancy and a substantial increase in office and warehouse vacancy over
the past year. Throughout the county, retail vacancy increased by only 5.27% from April
2006. Office vacancy increased by approximately 52.12% over April 2006. The increase in
warehouse vacancy was the most dramatic with an increase of 123.11% .

As of this report, we are showing county wide – 398,659 square feet of vacant office or
12.17%. The retail vacancy is 449,450 square feet or 6.39%. Warehouse vacancy is 170,475
square feet or 10.40%. Our industrial survey only includes the major industrial parks in the
County. There are small industrial areas scattered throughout the county that are not
currently surveyed. Other research we have done suggest that the warehouse vacancy could
be as much as 250,000 square feet.


                                   Kitsap County
                            Office Vacancy Survey
                               As of April 2007
                                             Office Space                    Percent
                 Area                  Surveyed         Vacant               Vacant
        Bainbridge Island                326,439          37,228              11.40%
        Downtown Bremerton               680,158          91,594              13.47%
        East Bremerton                   428,400          39,683               9.26%
        West Bremerton                   254,812          26,633              10.45%
        Poulsbo                          563,812          87,464              15.51%
        Port Orchard                     290,902          16,040               5.51%
        Silverdale                       730,715         100,017              13.69%
        Kitsap County                  3,275,238         398,659              12.17%

        * Does not include Bremer Dept. Store. (42,740sf)
                              Source: Bradley Scott, Inc.
Office Market: The Bradley Scott, Inc. survey of over 3.275 million square feet of office
space indicates vacancy increased over the last year from 8.66% to 12.17%. This represents
an increase of 136,593 square feet, which is approximately 52% higher than last year’s office
vacancy. This is the highest Kitsap County office vacancy rate recorded in the 12 years we
have been doing this survey.

Kitsap County                                                                              48
TRENDS Report                                               Spring/Summer 2007 ● Volume XXVIII
COMMERCIAL REAL ESTATE (continued)
Three things have contributed to the dramatic increases in office and warehouse vacancy.
First, there has been an increase in the amount of new construction over the last couple
years. Secondly, there are fewer parties looking for new space of any kind. Unfortunately,
we have not yet seen a major benefit in our area from the substantial growth on the other
side of the Sound. Finally and possibly most important, Kitsap County is greatly impacted
by the Navy. Despite all of our efforts to diversify, the United States Navy is still the major
force in the Kitsap economy. We are currently at the end of a couple major Navy projects
and new projects, which will provide more work for civilian contractors, have not yet begun.
This low point in the maintenance cycle, combined with funding pressures, has reduced the
work available to contractors and they have been downsizing both the office and warehouse
space they occupy.

Bradley Scott continues to increase the amount of commercial space surveyed. This survey
now covers, 11,943,894 square feet of office, retail and warehouse space, an increase of
420,058 square feet over last year. Most of this increase is from new construction

Only East Bremerton shows a decrease in office vacancy. The vacancy in East Bremerton in
the last year has dropped from 10.61% to 9.26%. This is a decrease of approximately 13%.
The key to this area’s decrease in vacancy, while the rest of the County has increased, is no
new office construction in several years. The area with the lowest vacancy rate in the
County is Port Orchard with only 5.51%. A year ago Port Orchard’s vacancy rate was slightly
lower at 5.26%. Over 90% of the new office space in Port Orchard that came on line last year
was absorbed.

The largest percentage vacancy increase occurred on Bainbridge Island. Over the last year,
the amount of vacant office space on Bainbridge Island has increased by over 400%. The
vacancy rate has increased from the lowest in the County at 2.78% to 11.40%. Again the key
is new construction. The amount of office space surveyed on Bainbridge Island has
increased during the last year by 68,385 square feet or almost 27%. The good news is
during the same time period, the Island tied for the highest absorption in the County. The
estimated absorption for the year is over 38,000 square feet. With over 37,000 square feet
vacant and almost 40,000 square feet of office space under construction, it appears new
construction has, at least temporarily, caught up to and possibly exceeded the demand.

The highest vacancy rate is in Poulsbo with 15.51%. This high vacancy is primarily the result
of two factors. First, as on Bainbridge Island, several new buildings have been constructed.
In addition, the Navy vacated a 40,000 square foot building early last year. The estimated
office space absorption over the last year is approximately 13,466 square feet. With more
than 87,000 square feet vacant and over 15,000 square feet under construction, Poulsbo
also appears to have more office space than can be absorbed in the near future. Some
Landlords are now converting the vacant office space to condominiums.

The largest square footage vacancy increase occurred in Silverdale. The amount of office
space available in Silverdale has increased during the year by over 68,000 square feet. The
vacancy rate increased from 4.84% to 13.69%. The construction of the 72,000 square foot
Cavalon project is the primary cause of the increase. A substantial portion of the project
has been taken, however most of the users are moving from other buildings in Silverdale,

Kitsap County                                                                               49
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
 COMMERCIAL REAL ESTATE (continued)
 creating new vacancies. The estimated absorption for Silverdale during the last year was
 only about 3,833 square feet. Silverdale currently has over 100,000 square feet available.

 Despite the large amount of vacant space available in Silverdale, there is upward pressure
 on rents. Office rental rates in Silverdale and throughout the County have been relatively
 stable for several years. A large portion of what is available is new construction. Since the
 cost of new construction has risen dramatically in the last few years, the lease rates on these
 spaces are up to 50% higher than the rates in older buildings. As a result, Landlords in
 quality older buildings are taking the opportunity to increase their asking rates. Partly
 because of the increasing rents in the most modern buildings, the lower priced, older
 buildings are experiencing lower vacancy.

 West Bremerton also experienced a large increase in vacancy. The vacancy rate increased
 over the year from 4.10% to 10.45% and the amount of office space available increased by
 16,610 square feet. Once more new construction is primarily responsible for the increase.
 New buildings in West Bremerton and Downtown pulled tenants out of existing buildings,
 which have been very slow to lease back up. The vacancy rate in Downtown Bremerton
 increased by almost 2% from 11.49% to 13.47%. This occurred despite tying Bainbridge
 Island for the highest square footage absorbed in the County, with over 38,000 square feet.
 The absorption is credited to the opening of a new 57,000 square foot building at 100%
 occupancy. The increased vacancy is primarily due to government contractors downsizing
 during the last half of the year.

 Note the bar graph indicates the County wide office vacancy has been increasing since at
 least April 2005.
                                                      Kitsap County Office Vacancy Rates
35%


30%
                                                                                                                Apr-05                       Apr-06                   Apr-07
25%


20%
                                                                                                                                    15.51%
                                                                                                                           15.05%




                                                                                                                                                                                       13.69%
                                                  13.47%




                                                                                                                                                                                                                12.17%



15%
                                         11.49%
                        11.40%




                                                            11.12%

                                                                     10.61%




                                                                                                       10.45%
                                                                              9.26%
                                 8.98%




                                                                                                                                                                                                        8.66%
        8.35%




10%
                                                                                                                                                                                                6.64%
                                                                                                                                              6.07%
                                                                                                                 5.94%




                                                                                                                                                              5.51%
                                                                                                                                                      5.26%




                                                                                                                                                                               4.84%
                                                                                               4.10%




                                                                                                                                                                       3.24%
                2.78%




5%
                                                                                       2.54%




0%
      Bainbridge Island            Downtown                East Bremerton             West Bremerton                     Poulsbo              Port Orchard                Silverdale            Kitsap County
                                   Bremerton

 Kitsap County                                                                                                                                                                                                  50
 TRENDS Report                                                                                                           Spring/Summer 2007 ● Volume XXVIII
COMMERCIAL REAL ESTATE (continued)

                                 Kitsap County
                           Retail Vacancy Survey
                              As of April 2007
                                                Retail Space                Percent
                     Area                  Surveyed        Vacant           Vacant
           Bainbridge Island                  360,846        31,014           8.59%
           Downtown Bremerton                 185,261        20,815          11.24%
           East Bremerton                   1,521,647      195,924           12.88%
           West Bremerton                     443,900        35,108           7.91%
           Poulsbo                            738,081         6,700           0.91%
           Port Orchard                     1,339,232        68,069           5.08%
           Silverdale                       2,440,949        91,820           3.76%
           Kitsap County                    7,029,916      449,450            6.39%
                            Source: Bradley Scott, Inc.
Retail Market: The Bradley Scott, Inc. survey of just over 7 million square feet of retail space
indicates the amount of vacant retail space increased by 22,499 square feet over the last
year, which is only 5.27% higher than last year’s retail vacancy. At the same time the vacancy
rate increased by .27%, from 6.12% to 6.39%. The retail market has been very stable over the
last year. The increase in vacancy can be accounted for by one 22,810 space in West
Bremerton becoming available, due to the tenant constructing a new building next door. In
contrast to previous years, the amount of retail space surveyed only increased by about
59,000 square feet. The year before, when the College Market Place project in Poulsbo
opened, the increase was over 500,000 square feet. Next year new construction is projected
to increase the amount surveyed by close to 200,000 square feet. The increase would have
been a little higher this year if the amount of retail space surveyed had not decreased in
both Downtown Bremerton and in Silverdale. The decrease resulted from buildings being
demolished. In Silverdale it was to make way for a new larger retail building. In downtown it
was part of the continuing urban renewal.

Poulsbo, Silverdale and East Bremerton each registered decreases in vacancy. Only 6,700
square feet of retail space is currently available in Poulsbo. At less than 1%, Poulsbo has the
lowest retail vacancy percentage in the County. During the next year, additional retail
construction at College Market Place and along the 305 corridor should be enough to meet
any increase in demand. Silverdale’s vacancy dropped from 4.14% to 3.76%. The majority of
the 91,820 square feet of vacant space in Silverdale is in a few larger buildings. A couple of
these have been vacant for several years. There are very few small retail spaces available.
East Bremerton decreased from 13.77% to 12.88%. This percentage and the 195,924 square
feet of vacant space are still the highest in the County. Again, 88% of the vacant space is in a

Kitsap County                                                                                51
TRENDS Report                                         Spring/Summer 2007 ● Volume XXVIII
COMMERCIAL                                                                   REAL                                      ESTATE                                                 (continued)

few large buildings. One of these buildings is 78,000 square feet and is probably a candidate
for redevelopment rather than re-leasing. Most of these larger buildings have also been
vacant for several years. As in Silverdale, the space available for smaller tenants is limited.

The largest increase in retail vacancy is again on Bainbridge Island. The vacancy rate
increased from 2.88% to 8.59%. Only West Bremerton, with its one large vacancy of over
21,000, had a greater increase in square footage available. Like the office market, almost all
of the increased vacancy on Bainbridge Island is the result of new construction. Much of it is
mixed use office or condo projects. Port Orchard was very stable, with the vacancy rate only
increasing by .31%. The amount of new space surveyed only increased by 4,700 square feet
and the amount of increased vacancy almost matched the increase with about 4,400 square
feet. Downtown Bremerton saw an increase in vacancy of 3.38%, from 7.86% to 11.24%. As
noted above, the amount of surveyed space in downtown decreased to 185,261 square feet.
Primarily due to the ongoing redevelopment, the amount of retail space in Downtown has
been decreasing for several years. It appears that is about to change. By this time next year,
the waterfront condos should all be occupied, the new marina and the downtown tunnel
should be close to completion, another small park should be open and the amount of retail
space could increase by 50%. Downtown is the smallest retail market in the county, but it
should be one of the fastest growing over the next few years.




                                                         Kitsap County Retail Vacancy Rates
      35%



      30%
                                                                                                                        Apr-05                        Apr-06                   Apr-07

      25%



      20%
                                                                14.99%

                                                                         13.77%

                                                                                  12.88%




      15%
                                                      11.24%
                              8.59%




                                                                                                            7.91%
                                              7.86%




      10%
                                      6.66%




                                                                                                                                                                                                              6.39%
                                                                                                                                                                                              6.27%

                                                                                                                                                                                                      6.12%
                                                                                                                                              5.71%



                                                                                                                                                              5.08%
                                                                                                                                                      4.77%




                                                                                                                                                                              4.14%

                                                                                                                                                                                      3.76%
              3.24%




                                                                                                                                                                      3.11%
                                                                                                                              2.88%
                      2.88%




      5%
                                                                                                    1.68%
                                                                                            1.23%




                                                                                                                                      0.91%
                                                                                                                    0.46%




      0%
            Bainbridge Island           Downtown               East Bremerton              West Bremerton                   Poulsbo           Port Orchard               Silverdale           Kitsap County
                                        Bremerton




Kitsap County                                                                                                                                                                                                         52
TRENDS Report                                                                                                                 Spring/Summer 2007 ● Volume XXVIII
COMMERCIAL REAL ESTATE (continued)
Industrial/Warehouse Market: The Bradley Scott, Inc. survey of over 1,638,740 square feet
of industrial space indicates the county wide vacancy rate has increased over the last year
from 5.00% to 10.40%. This represents an increase of 94,067 square feet, which is
approximately 123% higher than last year’s warehouse vacancy. The amount of warehouse
space surveyed increased by 112,000 square feet.



                                Kitsap County
                           Industrial Vacancy Survey
                                          April 2007
                                                        Industrial Space      Percent
         Industrial Park            Area             Surveyed       Vacant     Vacant
     Day Road                 Bainbridge               250,160        3,800     1.52%
     North Kitsap             Poulsbo                  479,764       58,800    12.26%
     Olympic View/SK          Port Orchard             492,516       82,425    16.74%
     Auto Center Area         Bremerton                416,300       25,450     6.11%
     Kitsap County             Kitsap County         1,638,740     170,475     10.40%
                                  Source: Bradley Scott, Inc.

Our industrial survey currently covers only the four main industrial areas in the county.
Therefore, it is less complete than the surveys for office and retail. Part of this is because
much of the industrial square footage is scattered in small areas throughout the county.
Although the survey is not as complete as we would like, it still shows a very clear pattern.

Warehouse vacancy has increased dramatically over the last year. More accurately, it has
occurred over the last few months. A good part of the increase, especially in South Kitsap,
can be attributed to new construction, but county wide the majority results from
government contractors and businesses downsizing or leaving the county. Bainbridge has
been affected little by this trend. Their vacancy has remained unchanged over the last year.
The Bremerton Auto Center Area has also seen only minor changes, with an increase of only
.9% from 5.21% to 6.11%. Olympic View Industrial Park and the South Kitsap area had the
largest increase in vacancy. The amount of vacant warehouse space increased by over
58,000 square feet. Most of this is due to a local company vacating a large building to move
into a new, much larger manufacturing facility they constructed to meet the needs of their
growing business. The biggest impact from the reduced Navy workload has been felt in
North Kitsap. The vacancy rate increased by 6.34%, from 5.92% to 12.26%. The amount of
vacant space increased by almost 32,000 square feet. nfortunately, there are no good news
stories of expansion in North Kitsap.




Kitsap County                                                                              53
TRENDS Report                                          Spring/Summer 2007 ● Volume XXVIII
COMMERCIAL REAL ESTATE (continued)
Despite the large warehouse vacancy in Kitsap County, there still seems to be a market for
some new industrial space. This is true even in South Kitsap, because most of their vacancy
is in one large building, which cannot be easily divided. Smaller spaces with good highway
access will be most in demand.

Note the bar graph indicates the County wide industrial vacancy has been increasing since at
least April 2005.




                                           Kitsap County Industrial Vacancy Survey




                                                                                     16.74%
    18%                                                                                                             Oct-05   Apr-06           Apr-07
    16%
                                                           12.26%




    14%




                                                                                                                                              10.40%
    12%

    10%
                                           7.31%




     8%




                                                                                                                    6.11%
                                                   5.92%




                                                                             5.92%




                                                                                                            5.21%




                                                                                                                                      5.00%
     6%




                                                                                                                              3.30%
     4%
                                                                                                    2.00%
                1.52%

                           1.52%

                                   1.52%




                                                                     1.16%




     2%

     0%
                        Day Road             North Kitsap           Olympic View/SK                Auto Center Area           Kitsap County




Kitsap County                                                                                                                                          54
TRENDS Report                                                                                 Spring/Summer 2007 ● Volume XXVIII
ASSESSED PROPERTY VALUES
                                                            Information Provided By
                                                                   Jim Avery
                                                        Kitsap County Assessor’s Office
                                                      P (360) 337-7090/ F (360) 337-4874
                                                        Email: assessor@co.kitsap.wa.us
                                                         Web site: www.kitsapgov.com


Assessed Property Values Continue to Grow
Total assessed value of all properties in Kitsap County for the Assessment Year of 2006 was
$28.58 billion which is a 23% increase from 2005.




                                                Kitsap County Annual Assessed Property Values



                                  30                                                                                  28.58


                                  25
                                                                                                               23.3
                ($ in Billions)




                                  20                                                                      19.476

                                                                                                      16.499
                                                                                                 15.328
                                  15                                                        14.291
                                                                                       13.187
                                                                                  12.534
                                                                             11.836
                                                                        10.651
                                  10                                9.237
                                                                6.661
                                   5             5.0675.4395.711
                                            4.337
                                       3.119

                                   0
                                       1981 1985 1989 1993 1997 2000 2002 2004 2006




Kitsap County                                                                                                                 55
TRENDS Report                                                                          Spring/Summer 2007 ● Volume XXVIII
ASSESSED PROPERTY VALUES (continued)
New Construction Property Values Hit Record High
Kitsap County new construction property values are continuing to rise. Total new
construction for 2006 reached $730 million, which was a 46% increase from 2005 compared
to last year’s increase of 35%.

Of the 46% increase in new construction values, 21% is a result of yearly market value
increase while the remaining 25% is due to additional permit activity in Kitsap County
Department of Community Development, the Suquamish Clearwater Casino and Hotel, as
well as redevelopment in cities such as Bremerton.



                                                  Kitsap County New Construction Values


                        800
                                                                                                                                                            730
                        700
                        600
      ($ in Millions)




                        500                                                                                                                         499.7


                        400                                                                                                                 371.9
                                                                                      343.3                           342.9 343.2
                                                                                              300.3           308.7                 300.1
                        300
                                                                              230.4                   236.9
                                                                      212.1
                        200
                                              150.8           155.8
                              134.1                   127.6
                                      108.3
                        100
                          0
                              1981        1985            1989            1993            1997            2000            2002          2004            2006




Kitsap County                                                                                                                                                     56
TRENDS Report                                                                                         Spring/Summer 2007 ● Volume XXVIII
  POPULATION TRENDS
                                       Data Obtained from
                         Washington State Office of Financial Management
                                    Website: www.ofm.wa.gov

  Kitsap County Population Growth
  Kitsap County population increased by 1.24% in 2006, with most of this growth occurring in
  Bremerton. The population of Bremerton, after two years of decline, experienced a turn
  around increase of 3.85% last year. Bainbridge Island experienced the second increase with a
  2006 annual growth rate of 1.80%.

  The populations of Port Orchard and Poulsbo also increased, however, the 2006 annual
  growth rate for both cities is considerably less than they were in 2004 and 2005. Port
  Orchard’s 2006 annual growth rate is 0.73% compared to 2.36% from 2005 while Poulsbo’s
  2006 annual growth rate is 0.54% compared to 3.47% in 2005.


KITSAP COUNTY
ANNUAL GROWTH RATE    1990        1995       2000        2001       2002        2003         2004      2005        2006
                     189,731     220,600    230,200     233,400    234,700     237,000      239,500   240,400   243,400
                     2.89%        2.38%      0.22%       1.37%      0.56%       0.98%       1.05%     0.38%     1.24%
BREMERTON            38,142      39,610      36,160     37,260      37,530     38,730       37,520    34,580    35,910
ANNUALGROWTH RATE    0.53%        0.77%      -0.30%      3.04%      0.72%       3.20%       -3.12%    -7.80%    3.85%
PORT ORCHARD          4,984       6,240       7,270      7,810       7,900      7,910        8,060     8,250     8,310
ANNUALGROWTH RATE    0.41%        5.81%      0.21%       7.43%      1.15%       0.13%       1.90%     2.36%     0.73%
POULSBO               4,848       5,765       6,500      6,965       7,005      7,010        7,200     7,450     7,490
ANNUALGROWTH RATE    4.04%        3.00%      0.85%       7.15%      0.57%       0.07%       2.71%     3.47%     0.54%
BAINBRIDGE ISLAND     3,081      17,910      20,150     20,740      20,920     21,350       21,760    22,200    22,600
ANNUALGROWTH RATE    4.03%          *        1.56%        2.93%      0.87%       2.06%      1.92%     2.02%     1.80%
                               Incorporation of entire Island of Bainbridge Island (1991)


                                      Population Annual Growth Rates
                          2001          2002     2003     2004     2005                      2006       6 yr
                                                                                                        avg.
    Kitsap County         1.4%            0.6%        1.0%        1.1%         0.4%          1.2%       .95%
    Washington            1.4%            1.1%        0.9%        1.1%         1.4%          1.9%       1.3%
    Oregon                1.5%            1.0%        1.1%        1.2%         1.4%          1.6%       1.3%
    California            1.7%            1.9%        1.7%        1.6%         1.4%          1.2%       1.6%

  Compared to Washington and Oregon statewide population, Kitsap County is not growing as
  fast. After a .4% increase in 2005, the county grew by 1.2% in 2006. While over the past five
  years, Washington and Oregon population is accelerating and California growth is
  decelerating.
  Sources:
  Kitsap data- rounded from Kitsap County Annual Growth Rate Chart above
  Washington data- provided by Regional Labor Economist Tess Camilon’s Kitsap Profile Booklet
  http://www.workforceexplorer.com/admin/uploadedPublications/7411_KitsapProfilelarge1.pdf
  Oregon data- Oregon Employment Department, http://www.qualityinfo.org/olmisj/PubReader?itemid=00000055
  California data- California Department of Finance, E5 Housing and Population Estimates
  http://www.dof.ca.gov/HTML/DEMOGRAP/ReportsPapers/Estimates/E5/E5-06/E-5text2.asp
  Kitsap County                                                                                                  57
  TRENDS Report                                                     Spring/Summer 2007 ● Volume XXVIII
POPULATION TRENDS (CONTINUED)
Kitsap County Population Density by City
The graph below shows the population density of each municipality in Kitsap County.


                                   Kitsap County Cities- April 2006

                City               Population      Land Area             Density
                                                   (Sq. Mi.)             (Pop/Sq. Mi.)

                Bainbridge Island 22,600            32.07               704.65
                Bremerton           35,910          24.35               1,474.60
                Port Orchard        8,310           3.92                2,121.51
                Poulsbo             7,490           4.15                1,803.05
                Source: State of Washington Office of Financial Management, Population Density
                     http://www.ofm.wa.gov/popden/citydensity.xls




Kitsap County is the Third Most Densely Populated County in the State
Although Kitsap County generally appears “rural,” it ranks as the third densest county in
the state of Washington. From 2000-2003, Kitsap County was rated the second most densely
populated county before Clark County surpassed it. In 2006, Kitsap County’s density
increased by 1.2%, this is less than the increase experienced by King County (1.5%) and Clark
County (3.0%).




                            2006 Seven Most Densely
                          Populated Washington Counties
                       1000
                        800
                        600
                        400
                        200
                          0
                            at ton
                            oh nd
                            Th ish



                                      )
                              Ki rk
                              Pi p
                                   ng




                                   ce




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                                   a
                                  la




                          Sn Isla
                                Ki


                                 ts
                                er




                          St urs
                               om



                                (a
                                C




                              e




Kitsap County                                                                                    58
TRENDS Report                                                  Spring/Summer 2007 ● Volume XXVIII
POPULATION TRENDS (continued)
                          Seven Most Densely Populated Washington State
                                            Counties
                                                Population/ Square Mile
                        County          Land Area        2005 Density             2006 Density
                                        (Square Miles)

                        King            2,126.00           850.55                 863.25
                        Clark           628.2              623.19                 642.29
                        Kitsap          396.00             607.11                 614.69
                        Pierce          1,678.9            450.23                 460.71
                        Island          208.4              364.62                 370.38
                        Snohomish       2,089.1            313.92                 321.58
                        Thurston        727.00             308.4                  317.87
                        State (avg)      66,544.1           94.02                 95.81
                        Source: State of Washington Office of Financial Management, Population
                        Density
                            http://www.ofm.wa.gov/popden/popden.xls

Kitsap County Median Household Income Ranks 6th out of 39 Counties in the State
Kitsap County enjoys a relative high Median Household Income compared to the majority of
Washington state counties. Moving up from 7th place according to last year’s projections,
Kitsap County now ranks 6th out of the 39 Washington counties. While King County’s
median income for 2006 is projected at 65,940, a 3.4% increase, Kitsap County’s median
income for 2006 is projected at 55,587, which is a 6.17% increase.


                9TH HIGHEST MEDIAN INCOME WASHINGTON STATE COUNTIES (OCT. 2006)
          COUNTY                 2005 ESTIMATED MEDIAN                      2006 PROJECTED MEDIAN
                                   HOUSEHOLD INCOME                            HOUSEHOLD INCOME
                King                         $63,742                                    $65,940
          Snohomish                          $60,926                                    $63,313
            Benton                           $54,183                                    $57,339
            Pierce                           $54,094                                    $57,102
            Island                           $52,692                                     55,907
            Kitsap                           $52,356                                    $55,587
           Thurston                          $51,317                                    $53,850
            Clark                            $51,682                                    $54,327
            Skagit                           $50,656                                    $53,496


          State (avg)                        $53,771                                    $56,807
                 Source: Office of Financial Management http://www.ofm.wa.gov/economy/hhinc/medinc.xls




Kitsap County                                                                                            59
TRENDS Report                                                        Spring/Summer 2007 ● Volume XXVIII
POPULATION TRENDS (continued)
Kitsap County Population by Age
Between year 2000 and 2006, there was a 25% increase in population among both the 50-59
and 60-69 age groups. The 40-49 age group increased by 1000 from 2000 to 2004, then
decreased again between 2005 to 2006. Overall within the six year period, the 40-49 age
group increased by 2.6%. The 30-39 age group decreased by 2,769 people, a 7.9% change,
while the 20-29 age group increased 2,728 people, a 9.4% change. The 10-19 age group did
not change significantly and the 0-9 age group decreased slightly.


                                                   Kitsap Population by Age

                             300,000


                             250,000
                                                                                                       80+
                                                                                                       70-79
                             200,000                                                                   60-69
                Population




                                                                                                       50-59
                             150,000                                                                   40-49
                                                                                                       30-39
                             100,000                                                                   20-29
                                                                                                       10-19

                              50,000                                                                   0-9


                                  0
                                        2000     2001     2002      2003      2004    2005    2006
                                                                    Year




                                               Kitsap Population by Age Group

            Age Group                   2000       2001          2002       2003      2004      2005     2006
            0-9                        33,004    32,679     32,302         32,085    32,111   32,015   32,298
            10-19                      35,364    35,583     35,701         35,812    35,857   35,615   35,646
            20-29                      29,123    29,101     29,285         29,828    30,490   30,905   31,851
            30-39                      35,039    34,637     34,058         33,465    32,910   32,326   32,270
            40-49                      38,415    38,782     39,033         39,261    39,417   39,067   38,743
            50-59                      28,282    29,511     30,696         31,943    33,135   34,204   35,470
            60-69                      14,715    14,983     15,433         16,245    17,101   17,738   18,433
            70-79                      11,309    11,191     11,030         10,984    10,904   10,818   10,841
            80+                         6,718     6,933      7,162          7,378     7,575    7,714    7,848




Kitsap County                                                                                                   60
TRENDS Report                                                                 Spring/Summer 2007 ● Volume XXVIII
CONSUMER PRICE INDEX
                                        Data Obtained from
                                  U.S. Bureau of Labor Statistics
                                   Website: http://stats.bls.gov

CPI for Seattle-Tacoma-Bremerton Higher than National Urban Average
The CPI for Seattle-Tacoma-Bremerton area recorded for 2006 was 207.6. This is a 3.7
percent increase compared to 2005. The recorded CPI for April 2007 is 215.8, however, this
is just a snapshot of April and not a year end average.


                                        Consumer Price Index
                                        All Urban Consumers

                           U.S. CITY AVERAGE              SEATTLE-TACOMA-
                                                            BREMERTON
                        YEAR      CPI     ANNUAL       YEAR     CPI    ANNUAL
                                          CHANGE                      CHANGE
                        1998       166.4      0.0%     1998         167.7   2.9%
                        1999       172.2      3.5%     1999         172.8   3.0%
                        2000       177.8      3.3%     2000         179.2   3.7%
                        2001       184.2      3.6%     2001         185.7   3.6%
                        2002       188.8      2.5%     2002         189.3   1.9%
                        2003       192.3      1.9%     2003         192.3   1.6%
                        2004       194.3      1.0%     2004         194.7   1.2%
                        2005       201.3      3.6%     2005         200.2   2.8%
                        2006       207.4      3.0%     2006         207.6   3.7%
                        2007       215.8      4.0%     2007        215.8*
                                  Source: U.S. Bureau of Labor Statistics

    * data for April 2007 (not annual), annual change for 2007 not yet available

Sources:
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_id=CUURA423SA0&data_tool=%22EaG%22

http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?series_id=CUURA423SA0&data_tool=%22EaG%22&output_v
iew=pct_12mths




Kitsap County                                                                                      61
TRENDS Report                                               Spring/Summer 2007 ● Volume XXVIII
         SCHOOL DISTRICT ENROLLMENT
                                              Information Provided By
                                   Washington Superintendent of Public Instruction
                                    http://www.k12.wa.us/DataAdmin/default.aspx
                            http://www.k12.wa.us/DataAdmin/pubdocs/p105/Oct06DistrictP105.xls


         School Enrollment is down across the county
         The enrollment of the five school districts of Kitsap County is summarized in the table
         below. In 2006, school enrollment continued to decline in all school districts but Bainbridge
         Island. County-wide, school enrollment was down 2.30%.

                            KITSAP COUNTY SCHOOL DISTRICT OCTOBER ENROLLMENT
  DISTRICT               1998     1999    2000    2001   2002   2003   2004                                                       2005         2006

   Bremerton             5,991      4,862        5,922           6,450           5,807           6,213           5,944           5,718         5,130

   % change              -2.70%    -18.80%      21.80%           8.90%       -10.00%             7.00%          -4.30%           -3.80%       -10.28%
 Central Kitsap          13,606    12,841       12,872          12,546          12,733          13,200          12,768            12,558       12,324

   % change              -0.30%    -5.60%        0.20%          -2.50%           1.50%           3.66%          -3.30%           -1.60%       -1.86%
  North Kitsap           6,922      7,007        6,840           6,657           6,803           7,049           7,045            6,830        6,749

   % change              0.90%      1.20%       -2.40%          -2.70%           2.20%           3.61%          -0.10%          -3.05 %       -1.19%
  South Kitsap           11,533    10,998       11,317          10,693          10,587          10,887          10,824           10,688       10,614

   % change              -1.20%    -4.60%        2.90%          -5.50%          -1.00%           2.83%          -0.60%           -1.26%        -0.69%
Bainbridge Island        3,664      3,763        3,859           3,862           3,921           4,111           4,112            4,222        4,280

   % change              3.40%      2.70%        2.60%           0.00%           1.50%           4.84%           0.00%           2.68 %        1.37%
 Kitsap County           41,937    41,801       39,304          40,627          39,851          41,460          40,693           40,016        39,097

   % change              1.80%     -0.30%       -6.00%           3.40%          -1.90%           4.00%          -1.80%           -1.66%        -2.30%



                                  KITSAP COUNTY PRIVATE SCHOOL ENROLLMENT

            KITSAP COUNTY
               PRIVATE            97/98      98/99       99/00           00/01           01/02           02/03           03/04        04/05
               SCHOOL
             ENROLLMENT           1985       1942        1976            1999            2033            1976            2192         2119




         Kitsap County                                                                                                                        62
         TRENDS Report                                                           Spring/Summer 2007 ● Volume XXVIII
OLYMPIC COLLEGE
                                Information Provided By:
                       Jennifer Hayes, Communications Director
                          P (360) 475-7106 / F (360) 475-7232
                                Email: jhayes@oc.ctc.edu
                              Dr. David Mitchell, President
                          President’s Office: P (360) 475-7100
                    Campus Operator: (360) 792-6050 or (800) 259-6718
                               Website: www.olympic.edu

Programs Offered
Olympic College is a public, Washington State two-year post-secondary institution serving
the people of Kitsap and Mason Counties. The college’s academic year is on the quarter
system: Fall, Winter and Spring plus a Summer session. Instructional offerings include
academic transfer and professional-technical programs as well as continuing education for
adult learners and basic skills that help students overcome deficiencies that may be a
barrier to educational goals. Non-credit classes include small business, professional
development, life enrichment, and specific programs designed to meet the goals of
extensive educational partnerships including the Navy and the Emergency Readiness Center.
Olympic College enjoys a reputation as a community college that puts students first – in
planning, in service, and in their quality instructional programs offered. It is known for
providing educational value for students of all ages and from all walks of life.

Partnerships
Olympic College has a strategic partnership with local fire districts and other state agencies.
Olympic College also coordinates with other colleges such as Western Washington
University, Old Dominion University, and St. Martin’s University to offer upper division
study and bachelor’s and master’s degree opportunities. In recent years, OC has also built
several community and education partnerships to maximize resources and respond to local
dynamics.

Serves Kitsap and Mason Counties
The area Olympic College serves includes Kitsap and Mason counties, which have a
combined 1,354 square miles and have a population of about 280,000. Today about 12,000
students are enrolled at several locations. In addition to the three major campus locations
(Bremerton, Shelton and Poulsbo), Olympic College offers courses at other locations,
including the Kitsap Emergency Readiness Center and Naval Base Kitsap – Bremerton and
Bangor.

Olympic College Bremerton
The largest campus is centrally located in Bremerton, WA on a 33-acre site. Classrooms,
special instructional areas, computer labs, student center, gym, theater, the Haselwood
Library, and other support facilities extend across a friendly, accessible campus. In 2005,
the college will break ground on a new 55,000-square-foot Science Technology building,
which will replace the existing Math/Science building on the Bremerton campus. The new
structure will offer science labs, high-tech computer classrooms, and general purpose




Kitsap County                                                                               63
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
OLYMPIC COLLEGE (continued)
classrooms. Plans are also in the works for a new Humanities and Student Services building
that will replace an older building and provide a new 466-space parking garage. The state
legislature provided $3.5 million to the college for the design of the two structures in the
2005 session. Pending budget approved by the state legislature, construction is expected to
begin in 2007.

Olympic College Shelton
Olympic College Shelton has about 1,000 students. It is a 27-acre campus located in Mason
County and is about 35 miles south of the Bremerton campus. In addition to the general
classrooms and science laboratories, the award-winning facility features computers, a media
center, student services, study and social areas, and a child care center. The Johnson Library
has three state-of-the-art classrooms, conference rooms, and office space. The facility is
equipped with fiber optics to provide high tech access, interactive television space, and a
teaching computer lab.

Olympic College Poulsbo
The new 38,000 sq. ft. Olympic College Poulsbo campus opened in Winter 2004 and features
multi-use classrooms, computer labs, meeting rooms, a science lab, a nursing skills lab, and
is equipped for distance learning via video teleconferencing and wireless Internet access.
The campus currently serves students with offerings that satisfy transfer, Running Start,
and professional-technical degree requirements, provide job training, and enhance personal
and professional development. The location is convenient for students from Bainbridge
Island and the northern part of the Kitsap Peninsula.

Olympic College Foundation
As a 501-c(3) organization (non-profit), the Foundation helps to provide the extra measure
of support that contributes so much to educational excellence. The Olympic College
Foundation supports students and college development with vigorous efforts dedicated to
expanding educational opportunities through the support of scholarships and programs
that enhance access to higher education.

Olympic College’s President
Olympic College’s President, Dr. David Mitchell, believes community colleges should be a
part of the communities in which they serve. He is focused on building opportunities for
students, faculty, staff and partnering with local education, government and business
organizations to successfully integrate Olympic College into planning for the future of
Kitsap and Mason Counties. President Mitchell is committed to building access to
baccalaureate programs for students, building new buildings to meet the needs of the
college and students, building new programs and services, and building ways to increase
retention of students who attend the college.




Kitsap County                                                                              64
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
FERRY RIDERSHIP
                                Information Provided By
                                      Marsha Walker
                     Washington State Ferries Planning Department
                              Email: Walkema@wsdot.wa.gov
                          P (206) 515-3490/ F (206) 515-3499
                     Website: www.wsdot.wa.gov/ferries/traffic_stats

                                      Ferry Ridership

                             Apri – Jun   Jul – Sep    Oct – Dec   Jan – Mar
                               2006         2006         2006        2007
                Seattle-
                Bainbridge

                Passengers   1,095,851    1,291,675    1,017,103    927,285
                Vehicles      539,399      581,215      511,787     478,641
                Total        1,635,250    1,872,890    1,528,890   1,405,926

                % change        0.9          2.7         -0.4        -1.2
                Seattle-
                Bremerton

                Passengers    128,804     122,926       127,672    114,978
                Vehicles       58,677      56,726        56,303     52,033
                Total         187,481     179,652       183,975    167,011

                % change        3.5          5.1          1.0        -0.2
                Edmonds-
                Kingston

                Passengers    150,094     149,173       167,587    128,467
                Vehicles      182,217     175,015       182,478    167,762
                Total         332,311     324,188       350,065    296,229

                % change        -2.9         -1.4         -0.1        4.4
                System       1,863,242    1,783,336    1,885,983   1,634,081
                Total           -0.6          0.1         -.06        1.5


* % change from a year ago




Kitsap County                                                                        65
TRENDS Report                                         Spring/Summer 2007 ● Volume XXVIII
KITSAP TRANSIT
                                  Information provided By
                                   Cathie Knox-Browning
                                        Kitsap Transit
                                       P (360) 478-6230
                                Web Site: www.kitsaptransit.org


Kitsap Transit Begins Using Bio-diesel Fuel
In the spring of 2007, Kitsap Transit (KT) began introducing a bio-diesel blend in all of its
transit buses and many vans. KT will start off with a 5% blend and monitor results over the
next several months. The agency is taking this cautious approach to both gauge the effect
of the newer fuel in some older transit equipment, including some buses from the early
1980s, as well as the impact of biodiesel on the agency’s farm of underground fuel storage
tanks.

Bio-diesel, in any mix with the ultra low sulphur diesel KT has used for years, can cause
deposits in older fuel tanks (both storage and vehicle) to loosen and mix with the fuel. Fuel
filters catch most of the deposits, but some of these deposits can make their way into
sensitive fuel system components such as fuel pumps and injectors.

Kitsap Transit hopes to manage these issues by phasing in the bio-blend over the next
couple of years, with a goal of using a blend of 20% biodiesel (to 80% ultra-low-sulphur
diesel) by June of 2009.


Expansion of Central Transit Base Moves Forward
In early 2007, the Federal Transit Administration approved the required environmental plan
for the expansion of KT’s Charleston Base on Charleston Boulevard in central Bremerton. A
consultant team of civil engineers, architectural designers and project managers has been
assembled and will work quietly behind-the-scenes through the year to develop the final
design.

By the end of 2007, passersby and customers can expect to see the following changes to the
bus yard and building:

    •   Creation of separate bus wash, fueling and maintenance drive-through structures
    •   Removal of the fuel wall and landscaping to allow for the use of the closed portion of
        Callow Avenue
    •   De-commissioning of old fuel tanks and installation of a new underground fuel tank
        farm
    •   Paving of the gravel lot to create a contiguous bus yard
    •   Addition of lighting and landscaping
    •   Remodeling of the second floor interior to accommodate ACCESS personnel
    •   Increasing the size of the drivers’ room




Kitsap County                                                                              66
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
THE Navy IN KITSAP COUNTY
                                  Information Provided by
                                       Tom Danaher
                                    Public Affairs Officer
                                       360-627-4031
                                      Navy Base Kitsap
                              Website: https://www.nbk.navy.mil

Naval Base Kitsap was established on June 4, 2004 through the merger of Naval Station
Bremerton and Naval Submarine Base Bangor. Naval Base Kitsap has sites at Bangor, WA and
in the city of Bremerton, WA. The Base actively pursues close and mutually beneficial
relationships with surrounding communities. Naval Base Kitsap is host command to over 60
tenant commands at Bremerton, Bangor and Keyport.

A. Naval Base Kitsap - Bremerton is comprised of 203 acres in the City of Bremerton. Its
architecture and landscape are a blend of modern facilities and buildings with trees dating
back to the turn of the century. In total, the Base encompasses 419 acres in three geographic
locations (Naval Base Kitsap - Bremerton itself, Jackson Park and Olalla Military Family
Housing areas). Puget Sound Naval Shipyard & Intermediate Maintenance Facility (PSNS &
IMF), a tenant of Naval Base Kitsap, occupies an additional 179 acres.

B. Naval Base Kitsap - Bangor, WA encompasses 7,201 acres. It serves the Navy as a home
port for the TRIDENT Submarines. Industrial activities include incremental submarine
overhauls, modernization and maintenance; assembly and processing missiles and
components; and training military and civilian personnel on the latest military technologies.

* Submarine Squadron Seventeen’s mission is to support the seven submarines and crews
that make up the strategic deterrent force in the Pacific. To accomplish this mission, the
squadron is staffed with numerous subject-matter experts, who constantly monitor the
operational and tactical readiness of the submarines and their crews. The squadron staff
consists of 17 officers and 60 enlisted people.

* Submarine Squadron Nineteen’s mission is to support the five submarines and 12 crews
that make up the strategic deterrent force in the Pacific. To accomplish this mission, the
squadron is staffed with numerous subject-matter experts who constantly monitor the
operational and tactical readiness of the submarines and their crews. The squadron 19 staff
consists of 8 officers and 23 enlisted people.

* Naval Submarine Support Command’s mission is to centralize administrative and support
functions economize resources and provide a common pool of experts to support the
submarines and staffs of Submarine Squadrons Seventeen and Nineteen, visiting and other
assigned units, including submarines in availability at PSNS. Specific areas of responsibility
include Administration, Personnel, Medical, Legal, Chaplain, Supply, Combat Systems,
Material, Communications, and Operations. The NSSC staff consists of 18 officers and 66
enlisted personnel.




Kitsap County                                                                              67
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
THE Navy IN KITSAP COUNTY (continued)
                              Commander, Submarine Group 9
                                  Website: www.csg.navy.mil
Commander, Submarine Group 9 (COMSUBGRU 9) is the senior Submarine Force command
in the Pacific Northwest Region, and the U.S. West Coast. It is located at Naval Base Kitsap -
Bangor, WA. COMSUBGRU 9’s mission is to deter threats to the United States and its allies
within the Pacific Fleet area of responsibility. And, should deterrence fail, it would employ
forces to achieve National Objectives. Additionally, its mission is to ensure the overall
readiness of 15 assigned SSBNs, SSGNs, SSNs, and 4,000 sailors serving in cognizant support
organizations.

                             TRIDENT Training Facility, Bangor
                                 Website: www.npdc.navy.mil
In April 1991, TRITRAFAC, Bangor became the first and only Department of Defense School
accredited by the Northwest Association of Schools and Colleges. Building upon this
accreditation it signed an articulation agreement with City University in 1994 and Olympic
College in 1997 as well as an educational services agreement with Old Dominion University
in 1998. These agreements have significantly expanded the educational opportunities for
area navy personnel. Sailors can now obtain two-year certificates of course completion in the
following areas: Marine Mechanical Systems; Marine Electrical Systems; Marine Electronic
Systems; and Marine Computer Systems.

The mission of the Trident Training Facility is to train officer and enlisted personnel in the
basic knowledge and skills required to build competence and proficiency in operating and
maintaining the TRIDENT submarine and all associated systems. The mission is to include
providing basic, advanced, functional, refresher and team training to TRIDENT submarine
crew members and submarine support personnel in order to increase and maintain
knowledge and proficiency in specific skills. And, to include providing specialized training
and to perform other such functions and tasks as may be assigned by higher authority.

Trident Training Facility, Bangor is committed to community service. The command is
actively involved with the local community. TTF personnel volunteer their time to support
the Silverdale Water for Life Program, the Dyes Inlet Cleanup Program, The Personal
Excellence through Cooperative Education (PECE) Program and the Drug Education for Youth
(DEFY) Program.

             Puget Sound Naval Shipyard& Intermediate Maintenance Facility
                                Website: www.psns.navy.mil
Puget Sound Naval Shipyard & Intermediate Maintenance Facility (PSNS & IMF) occupies two
locations in Kitsap County, WA. In Bremerton, it is comprised of 179 acres of Naval Base
Kitsap property bordered on the south by Sinclair Inlet, on the west by the fleet-support
portion of Naval Base Kitsap - Bremerton, and on the north and east perimeters, by the City
of Bremerton. PSNS & IMF also operates Intermediate Maintenance Facility, PACNORWEST, at
Naval Base Kitsap - Bangor. PSNS & IMP is the Pacific Northwest’s largest naval shore facility
and one of Washington State’s largest industrial installations. PSNS & IMF is focused on
providing its customers with quality and cost efficient maintenance and technical/ logistical
support. It works actively to establish close and mutually beneficial relationships with the
City of Bremerton and Kitsap County.



Kitsap County                                                                              68
TRENDS Report                                        Spring/Summer 2007 ● Volume XXVIII
KITSAP COUNTY MAP




Kitsap County                                      69
TRENDS Report       Spring/Summer 2007 ● Volume XXVIII

				
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