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Sunday, Jun. 26, 2011

Washington wineries, grape growers give WSU facility $7.4 million boost

RICHLAND -- Winemakers and grape growers think Washington State University's Wine Science Center is so important, they are contributing $7.4 million to get it built.

The $23.25 million center, to be built on George Washington Way adjacent to WSU Tri-Cities in Richland, is being hailed by industry leaders as one of the most important projects in the history of Washington wine and a cornerstone for propelling the state into a globally recognized world-class wine region.

"It will help the industry tremendously with research and education," said Ted Baseler, CEO of Ste. Michelle Wine Estates in Woodinville, whose company produces more than 60 percent of the wine in Washington. "When you have an institute like this, it draws people from around the world. It would be a draw not only for the Tri-Cities, but also Washington wine country."

On June 10, the Washington Wine Commission approved funneling $7.4 million to the project. The money would come from increased assessments on wine and grape production. Currently, wineries turn over 6 cents per gallon of wine produced and $10 per ton of grapes crushed. They would increase this to 8 cents per gallon of wine and $12 per ton of grapes. The wine industry actually approved the increased assessment in 2007 but never took the full amount.

John Bookwalter, owner of Bookwalter Winery in Richland and outgoing chairman of the Washington Wine Commission, said the unanimous vote was the most important action it has taken in his seven years on the board -- and perhaps ever.

"This will go down as one of the real watershed moments in our industry," he said. "The Wine Science Center will become a beacon for new investment potential. It will become a lightning rod for a lot of things."

Washington is the nation's second-largest wine-producing state, though it is dwarfed by California, which makes 90 percent of all U.S. wine. The University of California, Davis, has been the nation's center for winemaking and viticulture education and research for the past century. In fact, many of Washington's top winemakers earned their degrees at Davis. Baseler said WSU can do for Washington what Davis did for California.

"Nobody will have self-interest for Washington as much as people from Washington," he said. "Davis' primary interest is California -- as it should be. Every great wine industry in the world has a cornerstone institute for research and education. It's time for us to close the gap and move into the 21st century. We're so excited the industry can catch up with California in terms of research capacity."

The wine commission's decision does not come without challenges. An assistant attorney general who advises Washington's commodity associations believes that a state initiative requiring a two-thirds vote of the legislature to increase taxes stands in the way of the wine industry taking full advantage of the assessment it approved in 2007.

The Tim Eyman-led I-960 was passed by voters in 2007 and repealed by the Legislature in 2010. Then voters passed I-1053 last fall to reinstate it.

Kristen Mitchell, assistant attorney general in Olympia, believes the wine commission will need to either go to the Legislature or its own membership to approve the assessment.

"On its own, the board can't increase the assessment," she said.

Industry leaders don't agree, saying the wine industry already approved the assessment but never actually began collecting it, choosing to wait until it had a project it wanted to fund.

"I don't think there is a problem," Baseler said. "One way or the other, we'll get it straightened out."

That is not the only hurdle. Funding and building the Wine Science Center cannot actually go through WSU. The center is not on Pullman's capital project list, so it cannot be built on WSU land, nor can the money come through the university. But community leaders think it is too important to allow it to languish.

"Waiting 20 years is not acceptable," said Diahann Howard, director of economic development for the Port of Benton, which is providing 3.52 acres adjacent to WSU Tri-Cities for the project.

Funding and building the Wine Science Center will go through the city of Richland, which is forming a public development authority, or PDA. PDAs are government-owned corporations that have been used extensively to fund projects in Western Washington. Howard said they differ significantly from a public facilities district because they do not have authority to assess taxes. Rather, they are a conduit for money raised elsewhere.

Gary Ballew, business and economic development manager for Richland, said the city council is going through the process of forming the PDA.

It had a few questions and issues on how it gets created, how a no-cost lease with the Port of Benton would work and other agreements. The city council plans to take a second look at the PDA during its July 19 meeting.

"Everyone involved loves the Wine Science Center," Ballew said. "We're down to the fine points."

Once the building is constructed, the PDA would turn it over to WSU, and the port would donate the land to the university.

Howard added that the Wine Science Center also fits in with the Tri-Cities Research District because it will contribute research to an industry not tied to Hanford and will teach sustainable practices.

That all the pieces are falling into place is remarkable, industry leaders say.

"This is such an opportunistic collision," Bookwalter said. "With the economic headwinds we're facing, it's tough to get capital projects going. This shows a strong commitment to build the future of the Washington wine industry."

While the $7.4 million from the wine commission is the largest amount designated so far, it is not the first.

According to WSU Tri-Cities, about $1 million already has been raised, including personal donations from Ted and Joann Baseler, Tom and Anne-Marie Hedges, Rob and Brenda Mercer and Farm Credit Services. Architect Terence Thornhill also has donated about $100,000 in in-kind conceptual design services.

"WSU is very fortunate to have friends and partners like this in the community," said Vicky Carwein, WSU Tri-Cities chancellor, who estimated the project has received about $750,000 in in-kind donations. "The wine industry is making a statement. It wants this badly enough that it is putting up more than half of the actual construction costs. This should be a huge stimulus for the private fundraising."

Carwein hopes to raise enough six- and seven-figure gifts in the next year to begin construction by the spring of 2013.

The design phase is estimated to cost $1.2 million, and construction of the 45,000-square-foot facility is budgeted at $12.5 million. Furnishing classrooms and equipping labs and a teaching winery will cost an estimated $8 million.

About two years ago, WSU hired Thomas Henick-Kling to head its viticulture and enology program. He helped build research and teaching wineries at Charles Sturt University in Australia and Cornell University in New York but described the Wine Science Center at WSU Tri-Cities as the most important project in his career.

WSU's V&E program has 58 students, two-thirds of whom are in Pullman. When the Wine Science Center is completed, Henick-Kling believes it will be able to accommodate more than twice that many at the Richland campus. Just as importantly, research that will help winemakers and grape growers will occur in Richland.

Henick-Kling said the facility and research will fall in line with what the industry has said is important.

"This is not just a dream with a showy building," he said. "This is based on the research needs the industry developed."

The grape growers are firmly behind the project too.

"Having a facility like this will be a magnet," said Vicky Scharlau, executive director of the Washington Association of Wine Grape Growers. "This opens us to opportunities we've never been able to dream about before. Yeah, we're jazzed. We can't wait to get it built."

Scharlau said the state's grape growers have made research one of their top priorities for more than a decade, and she credited Baseler with having the vision and strategy for building the center.

"It's not just the physical building," she said. "Research has been important to the growers for years."

Robin Pollard, executive director of the Washington Wine Commission, agrees.

"It's going to be a significant milestone for the growth and success of the Washington wine industry," she said. "This is the next phase of the maturing process -- and a critical one."

With the $7.4 million commitment from wineries and growers, Baseler's fundraising efforts should get easier.

"There's no doubt the industry has to lead this effort," he said. "The first question people have is, 'What is the industry doing?' Without broad industry support, I don't think this would happen. This was a very important decision."

* Andy Perdue is editor of Wine Press Northwest.