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The Gristle

The Costs of Costco

Wednesday, January 15, 2014

THE COSTS OF COSTCO: Mayor Kelli Linville came one step closer to her goal, convincing her own City Council, at least, to request $2.5 million from Whatcom County’s Economic Development Investment (EDI) fund to help finance a large regional stormwater facility to serve a planned retail expansion in the city’s north end. Council agreed. The expansion is planned along Interstate 5 at Bakerview Road, a patchwork of interconnected wetlands and planned, buildable lands in an area already heavily impacted by big-box retail and associated traffic. The centerpiece of the expansion is a proposed 160,000 sq. ft. Costco and its associated 24-pump gasoline station, intended to replace the warehouse retailer’s existing store on Meridian. Costco Wholesale management claims the existing store is inadequate for future retail.

Whatcom County Council balked at approving a $1.68 million loan and related $825,000 grant from the county’s EDI fund late last year after tentatively approving the transaction. County Council’s primary concern was increased traffic in an area already under heavy development for hotels, other big-box retail and similar amenities in a section of the city that shares a growth boundary with Ferndale.

“Even before all of these existing developments were constructed, the day that interchange opened it was a transportation nightmare,” County Council member and former County Executive Pete Kremen commented in October.

“The city’s request meets all the requirements for EDI, getting a ‘compelling’ rating from the EDI board,” Linville said afterward. The EDI board ranks applications according to their economic significance. The city projects the development proposal could create or retain as many as 750 jobs, based on estimates of the number of employees per square foot of commercial development of this kind.

“This is a property that has long been in the city’s inventory for economic activity and commercial development,” Linville said. “I was a little surprised that the County Council would object to that now.”

There’s little doubt Bellingham benefits financially from retail expansion in the near-term. Bellingham’s rate of growth of taxable retail sales was almost double the state average from 2010 to 2011. The city projects $19.8 million in taxable retail sales in 2014, up 2 percent from the previous year and up nearly 20 percent from the collapse of county fortunes in the economic downturn of 2008. The trends in retail track closely with cross border traffic from Canada, according to the Border Policy Research Institute at Western Washington University, indicating (as if anecdotal eyewitness evidence alone is insufficient) a healthy percentage of Bellingham shoppers are from Canada.

The thornier problems for city and county policy­makers include the ultimate carrying capacity of Bakerview Road and its connections to the freeway and Meridian Street interchanges; and the ultimate capacity of the natural environment to bear the impacts of extensive acres of new impervious surfaces and stormwater runoff.

“The proposed Costco development will require stormwater detention and treatment for 21 acres,” COB Public Works Director Ted Carlson stated in the city’s application for EDI funds. “Due to the site constraints, an on-site facility would require installation of a vault of other buried system. Preliminary estimates for an on-site facility of this type are around $6 million. We estimate Costco’s proportional share of the regional facility to be around $1.2 million.” The balance of the project will be funded by the City of Bellingham, staff reported.

“This regional approach not only reduced permitting timelines but also reduces the cost of doing business in Bellingham,” Carlson commented.

A regional approach to handling stormwater is near to Kelli’s heart, believing it to be a more effective model than piecemeal stormwater solutions and having championed the model while still in the state Legislature.

“Investments in regional storm­water treatment facilities and wetland mitigation strategies are ways we can build capacity and create better, more cost-effective environmental results,” Linville explained.

The city’s traffic study indicates “the Costco development itself does not trigger any additional mitigation” in the near term, but the study rather glosses the cumulative impacts of construction already underway in the area by four substantial regional players—the cities of Bellingham and Ferndale, the Port of Bellingham, and—potentially—Lummi Nation at Slater Road. One cork in the bottleneck—a full rebuild of the freeway interchange at Bakerview that includes a new overpass connection to the airport—is not expected to be pulled by the Washington State Dept. of Transportation until 2022 at the earliest. The county will consider its own independent traffic analysis in February.

Zooming out, and considering those multiple competitors for finite commercial and economic dollars, the cracks in the façade become evident as all compete for a boutique market created by the idiosyncrasies of British Columbia’s revenue schemas. The area is slated for no fewer than five hotels totaling nearly 600 rooms, together with a staging area for “park-&-fly” airport expansion designed almost entirely around siphoning cheap air travel out of Canada. The latency of hotel construction coupled with the instability of airlines and air travel costs practically invites a boom-or-bust bubble economy, as does—frankly—a big-box retail strategy built to capture protest of B.C.’s peculiar consumer tax. Should the province ever correct those peculiarities, the boutique market would collapse. A small imbalance in the relative strength of the U.S. dollar against the Canadian dollar—inevitable, really—would lay waste to that market.

The capture of retail dollars is organically different from, say, efforts to capture tourism dollars. Tourism requires building a special place people want to visit and, in that effort, building a better place to live. Chain retail? Not so much.

Ticket Cascadia
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