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The Gristle

Keeping Costco

Wednesday, August 29, 2012

KEEPING COSTCO: The central role of big-box retail in the continued health of Bellingham’s tax receipts and municipal revenues was drilled home earlier this month after a local complaint about the congestion and inconvenience created by Canadian shoppers was picked up by Vancouver media and went viral throughout British Columbia. Mayor Kelli Linville responded with an official welcoming statement, declaring:

“Our local economy benefits tremendously from Canadian shoppers and we welcome their business. Retail spending, in part from Canadian visitors, in Bellingham and Whatcom County helps pay for the level of services our residents have come to expect from local government.

“Bellingham’s rate of growth of taxable retail sales was almost double the state average from 2010 to 2011,” she noted. “Much of this is due to people from Canada and elsewhere shopping in Bellingham.

“Retail spending makes it possible for us to keep our parks, playgrounds and trails open, our police and firefighters providing public safety services, and much, much more,” Linville said.

Among the largest draws of remote shoppers is, of course, Costco Wholesale on Meridian, which the Issaquah-based corporation has long declared is undersized for the volume of sales generated.

Their efforts to increase the size of their existing store was met in 2007 with the city’s big-box moratorium on megastores in excess of 90,000 square feet. The temporary moratorium was followed by the creation of specialized areas where megastores might be constructed, to ease their proliferation throughout the city and particularly into areas without services to support them. Bellingham City Council continued to modify their restrictions into 2010, with the creation of certain “value areas,” whereby a retailer might offer certain concessions—green landscaping, energy efficiency, living wages and employee benefits, focus on products that originate in the Northwest—to lift the size cap or lessen mitigation requirements.

As policymakers struggled to craft a comprehensive and responsive plan, however, Costco and similar large retailers shopped their options to competitive communities like Ferndale. Despite the assurances of Costco management that the company preferred to stay anchored in their original community, the risk of perhaps losing the retailer, and all their receipts and revenues, was very real as Linville took office in January.

By June, Linville had pressed for a solution that might allow Costco to construct a larger new store near West Bakerview Road and Pacific Highway, adjacent to the freeway, across from the Fred Meyer shopping center. Potential construction at the site, however, is challenged by traffic and wetlands considerations. The area is slated for $1.5 million in traffic improvements at the freeway interchange.

“At that corner, we have 207 net developable acres,” Linville said. “It is 21 percent of Bellingham’s vacant employment acreage, or about a quarter of what we have left.

“Early on we had talked about having site-by-site stormwater vaults and site-by-site wetland mitigation, versus regional wetland mapping that could enhance the quality of wetlands instead of creating an ineffective puddle on everyone’s property,” she explained. “When Costco talked to us about wanting to stay, we thought this might be a golden opportunity to look at regional improvements we had already planned on doing there, including the wetland mitigation and stormwater systems for roads and trails we would have to put together—not for Costco necessarily, but to best serve that area. We are looking at better environmental solutions, cheaper maintenance, better stormwater facilities, and better ways to partner to pay for things,” Linville explained.

“This is not a giveaway to Costco,” the mayor stressed. “This is Costco helping us pay for things that we want to do, but that we could not do because we didn’t have someone who wanted to build there.

“The point is, if we are going to effectively use that last 207 acres, we want to make sure that the environmental mitigation that we do is the best mitigation, and not parcel-by-parcel,” she said. “We are looking out for the city’s interests first, and it just happens that we have someone who has expressed an interest in doing something there, so that has motivated us and allowed us to look at a better environmental solution.”

The Mayor’s Office came under scrutiny earlier this month when Ferndale Mayor Gary Jensen attempted a public disclosure on Bellingham negotiations with Costco. Jensen obtained a June 20 letter from Linville to Costco’s director of real estate development with its details heavily redacted. The redactions raised questions about what Mayor Linville was offering the retailer in advance of any purchase of the property, any development application for the property or—indeed—any formal presentation of plans to Bellingham City Council.

Linville characterized their specifics: “Descriptions of regional wetland mitigation, regional stormwater mitigation. These are things that are already in our city code. These are not new, but the letter explained this in a little bit more detail. There are also commitments to partnerships that have not been discussed with the council, and that the council will have to approve and that are premature to reveal to the public at this time. This is not deal cutting in a dark room,” she said.

“When property negotiations and acquisitions come before the council for approval, they’re not something we negotiate in the newspaper. So it’s not like it’s a secret, for God’s sake. It’s the way we do business. There are some things we do not disclose until it is time for the public process, the legal review, and council action.” That, she expects, will happen in September.

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