What Lies Ahead: Business trends shaping headlines in 2014

Some major developments in Bellingham’s retail industry, the continued rollout of a long-anticipated federal health care reform law and the future legal marijuana retail market are just a few of the trends expected to play significant roles in 2014’s business news.

And while the following items do not represent a comprehensive account of all the things that could impact businesses in Bellingham and Whatcom County this year, these issues are ones that are likely to attract headlines in the coming months.

Local retail changes

Bellingham saw several new retail stores open in 2013, most centered around the growing commercial areas on Meridian Street and Bakerview Road.

With some large store spaces still vacant, and Costco’s anticipated construction of a new store along Interstate 5 near Bakerview Road, the local retail industry could continue to see new developments this year.

WinCo Foods, the Boise, Idaho-based discount grocer that operates more than 80 stores in the western U.S., opened a new location in August at 300 E. Bellis Fair Parkway, in the former home of Joe’s Sporting Goods. Across the parking lot, Carpet Liquidators opened a new store in a newly remodeled location that was once home to the electronics retailer Good Guys.

A new Sears Hometown Store opened at 3548 Meridian St., across the street from the Bellingham Golf and Country Club and next to Whatcom Farmers Co-Op’s Bellingham Country Store. That opening marked the return of a Sears-brand store to Bellingham, after Bellingham’s former full-line Sears department store at the Bellis Fair Mall closed in early 2013. That space is now home to a Sports Authority.

Bellis Fair Mall completed its first major remodel in nearly a decade, just in time for the start of the 2013 holiday shopping season. More changes are expected to come to the mall over the next year. General Growth Properties, which operates Bellis Fair, submitted tenant improvement applications with the city to demolish the mall’s Regal Cinemas movie theater and convert the space into new retail stores.

Regal Cinemas has already closed several of its theaters around Bellingham, focusing instead on the new Barkley Village Stadium 16 theater, which opened in late 2012.

Local grocery stores saw significant changes last year, as well.

The Markets LLC announced the closure of The Market at Lakeway grocery store. That followed an earlier announcement of that the company was closing its two Cost Cutter stores in Bellingham, one located on Meridian Street and the other in the Sunset Square shopping center.

Fred Meyer completed a remodel of its location at 800 Lakeway Drive, which is across the street from The Market at Lakeway. A similar effort is underway at the Fred Meyer at 1225 W. Bakerview Road.

Haggen Inc. completed remodels on its five Whatcom County locations. The company redesigned those stores under a new brand identity, Haggen Northwest Fresh. Haggen is also phasing out its TOP Food and Drug discount brand, which has operated since the 1980s.

Eight TOP locations around the Puget Sound area have closed or are slated to close this year. Three TOP stores that remain open are expected to be remodeled in the future as Haggen stores.

Health reform rolls out 

Between Oct. 1, 2013, and Jan. 14, 2014, 270,860 Washington residents enrolled in new private health insurance coverage or Medicaid coverage, according to officials from Washington Healthplanfinder, the state’s new online marketplace that helps individuals, families and businesses shop for health coverage—now mandated under the Affordable Care Act.

The new law rolls out across the country amid continued debate and uncertainty. State exchanges face challenges in convincing enough younger, healthy people to sign up for coverage, which is considered a key element in making exchanges work. Questions also remain over the new law’s employee mandate—which will require certain businesses to provide health coverage to their employees or face penalties—that the Obama Administration announced last July would be delayed until 2015.

Washington State Insurance Commissioner Mike Kreidler announced last December that the federal government now plans to allow certain qualifying businesses in the state to receive tax credits that can cover up to half of their employees’ health insurance premiums in 2014.

Under the new federal law, certain small businesses that provided health insurance to their employees from 2010 to 2013 were eligible for tax credits of up to 35 percent. Those credits increase to 50 percent this year, but only if the employer purchases health plans through a state’s small business health options program or a health exchange. Washington is one of only two states in the U.S. without such statewide programs.

Kreidler said he expected the federal extension of the tax credits to come as a relief for business owners in Washington state concerned about the costs of complying with the new law.

While the reform’s implementation continues, health care providers are seeing other changes in their industry, including an increasing number of mergers and consolidations.

PeaceHealth, the Catholic health care provider that operates St. Joseph Medical Center in Bellingham (Whatcom County’s sole hospital and largest employer), has announced several new partnerships over the past year, including ones with Skagit Regional Health and UW Medicine. A separate plan by PeaceHealth to enter a joint venture with CHI, a nationwide Catholic provider based in Colorado, was suspended last April.

PeaceHealth’s recent expansion efforts have sparked controversy among health advocates who want to preserve patients’ access to abortion, birth control and doctor-prescribed lethal medication under Washington’s “Death with Dignity” law. Those advocates worry that increasing collaboration between public hospitals and health providers run by religious organizations, particularly ones that do not offer such services due to faith-based objections, could hurt patients’ access to care.

Pot stores coming soon

Marijuana has now been legal in Washington state for more than a year. Yet as 2014 begins, businesses licensed to grow and sell pot are still months away from opening.

The Washington State Liquor Control Board has received thousands of applications from businesses seeking to enter the new market. The board continues to release lists of current applicants. Actual licenses are not expected to be issued until spring, as regulators work to vet each applicant and ensure all will be able to operate within the law.

As of Jan. 7, 2014, nearly 300 business entities seeking to grow, process or sell marijuana in Whatcom County have submitted applications to the liquor board. Washington regulators announced last September that they will allow six retail marijuana stores in Bellingham, and 15 total across all of Whatcom County.

They are also capping the statewide total of recreational pot farms and gardens at 2 million square feet, although there is no limit on the number of actual growers.

With more than 70 applicants seeking to open pot stores in Bellingham, the liquor board plans to use a lottery system to determine which stores will receive licenses.

Just how much authority local city and county governments will have to regulate where, or if, marijuana businesses can open remains under scrutiny after Bob Ferguson, Washington’s attorney general, issued a formal opinion Jan. 16 saying that Initiative 502, the measure that legalized marijuana in the state, included no clear indication that preempts local authorities’ ability to regulate such enterprises.

Several municipal governments in Washington have placed moratoriums or outright bans on marijuana business within their jurisdictions. Bellingham city officials say they are moving forward with plans to implement local regulations to allow pot growers and sellers, after the City Council lifted a short-lived moratorium last year.

Sharon Foster, the chair of the state liquor, said that Ferguson’s opinion “will be a disappointment to the majority of Washington’s voters who approved Initiative 502. We’re not yet sure how this opinion will change the implementation of the initiative. If some local governments impose bans it will impact public safety by allowing the current illicit market to continue. It will also reduce the state’s expectations for revenue generated from the legal system we are putting in place.”

Travel on the rise

Hundreds of new hotel rooms are slated to enter the Bellingham market over the next couple of years. Likely a prime component of the increasing demand for hotels, the Bellingham International Airport is set to finish a multiyear expansion of its commercial terminal in 2014.

Most of the hotel development is occurring around the airport and close nearby around Bakerview Road and Northwest Avenue.

360 Hotel Group of Lynnwood, Wash., opened a 122-room Marriott SpringHill Suites on Northwest Avenue last November. The company has also started construction on an attached 83-room TownePlace Suites, also a Marriott brand.

Just about one block away, on Bakerview Road, a La Quinta Inn opened in January 2014.

Additional developments nearby include a four-story, 105-room Home2 Suites by Hilton at 805 Home Lane, and a five-story, 99-unit Oxford Suites hotel at 4051 Meridian St.

Across the street from the airport, the Port of Bellingham has approved plans by Hotel Services Group of Mount Vernon, Wash., to build a Holiday Inn Express on about 3.77 acres of port-owned property on Mitchell Way, just south of the Pacific Cataract Laser Institute.

The 156-room hotel will include a full restaurant with its own separate entrance, an indoor pool, underground and surface parking, as well as about 7,000 square feet of conference rooms and meeting space, which will range from smaller board rooms up to a full-scale ballroom capable of hosting larger events, according to Dan Mitzel, chairman and managing member of Hotel Services Group. Construction should start in May.

Outside of Bellingham, the Semiahmoo Resort in Blaine re-opened last August. The resort’s hotel and two golf courses, the Semiahmoo Golf and Country Club and Loomis Trails, were bought for $19.5 million in June by Resort Semiahmoo LLC, a partnership whose managing member is Wright Hotels Inc. of Seattle. Coastal Hotel Group, also of Seattle, is Semiahmoo’s new manager.

Waterfront approved

Local leaders approved guiding framework to redevelop 237 acres of shorefront property along Bellingham’s city center last December.

The port and the city are working together to direct planning, cleanup and development of the property.

Development plans present a five-phase scheme with initial stages focusing on site cleanup and establishing a new commercial and residential area connected to the city’s downtown. Later phases include building a new public park at Cornwall Beach to the south, rejuvenating a marine-trades area and building the new marina to the north, and relocating a BNSF Railway line that bisects a portion of the site.

The port is already seeking developers for about 11 acres of property that surrounds Bellingham’s historic waterfront Granary Building. That process includes selection of a “master developer,” who will guide the first commercial development on the site.

The first construction on the site is not expected to begin for several more years.

Evan Marczynski, associate editor of The Bellingham Business Journal, can be reached at 360-647-8805 or evan@bbjtoday.com.



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