Page 1

Vol. 23 No. 10

Oct. 2015 BelleWood acres finds success in diversifying [Page 24]

The Buzz Pot is legal, but workplace drug policies haven’t changed Whatcom County employers aren’t relaxing their policies towards marijuana, experts say. But more people are failing drug tests. DRUG POLICY, 12

Interviews with port commissioner canditates Two candidates—Bobby Briscoe and Gary Jensen—are on the ballot for Port of Bellingham Commission District No. 3. ELECTION, 8

Why did Haggen file for bankruptcy in Delaware?

An employee pushes shopping carts outside a Haggen store at 2814 Meridian St., in Bellingham. [OLIVER LAZENBY PHOTO | THE BELLINGHAM BUSINESS JOURNAL]


Many corporations file for bankruptcy in Delaware because they think the outcome will be better in the “First State.”

How the Bellingham-based grocer’s massive expansion went sour On November 4, 2014, two months after John Clougher became Haggen’s CEO, Haggen executives attended a meeting at Albertsons headquarters in Boise, Idaho. They were negotiating a $300 million dollar deal, according to court documents filed long after the deal went bad. The deal would be huge for Haggen—it added 146 former Safeway and Albertsons stores to the Bellinghambased company’s portfolio of 18 Washington and Oregon supermarkets. For Albertsons, the sale was a small but necessary part of a $9.4 billion merger with its rival Safeway. Albertsons’ bid to become one

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of the country’s biggest supermarkets dependAt the time, he didn’t imagine Haggen could ed on it successfully selling 146 West Coast grow by 146 stores and become a major West supermarkets to Haggen. The Federal Trade Coast grocery player. That opportunity found Commission, concerned that the Albertsonshim. Safeway merger would reduce competition “It’s a great opportunity. Opportunities and hurt shoppers in 130 market areas across come when they come,” Clougher said in the West Coast, ordered Albertsons to sell off December 2014 after Haggen announced the 168 total stores before it would allow the deal. Haggen was coming out of a rough patch. Haggen, PAGE 22 The company had closed 10 stores in a twoyear period before the meeting. But in September 2014, just after taking over as CEO, Clougher told the Bellingham Business Journal that sales numbers were up and Haggen was ready to grow again, though he didn’t “feel the need for any visionary changes,” he said. WE SELL AND BUY:


The Bellingham Business Journal

October 2015


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Orchards at Bellewood Acres, near Lynden. BelleWood Acres is one of the rare orchards in Western Washington.

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[24] BelleWood Acres diversifies

NMLSR ID 856141

BelleWood Distilling and a full schedule of events have diversified income for owners of the 20-year-old orchard near Lynden.

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Anndi D. Pena

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Ross Schram von Haupt

Home Mortgage Consultant 360-746-4050

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[22] Haggen

Haggen plans to shrink to 37 stores by December, but its also exploring the possibility of selling the company.

NMLSR ID 404824

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[7] CH2M Hill closing Bellingham office The closure, a result of a downturn in the oil and gas industry, will affects 120 local workers. The multinational company is working to place employees in other offices.

[12] Side effect of legal pot: job loss Barry Weafer

Home Mortgage Consultant 360-647-0897

Brandon C. Mankle

Reah Marie Dewell

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Marijuana became legal in Washington in December 2012, but few Whatcom County employers have changed their drug policies and many still fire employees for off the clock marijuana use. [6] People On The Move [10] Market Indicators

Home Mortgage Consultant 360-384-4975

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[19] Public Records [26] Business Toolkit

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WCC gets $6.4 mil for cybersecurity

BUSINESS BRIEFS VSH CPAs opens Mount Vernon office After 20 years of operating in Bellingham, VSH CPAs recently opened an office in Mount Vernon. Mark Roetcisoender leads the company’s Skagit County office, which opened in September at 1404 E. College Way, in the Baird Wealth Management Complex. VSH CPAs hired Roetcisoender in July. He previously worked at Williams & Nulle, an accounting firm with offices in Mount Vernon and Anacortes. The Skagit VSH office will soon have three other employees, Roetcisoender said. “VSH is anxious to establish a practice and grow that practice in Skagit County,” he said. Office hours are 9 a.m. to 5 p.m. The office an be reached at 360-707-4290. Bellingham-based VSH CPAs has a 40-person team and focuses on serving small and middle market businesses, according to a press release from the


The Bellingham Business Journal



$3.5 mil. memory care facility breaks ground

Gas prices to drop to near $2 a gallon

Silverado Memory Care broke ground on a $3.5 million facility at 4400 Columbine Drive in Bellingham on Friday, Sept. 11. The facility, which the company expects to open late 2016, is designed to care for people with a range of memory-impairing conditions including Alzheimer’s, Parkinson’s, Lewy body and other types of dementia. The 41,000-square-foot facility is on four acres and will have 80 beds. In addition to supporting as many as 80 new healthcare jobs, Silverado expects construction to employ 100. The company is working with local teams, including architect James Brown with Wattenbarger Architects, Craig Parkinson with Cascade Engineering, and Dawson Construction Inc. as a project consultant. For project updates, visit Silveradocare.com/Belling-

Tumbling gas prices are expected to continue falling and could approach $2 a gallon near the end of the year. The drop is driven by a mix of factors, including low crude oil prices, falling driver demand and refineries switching to winterblend gasoline, which is cheaper to produce. In mid-Septmber, the average gas price in Bellingham was $2.63 a gallon. Costco at 4299 Guide Meridian had the lowest prices in the county — $2.19 a gallon, according to Gasbuddy.com, a gas-price tracking website. That price likely will drop to between $2 and $2.20 by mid-December said Allison Mac, a Los Angeles based analyst with Gasbuddy.com. Gas prices are considerably lower than 12 months ago, when the average in Whatcom County was

U.S. Rep. Rick Larsen, D-Everett, talks with Travis McEwen, Whatcom Community College computer information systems instructor. Larsen toured the college’s computer information systems lab in September after the National Science Foundation awarded Whatcom Community College with $6.4 million in grants for its cybersecurity program. [PHOTO COURTESY OF WHATCOM COMMUNITY COLLEGE]

nearly $1 higher, according to AAA’s Daily Fuel Gauge Report. Those savings pile up. Tom Kloza, chief energy analyst and a co-founder of Oil Price Information Service estimates American

drivers are paying $455 million less a day at the pump. The Gaithersburg, Maryland-based company owns Gasbuddy. Analysts expect gas prices to stay down into 2016. The U.S. Energy Informa-

tion Agency actually forecasts the average price next year to be less than in 2015. - Everett Herald staff

Briefs, PAGE 6


October 2015


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October 2015


MEMBERS Renee Aase

Jillian Ball

Carrie Beck

Brenda Bringhurst

Nicole Burdick

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Whatcom Center for Early Learning

October 2015


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The ladies of Whatcom Women in Business wish to send a heart felt congratulations to all our 2015 finalists.

Lynne Henifin

Nancy Leavitt

Dawn Matthes

Kathy Parks

Natalie Ransoms

Carolyn Saletto

Trudy Shuravloff

Stacee Sledge

Jamie Smeall

Tally Rabatin

Bridget Reeves

Carrie Viens

Mary Walby

Sharon Yonally

Amy Zender

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Whatcom Talk

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Keller Williams Realty

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BRIEFS, FROM 3 WWU opens new downtown welcome center Western Washington University’s new downtown office, called the Western City Center, opened on Monday, Sept. 21 on the corner ground-level floor of the Herald Building at 1155 N. State St. Western’s goal for new office is to better connect the university with downtown Bellingham. The 2,500 square-foot space has a public reception area, a retail space with Westernbranded items, and a kiosk where event tickets can be purchased. It also has offices and a conference room that will host public events. The office is open to walk-in visitors and the public can stop by for complimentary Viking Blend coffee by Woods Coffee. Lynden-based Woods Coffee will also provide free pastries on Wednesdays to celebrate “Western Wednesday.” Seven members of Western’s University Advancement and Alumni Association staff, as well as student staff and interns, work out of the downtown office.

Mentor program for new farmers seeks applicants Sustainable Connections is accepting applications for up to

four new participants for its Food To Bank On project, a training program for beginning farmers. The three-year program pairs new farmers with seasoned mentors from farms including Cedarville Farm, Cloud Mountain Farm Center, Osprey Hill Farm, Rabbit Fields Farm, Misty Meadows Farm and Growing Gardens. Participants go through a business planning series each winter, working with a cohort of peer and mentor farmers to work on their business plans. They also get access to other business resources and receive marketing help and free membership to Sustainable Connections, a network of local businesses and community leaders focused on sustainable practices. Sustainable Connections pays farmers in the program to deliver fresh food to local food banks and shelters. Whatcom County food banks, soup kitchens and women’s shelters have received more than $80,000 in fresh produce from the program since it started in 2003, according to a press release from Sustainable Connections. The program has a high success rate. Eighty percent of its 48 participants are still in business. Current program participants

include Well Fed Farms, Vine Maple Acres, Prairie Road Farm, Backyard Beans and Grains Project, McIntyre Family Farm, Triple Wren Farms, Grateful Bounty Farm, Highland Blueberries, Chubby Bunny Farm, Blanchard Mountain Farm and Dragon Tongue Medicinal Herb Farm. Applications for the program are on Sustainable Connections’ website and are due Oct. 15, 2015. For more information, contact Sara Southerland at sara@ sconnect.org.

Bison Bookbinding and Letterpress moves, adds retail space After more than a decade of cranking out cards, stationery and notebooks for a wholesale market, Bison Bookbinding and Letterpress is opening in a new location with more retail space in downtown Bellingham. The company is opening at 112 Grand Ave., the former home of Little Tiger Toys, on Oct. 2. The 3,200-square-foot space has a retail storefront and production space with antique letterpresses. After Oct. 2, Bison will be open from 10 a.m. to 6 p.m. Monday to Saturday and 11 a.m. to 5 p.m. on Sunday.

October 2015

Andrea Sturm appointed to lead Samson BY OLIVER LAZENBY The Bellingham Business Journal Andrea Sturm will takeover as president and CEO of Samson, Ferndale rope manufacturer, in January 2016, according to a press release from the company. She’ll start at Samson on Nov. 2, and work with current CEO Tony Bon for two months. Sturm, who is from Germany and went to school in France and the Netherlands, has a background in international business management, product management, new product development and marketing. Bon said Sturm’s international experience will help the company move into new markets. “Samson achieved its best year ever last year and has great potential to continue to grow,” Bon said in the press release. “Andrea brings the right combination of skills, leadership, and customer and market focus to take the business to the next level. I’m pleased to see the company in such capable hands and excited for the future of Samson.”

Sturm is currently the general manager at Everett-based Fluke Corp., a manufacturer of electronic test tools. Before that, she held several positions with Philips Consumer Electronics, including vice president of global marketing and sales with Philips Oral Healthcare, makers of the Sonicare toothbrush. Bon’s career at Samson spanned 41 years. He started on the factory floor in Samson’s Massachusetts facility in 1974 and transferred to the Ferndale facility in 1980. He advanced through the company in various positions until being named president in 2007 and CEO in 2013, according to the press release. “Tony has been an integral part of Samson’s success and growth over the past 40-plus years,” said Russell Ball, CEO of Wind River Holdings, which owns Samson. “Samson always has and always will lead the industry in innovation. Under Tony’s leadership, Samson advanced that effort even further and achieved new heights of synthetic rope technology.”

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October 2015


The Bellingham Business Journal

CH2M Hill closing local office Closure, caused by a downturn in the oil and gas industry, affects 120 engineering workers BY OLIVER LAZENBY The Bellingham Business Journal Low oil prices, which have led to thousands of layoffs across the country this year, seem to have hit Bellingham’s CH2M Hill office. The multinational environmental and engineering consulting firm announced in September that it’s closing its local office because of a downturn in the oil and gas industry. The office, at 21 Bellwether Way, employs about 120 people, company spokesperson John Corsi said in an email. Most Bellingham employees work on engineering consulting projects for oil and gas refineries, Corsi said. The Denver-based firm is looking into placing Bellingham employees in other CH2M hill offices, Corsi said. He emphasized that CH2M Hill is committed to Washington state. It has offices in Seattle, Spokane and Richland, and other project locations around Washington. Crude oil’s drop from $100 a barrel last year to about $50 a barrel this month— caused by increased production and stagnant demand—has led to a lot of layoffs in the energy industry. According to the U.S. Bureau of Labor Statistics, the number of workers employed in oil and gas extraction went

from 198,400 in August 2014 to an estimated 192,600 in August 2015, a loss of 5,800 jobs. The Houston Chronicle reported last month that 176,162 energy jobs have been cut globally in the past year. Closing its Bellingham office is not a sign that CH2M Hill is exiting the gas and oil business, Corsi said. “We’re always reevaluating our geographic footprint on how we can best serve our clients,” he said. CH2M Hill has about 2,500 employees in offices around the world. It’s managed such projects as an environmental cleanup at Hanford nuclear site, construction of FIFA World Cup sites and expanding the Panama Canal. Locally, the company is managing the environmental impact statement process for the proposed Gateway Pacific Terminal, which would ship coal and dry bulk goods from Cherry Point, west of Ferndale. The Bellingham office’s closure won’t affect CH2M Hill’s work on that project, Corsi said.

Oliver Lazenby, associate editor of The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or olazenby@bbjtoday.com. 1423771

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Two candidates are running for the open District 3 seat on the Port of Bellingham commission. The position, currently held by Jim Jorgenson, covers northwest Whatcom County— west of the Guide Meridian and north of downtown to the Canadian border. The winner of the Nov. 3 general election will start a four-year term next year. The Port of Bellingham oversees harbors in Bellingham and Blaine, as well as the Bellingham International Airport and industrial properties in Whatcom County. It’s mission, according to the port’s website, is to fulfill essential transportation and economic development needs in the region and provide leadership in maintaining the county’s economic vitality through the development of facilities, pro-

Coming Soon! Winter 2015

grams and services. Two candidates emerged from the Aug. 4 primary election—commercial fisherman Bobby Briscoe and Ferndale mayor Gary Jensen.

Bobby Briscoe BBJ: Is the waterfront redevelopment project on the right track? What should the port’s priorities be for waterfront redevelopment? That may well be the $64 million question. I’m not sure anyone can correctly answer this question. I believe we all hope it is on the right track. Not being involved at the commission level at this time, and not knowing all the intricacies

of the project, I will decline a yes or no answer. A great number of people spent a great deal of time, money and energy trying to come up with the best plan possible. Some like it and some don’t. As your port commissioner it would be my responsibility to bring the people of Whatcom County’s concerns forward and make sure those concerns are answered. After all, the people of Whatcom County own the Port of Bellingham and Port of Bellingham commissioners and staff must be held accountable for port business. That said, this will be a huge task with lots of moving parts to make it all happen—clean up, building infrastructure, recruiting long-term industrial and commercial tenants.


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The Bellingham Business Journal

PORT COMMISSION ELECTION ELECTION, FROM 8 This has the potential to create hundreds of new jobs for our citizens. The master plan has been adopted but there are many, many decisions yet to be made. To do it right the first time, the commission needs people who know waterfronts like I do.

BBJ: After ranking among the fastest-growing airports in the country for several years, traffic out of Bellingham International Airport shrank with the Canadian dollar. What should be the priority for the airport? I feel the priority for Bellingham International Airport should be as follows: 1. Maintain high standards in all areas of the airport facility. 2. Try and recruit other airlines and flights to increase local use of the airport, if feasible. 3. Research and explore the feasibility of other businesses that could be located on airport property. I believe flights that have been canceled by Alaska Airlines will resume over the next few months and business at our airport will be better. All that being said, the Port of Bellingham must be ever vigilant in exploring more ways to improve our airport productivity.

BBJ: What kind of businesses do you hope to attract to the Port of Bellingham? How can Bellingham compete for those businesses with other ports? As a port commissioner I would ask the Port of Bellingham to pursue shipping business as well as barging companies. We have a great deep water port facil-

ity. I would like to see a boatyard repair yard for vessels as large as 150 feet, both recreational and commercial. I want to see big businesses on our waterfront that will provide economic stability and good living wage jobs for the residents of Whatcom County.

BBJ: In a perfect world, what is one specific business you would like to have on port property? If the port were operating in a perfect world then I could give a perfect answer. But seeing as we are living in the real world I would prefer offering a real world answer. I envision attracting many good businesses to the port properties such as shipping, barging, and possibly a repair yard for our larger commercial and recreational vessels. My standards would be high. Long term business relationships would be a priority. I would like future businesses to draw their support needs from our existing businesses so all may prosper. The people of Whatcom County need businesses with stability and longevity that offer family wage jobs for our young people. It is the port’s job to ensure those things will happen for Whatcom County and it will require more than one specific business. It is going to be a difficult task, but one that I truly believe can be achieved.

BBJ: What is the most important issue facing the port in the next four years? Financial stability and working our way out of debt and staying in the black should be the top issue for the Port of Bellingham. The port needs to operate as efficiently as possible in all areas and stay within the budget set for each year. I know many people feel I should come up with a specific project that should be the top priority but the projects at hand are not going to be finished if we don’t have the money. If the Port of Bellingham has to find more funding they will have to raise the money through property taxes or borrow the funds needed. Neither of those options are palatable for Whatcom County. The issues and projects will prioritize themselves if the Port of Bellingham is financially stable.

BBJ: As a commissioner, how do you think you would differ from your opponent? I am presently a commercial fisherman. As a port commissioner I would differ from my opponent in the fact that I am a

fourth generation waterman born and raised in south Bellingham. I have owned and operated my own fishing vessels up and down the West Coast of the United States and in the waters of Puget Sound for 41 years. My fishing career has provided me with valuable experience and knowledge of various port operations and what the people and businesses require to operate within our ports efficiently. I do not believe my opponent has near the insight and experience in the waterfront environment that I do. Many major projects such as harbor rebuilding and waterfront redevelopment are on the Port of Bellingham’s plate. I can pass on my knowledge to the commissioner’s office and help create a very positive outcome for the Port of Bellingham and the residents of Whatcom County.

Gary Jensen BBJ: Is the waterfront redevelopment project on the right track? What should the port’s priorities be for waterfront redevelopment? Some of the redevelopment is on the right track and with other aspects it is too early to determine. The All American Marine addition in Fairhaven is the perfect example of a port using its abilities to help a private company expand and succeed. By use of cleanup funds and creative space management All American Marine is on track to add 27 new full-time, well-paid employees and construct new modern facilities. This will include one of the largest dry docks in the Puget Sound. A new 25-year lease with All American will ensure a sound future. As for other waterfront development, such as the former G-P site, that is beginning soon. The waterway clean up project is underway. Harcourt Developments will begin redevelopment of the Granary site in 2016. There are, however, many projects that need completion before the port can increase its “Working Waterfront” potential. For example a local company [Haskell Corporation] was performing module work but investments in dock improvement need to happen for that segment to continue. This work has a potential of $20,000 per month and is essential for future jobs. We must have a healthy mixture of development that includes a job component.

BBJ: After ranking among the fastest-growing

airports in the country for several years, traffic out of Bellingham International Airport shrank with the Canadian dollar. What should be the priority for the airport? It is very true that the airport is experiencing an economic downturn. As a business owner and soon-to-be former mayor, I understand economic challenges and how to react to them. A downturn forces all business to look inward for cost savings and efficiency. The port employees at the airport are doing this now. A new airport manager will be hired very soon. This new person will have increased marketing skills and require support from port commissioners who have a background in business management and marketing. I am that candidate. The table is set for a new direction and success. We have a new, modern terminal. A new hotel will open on the airport property. The airport can grow again.

on the former G-P site and with improvements we can bring wellpaid employment back to that site. That is a benefit to downtown Bellingham and Whatcom County.

BBJ: In a perfect world, what is one specific business you would like to have on port property? I would love to see a manufacturing business on the waterfront. The business would manufacture and retail products that embrace the giant recreation potential we have on the water. In Whatcom County, 42 percent of single parent families with female heads of household live below poverty level. Bellingham Technical College has a program to help and encourage females to enter that workforce. Manufacturing, retail and recreation enhancement along with living wage jobs does not have to be a dream from a “perfect world.”

BBJ: What is the most important issue facing the port in the next four years? The port must continue to secure funding for environmental cleanup requirements. State and federal grants plus insurance funds will only take cleanup so far. The port’s income producing segments must continue and improve where possible.

BBJ: As a commissioner, how do you think you would differ from your opponent?

BBJ: What kind of businesses do you hope to attract to the Port of Bellingham? How can Bellingham compete for those businesses with other ports? The Port of Bellingham has a vast portfolio of property and economic potential. For example, the Wood Stone Oven Corporation started on port property in Sumas. By supporting business incubation the port gained a tenant that has grown and prospered. The company’s new large building on airport property shows how the port can be a partner in business success. From the waterfront to the airport, Blaine Harbor and Sumas, the port must continue to seek out many, many opportunities to help business succeed. We are blessed with a blank canvas

The port has a very diverse set of priorities: airport, commercial real estate, industrial clients, professional services and a commercial fishing industry. I also have a diverse background and intend to be a full-time commissioner. I have attended every port meeting and the yearly, all day budget workshop. The port commissioners also attend the Whatcom Council of Government meeting on traffic solutions for all of Whatcom County. They also attend the Small City Caucus. Again, the role of a commissioner requires experience and a 12-month a year commitment.


The Bellingham Business Journal

October 2015

Market Indicators

Jobs: County 5.7% unemployment rate above state’s 5.3% Bankruptcies

Unemployment rate

Labor force participation rate

August 2015: 5.7 % August 2014: 6.5 %

August 2015 total: 30 Annual change: - 6.25 %

Includes non-seasonally adjusted figures in Whatcom County

Includes filings for Chapters 7, 11 and 13 in Whatcom County






Chapters 11,13 Chapter 7


August 2015: 63.0% August 2014: 63.4%

Includes non-seasonally adjusted figures for Washington state


25 20








J F MAM J J A S O N D J F MAM J J A 2014



J F M A M J J A S O N D J F M A M J J A 2014










Spending: Big projects contribute to spike in permit values Sales-tax distribution �

August 2015: $1,934,124.1 Annual change:



Building-permit values

Canadian dollar


August 2015: $32,252,751 August 2014: $11,697,777

August 2015: $0.76 August 2014: $0.92

Includes basic and optional local sales tax to Bellingham

Includes monthly averages (Canada-to-U.S.) at market closing



$35M $30M












$25M $20M















J F M A M J J A S O N D J F M A M J J A 2014








Housing: Housing numbers still up going into fall Housing sale prices


Pending sales Closed sales






Includes sales of single-family houses and condos in Whatcom County


Average price


Delinquency rate: June 2015: 1.81 % June 2014: 2.63% Foreclosure rate: June 2015: 0.69 % June 2014: 1.03%

Closed, August 2015: 368 Annual change: + 16.09 % Pending, August 2015: 405 Annual change: + 10.35 %

Median price


Foreclosures & delinquencies

Housing sales

Average: August 2015: $300,094 August 2014: $307,252 Median: August 2015: $280,000 August 2014: $265,000













Delinquency rate





Foreclosure rate






Other factors: Airport traffic down 25 percent Cruise terminal traffic

Airport traffic Includes total passengers flying from Bellingham International Airport

80K 60K






50K 40K 20K


















1.75M 1.25M 1M 0.75M



Includes southbound passengers crossings into Whatcom County





July 2015: 1,442,295 Year-over-year: � 9.94 %

Includes inbound and outbound passengers at Bellingham Cruise Terminal



Border traffic

August 2015: 2,866 August 2014: 4,368

August 2015: 36,087 Annual change: - 24.5%

0.5M 0.25M














Notes: Graphs include the most recent data available at press time. Annual changes show cumulative difference from the same time period during the previous year. Data include raw numbers only and are not adjusted to account for any seasonal factors.






October 2015


The Bellingham Business Journal

October 2015


New hotel for travelers under construction near to Bellingham International airport

Sponsored content provided by Port of Bellingham Recreational and business travelers will soon have a new amenity making traveling out of Bellingham International Airport (BLI) even easier. Bellingham HI, LLC is currently building a 153-room full service Holiday Inn Hotel which will open across the street from BLI’s passenger terminal. The new hotel will include over 7,500 square feet of conference rooms and meeting space, a full service restaurant and bar, an indoor pool and spa, and underground secure parking in addition to surface parking. “We are very excited to be building this very significant project for the Bellingham and greater Whatcom County community,” said Dan Mitzel, Co-Managing Member of Bellingham HI, LLC. “Over one million people use Bellingham International Airport each year and we are pleased to offer airport travelers a convenient and affordable hotel option which will be located just a short walk from the passenger terminal.” The new Holiday Inn is being built on port-owned property located on Mitchel Way, just south of the Pacific Cataract Laser Institute. Trees and vegetation have been removed from the site, to clear the way for construction and give the hotel better visibility from Interstate 5. The hotel is expected to be finished in 2016 and the construction is valued at $20 million. Hotel Services Group, LLC (HSG) based in Mount Vernon will be the manager of the hotel. HSG is owned by Mitzel and other hotel investors. Mitzel’s construction company, M&H Contracting, LLC will be the general contractor. Major subcontractors for the project are based in Bellingham and the Mount Vernon area. BLI has seen rapid growth in recent years with the total number of passengers increasing from 454,500 in 2008 to 1,128,575 in 2013. Many travelers come from Canada because airfare and parking are significantly

Company established in 2007 specializing in hotel management and ground-up development. The corporate leadership team includes multiple hotel owners with significant hotel development expertise. Presently HSG manages a total of 8 hotels and has three hotel projects in development phase in Western Washington. Travelers will enjoy a full-service hotel at the Bellingham International Airport.

PORT OF BELLINGHAM CONTACT: Port Administrative Offices 360-676-2500 info@portofbellingham.com www.portofbellingham.com 1801 Roeder Ave. Bellingham, WA 98225 HOURS: Monday - Friday 8:00 am - 5:00 pm

Vertical construction has started on the new Holiday Inn cheaper at BLI than Vancouver International Airport which services 17 million passengers annually and is located just 45 miles to the north. The Port recently completed a $38.6 million dollar expansion project tripling the size of the commercial terminal to help meet the increased demand for low-cost airport services. Growth at BLI has been driven by recreational travel, but the new Holiday Inn will offer a strategic advantage to regional business interests. BLI provides a vital transportation link that permits the rapid, efficient, and cost-effective movement of people, goods and services in and out of Whatcom

County. The convenience of a fly in/ fly out hotel combined with the close proximity of a new full service hotel with conference / banquet rooms capable of seating 300 in round table setup will enhance midsize group business and leisure travel to Whatcom County. Mitzel stated, “We intend to create a market for inbound midsize group conference business that is not being pursued to any significant degree by the existing hotels that are located in Bellingham. Bellingham needs to become a destination for out of area conference business.” Hotel Services Group, LLC is a Washington Limited Liability

BOARD OF COMMISSIONERS Dan Robbins, District One Michael McAuley, District Two Jim Jorgensen, District Three MEETINGS: 3 p.m. on the 1st and 3rd Tuesdays of the month. Agendas are on the Port website. THE PORT OPERATES: Bellingham International Airport Bellingham Cruise Terminal Squalicum Harbor Blaine Harbor Fairhaven Marine Industrial Park Bellwether on the Bay Shipping Terminal Airport Industrial Park Sumas Industrial Park


The Bellingham Business Journal

October 2015

Pot’s legal, but still forbidden in the workplace

Whatcom employers haven’t eased workplace drug policies since legalization BY OLIVER LAZENBY The Bellingham Business Journal

Before she crashed the company car, Cyd Maurer, 25, was climbing a ladder of television news jobs. She got her first gig as a reporter at KMTR-TV in Eugene, Oregon, in 2012 while still a senior at the University of Oregon. The station promoted her within five months. When the station sold and its new owners laid off most of the staff, Maurer landed a job at KEZI 9, also in Eugene. Her journey up the ladder ended in May 2015, when she got into a fender bender in the company car and failed a drug test. Maurer wasn’t high at the time, but she had used marijuana the weekend before the accident, she said in a presentation in Bellingham in

September. Oregonians voted to legalize marijuana six months before Maurer’s fender bender. Less than a week after her last day of work it became legal. But the drug’s legal status probably wouldn’t have mattered to Maurer’s employers. Marijuana became legal in Washington in December 2012, but few Whatcom County employers have changed their drug policies and many still fire employees for off the clock marijuana use, human resources managers and drug testing professionals said. That’s a problem to Maurer and other marijuana activists who see the policy as encouraging employees to drink alcohol and use other drugs,which are more addictive than marijuana but leave the body quicker,

according to a paper in the journal Mayo Clinic Proceedings. “Had I used meth, cocaine, opiates or heroin the weekend before the accident, I would still be working in news,” Maurer said. “In my opinion, employers who drug test are saying, “I’d rather have people drink than use cannabis.”” Rich Bosman hasn’t seen many employers change their drug policies since legalization, he said. Bosman owns Bostec, a Lynden-based company that collects samples for drug testing labs and works with employers to write drug policies. What he has noticed is an increase in failed drug tests. “We used to have maybe a few a month and now we get sometimes a few a day,”

Cyd Maurer, a news anchor who was fired for marijuana use, speaking about workplace drug policy at the Best Western Lakeway Inn in Bellingham in September. [OLIVER LAZENBY PHOTO | THE BBJ]

Bosman said. “It’s getting better but there was this huge bump right after the law passed. There’s also a huge increase in people who are bringing in samples that are not their own urine.” Bosman, a retired state trooper, attributes the surge in positive tests to employee confusion. Kara Turner, owner of Turner HR Services in Bellingham, also said employers aren’t changing their drug policies. Currently, labs that test for marijuana can’t tell if an employee was impaired on the job, Bosman said.

Maurer hadn’t smoked marijuana in nearly a week before her accident and attributes the crash to stress and traffic. It happened just before 5 p.m. on Friday before Memorial Day, when weekend traffic was beginning to clog the streets. “I had an 18-minute window to get 15 minutes away for the top story of the 5 p.m. broadcast,” Maurer said. The top story was a fatal car accident. “That meant I had to get to my location, park my car next to the highway, get a mic on and be ready at the top of the show to be on air. My mind was in a lot of other

places.” On the way to the shoot, she bumped into a Toyota Sienna minivan, leaving little damage to either vehicle. Maurer called her supervisor, who asked her to take a drug test per company policy. Maurer told him that she occasionally used marijuana. Back at the office Maurer told her other immediate supervisor that she would test positive for marijuana. “He looked at me right in the eyes and said, “I know

Workplace drug policy, PAGE 14



October 2015

(360) 734-1330 www.bellingham.com


The Bellingham Business Journal








Bellingham / Whatcom Chamber of Commerce & Industry : Representing Businesses Across Whatcom County

An Update from the Bellingham/Whatcom Chamber of Commerce & Industry

Networkers at Work By: Guy Occhiogrosso

Networking is the buzz word to end all buzz words. In fact many would say the word should have ended long before now. But is it the essential piece to building meaningful, valuable, sustainable business relationships. Our business vernacular is inundated with references to networking, some good and some bad: “Your network equals your net worth” and “I’m not working, I’m networking.” Hilton Home 2 Suites • Making friends and having fun at the Throughout history, Chambers of Commerce have Business After Business at Hilton Home2Suites. ©Photo by Radley been all about building relationships, whether those Muller Photography are relationships between government and business or business-to-business or business-to-consumers. Our own Bellingham/Whatcom Chamber of Commerce & Industry is no exception to that rule. In fact one of our cornerstone programs is our Mary Kay Networking • Mary Kay Robinson of Windermere Real monthly Networking Breakfast. This event occurs on Estate networking at a monthly Chamber Networking Breakfast the second Friday morning of the month. It has been ©Photo by Radley Muller Photography referred to as “speed dating for business.” The goal features food and beverages and a chance to network is to introduce member businesses, nonprofits and on a more personal level. It’s a place where business government representatives to each other. At every deals happen and new friendships are forged. breakfast it takes a team of Ambassadors, staff, and an emcee to pull off a great event! Chamber President/CEO Guy Occhiogrosso says, “Every time the Chamber meets, it is a chance to This Chamber program has been going strong 360-734-1330 | guy@bellingham.com build those relationships, to network.” The breakfast for over two decades. We boast the biggest monthly is designed to introduce those trying to build their business networking event with 80-120 attendees business and those who want to further develop every month. Everyone gets a chance to present their business connections in a fun, energetic their one-minute elevator speech to a minimum of 10/9—Networking Breakfast manner - it’s a great way to start your weekend! 24 people.

Upcoming Events

For people who prefer a less formal networking setting, the Chamber hosts a Business After Business on the third Thursday of each month. It is a casual social setting at a member business’ facility and

For more information and to register for the next Networking Breakfast or Business After Business, please visit the Chamber website at www.bellingham. com or call at 734-1330.

Networking Breakfast • An average of 80-120 people show up every month for the Bellingham/Whatcom Chamber’s Networking Breakfast.

Sponsored by: BP Cherry Point Where: Northwood Hall 3240 Northwood Ave., Bellingham When: 7:15—9 a.m. Cost: $14 with RSVP / $18 without RSVP

10/15—Business After Business Sponsored by: Fairhaven Village Inn Where: Fairhaven Village Inn When: 5:30—7:30 p.m.

10/27—Leadership Lunch SPONSORSHIP AVAILABLE Speaker: TBA Where: Hampton Inn—Fox Hall When: Noon—1:30 p.m.

11/13—Networking Breakfast Sponsored by: Massage Envy Spa Where: Northwood Hall 3240 Northwood Ave., Bellingham When: 7:15—9 a.m.

11/19—Business After Business Sponsored by: Massage Envy Spa Where: Massage Envy Spa at 330 36th Street When: 5:30—7:30 p.m.


The Bellingham Business Journal




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that that has nothing to do with this accident. I’m going to fight for you and figure out what I can do to help this end positively for you,”” Maurer said. Though her supervisors were on her side, things didn’t end positively for Maurer. When she returned to work after the three-day weekend, the station’s general manager delivered a terse message. “I think his exact words were, “This was a motor vehicle accident, you had to take a drug test, to our surprise and disappointment

you failed. Therefore, today is your last of employment,”” Maurer said. Maurer’s employer may have had a choice about whether to fire employees for marijuana use, but many don’t. Organizations that get federal funding can’t allow employers to use marijuana, since it’s still illegal federally. That includes some of Whatcom County’s biggest employers, such as Western Washington University and the City of Bellingham. “We are zero tolerance and we will remain that

October 2015 way because we can’t risk losing federal funding,” said KayCee Luxtrum, City of Bellingham’s Human Resources Director. Another big chunk of employers—including the majority of Bosman’s clients—are in the transportation industry and regulated by the U.S. Department of Transportation, which also requires employers to test for marijuana. Though a few of Bosman’s clients have made their drug policies more lenient toward marijuana, others started testing more after legalization, he said.

“My supervisors knew me and trusted me, just like they trusted my coworkers who chose to drink alcohol in their free time.”

CYD MAURER NEWS ANCHOR FIRED FOR MARIJUANA USE Employers contacted by the Bellingham Business Journal didn’t want to talk about their drug policies. Since her accident, Maurer has become a marijuana activist—she tours and speaks about marijuana in the workplace. One of her messages is that drug policies that prohibit employees from using a legal substance are a poor business decision. Turner and Luxtrum, the human resources professionals, said they haven’t seen any evidence that that is true, they said. Testing for marijuana reduces a company’s potential talent pool and tells workers that they’re not trusted to be sober, Maurer said. And in Maurer’s case, it sent a message to her supervisors that they weren’t trusted to make decisions on hiring or firing, she said. “The decision to fire me didn’t come from my immediate supervisors who worked with me everyday, who actually told me they wanted me to keep my job,” the former news anchor said on her website. “That’s because my supervisors knew me, and trusted me, just like they trusted my coworkers who chose to drink alcohol in their free time.”

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Oliver Lazenby, associate editor of The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or olazenby@bbjtoday.com.

October 2015


The Bellingham Business Journal

Sponsored content provided by Loni Rahm, and Bellingham Whatcom County Tourism.

Autumn: A Great Time to Explore Whatcom County

One autumn, when I was pretty young, I got lost in a corn maze. I’ll let you in on a little secret. I wasn’t really lost. I got so mesmerized by the intricate little pathways, the twists and turns, and the unexpected dead ends, that I just decided to stay in there for a while. But my mom didn’t realize I was merely dawdling, so she asked an attendant to find me. He climbed the perimeter catwalk blowing a whistle and asking me to holler back in a bizarre corn maze style “Marco Polo” interaction until I finally meandered out. Despite that experience, or perhaps because of it, I am taking my young sons to a corn maze this weekend. If we have time I also plan to hit one of Whatcom County’s prolific pumpkin patches. We’ll embark on a treasure hunt to

find the perfectly shaped, or perfectly misshapen pumpkins for our annual jack-o’-lanterns. The ritual of corn mazes and pumpkin patches are just two of the reasons why I love October in Whatcom County. Other reasons to embrace fall involve the showy display of colorful fall foliage that dots the hillsides and lines so many of our trails. In fact – with the scant snowfall last winter and abnormally warm spring and summer – hikers, bikers and walkers can access higher elevation trails this year than usual. Not all of Whatcom County’s fall activities are outdoor oriented. This month marks the 21st Annual Whatcom Artists Studio Tour, when dozens of artists will open their studios to the public for two weekends (October 3 & 4 and

October 10 &11). You can also experience the Lynden Music Festival (October 14-18) and the new Bellstock which is making its debut next to the Bellwether Hotel on October 3. Those blustery “looks more like fall than yesterday did” kind of days are a great excuse to get a few more stamps on your Bellingham Tap Trail map. The new map features 16 passport locations and some great prizes redeemable upon completion. I realize the challenge with naming a particular event or activity scheduled during this busy month is the fact there are dozens more that didn’t get mentioned. So as you look for ways to experience this last burst of quasi-warm weather, please stop by the information center at 904 Potter Street or

downtown Bellingham at 1306 Commercial to pick up maps, brochures and calendars. You can also check out our website Bellingham.org for a comprehensive calendar of events. Because exploring Whatcom County is an experience best shared, I encourage you to invite your out-of-town family and friends to join you. We have fabulous hotels, bed & breakfasts, inns, houses and cabins for their lodging. And you already know about the area’s great food options. Contact Bellingham Whatcom County Tourism – Cheryl@bellingham.org or 360-671-3990 for suggestions about where to stay, where to eat, and what to do in October. And if you happen to “accidentally-on-purpose” get lost in a corn maze for awhile – I will certainly understand.

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October 2015

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October 2015


The Bellingham Business Journal

Oct 2015

Sponsored content by BIAWC

It’s infill, expansion or sprawl – what’s your choice? Linda Twitchell BIAWC Government Affairs Director

Whatcom County’s Planning Commission is, this month, wrapping up its work on the county’s Comprehensive Plan update. Comp Plans set land-use goals and policies for the next 20 years. The county and area cities have to update theirs by July 2016. So decisions are being formed now.

Our primary concern is housing – that we have enough room for the single-family housing that people want and can afford. Since Bellingham is the county’s designated urban center, the city’s population projection and housing capacity are paramount.

Why worry about land for single-family housing? Because supply and demand determine housing prices – which in Bellingham are literally going through the roof. We have the fourth highest prices in the state after King, Snohomish and San Juan counties, according to UW’s Runstad Center for Real Estate Studies.

Bellingham’s housing inventory is tight, leading to bidding wars even among the current population, particularly for smaller homes. Housing for the average citizen (not just low-income residents) is now an official concern. Our urban growth area (UGA) – land around the city targeted for growth in the coming 20 years – is already “mostly built out,” according to the Planning Department. And most remaining land includes wetlands or steep slopes – where construction may be possible, but is expensive.

On paper, it looks like Bellingham has enough land to accommodate projected growth as required by state law. But we’re having trouble housing the people who live here now. Any newcomers we hope to serve will need a good income, or they won’t be able to afford the land that’s left.

Bellingham’s official stance is to “accommodate” growth in Urban Village condos or apartments. But that’s not the kind of housing most people are willing to accept. We need variety in housing forms, or growth will move outside the city where houses are cheaper – creating the “sprawl” state law warns against.

In August, Bellingham’s City Council decided on a strongly split vote not to expand the city’s UGA.

Some City Council members testified that they don’t believe there’s a market here for more single-family housing. Michael Lilliquist noted that only 45% of the city’s housing is now single-family, suggesting that shows people want multi-family units. Jack Weiss said, “I challenge the idea that we don’t have enough single-family homes.” Look at all the land that’s available, Mr. Weiss said. “If people wanted single-family homes, those homes would be built,” he said. Dan Hammill opposed a UGA expansion because fixing existing infrastructure deficiencies – problems the city has ignored for years that would become a legal requirement if the UGA is expanded – makes expansion too expensive. Terry Bornemann said he thinks the city will grow, but not fast enough to pose an immediate problem. The housing and real estate industries disagree. Market research consistently shows that 3/4s of Americans want singlefamily housing. Realtors confirm that’s what they see locally. This include Millennials (20-30 somethings) most of whom, in Bellingham, can’t afford expensive, uptown living, and seniors, 90% of whom want to “age in place” in their existing homes, according to the AARP. Many people can’t find the kind of housing they want in Bellingham at a price they can afford, even now. Instead, they’re buying in Ferndale and Lynden where land is cheaper. Both those cities (with populations of about 13,000) are now growing faster than Bellingham (population 83,580). There are other problems. Bellingham’s land capacity analysis assumes hundreds of “housing units” will be built in areas that lack access or are locked up by wetland or pipeline buffers. Realtors say about 80% of Bellingham’s remaining “available land” consistently is not for sale. Why shouldn’t Bellingham emphasize rentals? People who rent can’t build equity – which is American’s most common means of financial growth. And homeownership is cited by large cities as a major factor in their success, or lack thereof – Detroit has a 50/50 housing split and regularly attributes many of its problems to lack of home ownership/community investment. And, as City Council member Roxanne Murphy noted Aug. 31, market-affordable homes are needed to support and attract businesses and industry that offer living wage jobs.

Bellingham’s Planning Commission heard testimony on all this for months, and unanimously recommended to City Council that the UGA expand into two areas – the south half of Caitac’s land north of Cordata, and the south Yew Street area, which was in the UGA for years but was shifted into “reserve” status in 2009.

City Council ignored that advice, even though Bellingham is already struggling to provide homes that residents want and can afford.

The Whatcom County Council will make the final decision on UGAs and population/job projections. The last time they considered this, in 2013, Bellingham’s lack of land for single-family homes was cited as a reason for continued sprawl, a situation city spokesmen said would be corrected. Yet here we are again.

There’s no legal way to prevent growth. So how can Bellingham provide room for adequate, affordable housing? As City Council Chair Gene Knutson said on Aug. 31, “It’s infill, expansion or sprawl.” Bellingham neighborhoods have repeatedly opposed infill – greater density. A Council majority opposes expansion. State law opposes sprawl.

There are no easy answers, but now is the time to consider – how does all this affect your business, your employees, your family? Let the county know what you think. Oct. 22, the county Planning Commission will make a recommendation on Bellingham’s UGA proposal. A hearing on the entire Comp Plan update is set for Nov. 12.

This time around, let’s adopt planning strategies that make sense and support housing everyone can afford. BIAWC recommends a high population projection for Bellingham if it wants to remain our official “urban center.” And we recommend expanding Bellingham’s UGA to include both Caitac and the south Yew Street area.

Send your observations to: Whatcom County Planning Commission – PDS_Planning_Commission@ co.whatcom.wa.us County Council – Council@co.whatcom.wa.us

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The Bellingham Business Journal

October 2015

October 2015


The Bellingham Business Journal

Public Records BUSINESS LICENSES Listings, which feature both new and renewed licenses in Bellingham, include business name, licensee name and the business’ physical address. Records are obtained from the City of Bellingham. August licenses 4051 Hammer Drive Llc, 4051 Hammer Drive Llc, 4055 Hammer Dr. Abaci, Llc, Abaci Llc, 613 Marine Dr. Active Rain, Inc., Activerain, Inc., 2211 Rimland Dr. Ste 124. Airsure Limited, Llc, Airsure Limited, Llc, 4605 Raptor Ln. Amy Cain, Amy Cain, 3319 Lummi Shore Rd. Arche Medical Billing Solutions, Leigh Marion Lingbloom, 3641 Haggin Rd. Ariston Pacific, Inc., Ariston Pacific, Inc., 1337 Lincoln St Ste 1. Avizr.Com, Avizr.Com, Llc, 2525 Grant St. Back Booth Media, June Hathaway, 421 Lakeway Dr. Apt. B. Balraj Singh Logistics, Harsukhraj Singh Khehra, 4022 Northwest Ave. Apt. 202. Bavita Cleaning Service, Lakhwinder Chand, 4173 Dover St. Beauty Becoming, Ciara June Bozkurt, 1213 Whatcom St. Apt. 68. Bellingham Graphics, Katrina Young, 3573 Skylark Loop. Bellingham Osteopathic Center Pc, Bellingham Osteopathic Center Pc, 1712 D St. Bob Lycan Real Estate, Bob Lycan Property Management Bob E Lycan, 2211 Rimland Dr. Ste 124. Brit Keeton, Brittany Ehrlin Keeton, 1210 Cornwall Ave. Calou Calay, Zachary Callaghan, 220 Bayside Rd. Cascadia General Mercantile, Gary Joseph Hardwick, 4009 Hoff Rd. Chocolate Caravan, Ethos Washington Llc, 2674 Lake Whatcom Blvd. Chuckanut Feline Center, Wagly, Inc., 1214 Dupont St. Coal Coffee, Coal Coffee Llc, 2202 Wilson Ave. Colby’s Cleaning, Colby Blackwood, 508 E Ivy St. Apt. 201. Communication Services Northwest, Pllc, Communication Services Northwest, Pllc, 194 Polo Park Dr. Community Construction Services, Catholic Community Services Of Western Washington, 1133 Railroad Ave. Ste 100. Conscious Networks Llc, Conscious Networks Llc, 930 32nd St. Courageous Educational Services, Heather Rain Mazen Korbmacher, 3216 Maryland Pl. Crossfit Iron Industry, The Grind, Llc, 909 Harris Ave. Cruise Through Cancer Foundation, Cruise Through Cancer Foundation, 2953 Sunset Dr. Daisy’s Cart Repair, John Mark Tilley, 4134 Palisade Way. Delaney Enterprises, Llc, Delaney Enterprises, Llc, 765 W. Axton Rd. Dog Gone Gorgeous, Sharon M Henley, 4120 Meridian St. Ste 250. Driftcon, Driftcon Llc, 508 Darby Dr. Unit 305. Dudley Interpretive Sign Consulting, Anna K Dudley, 1106 N. Garden St. Earthbound Trading Company, Earthbound Holding, Llc, 1 Bellis Fair Pkwy Ste 608. Emily Mcdonnell, Emily Mcdonnell, 905 Harris Ave. Erik J. Dyrland Insurance Agency, P.S., Erik J. Dyrland Insurance Agency, P.S., 2105 Park St. Essence Of Clean, Anastasia R Mcgowan-Sissom, 9 Parkview Circle. Ever After Floral, Judy L Hazel, 1727 Northshore

Dr. Everlife Remedies, Everlife Remedies, 919 32nd St. Everyday Champion, Everyday Champion Inc., 4137 Agate Rd. Firehouse Cafe, Tumnus Coffee Company, L.L.C., 1314 Harris Ave. First Christian Church, First Christian Church Of Bellingham, 495 E. Bakerview Rd. Fitzpatrick Global Llc, Fitzpatrick Global Llc, 3918 Timothy Ct. Focal Images, Scott A Walker, 5253 E 18th Crst. Go! Calendars, Ray Rothstein, Bellis Fair Mall. Goddard Ventures, Llc, Goddard Ventures, Llc, 2629 Grant St. Green Truck Rasi Rahimi, Llc, Green Truck Rasi Rahimi, Llc, 921 Cornwall Ave. Greenwich Condo Development, Llc, Greenwich Condo Development, Llc, 4160 Deemer Rd. Half Pints Inc., Pandora’s Half Pints Inc., 2701 Meridian St. Healthcare Certifications, Sluys Enterprises Llc, 4220 Meridian St Ste 104. Heron’s Nest Llc, Heron’s Nest Llc, 2170 Douglas Ave. His And Her ’s Landscape, His And Her’s Landscaping Llp, 3225 Racine St. I n d e p e n d e n t R e c y c l i n g E n g i n e e r, Independent Recycling Engineer Llc, 2210 St Clair St. Io Glass, Llc, Io Glass, Llc, 2219 B St. Jaclyn Celine Parton, Jaclyn Celine Parton, 1302 Indian St. Jacob’s Ladder, Paublo Baca, 3348 Sussex Dr. Jason P.T. Geibel, Lmhc, Jason Philip T Geibel, 214 N Commercial St # 100. Joseph Kelly Beerman, Joseph Kelly Beerman, Ste 104 Unit 313. Joshua Jeffrey Crow, Joshua Jeffrey Crow, 2034 James St. Jun’s Sushi & Bento., Jun’s Sushi & Bento Inc., 202 E. Holly St. Ste 110. Ken’s Floor Covering, Kenneth R Shoemaker, 2506 Mackenzie Rd. Kim Wiley Therapy, Kimberly Deanne Wiley, 4784 Nettle Ln. Kind Consulting, High Level Consulting, Llc, 2420 Dean Ave. Kj Work Design Co., Kevin Baier, 1489 Hillspring Rd. Krista Jean Isley, Krista Jean Isley, 2620 N. Harbor Loop D.r Ste 22. Law Firm Of David N. Jolly, P.S., Law Firm Of David N. Jolly, P.S., 301 Prospect St. Leon Fulginiti – Math Tutor, Leon Anthony Fulginiti, 1506 24th St. Unit 1. Licensing Liaison, Llc, Licensing Liaison, Llc, 1809 Taylor Ave. Lift Haus, Beefcakery Inc, 8 Maple Ct. Linnia Kay Sayers, Linnia Kay Sayers, 1200 12th St. Unit 103. Luigi Handyman Services, Luis Omar Camacho Caballero, 638 Kelly Rd. Lummi Indian Business Council, Lummi Indian Business Council, 2665 Kwina Rd. Mac’s Painting, Jason R Macwain, 1001 Key St. Main Street Trading Co., Wayne Douglas Howard Jr., 517 Potter St. M ate l l a I n te r n at i o n a l, Inc., Matella International Inc., 3550 Meridian St. Ste 6. Michael Kelly Construction, Michael Kelly, 5215 Everson Goshen Rd. Monjeau, Scarlet Kelly, 5215 Everson Goshen Rd. N2 Publishing: Edgemoor Chuckanut LifeBellingham, It Matters Media Llc., 527 W Lake Samish Dr. New Grounds Expresso, New Grounds Espresso

Llc, 3948 Tamarack Rd. New Perspective Photos, William H Apt III, 1904 Rhododendron Way. Nicole Bishopp, Nicole Bishopp, 23 Inglewood Pl. North Voice Over Seattle, Inc., North Voice Over Seattle, Inc., 2409 Xenia St. Northwest Home Solutions, Inc., Northwest Home Solutions, Inc., 814 Dupont St. Northwest Urologic Technical Services, L.L.C., Northwest Urologic Technical Services, L.L.C., 3183 Edgewood Ln. Northwest Washington Central Labor Council, Afl-Cio, Northwest Washington Central Labor Council, Afl-Cio, 1700 N. State St. Ste 203. Nyx Logistics, Llc, Nyx Logistics, Llc, 1229 Cornwall Ave. Orcas Island Growlers, Orcas Island Growlers, Llp, 215 W. Holly St. Outdoor Canine Companion, Montgomery William Apt. 2526 Vining St. Over The Shoulder Proofreading, Jennifer Ruth Karchmer, 2505 Monroe St. P3-Associates Llc, P3 & Associates Llc, 4224 Dewey Rd. Pacific Facility Solutions Inc., Pacific Facility Solutions, Inc., 114 W. Magnolia St. Ste 105. Pacific Risk Management & Insurance Services, Joseph Carl Fioretti, 639 W. Horton Way Apt. 227. Phil Roberts Photography, Phil Roberts Photography Llc, 1901 18th St. Apt. E4. Portraits By Nature, Michelle Marie Jefferson, 1224 Harris Ave. Apt. 204. Pro Cuts, Selina M Hartson, Bakerview Square. Quantum Healing Naturopathic Medicine, Quantum Healing Naturopathic Medicine, Llc, 910 Harris Ave. Ste 102. Rabbit Tracks, Rei Greene, 630 Boulevard Apt. B. Raw Land Construction Llc, Raw Land Construction Llc, 3948 Tamarack Rd. Rcm Fabrication And Handyman Company, Rcm Fabrication And Construction Llc., 2915 Cottonwood Ave. Red Designs, Red Designs Llc, 1316 High St. Unit 2. Relax Bodtwork, Relax Bodywork Inc., 1 Bellis Fair Pkwy Ste 132. Riverway Ministries, Riverway Ministries, 826 Queen St. Roslyn Howell, O.D., Roslyn K Howell, 182 E Kellogg Rd. Apt. D9. Sanderson Siding Services, Timothy John Sanderson, 5240 Graveline Rd. Savatgy Photography, Rory Edland Savatgy, 3001 Lindbergh Ave. Sea Clean, Susan J Sale, 3742 Greenville St. Seal Team One Northwest, Llc, Seal Team One Northwest, Llc, 1840 Squalicum Mountain Rd. Second Row, Stephanie Germaine Cooper, 3571 Ridgemont Way. See P’z Janitorial, Christopher Curtis Powell, 31141 Orleans St. Selfless Films Production, Selfless Films Production, 1908 20th St. Apt. D8. Sharp’s Online Treasures, Sharp’s Online Treasures, Llc, 4109 Silverbell Way. Shopworks, Jerid James Lewton, 1401 Iowa St. Soulmuzaic Llc, Soulmuzaic Llc, 2711 Lakeridge Ln. Springsnow Massage, Gabriel Emerson Springsnow, 1605 N. State St. Strix Industries, Matthew Lind Haugness, 508 Darby Dr. Unit 305. Strowlers 1 Llc, Strowlers 1 Llc, 103 E. Holly St. Ste 413. Subdued Hype Smash, Subdued Hype Smash, 3140 Adams Ave. Apt. C305. Summit Bookkeeping, Summit Bookkeeping Llc, 1530 Birchwood Ave. Ste D.

Sunrise Services, Inc. Sunrise Services, Inc., 1515 Cornwall Ave. Tanya Carter Co., Tanya Marie Carter, 1623 King St. The Grill, Cecna Llc, 1155 E Sunset Dr. Ste 105. The Photic Zone Llc., The Photic Zone Llc, 1489 Roma Rd. The Way Back Workshop, Michael Mckenzie, 817 Harris Ave. Timothy Burger Llc, Timothy Burger Llc, 5785 Everson Goshen Rd. Titch, Llc, Titch, Llc, 3309 Plymouth Dr. Tj Bellis Fair Inc., Tj Bellis Fair Inc., One Bellis Fair Parkway Ste 504. Travis Carroll, Travis L Carroll, 3040 Eberly Rd. Tumbler Mountain Llc, Tumbler Mountain Llc, 3800 Taylor Ave. Ulysses Asset Sub I, Llc, Ulysses Asset Sub I, Llc, 3432 James St. Vip Nails Spa, Helen Le Trieu, 3908 Meridian St. Ste 106. Vittles & Rainbow, Morgan Lee Fuller, 427 W Holly St. Wander, Cara Sorenson-Baker, Unit 1970. Westgate Designworks, Llc, Westgate Designworks, Llc, 2925 Cottonwood Ave. William John Childs, William John Childs, 2713 Madrona St. Wise Enterprises, Llc, Wise Enterprises, Llc , 3824 Williamson Way. Wizards, Christine R Woodward, 2715 W Illinois St. Z Rustic, Lori L Zeasman, 1228 Bay St.

BUILDING PERMITS Includes commercial building activity in Bellingham with an estimated valuation listed at $10,000 or more. Records are obtained from the City of Bellingham’s Permit Center. Status updates on permits are available on the city’s website at http://pnw.cc/sVCen. 8/31/15 to 9/4/15 Issued permits 4014 Northwest Ave., $50,000 for repair: replace rotten beams like-for-like in center walkways of multifamily building. Contractor: Bell Construction Inc. Permit No.: BLD2015-00381. 8/31/15. 104 E. Maple St. 101, $26,000 for tenant improvement: new brewery production and tasting room in existing building: Gruff Brewery. Permit No.: BLD2015-00222. 8/31/15. 4152 Meridian St., $37,913 for commercial: replace overhead polycarbonate on existing system over non-heated space. Contractor: Lyndale Glass Inc. Permit No.: BLD2015-00385. 9/1/15. 250 N. State St., $75,000 for commercial: enlarge window openings and add balconies to multifamily building. Contractor: Jacobsen and Associates. Permit No.: BLD2015-00086. 9/1/15. 2 4 1 0 J a m e s S t. , $ 1 1 , 0 0 0 f o r te n a n t improvement: new walk-in freezer in stock room. Contractor: Key Mechanical. Permit No.: BLD201500378. 9/4/15. Pending applications 132 E. Holly St., $160,000 for tenant improvement: interior remodel to existing coffee shop. Permit No.: BLD2015-00382. 8/31/15. 1313 E. Maple St. 103, $100,000 for tenant improvement: reconfigure interior offices. Permit No.: BLD2015-00365. 9/1/15. 1480 Electric Ave., $15,000 for commercial: install 8’x8’ walk-in freezer on new slab adjacent to SE corner of building. Permit No.: BLD201500383. 9/2/15. 250 N. State St. $20,000 for multifamily: repair existing exterior balconies with addition of new steel columns and beams. Permit No.: BLD201500348. 9/2/15. 909 Squalicum Way 105, $15,500 for tenant

improvement: finish tenant space in existing shell building. ADA bathroom/railings/drywall. Contractor: Rocky Point Builders. Permit No.: BLD2015-00391. 9/3/15. 4400 Columbine Dr., $863,539 for foundation only: new 41,206-square-foot memory care facility: Silverado Care. Permit No.: BLD201500254. 9/3/15. 4400 Columbine Dr., $3,454,157 for new 41,206-square-foot memory care facility: Silverado Care. Permit No.: BLD2015-00255. 9/3/15. 3610 Iron Gate Road, $2,586,000 for new heated commercial storage building: provided for storage of personal or commercial product. Permit No.: BLD2015-00388. 9/3/15. 2219 Rimland Drive 411, $37,000 for tenant improvement: reconfigure existing office space. Contractor: Scoboria Construction Inc. Permit No.: BLD2015-00393. 9/4/15. 9/7/15 to 9/11/15 Issued permits 200 E. Maple St. 101, $110,000 for tenant improvement: interior remodel for new restaurant in existing building: Naan and Brew. Permit No.: BLD2015-00266. 9/10/15. Pending applications 1800 Broadway St., $280,000 for commercial: removal of existing bur and insulation and installation of new insulation and roof. Permit No.: BLD2015-00398. 9/10/15. 1225 E. Sunset Drive 135, $86,000 for tenant improvement: new wireless retailer. Permit No.: BLD2015-00397. 9/11/15. 9 0 4 Po t te r S t. , $ 1 8 0 , 0 0 0 f o r te n a nt improvement: addition of second floor office and remodel of reception area and kitchen. Permit No.: BLD2015-00241. 9/11/15. 9/14/15 to 9/18/15 Permits issued 250 N. State St., $20,000 for multifamily: repair existing exterior balconies with addition of new steel columns and beams. Contractor: Jacobsen and Associates. Permit No.: BLD2015-00348. 9/14/15. 1480 Electric Ave., $15,000 for commercial: install eight-foot by eight-foot walk-in freezer on new slab adjacent to southeast corner of building. Permit No.: BLD2015-00383. 9/16/15. 132 E. Holly St., $160,000 for tenant improvement: interior remodel to existing coffee shop (Starbucks). Permit No.: BLD2015-00382. 9/16/15. 3 8 7 6 H a n n e g a n R o a d, $ 1 9 1 , 0 0 0 f o r commercial: set 3 module buildings on site to serve as a temporary sorting facility. Contractor: USA Modular. Permit No.: BLD2015-00366. 9/16/15. 909 Squalicum Way 105, $15,000 for tenant improvement: finish tenant space in existing shell building: construct new restrooms walls & install fixtures, install stairs to & guard on existing mezzanine. Contractor: Rocky Point Builders. Permit No.: BLD2015-00391. 845 Viking Circle, $1,496,190 for new 16-unit multifamily building (building type E). Contractor: Dawson Construction Inc. Permit No.: BLD201500247. 9/17/15. 835 Viking Circle, $1,496,190 for new 16-unit multifamily building (building type E). Contractor: Dawson Construction Inc. Permit No.: BLD201500246. 9/17/15. Pending applications 1155 E. Sunset Drive 105, $28,000 for tenant improvement: renovate existing suite for new restaurant. Contractor: Braam Construction. Permit No.: BLD2015-00402. 9/14/15. 2219 Rimland Drive third floor, $12,000 for tenant improvement: modification to lobby area on third floor. Contractor: Scoboria Construction Inc. Permit No.: BLD2015-00404. 9/15/15. 3217 Squalicum Parkway, $1,400,000 for



The Bellingham Business Journal

October 2015

RECORDS, FROM 19 tenant improvement: remodel of one-story building, addition of approximately 2,000 square feet to include classroom, therapeutic pool, and associated patient changing/shower area. Permit No.: BLD2015-00273. 9/15/15. 794 Kentucky St., $38,780 for tenant improvement: new retail marijuana sales. Permit No.: BLD2015-00406. 9/16/15. 2508 Utter St., $10,000 for new 525-squarefoot open-sided bike shed: Columbia Elementary School. Permit No.: BLD2015-00408. 9/17/15. 4125 Arctic Ave., $154,000 for soldier pile retaining wall on the northwest corner of new Costco site. Permit No.: BLD2015-00403. 9/17/15.

LIQUOR AND MARIJUANA LICENSES Records include license activity in Whatcom County. They are obtained from the Washington State Liquor Control Board, online at www.liq. wa.gov. issued permits Our Church, at 4326 Pacific Highway Suite C, Bellingham, WA 98226, received approval on a license to operate a tier 2 marijuana production facility. License No.: 417051. 9/22/15. Perecan Farm, at 5373 Guide Meridian Road Suite C4, Bellingham, WA 98226, received approval an additional fees to a license to operate a tier 1 marijuana production facility. License No.: 413667. 9/21/15. Bob’s Burgers & Brew, at 819 Cherry St., Sumas, WA 98265, received approval on an addition/ change of class/in lieu to a license to sell spirits/ beer/wine in a restaurant and lounge. License No.: 078497. 9/16/15. Green Leaf, at 4220 Meridian St. Suite 102, Bellingham, WA 98226, received approval on a change of corporate officer to a license to operate as a marijuana retailer. License No.: 413886. 9/15/15. North State Street Market, at 902 N. State St. Suite 103, Bellingham, WA 98225, received approval on an assumption to a license to sell beer and wine in a grocery store. License No.: 419311. 9/11/15.

Fairhaven Pizza, at 1307 11th St., Bellingham, WA 98225, received approval on an addition/ change of class/in lieu to a license to operate as a direct shipment receiver (in Washington only). License No.: 080359. 9/10/15. Mt. Baker Homegrown, at 3929 Spur Ridge Lane #1, Bellingham, WA 98226, received approval on a new license to operate as a tier 1 marijuana producer. License No.: 412500. 9/10/15. Bob’s Burgers and Brew, at 202 E. Holly St. Suite 101, Bellingham, WA 98225, received approval on an assumption to a license to serve spirits/beer/wine in a restaurant and lounge. License No.: 400474. 9/1/15. Genetics 360, at 1975 Alpine Way #6, Bellingham, WA 98226, received approval on a new license to operate as a tier 1 marijuana producer. License No.: 417321. 9/1/15. L akeway Inn, at 714 Lakeway D rive, Bellingham, WA 98229, received approval on a new application to operate as a direct shipment receiver (Washington only). License No.: 352358. 8/27/15. pending applications Kickin’ A Saloon & Dance Hall, Kickin’ A Saloon & Dance Hall LLC; Jesslyn Anderson, applied for a new license to operate as a direct shipment receiver (In/out, in Washington only) and nightclub at 5225 Industrial Place, Ferndale, WA 98248. License No.: 420162. 9/21/15. Yorky’s Grocery III, Yorkston Oil Co., applied for an addition/change of class/ in lieu to a license to sell beer/wine in a grocery store, beer/cider in growlers and operate as a direct shipment receiver at 1501 12th St., Bellingham, WA 98225. License No.: 365061. 9/18/15. The Filling Station, Avenue Bread & Deli, Inc.; John M. Defreest, Wendy W. Defreest, applied for a new license to sell spirits/beer/wine in a restaurant and service bar at 1138 Finnegan Way Suite 311, Bellingham, WA 98225. License No.: 420153. 9/17/15. Jun’s Sushi & Bento, Jun’s Sushi & Bento Inc; Jun Won Bark, applied for an assumption to a license to serve beer/wine in a restaurant at 202 E. Holly St., Suite 101, Bellingham, WA 98225. License No.: 418555. 9/9/15.

Avenue Bread & Deli, Avenue Bread & Deli Inc.; John Defreest and Wendy Defreest applied for a new license to serve beer and wine in a restaurant at 444 Front St., Lynden, WA 98264, 9/9/15. The Beach at Birch Bay, The Beach at Birch Bay LLC; Kelly Koehn, Kenneth Russell, Janet Russell, Randall Sheriff, Anne Van Der Zalm, Peter Van Der Zalm applied for a new license to serve spirits, beer and wine in a restaurant and lounge at 7876 Birch Bay, Blaine, WA 98230. License No.: 420092. 9/2/15. Kombucha Town, Real McCoy Teas LLC; Christopher McCoy applied for a new license Farmer’s Market license. License No.: 420092. 9/2/15. Mazatlan Seafood & Grill, Lourdes Medina De Torres, Ernesto Alonso Torres Murillo applied for a new license to sell beer and wine in a restaurant at 2012 Main St., Ferndale, WA 98248. License No.: 086085. 9/1/15.

FEDERAL TAX LIENS Tax liens of $5, 000 or more issued by the Internal Revenue Service. Listings include taxpayer name(s), lien amount, document number and filing date. Records are obtained locally from the Whatcom County Auditor’s Office. David J Roberts, $28,499.33, 2150803605, 8/31/15. Kent G Kok, $10,310.28, 2150803606, 8/31/15. Richard Phinney, $34,333.42, 2150803607, 8/31/15. Pierpont Investments 2 LLC, $81,367.71, 2150901573, 9/15/15. Charles B Neff, $35,281.89, 2150901574, 9/15/15. Schwiesow & Drilias Inc. a corporation, $31,743.92, 2150901575, 9/15/15. Blue Sky Web Solutions LLC, $7,657.11, 2150901576, 9/15/15. Bryan W Erickson, $57,980.97, 2150901577, 9/15/15. Colin S Moore, $42,674.79, 2150901582, 9/15/15. Douglas B Hyde, $101,127.50, 2150901583,

9/15/15. F r e d e r i c k TC B a r t e l s, $ 1 1 2 , 9 4 9 . 1 6 , 2150902269, 9/21/15. Schwiesow & Drilias Inc. a corporation, $9,823.46, 2150902270, 9/21/15. John S Butler, $45,329, 2150902271, 9/21/15.

Carlos & Pamela K Gonzalez, $56,536.90, 2150902275, 9/21/15. Dodsons Market, $29,217.95, 2150902276, 9/21/15. Pierpont Investments 2 LLC, $58,472.03, 2150902277, 9/21/15. Pierpont Investments 2 LLC, $21,494.72, 2150902278, 9/21/15.

Release of Federal Tax Liens Terry A Wolff, $26,433.53, 2150803608, 8/31/15. Reference Media Inc, $18,680.13, 2150803609, 8/31/15. Brian M Watson, $16,108.29, 2150803610, 8/31/15. K e n n e t h S h o e m a k e r, $ 3 9 , 6 1 5 . 5 1 , 2150803611, 8/31/15. Glenn Scott, $58,246.19, 2150900703, 9/08/15. Genevieve A James, $17,674.41, 2150901578, 9/15/15. Domenic & Gillian Scianna, $20,092.81, 2150901579, 9/15/15. Joe Shahan, $11,542.78, 2150901580, 9/15/15. Robert & Kathleen Appel, $17,281.64, 2150901581, 9/15/15. Custom Prescription Shoppe LLC, $29,176.06, 2150902272, 9/21/15. Harlan L Maassen, $22,581.71, 2150902273, 9/21/15. Startouch Inc., $34,628.82, 2150902274. 9/21/15.

Washington state government agencies and filed locally in Whatcom County Superior Court. Listings include taxpayer name(s), judgment amount, the state agency filing the judgment, originating case number and filing date. Judgments can later be lifted or paid; listings are only current as of their filing dates. Records are obtained from the Whatcom County Superior Court Clerk’s Office. Mehar Express LLC, $6,951.12, 15-2-01788-4, 9/23/15. Eric Miller, $7,357.93, 15-2-01780-9, 9/22/15. David Nixt, $9,154.37, 15-2-01782-5, 9/22/15. G Star Transport LLC, $10,476.79, 15-2-017639, 9/22/15. Akers Drums, $5,293.87, 15-2-01755-8, 9/18/15. Toandgo Corporation, $13,663.26, 15-201746-9, 9/16/15. Bromleys Market, $10,278.43, 15-2-01683-7, 9/4/15. Birch Bay Restaurant and Lounge LLC, $5,917.36, 15-2-01686-1, 9/4/15. Deric Willett Construction Inc., $19,568.98, 15-2-01687-0, 9/4/15.

BUSINESS BANKRUPTCIES Whatcom County business bankruptcies filed in the U.S. Bankruptcy Court, Western District of Washington. Michael Gar y Neria, estimated asset range:$100,001 to $500,000. Estimated liabilities: $500,001 to $1 million. Case No.: 15-15171-MLB. Date filed: 8/27/15. Fernand Lopez De La Cruz, estimated assets: $0 to $50,000. estimated liabilities: $0 to $50,000. Case No.: 15-15629-MLB. Date filed: 9/21/15.

STATE TAX JUDGMENTS Tax judgments of $5, 000 or more issued by

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October 2015

Why did Bellingham-based Haggen file for bankruptcy in Delaware? BY OLIVER LAZENBY The Bellingham Business Journal Haggen is based in Bellingham and all its stores are on the West Coast. But when the grocery chain’s lawyers filed for chapter 11 bankruptcy last week, they did it in Delaware. The struggling grocer isn’t alone in filing for bankruptcy in Delaware even though its headquarters are elsewhere. The bankruptcy court in Wilmington, Delaware, is one of the two most popular places for corporations to go bankrupt—the other is the New York Southern District Bankruptcy Court in White Plains, New York. “The bankruptcy courts in Delaware are better setup and familiar with these big cases,” said Steven Hathaway, a Bellingham bankruptcy attorney who is not working on the Haggen case. “They’re geared toward these huge cases.” The judges, clerks and staff in Delaware bank-

ruptcy court are familiar with how to handle the huge volume of paperwork required by big cases like Haggen’s, Hathaway said. Haggen’s lawyers didn’t respond to phone calls and emails. Companies who file for bankruptcy in Delaware or New York are significantly more likely to survive, according to a paper published earlier this year in UCLA Law Review. The day after Haggen filed for bankruptcy, Quiksilver, makers of surfinspired clothing, also filed for bankruptcy in Delaware. Quiksilver is based in Huntington Beach, California. An oil and gas drilling company called Hercules Offshore, RadioShack, and Colt—makers of the Colt 45 and other firearms— all filed for bankruptcy in Delaware this year, and none of them are based there. Another reason for so many bankruptcy filings in Delaware is that many national companies are

incorporated there. That’s the case for Haggen, as well as Albertsons and some of Haggen’s other creditors in its bankruptcy case. Delaware provides an income tax exemption for companies incorporated in the state, according to a paper by Sheldon D. Pollack, a professor of law and political science at the University of Delaware. “As is widely known among tax lawyers, Delaware is a domestic tax haven,” Pollack said in the paper. It’s not, he notes, an international tax haven. Nearly half of all public corporations in the United States are incorporated in Delaware, according to a 2012 New York Times report. The report says that more than 285,000 separate businesses used a single office building in Wilmington as their legal address in 2012.

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Oliver Lazenby, associate editor of The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or olazenby@bbjtoday.com.

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HAGGEN, FROM 1 massive acquisition. Clougher didn’t comment for this story. Haggen’s expansion failed fast. Now, less than eight months after it began, the company plans to shrink from 168 stores in five West Coast states to 37 stores in Washington and Oregon by December. Haggen wants to shed all but 21 of the stores it acquired from Albertsons and keep 16 of its legacy locations, including all Whatcom County stores. How did the expansion fail so fast? Supermarket analysts say Haggen didn’t have much of a chance at opening 146 new stores in markets where it had little brand recognition. And Haggen claims in a $1 billion lawsuit that Albertsons broke its purchase agreement and sabotaged Haggen’s entrance into new territory. For the expansion to work, everything had to go perfectly, produce and supermarket analyst Jim Prevor said. After the FTC ordered Albertsons to sell stores, Albertsons got to pick which stores to sell and who to sell to. The Federal Trade Commission reviewed the deal and was satisfied with Haggen’s chances, said Dan Ducore, assistant director of the FTC’s Bureau of Competition. “They get to bring us who they’re going to compete with,

but it only works if we decide we’re comfortable that these people offer good competition,” Ducore said in August 2015. After reviewing Haggen’s business plan, financial plan and sources of capital, the FTC approved Haggen’s purchase in January 2016. Prevor said the location of many of Haggen’s new stores were challenging. “The approach of [Haggen] is to offer a richer experience at a higher price. That’s not necessarily what people were looking for in those neighborhoods,” Prevor said. “These stores were profitable so I think to some extent what you wanted to do was take them over and keep them the same.” Taking stores over and keeping them the same was Haggen’s strategy, according to court documents. Haggen based the success of the stores on the idea that when customers walked into a brand new Haggen store, they would see no difference in prices, according to court documents. Haggen noted that even small changes in price make a big impact on customers. So it must have been surprising to Haggen executives when customers complained that Haggen’s prices were higher than those at the Albertsons, Vons and Safeway stores it replaced.

Haggen’s takeover begins At 12:01 a.m. on Thursday,

Feb. 12, Haggen rebranded its first store, a former Albertsons in Monroe, Washington. Over the next five months, the green Haggen banner went up at 145 other stores in Washington, Oregon, Nevada, California and Arizona. Most supermarkets closed for about 48 hours as workers changed signs, stocked shelves and did other maintenance. Depending on union seniority, some workers had a choice: they could transfer to a different Albertsons store or stay and work for Haggen. When a store in Carpinteria, California, converted from a Vons (owned by Safeway) to a Haggen, pricing specialist Debra Sukiasian decided to stay and weather the transition rather than transfer and stay with the company she’d worked with since 1977. That decision led her to sue her new employer in August 2015. Sukiasian’s store switched in June and her problems started immediately, according to court filings in her suit against Haggen. She noticed a pricing discrepancy. “The register prices were uniformly higher than those marked on the shelves,” court documents said. Customers noticed the difference too, the lawsuit alleges. Sukiasian brought the problem to Judy Hagy, who was responsible for pricing at all Haggen stores in the region. Her concerns were

October 2015 ignored, Sukiasian alleged in court documents. So she emailed Bill Shaner, then-CEO of Haggen’s Pacific Southwest region. Soon after her email, Sukiasian was “upbraided for disclosing the pricing discrepancies to the CEO.” Haggen’s district manager and vice president of operations told a senior manager at Sukiasain’s store to “find a way to terminate” her, the lawsuit alleges. Sukiasain, who was eligible for retirement, “reluctantly elected to retire rather than be terminated.” Her last official day with the company was Sept. 1. About the lawsuit, a Haggen spokesperson said, “Haggen was disappointed to learn about this lawsuit and is confident it has absolutely no merit.” Sukiasian isn’t the only upset Haggen employee. Haggen’s store closures affect more than 6,000 workers, according to regulatory filings. The United Food and Commercial Workers union filed grievances against both Albertsons and Haggen in August, saying that layoffs and reduced employee hours violate a collective bargaining agreement. Before the store conversions, Haggen met with UFCW 770 and assured the union that they were “in it for the long haul,” said Kathy Finn, the union’s collective

What’s next for Haggen? ▶ Haggen is in the process of closing 127 stores and exiting the southwest. ▶The company plans to reorganize around 37 core stores. The core stores include 16 legacy stores and 21 it acquired in its 146-store expansion earlier this year. Haggen’s historic stores earn $25 million in gross profit annually before taxes, and the 21 newer stores are in strategic locations, according to Haggen court documents. ▶Haggen has asked U.S. Bankruptcy Court in Delaware for permission to retain Sagent Advisors to explore selling the grocery chain or most of its assets. Sagent Advisors is an investment banking firm that Haggen has worked with throughout its expansion.

Haggen, PAGE 23

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October 2015

HAGGEN, FROM 22 bargaining director. A few union members per store left to work for Albertsons, but the majority—90 percent, Finn estimated— stayed with Haggen. “They enticed people to come to work for them and we don’t feel the commitments they made were made in good faith because within weeks they began reducing worker hours,” Finn said. “It’s hard for me to believe that after taking over a store in two weeks things were so different than they anticipated.” Haggen claims sabotage But store conditions were different than Haggen anticipated, the company said. Haggen’s debut in new markets was going sour even before the company got keys to its new stores. Days before an Albertsons In El Cajon, California, was to be converted, a bakery manager was instructed to “bake off everything in the freezer,” according to documents Haggen filed in U.S. Bankruptcy Court in Delaware. Most of that inventory expired before Haggen opened, according to court documents. At a store in Shoreline, Washington, Haggen management found inventory missing from shelves, the lawsuit alleges. Within days, the store had to purchase about $208,000 of new inventory, or almost 24 percent of total inventory at the store. Haggen accused Albertsons of similar overstocking actions in other departments—produce and perishable meat overstocked, multiple shipments of expired medicine arriving unbidden, meat freezers loaded with 256 cases of frozen turkeys left over from the holidays—across


The Bellingham Business Journal at least 25 stores. Haggen’s 55-page complaint alleges a variety of other transgressions against the purchase agreement at its new stores, including mold in display cases, broken meat scales, poor sanitation, broken ovens, and a walk-in cooler with a broken door held closed with a trash can. The issues distracted store-level and senior management at a critical time, Haggen said. Money used on those issues depleted the company’s marketing budget and consumers were left with the impression that stores were not well operated. One of the main allegations in Haggen’s $1 billion lawsuit against Albertsons is that Albertsons didn’t train Haggen managers, as promised in the purchase agreement, on the “business process outsourcing” suite that Albertsons used in 107 of the stores Haggen acquired. The business process outsourcing suite, or BPO, is technology that aids with functions including accounting, payroll and benefits, asset protection, merchandising and pricing, and point-of-sale systems. Learning to use the equipment was so important to Haggen’s success that representatives from the BPO company attended the Nov. 4, 2014 meeting with Albertsons and Haggen executives to ensure Haggen that it could operate all 146 stores under the same BPO system—which Albertsons promised to provide at all the stores Haggen would acquire, according to filings in Haggen’s lawsuit against Albertsons. Haggen claimed that Albertsons didn’t come through on its promise to train Haggen employees on the technology, and that caused some of Haggen’s pricing problems.

In a statement, Albertsons spokesperson Brian Dowling said Haggen’s allegations are “completely without merit.” Haggen brought its complaints to Albertsons on June 29, according to court filings. Albertsons didn’t respond, but instead “raced to the courthouse” to file a complaint against Haggen. Albertsons sued Haggen for about $40 million on July 20, saying the Northwest grocer failed to pay for some inventory. Bellingham bankruptcy lawyer David Vis said Haggen’s lawsuit may be posturing on the Bellingham grocer’s part, or setting up a defense against the lawsuit Albertsons filed against Haggen a month earlier.

Key employees While the majority of employees at Haggen’s new stores stayed, the minority who left for other Albertsons stores may have been detrimental to the company. David Livingston of JDL Research suspects that the employees who left were probably top employees, he said. Workers were eligible to transfer to other Albertsons stores depending on union seniority—the employees who could transfer had the most experience. “It didn’t take a genius to figure out this may not work,” Livingston said of Haggen’s expansion. “If you’re an employee at Safeway or Albertsons, do you want to go to work at Haggen or do you want to stick with the company that’s taken care of you?” Even if only 10 percent of employees transferred the stores would be at a disadvantage, Livingston said. “What if we took the best five players of the Seattle Seahawks and sent them to another team—you’re devastated right? I mean,

you’re really screwed,” he said. “You’re the Jacksonville Jaguars all the sudden. It doesn’t take much to impact the quality of the stores.” Livingston criticized Haggen early in its expansion, but he was more sympathetic to the chain after visiting a Las Vegas store in September, he said. Store employees told him that right before Haggen took over, Albertsons raised prices, he said. “Maybe they did sabotage Haggen,” he said. “It was probably very difficult for Haggen price coordinators to come in and figure out what prices should really be. It was almost an impossible job. They really needed more time. They needed six months to do their due diligence.”

What’s next In late September, Haggen was completing 27 store closures and planning 100 more closures. The stores slated to remain open, at least those in Bellingham, didn’t appear to have any inventory issues. Haggen court documents said the 16 legacy stores the company planned to keep were making $25 million annually in gross profit before tax. Haggen expects store closing sales to yield about $125.6 million—a cash infusion that the company called “necessary and significant,” in court filings. Reviving a struggling company isn’t new to Clougher. He joined the board of managers at Andronico’s Neighborhood Markets in 2011, just months after the Bay-area chain of specialty markets filed for bankruptcy. The chain successfully reorganized, and Clougher became CEO. Clougher started in the grocery industry as a teenager, working as a

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bagger and sweeper in a Boston supermarket. Before Andronico’s he was a regional vice president for Whole Foods Market. In that job, he frequently drove between Seattle and Vancouver, B.C. When he stopped along the way, he liked to check out Haggen stores, which he grew to admire, he said in September 2014. When asked in 2014 if his experience leading a bankrupt grocery chain— Andronico’s—would help him at Haggen, which had recently closed stores, he said sales were up and a

lot of the hard work had already been done by Haggen’s management team, he said. If Clougher’s experience with a bankrupt company didn’t help then, it might now.

Oliver Lazenby, associate editor of The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or olazenby@bbjtoday.com.



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October 2015

Distilling, diversifying are keys to success for BelleWood Acres

IN GOOD SPIRITS BY PATRICIA GUTHRIE For The Bellingham Business Journal Pruning, picking and packing nearly 32 acres of apples makes for long days and hard work for John and Dorie Belisle, a former Florida couple who decided to turn a chunk of fertile valley soil into an orchard near Bellingham 20 years ago. They quickly learned that apple season is gone in a flash. “Two months, it’s over,” says John Belisle as he gives a tour of perfectly aligned rows and rows of trees laden with 21 varieties of apples — many of them grafted into unique blends. Called BelleWood Acres, at 6140 Guide Meridian in Lynden, six miles outside of Bellingham, the farm has become a popular year-round destination for families wanting to ride the “Apple Bin Express,” an eight-seat bin cart ride pulled by a bright blue tractor, and for it’s mosaic of fall colors come to life on pumpkin, squash, sunflower and corn fields. Apples growing on this side of

the Cascades? It’s the other side of the mountains — in Eastern Washington — where apples, cherries, apricots, peaches and many other fruit grow by the tens of thousands of acres because the climate is drier and hotter. But there is one apple variety called Jonagold that grows well in cooler climates. From that one variety, the Belisles struck gold, so to speak — or at least decided to try their hand as small-acreage fruit farmers. “Eastern Washington was looking for Jonagold growers on the west side of Washington because Jonagolds like the maritime climate we have here,” Dorie Belisle explained. “We had packing houses that wanted our fruit so we decided to learn how to be the best grower around.”

Car parts to apple crates Former owners of an automobile repair shop in Florida, Dorie and John Belisle moved to Washington with four adult children who soon followed various pursuits and careers of their own. In 1995, the couple purchased a

Above: Dorie and John Belisle, owners of BelleWood Acres. Right: Dorie and John Belisle have diversified their business and added yearround income through BelleWood Distilling. [DIANE GUTHRIE PHOTOS | FOR THE BELLINGHAM BUSINESS JOURNAL]

30-acre former dairy farm and planted their orchard. The next year, they converted a 10-acre grass field into a high density

Jonagold block (780 trees per acre). Five more acres were planted with Jonagolds in 1998 and in 2000, 8 acres were planted with

Honeycrisp, another cool-climate apple. They added a 10-acre Jonagold orchard in 2003 and then purchased a 17-acre plot to take a giant “gamble” and leap from largely wholesale into a retail roadside destination. In 2012, 10 years after first selling their fruit to the public from a onebay garage, the couple opened the new BelleWood Acres -- a cavernous 14,000 square-foot red barn-shaped building that holds a cafe, country store and distillery. It’s part outdoor apple playground that features fruit-picking, outdoor games and entertainment, and a place to set down, relax at the picnic tables and order from the Country Cafe. (Be sure to try your hand at the “corn cannon” that shoots ears of corn off into the great yonder and at tire targets). The farm has grown over the years to 61 acres total, half planted with apple trees, and to 25 year-round employees with an additional 40 hired during harvest season, which peaks in October. Seasonal activities and sales — such as Christmas trees and wreaths — keep BelleWood Acres hopping during Thanksgiving and Christmas, while beautiful

Bellewood Acres, PAGE 25





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BELLEWOOD ACRES, FROM 24 blossoms are featured in spring and early summer. Needing steady year-round income, the Belisles decided to diversify three years ago. Today, a tasting room and distillery are a four-season draw for the over21 crowd wanting to belly up at BelleWood Distilling, the farm’s liquor-making operation. While sipping shots at the bar, visitors learn how BelleWood apples end up in bottles of vodka, gin, brandy and it’s newest liquid creation, pumpkin spice liqueur. “It takes 30 pounds of apples to make a fifth (bottle of liquor),” Dorie Belisle says as she deftly pours a small shot of gin for a customer. (Ask for the recipe and she’ll hand you a small tray of seven botanical herbs, including juniper, angelica root and orange peel to sniff and whiff. But she won’t reveal in what proportions the potions are infused into the liquor.) “We worked on getting this mix right for months,” she says.

help launch BelleWood Distilling. For instance, it takes 250 pounds of raspberries to make 100 gallons of flavored vodka and 3,300 pounds of apples to make 28 gallons of brandy. All that fruity mash is brewed in two beautiful 150-gallon cooper stills, handmade by Vendome Copper and Brass Works in Kentucky, and then bottled in a small warehouse behind the tasting bar. Both the Belisles and Parker, a communications major in college, learned the spirit business through workshops, hands-on training and American Distillers Institute’s conferences and classes. Today, BelleWood describes itself as the only “Farm to Glass Distillery” in Washington—fxand one of only three in the nation—because it uses apples grown on-site, berries from neighboring farms and grains from around the state. BelleWood Distilling sells three vodkas,(Signature, Honeycrisp, and Raspberry) two brandies, one gin and a pumpkin spice liqueur. “We’re always perfecting,” Parker said, adding that he’s sure to write down any tinkering that goes in the tanks — a lesson learned the hard way. “When we distilled our first batch of gin, we added random amounts of several ingredients,” he recalled. “People loved it and we sold

“The recycling unit” Head distiller Jesse Parker describes distilling as a natural extension of fruit orchards. “They’re like the recycling unit on a farm. Whatever you have left over, you turn it into spirits,” says Parker, 24, who was hired to

400 bottles. But we really didn’t know how to make it again. We tried and tried but we never could repeat it exactly.” The vapor-infused recipe they eventually settled upon (and keep in a top-secret location) seems good enough. On the rocks or with a little tonic and lime, BelleWood Gin is the company’s top seller and has won five gold awards for small-batch craft distilling. In its first years, the distillery already has been awarded medals from American Distilling Institute and National Beverage Tasting Institute.

Matches made in heaven Lined up in the cafe are boxes and boxes of “Grandma’s Handmade U-Bake pies” — apple, blackberry, blueberry, strawberry/ rhubarb and honey-roasted peanut butter chocolate silk. The grandma behind the name is the mother of Dorie Belisle who “baked all the time” to keep 10 kids happy. Visitors also line up to taste another BelleWood treat — honey roasted peanut butter — patted onto slices of apples, of course. Those free samples pay off. John Belisle says his farm sells some 12 tons of peanut butter annually. Their apples, peanut butter and other products are sold in local grocery stores and farmers’ markets. Apples and peanut butter are

“a match made in heaven,” he said, a lesson learned from being members of the North American Farmers Direct Marketing Association and by taking one of its annual farm tours. Other homemade apple products for sale: apple vinegar, crisp apple chips, hard cider, apple sauce, caramel apples, apple syrup and three types of fresh apple cider. The orchard also supplies five local school districts with small apples called School House Red. Many banquets and special events, such as weddings, art shows, fundraisers and company picnics are also held at BelleWood Acres throughout the year. Weekend events often feature singers, bonfires, barbecues and seasonal themes, such as a Father’s Day car show or a benefit for “hardworking honey bees.” School kids, church and senior groups often tour the farm, weaving in and out of orchard trees and taking in the view of the white-capped Mount Baker on the horizon. Including the community and sustaining the farm’s rich soil, stream water and natural beauty are themes the Belisles have emphasized since planting their first trees in 1996. “Everything is done with the philosophy of strong community and responsible farming,” John Belisle said. Adds Dorie: “We know we would not be here without the support of the entire community. We so appreciate them. We try and

share the farm, our local authentic products and provide lots of education.”

Harvesting 25,000 trees, 35,000 gallons of cider

On a sparkling fall day, the blue tractor cruises past the hues of autumn — yellow corn fields and sky-high rows of bobbing sunflowers, the greens of gourds and the orange blobs of the huge U-Pick Pumpkin Patch. The tractor and train stop to unload visitors and they’re off to pick their own red and green gems from some 25,000 trees loaded with 21 different variety of apples. Annually, the farm sells 1.7 million pounds of apples, and 35,000 gallons of cider. A “ripening calendar” on the farm’s website charts the harvest season, recommending what apples are ripe for picking when and how to best use them. For example, the season begins in late August with Gravensteins that make “terrific sauce or pie apple” and ends in late October with a variety called BelleWood Prince that is a “pleasing mix of sweet and tart and all-around versatile apple.” The heirloom Mountain Rose is billed as a “tart taste with a long-lasting shelf life.” A long shelf life, just what these apple entrepreneurs have grown.

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Business Toolkit

October 2015

Complex vs. Complicated: Knowing the difference really helps Just about any business owner or manager these days will tell you that the challenges they face are much more complex than in the past and the complexity is rapidly increasing. If you think, “Oh, he means complicated when he says complex,” we need a brief intermission. If you simply consult a dictionary you’d probably be satisfied that complex and complicated can be used interchangeably. However, as the study of systems theory and complexity has advanced, experts in both fields are getting better and better at differentiating between the two. In researching for this piece I found an article from the September 2011 Harvard Business Review to be particularly helpful. The article, “Learning to Live with Complexity,” by Gokce Sargut and Rita McGrath, had the following to say that I found particularly helpful: “Complicated systems have many moving parts, but they operate in patterned ways. Complex systems, by contrast, are imbued with features that may operate in patterned ways but whose interactions are continually changing. Practically speaking, the main difference between complicated and complex systems is that with the former, one can usually predict outcomes by knowing the starting conditions. In a complex system, the same starting conditions can pro-

duce different outcomes, depending on the interactions of the elements in the system.” Why the distinction matters so much to a business owner or manager is that if you address one type of problem as though it were the other, actions may be taken that produce multiple unintended and costly consequences. Part of the challenge then comes in knowing which type you’re facing. For instance, it is unlikely that you would open the hood of your new Volkswagen Passat and think that you were looking at the same situation as you did in 1975, when you went around to the back end of your Beetle with “Volkswagen for Dummies” in hand and confidently set about giving your “bug” a tune up in your driveway. Nope! Today, if you did dare open the hood (it’s in the front now!) on that Passat, chances are good your actions would be limited to adding windshield washing fluid and getting out of there as fast as possible knowing you were in unknown territory. OK, you say, I get it! Not so fast. The people who work for us are not Volkswagen Beetles, though for years that’s the way they’ve been treated. They are complex and powerful, like the Passat. Learning how to handle the power of people is part of learning how to deal with complexity. We need our employees more than ever today. As our businesses themselves have

become more complex we need the complex thinking abilities our employees can bring to bear. This is one of the characteristics of complexity— interdependency. Interdependency Mike implies mutuality and need. Far too Cook many employers still hold to a On perspective of the Managers & owner or manager as benevolent dicEmployees tator, resisting the evolution towards complexity that has occurred in business. Recently a manager told me he was having trouble with some of his direct reports. They were not doing what he asked them to do. I asked, “Did they say they would?” He looked at me like I was speaking a language he did not understand. “Should I have to ask if they are going to do it? I am their boss.” Therein lies the problem. This manager was operating from a memory of his role when things were less complex. Nowadays, an order or demand from a manager or

business owner is delivered into a complex network of overlapping commitments (this is the true nature of most jobs today). That order/demand is processed by a human being who is after all a complex system finally being asked to perform like one after decades of being asked to simply follow directions. That human complex system immediately sets about weighing and analyzing this input against all other competing requests, responsibilities and demands to determine how to prioritize the order. And so on. If he doesn’t get this, the manager can draw any number of incorrect conclusions: the employees are insubordinate, they are lazy, they are a “younger generation with a different work ethic,” etc. That manager and I sorted the issue out pretty quickly. He recognized that the limitations of his perspective might need a “tune up.” If you are a business owner you can take this little example, multiply by infinity and get some understanding of the complexity involved in running a business today. You cannot do it alone; it is time to learn to be interdependent with your employees.

Mike Cook lives in Anacortes. His columns appear on BBJToday.com every other Tuesday. He teaches in the MBA program at Western Washington University and also runs a CEO peer advisory group in the Bellingham area.


October 2015

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