To ease delivery issues, the County Council approved legislation in November allowing farm vehicles such as hay trucks to stop along the side of a road.

“With a growing demand for locally sourced agricultural products, we need to ensure that our regulations do not make farming more difficult for our area farmers,” said Councilmember Reagan Dunn, the sponsor of the ordinance, in a statement. “Local farming is a value that King County embraces and our regulations should reflect these values.”

The new policy will allow commercial farm vehicles to stop on roadways as long as they stop in a safe location, for a period of less than an hour and park as far off the road surface as possible. At all times, drivers of these commercial vehicles are required to leave room for emergency vehicles and at least twenty feet of roadway for two way traffic.

The company, New Sky wants to build at least one and possibly two hotels on the nine-acre site. Most of the land would be left untouched as a buffer.

According to the development proposal that the company filed with the city in early November, New Sky would first build a 106-room Holiday Inn Express hotel on a 1.91 acre site, and potentially build an 85-room Hampton Inn and Suites on a 1.32 acre site in the future.

The franchises could change, according to the document.

No representative from New Sky or its owner, Paul Pong, could be reached for comment.

The 106-room building would have five stories and be 55 feet tall. It would have a conference room and restaurant.

The second development, if constructed, would have four stories and be 55 feet tall, as well. It could be changed to provide space for retail, residential or commercial use, according to the document.

The site is zoned as Interchange Mixed Use, which allows residential and commercial uses.

New Sky filed initial documents with North Bend in January.

The company is owned by Paul Pong, whose family has developed several hotels in the Seattle area, including the Courtyard Inn by Marriott in downtown Bellevue.

The nine-acre site, next to the Shamrock Park neighborhood, is owned by the Pioneer Development Corp., which is also owned by Pong, according to county records.

Just a few blocks to the east is a site of another potential hotel development project. That site is owned by Snoqualmie Valley native George Wyrsch, but he has had trouble finding financing for his development south of Interstate 90.

Wyrsch said he is not concerned about the potential competition.

The New Sky project still has many hurdles to clear before ground is broken, according to city staff.

The steps include ensuring the plan’s compliance with North Bend code and state law, such as passing environmental review and design review.

Once the developer’s application is in order, the city will schedule public hearings before permits are approved.

The city has not made any decisions yet on the application, Estep said.

According to a traffic study filed by the developer in January, the project would not significantly affect traffic on Bendigo Boulevard.

The study, conducted by Heath and Associates Inc. in December, projected that most trips — about 75 percent — to the site would come from I-90.

The development narrative filed in November calls for creation of more than 250 parking stalls.

Dan Catchpole: 392-6434, ext. 246, or editor@snovalleystar.com.

Hauglie joined the President’s Council of Farmers Insurance Group in recognition for his high overall performance, according to a news release from the company.

Membership on the council is an honor attained by few agents and district managers. Of the roughly 17,000 Farmers agents and district managers in 41 states, only 160 individuals are being named to the council for 2011.

“Council selections are based on outstanding customer service, sales production in all insurance lines, overall professional competence and maintenance of the highest quality standards,” Farmers’ president of distribution Mhayse Samalya said in a statement.

Farmers’ senior management meets annually at the Presidents Council with the company’s top performers to review and discuss key issues affecting customers and the insurance industry.

Hauglie and his wife, Laurie, opened their Farmers agency in Fall City in 1985.

Today, along with their daughter, Angela Donaldson, they serve the entire Snoqualmie Valley with offices in Fall City, downtown Snoqualmie and Duvall.

The port includes both the seaport in downtown Seattle and Sea-Tac International Airport. According to the port’s annual report for 2010, the port collected $75.6 million in property taxes in 2009. The projection for 2010 was $73.5 million. Those collections come from all King County residents.

Bill Bryant

Dean Willard

“The port is an economic engine for the entire county, not just the city of Seattle,” said Charla Skaggs, corporate media officer for the port.

Both Skaggs and other port officials said thousands of jobs depend directly and indirectly on port operations. According to what is billed by the port as an independent report released in 2009, the port was directly and indirectly responsible for 190,000 jobs in the Puget Sound region.

Port facilities generated more than $17 billion in revenue for businesses who deal with the port or the port tenants who operate the maritime terminals. All in all, those employers and employees pay about $867 million in state and local taxes.

Finally, the 2009 report stated that more than 135,000 people are employed at regional businesses that have cargo moving through the Port of Seattle.

Skaggs talked about how plenty of Eastside companies depend on the port for importing or exporting goods and raw materials. She stated port operations create a wide variety of jobs from the longshoremen who load and unload cargo to cruise ship employees.

Port operations themselves employ about 1,600 people, said Port Commission President Bill Bryant, one of two incumbent commission members up for election this year.

All in all, just from its maritime operations, Bryant said about 70,000 families depend on the port. Although his opponent in the upcoming election disagrees, Bryant said those jobs are well-paying, family-wage positions. He further argued the port is one of the top five or six job creators in King County, right up on the list with Boeing and Microsoft.

“I think the port is becoming an example of an agency that can create jobs,” Bryant said.

Bryant also wants to help support existing jobs and to create new ones outside Seattle by steering cruise ship tourists to visit places such as Snoqualmie Falls.

“There is no doubt the port is a critical economic engine for the region,” said Dean Willard, who is opposing Bryant for the latter’s spot on the port commission.

Willard specifically said the port does not do enough to create living-wage jobs, but also was highly critical of the port’s environmental record.

“I have observed decisions that are not transparent and not reflective of local values,” Willard said, adding those local values include environmentally sound operations. Bryant sharply disagreed, arguing the port’s environmental record is another reason the institution is important to voters and residents in the Puget Sound area.

As one example of what he said is the port’s environmental stewardship, Bryant pointed to what ultimately becomes of contaminated dredging materials the port removes from around its maritime facilities.

He said the port legally could dump those materials into Elliot Bay. Instead, the port takes on the added expense of having the materials moved inland.

As one example of how the port has dropped the ball environmentally, Willard pointed to what he said is the port’s lack of attention to problems with the Duwamish River. He said the port undoubtedly has a shared responsibility for cleaning up the waterway.

For his part, Bryant agreed the port has some responsibility for the Duwamish, but said officials are living up to the responsibility. He said the port has supported a plan to restore the river’s habitat, another environmental step he said the organization was not required to take.

Another voluntary environmental move, according to Bryant, includes replacing outdated port trucks with newer, more efficient models. By 2015, he said all port trucks must meet certain EPA standards.

Willard said Bryant and other board members consistently “talk the talk, but fail to walk the walk.”

For example, he again argued the port’s efforts regarding the Duwamish are completely insufficient. Willard backed a protest held downtown Sept. 15 as the Port of Seattle was hosting the American Association of Port Authorities.

The group directly mounting the protest is known as Puget Sound Sage. Among other claims, the group charges seaport truck drivers often are forced to work 10- to 12-hour shifts while not receiving health benefits or sick time and earning about $28,500 a year.

Tom Corrigan: 392-6434, ext. 241, or tcorrigan@isspress.com.

The proposal would have allowed event venues to be built on parcels zoned as cottage residential, a designation created in 2006 to encourage more affordable housing near downtown.

Several City Council members said the zoning had not had time to be effective. The city had a self-imposed building moratorium until 2009. By the time the ban was lifted, the housing market had fallen apart, leaving little demand for new homes.

Even so, one area zoned as cottage residential is under development by John Day Homes.

The proposed zoning change had been submitted by Heidi and Paul Moon. The couple runs an event venue in unincorporated King County, which hosts mostly weddings.
Under King County code, the couple can only operate with a six-month temporary permit. So, they want to relocate to a city that would allow for a permanent operation.

The Moons want to take over the lot formerly occupied by Bad Girls Antiques, which closed in 2010. The shop is on land zoned as cottage residential, which allows small commercial operations.

A couple dozen supporters of the proposal turned out at the council meeting. Several said allowing event venues would boost the local economy.

Several homeowners in the neighborhood around Bad Girls Antiques also showed up to oppose the proposal.

City Council members sided with the homeowners.

The outlook for 2011 isn’t any better, according to market analysts.

Home prices in King County fell in February to a new low since the real estate boom collapsed in 2008.

Prices have been pulled down by short sales and foreclosures, which are often priced below market value. That is especially true of the Ridge, which has a higher rate of distressed properties — bank-owned homes and short sales listed for less than the owner owes the lender — than the rest of the county.

The number of distressed properties is expected by analysts to rise in 2011, meaning prices will likely continue declining for the rest of the year.

Experts don’t expect prices to stabilize before 2012.

“This year’s going to be tough for everyone,” said Glenn Crellin, an economist and director of the Washington Center for Real Estate Research at Washington State University.

Across the county, 37 percent of houses for sale in February were considered distressed, according to the Northwest Multiple Listing Service.

On Snoqualmie Ridge, that number is 42 percent, and many of those are on the Ridge, said Cary Porter, a Realtor with The Cascade Team, a local real estate agency.

“We’re at 42 percent and headed up,” Porter said.

When a house is sold at below-market price, it forces down the value of other houses on the street.

Porter pointed to his own house on Carmichael Loop. He paid $720,000 in 2005, when housing prices were rushing up. There was recently a short sale on his block for $545,000.

“That means my house is worth maybe $525,000,” he said. “My price is going to go down for another year.”

He expects that if home values recover at a steady 3 percent after 2012, it will take about 16 years for his house to reach its 2005 value.

“Twenty-two years after moving in, I can sell my house for zero profit,” he said.

Fortunately, he likes his neighbors.

Most of the houses on the Ridge were bought when home prices were soaring upward.

“Almost everyone on the Ridge is upside down,” meaning they owe more than on their home than it is worth, Porter said.

Higher-end properties have seen even larger drops in market value. He recently helped sell a home on the Ridge for $500,000. The owner had paid $1,050,000.

“It has just, whew — straight down,” he said while slashing his hand downward.

Prices are also being driven down because the market has too many houses for sale. Currently, there is a 10-month backlog of homes in Snoqualmie Valley. Porter said he expects it to rise to about 12 months because more houses are typically listed in the spring.

A six-month supply usually means prices will be stable.

With so many houses for sale, buyers can be picky. The average home for sale in Snoqualmie and North Bend spends 169 days on the market. That compares to 45 days four years ago.

Since prices are headed down, the longer a home sits on the market, the less it will probably sell for.

“Do homes sell in one day? Absolutely, but they have to be priced right,” Porter said.

One of his agents recently sold a house for $585,000, but three years ago, it would have sold for $800,000, he said.

In addition to the inventory of existing homes, sellers also have to compete with new homes from developers. While home construction on the Ridge has slowed dramatically, it still continues.

To lure buyers, developers have had to increase their offerings, upgrading amenities and slashing prices. That is another drag on home prices.

Builders are still putting up new homes because they have already paid for infrastructure improvements, and they can also spread their losses out across a wider area.

Not all news has been bad news for homeowners, though.

There have been signs that buyers’ confidence in the economy is improving, but that could be short lived if rising energy prices and international instability put a brake on the recovery, Crellin said.

Rising gas prices could especially hurt the Valley, where the vast majority of residents commute to work.

“That’s a very expensive commute with current gas prices,” he said.

Still, analysts see 2011 as a year that must be endured.

“We’re still going to drop for the rest of the year. It’s just math,” Porter said.

Dan Catchpole: 392-6434, ext. 246, or editor@snovalleystar.com.

The site of George Wyrsch's proposed hotel. (By Dona Mokin)

Plans for a hotel in North Bend near the highway have stalled due to the tight credit market. Other parties remain interested in other hotel sites in the upper Snoqualmie Valley, but those plans wouldn’t be pursued for at least a couple of years.

George Wyrsch has been trying to build a hotel in North Bend for more than a decade. The planned site, immediately south of Interstate 90’s Exit 31, is overgrown with vegetation.

Residents from the neighboring Forster Woods development have stymied Wyrsch’s efforts through City Council and litigation. In the early part of the past decade, City Council prohibited hotels south of I-90.

The residents opposed the development, which, they say, will lower home prices, increase crime and take away from their neighborhood’s rural character.

However, the road appeared clear for Wyrsch when the City Council lifted the ban on hotels in a 6-1 vote last April.

Wyrsch already had an architect, and several hotel chains had expressed interest in having a franchise in the area, he said.

Permits still had to be issued, and the building would still have to clear several hurdles, including city design review and state environmental review. But the main roadblock had been removed.

That is until Wyrsch tried to get financing for the project, which will take between 12 and 18 months to finish. Wyrsch has been unable to find money in the commercial credit market, he said.

“I still want to build a hotel, but so far I haven’t been able to find the money,” he said.

Wyrsch said several hotel chains remained interested in opening a franchise, but that he hasn’t signed to any company, yet. A franchise agreement often requires that the new hotel open within three years of signing or penalties will be charged. For that reason, Wyrsch said he doesn’t want to sign until the financing is lined up.

The difficulty in funding the project has nothing to do with the project or the location, he said.

The Snoqualmie Valley is greatly underserved by hotels, he said.

“I anticipate there will be potentially two or three hotels in North Bend,” he said.

Forster Woods residents have not resigned themselves to having a hotel down the hill from their homes.

The neighborhood’s homeowners association or individual residents could pursue litigation to block future development, according to Doug Weinmaster, a Forster Woods resident.

“That’s still a possibility,” he said.

Other hotels

Wyrsch is not the only person interested in building a hotel in the Valley. But no parties appear to be in a hurry to break ground.

The master plan for Snoqualmie Casino’s property includes a hotel, but how big it will be and when it will be built remain open questions, said Matt Gallagher, the casino’s vice-president.

“At this point, we don’t see any plans in the immediate future,” he said.

Nothing would happen in 2011, but beyond that he couldn’t be as certain, he added.

Like Wyrsch, the casino is not concerned about potential competition.

The Salish Lodge & Spa could expand with a new facility with up to 250 rooms across the road from its current location. But the lodge’s owner, the Muckleshoot Tribe, has told the city it is holding off until demand improves, according to Snoqualmie Mayor Matt Larson.

Another developer has expressed interest to the city in building a hotel next to Snoqualmie Valley Hospital’s future site near the interchange of I-90 and state Route 18, Larson said.

That group, however, asked the city to not divulge its identity and is holding off for the time being.

Hilary Shemanski makes a drink for a customer at Koko Beans in Snoqualmie. Despite the tough times other food service businesses have endured in Snoqualmie, Shemanski is confident she can succeed. By Dan Catchpole

Lunchtime at Isadora’s Café in Snoqualmie was busier than usual the week after Christmas. Regulars pulled up chairs on the restaurant’s well-worn wood floors to get a last meal before Isadora’s closed with the new year.

For the owners, Jody and Michael Sands, the decision to close the doors after two years was a long time coming.

“It was heartbreaking, absolutely heartbreaking,” Jody Sands said.

She had learned a lot about the restaurant business while waiting tables at the café in the mid-‘90s. Owning Isadora’s had been a dream come true for the Snoqualmie native.

Like several other independent owners of food service businesses in the Valley, Sands endured the economic recession in 2008 and 2009, but couldn’t overcome the lagging recovery in 2010. Squeezed by anemic revenue, rising costs and no available credit, these merchants either closed or sold their businesses.

Fewer customers

Even though the Great Recession technically ended in 2009, the economy has continued to limp along. The recovery so far has been fueled by increased productivity from existing workers, rather than new hires.

“Job growth has been slower than molasses,” said Arun Raha, Washington State’s chief economist.

For many businesses, that means their customer base hasn’t been growing. In addition, people are still saving more and spending less, especially on non-essential goods and services.

That has not been good news for the Snoqualmie Valley’s businesses, most of which offer non-essential goods and services, especially food. Snoqualmie has 37 businesses which sell food, according to Bob Cole, an economic consultant for the city.

“From the beginning, I could see we were going to have a problem,” Sands said.

When she took over Isadora’s in December 2008, Sands changed the menu — keeping the mainstays, while adding dishes to cater to a wider crowd. Over the next couple years, she worked to increase traffic with more live music, an open mike night and small stage theater.

She had enough people coming in through the door to keep the lights on from day to day, but not enough to provide any security for the future.

Several owners of retail and food businesses in downtown Snoqualmie said that customer traffic was down this summer, the peak season for many stores, during work on the city’s downtown revitalization project. The work included tearing up one side of the commercial area’s main street.

“Between the economy and all the construction they did last year, we put so much money into it, we just couldn’t keep it going,” said Kathy Twede, who recently sold the Choo Choo Café at the Snoqualmie Falls Candy Factory.

Her husband, Kyle Twede, owns Twede’s Café in North Bend.

Both Twede and Sands said that the downtown work will benefit the city in the future.

The city’s primary role in boosting the local economy is providing and maintaining infrastructure to support businesses, Cole said.

“I love this town, this community, and I’m really excited to see it blossom. Unfortunately, we’re going out at the beginning of this,” Sands said.

Fewer resources

Independent restaurants are having difficulty getting credit to get through the lean times. Twede couldn’t even get overdraft protection for her restaurant. It had been easy to get 10 years before when her husband opened Twede’s Café.

“Nobody’s willing to shell out money like they used to,” she said.

To maintain a positive cash flow, Twede cut back her employees — from six to two — and increased her own hours.

To get credit, businesses have to show that they can make a profit and pay off their debt.

For small businesses struggling to stay open in a small market, it becomes a Catch-22: They need credit to keep afloat and eventually turn a profit, but they have to show they are profitable to get credit.

“They don’t have the business plans that a banker would be interested in,” Raha said.

Typically, smaller restaurants lack resources and expertise available to larger businesses, said Arnold Shain, founder of the Restaurant Group, Inc., a consulting firm.

“Smaller restaurants are more on the line of being chef driven, and while that is appealing to many people, it is somewhat one-dimensional in operational knowledge required.”

Restaurants must succeed in many areas: cuisine, branding, service and management, atmosphere, and systems and control.

“If one or more of these legs is longer, shorter than the other than the chair either leans or falls over,” Shain said.

But the state has been seeing some positive signs for restaurants across the state, Raha said. “After two years of eating at home, they’re getting sick of it.”

Hope for the future despite obstacles

Some business owners see a brightening horizon. A few doors down from Isadora’s, Hilary Shemanski just bought Koko Beans, a struggling coffeehouse, in December.

“I feel fortunate, actually,” she said. “It feels like I got in at the right time.”

One benefit to her location is its low overhead. Koko Beans is a coffeehouse in a comfortable shoebox with room for a handful of tables.

“As cute as it is, it’s obviously not working because I’m the fourth owner in three years,” said Shemanski, who has lived in the area since 1998.

She thinks she has the missing ingredient: high-end beer, which she plans to add by mid-April. It will still be a coffeehouse, though.

Shemanski hopes that will help her capture more of the tourist market while maintaining the store’s local regulars.

But even after the economy recovers and business picks up, Shemanski has discovered a long-term obstacle that business owners must put up with: permits.

“Going through the permit process, it almost fizzles out your creativity. You come in with all these ideas, and then you find out there’s a form for everything,” she said.

Currently, she is trying to get a license to serve beer and looking into getting a license to serve prepared foods, such as sandwiches. But the costs of permits can add up for small businesses.

So can other small costs, like customers using debit or credit cards rather than cash, she said.

Each time a customer uses a debit card she has to pay 25 cents. Credit cards with rewards programs are worse; they can cost her up to 7 percent of the total purchase, she said.

Despite the obstacles, Shemanski is confident she’ll succeed.

“If you do it right, you can make it,” she said.

Dan Catchpole: 392-6434, ext. 246, or editor@snovalleystar.com. Comment at www.snovalleystar.com.

DirtFish Rally School instructor Forest Duplessis takes a turn on part of the school’s course, called the Boneyard. (Photo by Dan Catchpole)

“You drive with the gas and the wheel, not the brakes!” Forest Duplessis said over the car’s revving engine and rocks kicking in the wheel hubs.

He punched the gas pedal again, while jerking the car’s steering wheel.

Outside, the horizon spun around as the car came roaring out of a sharp turn on the gravel and dirt road at the old Weyerhaeuser mill site in Snoqualmie.

Duplessis is a driving instructor at DirtFish Rally School, which recently opened at the former mill site.

The school is the vision of Greg Lund, an Issaquah native who saw his first rally car race in 1985 in the woods near the school’s location.

“We drove up into the woods and bam! There was a car flying through the woods, and I’ve been hooked ever since,” the 51-year-old said

Now, he wants to introduce others to rally car driving.

In rally racing, participants race the clock in stock cars on closed-off sections of roads that are usually unpaved. Races can be short or they can cover hundreds of miles in all sorts of weather and last several days.

It is a small sport with a devoted following that is strongest in Europe. Lund wants to spread the gospel of rallying in Puget Sound.

To do that, he and a partner, Steve Rimmer, bought the old Weyerhaeuser site for $3.25 million at the end of June.

The site, about 300 acres, was created from compacted gravel fill. Most of it sits in the FEMA floodway, which makes building extremely difficult.

The site is ideal for rallying, as far as Lund is concerned.

The gravel base allows the school to constantly change and reshape its courses. And they don’t need more structures than the massive industrial buildings already on site.

Lund and Rimmer said they expect to bring in about $3 million in revenue eventually.

“We’re set up to handle six people a day. As far as revenue, we’re a long way from $3 million,” Lund said.

DirtFish’s business plan is to offer a high-end experience — an introduction to rallying with catered meals. Lund and Rimmer are focused on getting corporate customers looking for offbeat team building exercises.

“We’re expensive. We’re $900 a day to come here. We need to provide the high-end service that someone would expect,” Lund said.

While the cars are gritty and plastered with mud, the main building looks like the interior of a hotel catering to business travelers. In the men’s shower room, there is a wicker basket with a canvas liner for used towels. Not exactly grease monkey décor.

But don’t let the decorations fool you.

Lund has rally in his blood. In the 1980s and ‘90s, he and his wife drove together. At one point, they sold everything and quit their jobs to become drivers for Ford Europe, but their dream jobs fell through at the last minute, he said.

He never got back into rally driving, but has stayed around the sport. It was too expensive to put together another car, he said.

Lund still loves it, though.

“It’s all about how good you can be,” he said, sitting in his office, which overlooks the site.

It only took once for him to become addicted to the sport, and he is betting that the same is true of many people in the area.

Dan Catchpole: 392-6434, ext. 246, or editor@snovalleystar.com.

In an effort to bring together local shoppers and merchants, Sample Snoqualmie drew between 250 and 300 people Sept. 10 to Community Park on Snoqualmie Ridge.

“The goal was to show our residents what they could find right here in town to make their lives easier, as well as give our merchants an opportunity to meet potential new customers,” said Gwen Voelpel, the city’s Parks and Recreation Director.

Merchants set up 25 booths featuring their wares and services.

“The event was meant to encourage all types of economic activity — more shoppers frequenting our local shops, more diners visiting our restaurants, more people applying for loans at our banks or getting their teeth cleaned at our local dentists,” Voelpel said.

The economic recession and sluggish recovery has not made life easier for local businesses.

“Verbal reports from some businesses show that a few are experiencing increases in sales over a comparable time period in 2009, while others are showing decreases in sales,” said Bob Cole, the city’s economic advisor. “A few businesses have been severely impacted and are closed or closing.”

The city might organize a second event next year, but earlier in the summer when daylight is longer, Voelpel said. The crowd began dispersing as darkness fell this year.

In an effort to increase local sales, Snoqualmie’s merchants will be out in force to give residents a taste of their wares, foodstuffs and services at Sample Snoqualmie. The city-organized, free event will also feature live music by local band The Left Coast Gypsies.

Local merchants have been hard hit by the recession and sluggish recovery, according to several business owners and city officials.

Sample Snoqualmie is an attempt to encourage local shopping.

“It’s a great opportunity to attract new customers,” said Jody Sands, owner of Isadora’s Café in downtown Snoqualmie.

Nearly 30 merchants are participating, including downtown cornerstone Northwest Railway Museum, Salish Lodge & Spa, Finaghty’s Pub, DMW Martial Arts, Oldies for Sale and Acacia Salon. Even the Snoqualmie Valley School District and some other nonmerchants are getting involved.

Crafts and games will be available for children, who can also “drink themselves silly with free root beer,” according to a news release from the city.

Sample Snoqualmie is scheduled to run from 5-8 p.m. Sept. 10, on Snoqualmie Community Park’s lower field, 35016 S.E. Ridge St.

A full list of participating merchants is available at www.cityofsnoqualmie.org, under the “Special Events” tab.

The new taco, burrito and quesadilla haven, L Taco, opened its doors on April 2 at 202 North Bend Way, North Bend.

“We’re excited to be introducing a new restaurant to North Bend,” said co-owner, Jason Lakman in a news release. “I’m passionate about tacos and wanted to create something that would be fresh and delicious, while also being friendly to the pocketbook. I’m having a lot of fun with this new venture and have enjoyed getting to know the people who have started coming in.”

Jason Lakman previously owned and operated Island Taco on Maui, Hawaii and now lives in North Bend. He and his brother, co-owner Geoff Lakman called L Taco a budget-friendly sit-in or take-out place, with small tacos costing $3 and large tacos costing $5.

The North Bend-based D Square Energy Systems, the largest independent stand-by power generator dealer in the Pacific Northwest, has opened a Portland-area office.

The facility, located in Clackamas, Ore., allows D Square Energy Systems to reach the Oregon market. It will focus on installing, repairing and maintaining generators for commercial, industrial and residential customers.

D Square Energy Systems was founded by Don Dunavant in 1990.

The General Store at Exit 32 in North Bend re-opened its doors in December 2009. New owners had taken it over since it closed the previous spring.

The store is located near Interstate 90’s Exit 32. Despite re-opening in December, the store’s customers donated $115 for a local food bank. The store stocks groceries and is attached to the River Bend Cafe. It is open seven days a week.

Snoqualmie Ridge resident Steve Pennington has bought Zoka Coffee Roaster & Tea on the Ridge, and plans to turn it into Steve’s Doughnuts in late January.

Despite the name change, the coffee and the faces serving it will stay the same. Pennington says he will keep any barista who wants to stay on and he will continue selling Zoka coffee in drinks and in whole-bean coffee bags.

Zoka’s owner, Jeff Babcock, says he plans to focus on his company’s new location in Kirkland, which opened this past summer. He opened the Snoqualmie store about two years ago. There are also locations in Seattle near Green Lake and behind University Village. He also licenses three stores called Zoka in Japan and licenses a fourth store there under a different name.

Zoka coffee is roasted on West Nickerson Street in Ballard, where Babcock says he might someday open a drive-up shop.

Pennington, a former program manager for Microsoft, plans to make doughnuts using all natural ingredients (including palm oil) from sources as local as possible.

“We want the cows and chickens to be local and the flour to be Washington flour,” he said. “Within reason, we want to make sure we’re supporting local agriculture.”

Why doughnuts?

“I love doughnuts,” Pennington said. “Our motto is, ‘Doughnuts make you happy’.”

Material from The Seattle Times was used in this report.

With unemployment hovering just below ten percent in Washington, local retailers are courting customers looking for best bargains this holiday season.

With only modest growth predicted this season, local shopkeepers are luring recession-weary shoppers with more merchandise at the low end of their price ranges and promoting perks such as free gift wrapping.

Many store owners are anxiously waiting to see whether this year’s holiday sales meet their diminished expectations, which could mean the difference between a loss and a profit for 2009. Some stores could be doomed if they experience a repeat of last year’s disastrous season—the first time that holiday sales have dropped since the National Retail Federation began tracking them in the early 1990s. The economic recession and bad weather right before Christmas pushed sales down locally.

The effects of another down season would be felt in Snoqualmie Valley and across the state. The retail sector provides jobs for one of every 10 nonfarm workers in Washington state, and it is one of the largest employment sectors in the valley.

State and local government depend on sales tax revenue to pay for a large portion of their budgets. Retailers bring in around 15 cents of every dollar that ends up in the state’s general operating fund. North Bend heavily relies on sales-tax revenue, which provides about 85 cents of every dollar in the city’s general operating fund.

“Our bread and butter is retail sales,” said Elena Montgomery, North Bend’s finance director. So far this year, North Bend’s sales-tax revenue has been down.

“We’ve been running seven to eight percent lower than last year, but in the last couple of months we picked up a few percentage points,” she said.

The city isn’t expecting any big jump or drop in local retail sales this holiday season. Holiday retail sales in Washington are expected to increase one or two percent over last year, according to the state’s chief economist Arun Raha.

Nationally, expectations range from down one percent to up three percent.

“One or two percent over a really bad year isn’t really that good,” Raha said.

Weak consumer confidence from the high unemployment rate and a higher savings rate are limiting how much people plan to spend this year, he said.

However, some analysts think consumers are more confident this year.

Retail strategist Dick Outcalt predicts retailers’ sales will increase by half as much as they dropped last year.

“Shoppers are more confident and more anxious to buy merchandise more than they have been in a year,” said Outcalt of the Seattle-based consulting firm Outcalt and Johnson: Retail Strategists.

He predicts consumer confidence will be buoyed by a more stable economy, a more peaceful Iraq, a resurgent stock market and an unemployment rate that appears to have peaked.

Wherever consumer confidence is this year, shoppers will likely be looking to stretch their dollars as far as possible.

“The good news for an outlet mall is whatever consumers are spending, they’re looking for value. People have migrated to the lower price points,” Raha said.

Shoppers came to the Factory Stores in North Bend looking for good deals on Black Friday, the day after Thanksgiving when many retailers become profitable – or ‘go into the black’ – for the year. Some stores opened at midnight with special offers for eager shoppers.

Paula Satterberg did most of her on Black Friday and on the Internet, she said while shopping at PacSun for a backpack to give as a gift. She often makes the 20-minute trip from her home in Ravensdale to the Factory Stores.

“We’re not exchanging gifts with as many people this year, so we won’t be spending as much money,” she said.

The mall had record traffic counts, according to Ed Cook, the mall’s general manager.

“It was probably the largest single-day traffic count we’ve had, so the shoppers are out,” he said.

Like other local retailers, the Factory Stores were hard hit by cold, icy weather in December 2008 that made driving conditions dangerous, which kept many shoppers at home and forced some stores to close. The mall draws customers from King County to British Columbia and east of the Cascade Mountains.

Overall, business seems to have been fairly consistent this past year, Cook said based on conversations with tenants.

“Shoppers are savvier and are looking for better deals, which puts us in pretty good stead,” he said.

On Snoqualmie Ridge, Hip 2 B Square’s customers have been looking for deals.

“Consumers are trying to be more innovative about getting the best value,” said Kimberly Hutchison, the scrapbooking store’s owner.

Unlike most retail shops, Hip 2 B Square helps customers create a finished product—a scrapbook. It can be an inexpensive and very personal—but also time intensive—gift, she said.

Hip 2 B Square’s benefited from shoppers looking to stretch their money by supplementing their budget with their own time, she said.

Hutchison is also focusing more on less expensive items and offering more how-to classes, “so people won’t have to break the bank,” she said.

“People have less money to work with this year, and [a class] gives them an opportunity to get out and do something. And they come out with a Christmas gift in the end,” Hutchison said.

Still, holiday business for Hip 2 B Square hasn’t picked up as quickly as in past years. Other stores have seen a similar trend.

“I think a lot of customers are waiting for the last minute to see if there are any better deals closer to Christmas,” said Chuck Gleghorn, owner of Scriptures Christian Store in Snoqualmie.

Unlike many retailers, Gleghorn also gets a sales boost around Easter, but most shops depend on sales in November and December to turn a profit.

He expects this year’s sales to be similar to last year, which was down from previous years.

However, not all shoppers are paring back this year.

“I’ll probably be buying more this year, because I have a better job,” Linase Neal said while shopping at the Factory Stores. She works as a flight attendant.

The Auburn resident said she regularly comes to the outlet stores. Earlier that day she bought a purse at the Coach store.

Still, most shoppers appear to be concerned with widespread joblessness.

Nearly a quarter of respondents to a recent survey of 207 households in the Seattle area said their jobs are “not at all” or “not very” secure, according to professional-service firm Deloitte.

A year ago, fewer than one in six respondents felt unsure about their jobs. Since then, two of the region’s largest employers, Boeing and Microsoft, have cut jobs, and unemployment in the state is at 9.3 percent.

As a result, consumers are saving more to pay down personal debt, said Lynette Frank, who advises retailers as a partner for Deloitte in Seattle.

Respondents last year said they planned to spend an average of $1,499 for the holidays. This year, they plan to spend $1,235 — an 18 percent drop. Planned expenses include gifts, decorations, entertaining and socializing.

Regardless of the economy, one thing remains true for all retailers, Hutchison said. “You have to figure out what people need and offer that to them.”

SnoValley Star reporter Tara Ballenger contributed to this report.

The North Bend Theater continues to light up North Bend’s downtown, as it has since 1941. Photo by Tara Ballenger

In the fall of 1999, Brian and Karlene Slover bought the North Bend Theater determined to make the 1941 art deco-era building shine again. It was closed for three months during renovations, and on Dec. 17 re-opened, complete with the restored iconic neon sign that casts a blue and red glow on the sidewalk lining Bendigo Boulevard.“Brian was a movie buff and had a passion for the theater,” said Cindy Walker, a family friend of the Slovers who bought the theater in 2006. “He wanted it to be a vibrant center of the community.”

Brian—a fixture of the community and much beloved for what he did for the theater—died just three years after the grand re-opening, but ten years later, Walker is still committed to making it a community centerpiece.

“It’s been great. One of the things that we really enjoy about it is that it gives an opportunity to get involved in the community,” Walker said. “We feel like we’re bringing a good service to the community, it’s been very rewarding. We have a good time with it.”

Walker involves the community by using the theater to host fundraising events, like the recent Cans Film Festival—a play off the elite Cannes competition—where admission to the night’s movie was free when patrons brought a canned food item to benefit Encompass’ holiday giving drive.

A similar event will take place on Dec. 16, when movie-goers can watch “Miracle on 34th Street” for free with a donation of a toy for Toys for Tots.

Other fundraisers have benefited North Bend schools and PTA.

“One of the things that’s really important for success is working with partners. Reaching out and finding connections is how we can survive through these tough times,” said Walker. “By partnering and working together, it makes it a little easier on everyone.”

Walker is especially proud of the Banff Film Festival that will be making a stop at the theater on Dec. 9. The festival takes its winners and highlights on the road to about 30 theaters—and this year North Bend is on the list. The three-hour showing is almost sold out, reports Walker.

Beyond the special events, Walker said that business has been fairly steady, even with the recession in full swing. The 275-seat theater usually draws about 100 people on weekends when it shows new movies.

“With the economy, people are more likely to look at things to do close to home,” said Walker. “If the kids want to see a movie, instead of driving out to Issaquah, parents are more inclined to stay here. That helps us a lot.”

Tara Ballenger: 392-6434 ext. 248 or tballenger@snovalleystar.com. Comment at www.snovalleystar.com.

Philips Oral Healthcare is located at 35301 S.E. Center St. File

On Oct. 30, the first seven of the remaining 75 workers were laid off. Within a year, only the 150 people in nonmanufacturing jobs will be working at the location.

“We’ve been honest and forthright from the beginning,” said David Wolf, company spokesperson for Philips Sonicare, the electric toothbrush manufactured at the Snoqualmie plant.

“We’re offering generous severance packages and we’re trying as hard as possible to take care of these workers,” Wolf said.

Some employees will be eligible for government benefits under the Trade Adjustment Assistance program, which offers financial assistance and job training to American workers who have lost their jobs due to shifts to foreign production, he said.

Philips decided to move the manufacturing jobs offshore as a way to stay cost-competitive.

“We’ve had to make some tough decisions, just like all companies, especially under increasing economic pressures,” Wolf said.

The jobs that will stay in Snoqualmie include administrative and advertising positions, he said.

Tara Ballenger: 392-6434 ext. 248 or tballenger@snovalleystar.com. Comment at www.snovalleystar.com.