County growth cools

Published 9:00 pm Thursday, July 26, 2001

By Warren Cornwall

Herald Writer

After several years of fast-paced growth, land development applications decreased in Snohomish County in the first half of the year, an indicator of slower growth in the region.

Developers sought county approval of fewer construction projects, including business offices and subdivisions, compared to the same time period in 2000.

"It has ground to a halt," said Dan Mitzel, a Burlington-based developer who recently shelved plans for an office building near I-5 and 128th Street SE in south Everett.

This comes amid a cooling national and regional economy, and as the county tightens regulations on housing developments. Regarding commercial developments, there is broad agreement that the shaky economy, the collapse of Internet companies and an earlier boom in office construction are all feeding the trend.

"The economy has slowed down, and it’s not unusual that developers are more cautious," said Derek Heed, a vice president for Colliers International, a commercial real estate firm with an office in Bellevue that handles deals in Snohomish County.

The number of new commercial applications fell 22 percent in the first six months of this year, from 359 to 279, compared with the same time in 2000, according to the county’s Department of Planning and Development Services. King County has experienced a similar falloff.

Mitzel said he put a hold on his project, though the county was ready to issue the permit, because he couldn’t find tenants for the 40,000 square feet of office space he planned to build.

"We worked on the deals, but they kind of evaporated because people were pulling in their horns on expansion," he said.

Seattle office space that once leased to Internet firms for top dollar is now available for less expensive subleases, he said. He also noted that Boeing has pulled out of space in the county in recent years, leaving behind unfilled space.

The reasons behind the slowdown in housing projects are more disputed. Builders point to tightening county regulations as a main reason they aren’t coming forward with new projects.

Ty Waude, general manager of Belmark Industries in Marysville, a major developer in the area, blamed recent changes to regulations governing a once-popular kind of development called a planned residential development, or PRD.

"PRDs are probably the reason for the slowdown, because many of our submittals were PRDs," Waude said.

The Snohomish County Council passed a series of reforms in 1999 and 2001 reducing the number of houses that could be put on one acre of land in those developments and requiring more open space for activities and buffers.

The number of housing development applications plummeted from a peak of 2,306 housing lots in the first half of 1999 to 554 in 2000, and fell again to 417 in 2001.

With demand for houses remaining strong, Waude said he feared the slump in developments could translate into a housing shortage in future years.

But Faith Lumsden, director of the county’s development department, said the economy as a whole, and the shrinking availability of easy-to-develop land, likely play a bigger role than regulation.

"I think right now the big investors and the big developers are unwilling to take too many risks," she said.

The cooling of growth may offer a welcome respite for governments trying to ensure infrastructure such as roads keeps pace with development, said county councilman Dave Somers, a proponent of the PRD reforms.

"Frankly, the slowdown in my view has some positive benefits because it gives us some breathing room to deal with issues like transportation," he said.

The shift is also causing a shake-up at the county’s development department, which depends on permit fees for much of its revenues. The department next year plans to increase fees and cut 23 jobs, or nearly 10 percent of its staff, to offset the drop in permits, Lumsden said.

Lumsden said she was shuffling job assignments to try to reduce the impact of the cuts. But she worried it could hurt service at the front counter.

The department still has a steady supply of requests for permits to build homes. That is one category that has increased since last year, as projects begun several years ago reach the point where builders are ready to dig foundations.

You can call Herald Writer Warren Cornwall at 425-339-3463 or send e-mail to cornwall@heraldnet.com.