Edmonds
For most of the country, recession is either already a fact or about to be one. In Edmonds, it is still more a question mark.
Even as the New York Times reported March 21 that troubles are hitting the Puget Sound region, economic data in Edmonds is still showing signs of promise, officials said.
Sales-tax collections — a measure of business vitality and a vital source of revenue for city government — are still rising, officials said this week.
Collections for the first three months of 2008 are up 1 percent over the same period in 2007, according to city data.
That doesn’t mean all Edmonds-news is good news.
Real-estate transactions have slowed dramatically in the opening months of 2008. Even as condos are selling more rapidly, single-family home sales are down in Edmonds, according to the Northwest Multiple Listings Service.
That’s helped lead to a 47.2 percent fall in city real estate excise tax (REET) revenues in the first two months of 2008 compared to last year. The tax is paid on home sales and construction.
“I think it is not unexpected,” Edmonds Mayor Gary Haakenson said March 25. “We knew the sales paces couldn’t be maintained, so consequetly the REET funding could not be maintained.
“We are going to face whatever the rest of the country is facing,” he said.
The city recently downgraded its estimates for 2008 REET revenues from $1.4 million to $800,000, finance director Dan Clements said March 24.
That is a startling trend, but one that is understandable, said Cameron Fay, spokeswoman for the Snohomish County-Camano Island Association of Realtors.
“We are coming off the highest collections in history,” Fay said. “We are not seeing a crash here that other places have seen. We are just seeing a steady normalization to true market prices.”
That normalization will likely have an impact on streets projects in Edmonds as soon as this year, city engineer Don Fiene said.
Road resurfacing projects are funded primarily through the REET fund, so the slashed estimates mean Edmonds will spend only $400,000 to $500,000 on overlays in 2008, instead of the $800,000 to $900,000 the city was expecting, Fiene said.
“We are going to have to cut back because of the lower revenues. It is going to be fairly significant,” he said.
Streets cut up by utility projects will get priority, but other projects could slip into 2009 or later, he said.
Businesses are faring better.
While growth has slowed, it hasn’t stopped. After growing by 11 percent in 2006, and 3.5 percent in 2007, sales tax revenues in Edmonds were expected to grow only 1.4 percent in 2008, officials said. The early 1 percent growth shows the city is a little behind estimates.
But, business is still growing.
At Comstock Jewelry, owner Brian Comstock has seen a series of previous downturns in its 30 years of operation. That this one hasn’t hurt Edmonds yet is a sign that the business district is solid, he said.
“I think it is a multitude of things. It is business owners who are more qualified, it is marketing programs, and it is a good feel for the types of products and services (that customers want),” Comstock said.
Newer businesses said while the nation’s possible recession hasn’t hit home yet, they were watching closely.
Last year was a big year for Running in Motion, Frank Yamamoto’s store on Main Street. He made money, he said. Still, December was a little lighter than he expected, a trend that has continued into the opening months of 2008.
“It is not shutting down, obviously, but it is a little slower than we would like it to be,” Yamamoto said.
The sales taxes are something that the city needs to watch closely, as they are much more important to Edmonds than the REET, finance director Clements said.
“(The sales tax) is something we watch like a hawk,” Clements said. “It is still doing fine.”
“It doesn’t mean we’ll be immune from a recession, but the bottom line is that the economy up here is still very strong,” he said.
Reporter Chris Fyall: 425-673-6525 or cfyall@heraldnet.com
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