Plot Thickens As Fred Meyer Seeks To Build Store -- An Industrial Vs. Retail Saga

There's not much to see down at the old Salmon Bay Steel mill along the Lake Washington Ship Canal between Ballard and Fremont. Just rusted roofs on steel skeletons, broken-down remnants of machinery.

But among the ruins lies a story, stirring through the empty buildings whose only residents are the homeless who sometimes climb the chain-link fence to seek shelter.

It's the twisting story of the house that Fred Meyer wants to build there. It traverses hearings, environmental studies, permit applications, appeals and, most recently, what a state agency characterized as a lawyer's improper contact with a trial witness.

That latest development means the earliest resolution of the case will come in September. The postponement means the current owner can't raze the empty buildings or clean up the soil as it had planned in the meantime.

Alabama-based Birmingham Steel, the site's owner, informally began shopping the property in 1987 as it prepared to consolidate operations in West Seattle. Fred Meyer, the Portland-based general-merchandise chain that had been interested in the land as early as 1988, moved to buy it after it was officially put on the market in 1992.

This sparked a vehement debate about the right of a retailer to build a megastore in an industrial area filled with shipbuilders and sand, steel and fuel companies. Four years later, the controversy continues.

The cast of characters includes Fred Meyer and Birmingham Steel; Save Our Industrial Land (SOIL), a nonprofit group of Ballard residents and merchants whose goal is to stop retail businesses from encroaching on industrial space; area business owners afraid Fred Meyer will steal their customers; and, finally, the residents of Ballard, Fremont and the area inbetween who often must drive out of their neighborhoods for groceries.

But the story is more than a saga about living in the shadow of a big-box store. It is about the changing flavor of a neighborhood, the changing nature of a city.

Within the city of Seattle, 6,000 acres of land are zoned for industrial use. The land can be used for other purposes such as office and retail space, but in 1994, the city put limits on the amount of acreage that can be used for those other purposes.

If the Fred Meyer proposal came under scrutiny today, the planned 172,000-square-foot store would not be allowed in the area. But the company applied for its permit in 1992, before the new limits were approved.

That loophole angers SOIL members.

"We don't think it's appropriate for them to put in a mega-shopping center of over 160,000 square feet that will drastically change the nature of the industrial area and replace high-paying manufacturing jobs with lower-paying retail jobs," said Brad Rice, secretary of SOIL.

But real-estate agents contend that no industrial user came forward to buy Salmon Bay Steel, which sits on a 19.9-acre plot of land with direct shoreline access.

Even during the mid-1980s, interested parties were shown the property. After the 1992 listing, the land was marketed to 1,300 industrial users throughout the West, but Birmingham Steel received no offers, said Bill Lucas, the company's executive vice president.

Dave Speers, a redevelopment specialist for Kidder Mathews & Segner who dealt with the Salmon Bay site, said he marketed the land aggressively to industrial users in Washington, Alaska and Oregon.

For heavy industry, the site was too expensive and small, Speers said. For biotechnology companies, it was too far from the University of Washington and the medical centers on First Hill.

Best possible use?

So when Fred Meyer showed interest in the property, it seemed like the best possible use for the space, Speers said.

A Fred Meyer store at Salmon Bay won't boost the economy in the same way an industrial tenant or biotech company would create jobs, goods and services, said Dick Conway, a Seattle economist.

Last summer, after three years of hearings, traffic and environmental-impact studies, a revised plan for the Fred Meyer project was approved by the city Department of Construction and Land Use. The revised proposal incorporates two buildings from the steel plant and brings a more industrial style to the architectural design.

The proposal also would allow a small Seattle shipping company, Alaska Outport Transportation Association, to use the property's waterfront space. That space had long been without a shoreline tenant.

But the twists continued. SOIL appealed the approval, and the Shorelines Hearings Board, a part of the state Environmental Hearings Office that decides on cases that affect the waterfront, planned to hear the case in December. A few days before the hearing, a Fred Meyer attorney contacted a SOIL witness, which has further postponed the case.

The hearings board ruled on that incident in February. It found that Fred Meyer's lawyers offered Richard Feldman, a King County Labor Council member and SOIL witness, an inducement not to testify at the appeal hearing.

The board's decision states that Feldman himself had called Fred Meyer attorney J. Tayloe Washburn to urge Fred Meyer to support a settlement of the SOIL case that would include an agreement to employ only union members in constructing the store.

According to the decision, Fred Meyer agreed, "provided that the Labor Council not oppose the project and that Feldman not testify."

The hearings board ruled that the contact damaged SOIL, and it removed Fred Meyer's lawyers from the case and urged Fred Meyer to negotiate payment of a financial penalty to SOIL by March 25.

Fred Meyer disagreed with the decision, said spokesman Robert Boley. He said focusing on that one incident was a delay tactic designed to divert attention from the real issue, the validity of the store's permit to develop the Salmon Bay site.

If Fred Meyer had reached a settlement with SOIL, the appeal hearing for the permit would have taken place this month. The negotiations fell through, however, delaying the appeal until September.

Fred Meyer says it is still committed to the project and hopes to move forward as soon as possible after the appeal hearing. "We hope for all the people of Ballard who would benefit from having a Fred Meyer that this really is just a little bump on the way," Boley said.

But the delay affects not only those residents who look forward to having the convenience of nearby one-stop shopping. It also affects some of the industrial companies SOIL seeks to protect.

"We're very disappointed that we haven't been able to move already," said Jim Ferguson, agent for Alaska Outport, which ships goods between Seattle and small Alaskan towns. He said his location in the University District is cramped and inconvenient.

"We will be able to expand our service and put more people on the payroll," he said, adding that the cost of the land and cleanup would be too much for his company to afford without Fred Meyer.

Birmingham Steel also must pay the price for the long wait. The company has had to invest capital in keeping up the Salmon Bay site rather than investing in production and improvements at its West Seattle plant.

The delay of the sale means Birmingham Steel isn't sure it will get the money to reimburse the cost of tearing down the unused buildings and cleaning the soil at the mill. The Department of Construction and Land Use last week tentatively approved the demolition permit and received an application for the cleanup permit, but Lucas at Birmingham Steel said the company was withdrawing those applications.

City in transition

Beyond land use and litigation, the controversy reflects the evolution of a city and what some specialists call a natural change from an industrial to an urban area.

As Seattle grows into a city of urban villages, industrial land use is not as efficient in densely populated urban areas as shopping centers that serve their neighborhoods.

Even so, the Fred Meyer store would land right between two urban villages, Ballard and Fremont. And although Fremont is well-known for its eclectic shops, it lacks a pharmacy, a post office and a large grocery store, all of which the Fred Meyer would provide.

SOIL members and other critics worry that the store's location would increase traffic - as many as 10,000 cars a day - in an area not equipped to deal with the influx, making it more dangerous for pedestrians and less pleasant for residents.

But Suzie Burke, president of the Fremont Dock Co., said the traffic from heavy trucks carrying steel rods was far worse. Car traffic would also mean more business for the surrounding areas, she said.

"My businesses in Fremont get zip codes from all over the city as their customers, and if they didn't, they couldn't be here," Burke said. "We're neighborhoods, we're not exclusive terrain."

Ballard feels like a small-town enclave and has a more developed business center than other neighborhoods. Although many stores can survive the big-box phenomenon by specializing, Ballard stores could suffer from the Fred Meyer competition down the street.

"I haven't seen where the huge complexes draw people and more business into the area," said Ron Lewis, who owns Greenwood Hardware northeast of Ballard and opposes the Fred Meyer project. "For restaurants, it might be advantageous. But that doesn't hold true for the kitchen shop or clothing shop down in Ballard."

And having a Fred Meyer almost directly between Ballard and Fremont would hurt existing neighborhoods, he added.

"If they had bought a city block in Ballard, then that would be OK," he said. "Then it wouldn't be apart from downtown, it would be a part of downtown."

The stagnation hasn't helped the situation. In the four years since Fred Meyer moved to buy the property, no jobs have been created, no money brought into the community. The steel mill has become dilapidated and, some neighbors say, dangerous. Many simply wait for a resolution.

"No one has come up with the money or offered to do anything other than Fred Meyer," said Joan Reid, a longtime resident of the area between Ballard and Fremont. "Anything would be an improvement. We need some stores in this area. People unable to drive have to take two buses to buy a loaf of bread."