Is business getting too big for Winslow?

Though still vibrant, the Bainbridge economy is feeling pinched by limited physical space, declining public-sector budgets and rising home prices.

But for those businesses able to overcome those obstacles, the island is a hospitable market both financially and personally, according to local entrepreneurs.

“Not surprisingly, Bainbridge Island is a big market for financial services,” said Rex Townsend, CEO of American Marine Bank. “Our main office is the largest financial insitution in Kitsap County, with $15 million more in deposits than anyone else.”

The comments came at Monday’s Bainbridge Island Economic Vitality Conference, presented by the Bainbridge Economic Council, which drew a standing-room crowd at Wing Point for a day-long “snapshot” of the island’s economy.

Although AMB is doing a robust business, and is re-expanding from its Bainbridge base into other areas of Kitsap County, Townsend said the national economic weakness is being felt.

“Our loan delinquency rate has gone from 2.4 percent to 4.95 percent in the last year, and there has been little growth in business loans,” he said.

For Ken Schuricht and Mary Hall of Winslow Hardware, the limiting factor is the lack of available space on the north side of Winslow Way, which forced them to locate their new Winslow Paint store outside of the downtown core.

“Downtown businesses can’t really expand, especially those on the north side of the street,” Schuricht said. “Construction costs are prohibitive, as are the parking requirements and lack of access for service trucks.

“Downtown may not be the major focus for retail expansion,” he said.

Hall said that the major obstacle facing retail stores is lack of available space.

“When we started looking for a location for the paint store, there was nothing available at all for two years,” she said, before the Hildebrand Lane location was built. And with the Village area filling up, she looks to the neighborhood service centers of Lynwood, Rolling Bay and Island Center as possible areas for expansion.

“I know some property owners in those areas won’t welcome that, but it would provide places where people in those neighborhoods could meet each other,” she said.

The good news is that six months after opening the paint store, sales are twice what they predicted, mostly to contractors who no longer need to leave the island to find what they need.

“People don’t want to get on Highway 305,” she said. “There is an incredible amount of money that we can keep on the island.”

Hall’s overarching concern is that the value of land on the island makes it difficult if not impossible for what she calls “essential” businesses to both pay the rent and maintain prices competitive with off-island retailers.

“If we didn’t own our own building, we couldn’t afford to run a hardware store,” she said.

A lot of those dollars that leave the island do so in the form of paychecks to island employees who can’t afford to live here, particularly public-sector employees.

“Only about 25 percent of our employees live on the island,” said city Administrator Lynn Nordby, who said that newcomers can’t qualify for a mortgage at today’s prices on a city salary.

The picture was slightly better at the school district – the island’s largest employer – and the park district, because a lot of their employees are long-timers, who got here when housing was more affordable.

But they are being threatened by shortages of taxpayer dollars.

“Though we think of Bainbridge Island as an affluent community, our per-pupil expenditures are in the bottom 10 percent for the State of Washington,” said school district superintendent Stephen Rowley, who said that no-growth enrollment combined with state budget pinches add up to a “grim” financial outlook for the district in the near term.

Park District Director Dave Lewis noted that voters failed to approve the district’s 2003-04 operating levy in February by a narrow margin, and that if the levy is not approved in September, the district will have to lock facilities and cease operations as of the first of the year until at least February.

Sounding a note of optimism despite the financial pressure was Washington State Ferries’ new CEO Mike Thorne, who observed that the ferries are Washington’s leading tourist attraction.

“We haven’t done much to build on that,” he said, but he suggested that marketing opportunities are avaiilable.

He also said that preliminary work should begin this summer on a modernized fare-collection system that will not only eliminate the hand-sale ticket booths but could interface with other transit systems, leading to such things as a “smart card” that could be used for both boat and bus fare.

Maintaining and expanding the ferry system is key to Bainbridge’s economic future, he said.

“When you define a region’s transportation system, you define the region,” he said.

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