Tony Overman/The Olympian
Nels Honeycutt, manager of Skookum Bay Outfitters, carries merchandise racks from the earthquake-damaged building as he and William Hannah (left) move equipment to the temporary store one block away.

One downtown business getting temporary space

Skookum Bay Outfitters fights recovery loan snags

SCOTT WYLAND, THE OLYMPIAN

OLYMPIA -- Ever since the Nisqually Earthquake crumbled part of his Skookum Bay Outfitters store, Gary Sandgren has felt as if he were riding a raft over rapids.

The earthquake tore out a section of his building and caused severe structural damage, estimated at more than $400,000. That shut down his store.

Saturday, Sandgren found a space to set up temporary shop at 410 Washington St. until his store is repaired.

Sandgren is combining two adjoining spaces into one 2,400-square-foot store, with a monthly lease payment of $2,500.

"We at least wanted to have a face in downtown and stay in downtown," Sandgren said. "Let people know we are open."

Sandgren said he's happy to have found a temporary place so quickly, but he wishes it were closer in size to his 14,000-square-foot store.

"It doesn't really serve our needs; it's too small," Sandgren said. "That's a concern. It would be hard to imagine we would do the type of volume we were doing in our other location."

Sandgren has had to lay off seven people. The smaller shop simply doesn't require the same staff, he said.

Alpine Experience, a retail competitor, is leasing Sandgren storage space for his surplus merchandise. Alpine is charging 15 cents per square foot, a bargain compared to the 55 cents per square foot he would have paid at other places, he said.

But Sandgren said he has stumbled into a new hurdle with the Small Business Administration.

Sandgren hit the first snag just after the earthquake, when the SBA refused to lend him enough money to cover his store's damage and pay off his current mortgage. The agency said that the mortgage had been financed through SBA and that its policy forbade it from buying out its own loans.

Sandgren feared that taking on a second loan would add $2,000 to his $6,700 mortgage payment and perhaps drive Skookum Bay out of business.

The SBA eventually ruled that it could take over his mortgage because the loan was SBA-backed and not made with SBA money.

Sandgren's latest problem began when an inspector with the Federal Emergency Management Agency estimated the building damage at $192,000, well below the $400,000-plus estimate a private engineer had made.

SBA in turn denied his loan request, saying the damage must equal at least 40 percent of the building's assessed worth, Sandgren said.

The building has been assessed at $675,000, so FEMA's estimate fell well short of that standard, he said.

The next step is persuading the SBA that FEMA's estimate is low, he said.

Sandgren plans to send SBA a letter from his engineer stating the damage estimate, a letter from a city official describing building codes that create expenses and a cost estimate from a contractor.

He also hopes to receive an additional $200,000 loan from the SBA to cover lost business, plus a $100,000 loan from Heritage Bank.

If that happens, his monthly loan payments will end up around $6,700, right in line with the mortgage he was paying on the store before the earthquake struck, Sandgren said.

"It's a waiting game," Sandgren said. "We're still on a rollercoaster ride."

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