The uncertainty with his FEMA loan application has Skookum Bay Outfitters owner Gary Sandgren still feeling the aftershocks from the February earthquake.

Steve Bloom/The Olympian
Cleanup at Skookum Bay Outfitters started immediately after the quake, as most of the display glass wound up on the sidewalk.

Obstacles to recovery challenge one business

Skookum Bay Outfitters fights for disaster loan

SCOTT WYLAND, THE OLYMPIAN

"It hasn't been easy. We're still in limbo." -- Gary Sandgren, owner of Skookum Bay Outfitters

Originally published Sept. 2, 2001

OLYMPIA -- Gary Sandgren is still a refugee trying to find his way back home, six months after the Nisqually Earthquake ravaged his downtown store.

The earthquake crumbled the top section of his Skookum Bay Outfitters store and caused severe structural damage, estimated at $400,000.

Sandgren's store remains closed.

He set up temporary shop at one downtown site.

When that space proved too small he moved to another.

At the end of the year, Sandgren will have to move again.

Meanwhile, Sandgren has been turned down twice for a disaster loan.

Sandgren said his business will probably fold if he fails to obtain aid on his third and final try.

"It hasn't been easy," Sandgren said. "We're still in limbo."

Layoffs and debt

Sandgren has had to lay off seven of his 12 employees. In late March, he began selling his outdoor equipment at a 2,400-square-foot shop at 410 Washington St., but it was too cramped.

In June, he moved to a store at 619 Legion Way that has three times the space of the previous site.

Still, the latest location is only half the size of the 15,000-square-foot store damaged in the quake, so Sandgren said he had to scale back his operation.

After Sandgren made the latest move, he started selling merchandise -- often at a discount -- on the sidewalk in front of his familiar reddish building on Capitol Way.

"We've been doing that to survive," he said.

To generate more income, his daughter works at an espresso stand near the Legion Way store, Sandgren said.

Despite their efforts, he has fallen in debt to suppliers, who are waiting patiently while he pursues a low-interest disaster loan through the Small Business Administration.

Rocky experience

Sandgren's experience with the SBA system has been as up-and-down as seismic waves after a quake.

Sandgren is seeking a $1.6 million loan, which would give him the funds to repair the damage, pay off the $570,000 he still owes on the building and cover the $300,000 in profit he has lost since the earthquake.

The loan would be a 30-year deal at 4 percent interest.

Sandgren's monthly payments would be $6,700, about the same as he is shelling out now on the higher-interest mortgage.

At first, the SBA refused to lend him the extra money he needed to pay off his mortgage, explaining that the mortgage had been financed through the SBA and the agency was forbidden from buying out its own loans.

But buying out the existing loan was the only option Sandgren could afford.

Taking on a second loan to cover repairs would have added $2,000 to his monthly payments, he said.

A week later, the agency ruled that it could take over his mortgage because the loan was SBA-backed and not made with SBA money.

But Sandgren's triumph was short-lived.

Disappointments

The Federal Emergency Management Agency pegged the building's damage at $192,000, less than half of what a private engineer had estimated.

The SBA told Sandgren that he was ineligible for a loan because the damage was less than 40 percent of the building's $675,000 assessed value.

Sandgren eventually convinced FEMA that the damage estimate was closer to $400,000.

Then came the next blow.

In June, the SBA ruled that his cash flow was too slim to afford such a large loan. He appealed, and a second loan officer upheld the ruling.

Sandgren is now making his final appeal.

A third loan officer, Steve Cochran, has been assigned to judge his case and could decide the fate of the loan -- and of Skookum Bay Outfitters -- as early as next week.

Sandgren said his accountant explained to Cochran that with gross yearly revenue of more than $1 million, Skookum Bay's cash flow is sufficient.

Although Cochran seemed receptive, he wasn't encouraging, saying it was difficult to contradict two rulings, Sandgren said.

Cochran declined to talk specifically about Sandgren's case.

However, Cochran said he is not against overturning a ruling if it turns out to be faulty, or if new information comes to light.

In any event, Cochran said he will look hard at why the previous loan officers ruled the way they did.

Cochran said he will decide whether he truly has reason enough to challenge the previous rulings.

One bright moment

Sandgren said the SBA has no reason to assume he can't handle the same monthly payments -- $6,700 -- that he has made for years.

His cash flow has ebbed since the quake because he has worked from a smaller shop, he said. Before that, he had slipped into the red once in 13 years.

That happened last year as a result of his money-losing Aberdeen store that he plans to close in September, Sandgren said.

"The Aberdeen store was draining me, " Sandgren said.

One bright moment in this whole ordeal has been the generosity of Hoyt Sign Co., which was supposed to take over the site on Legion in October.

Instead, the company agreed to let Skookum Bay stay at the spot until the end of December.

"It was very nice of him," Sandgren said.

But the extended time will mean little if the SBA denies the loan, he said.

Ending the saga this way would be bad both for Skookum Bay Outfitters and the federal government, Sandgren said. "It will force me into bankruptcy, and I will default on the existing SBA loan."

Scott Wyland is a business reporter for The Olympian. He can be reached at 360-357-0748 or scottolympian@yahoo.com.

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Earthquake Extra.

Earthquake Extra: photo gallery.

Emergency Preparedness.

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