The uncertain future of downtown Aberdeen and Hoquiam

If Aberdeen and Hoquiam are the beating heart of Grays Harbor County, then U.S. Highway 101 is the aorta. Snaking through the two downtown corridors, the famous highway carries timber trucks, tourists, and everyday residents through the county.

But what do passersby see when they look out their windows? Often it is a few local businesses operating in the shadows of boarded up storefronts, prolific for sale and for lease signs, graffiti, and even the occasional broken window.

“When I was growing up, this was a booming place. There was pride of ownership, and there was pride in our communities,” said Greg Larson in a phone call with The Daily World.

Greg and his brother Shawn own and operate Buddy Moo’s along Highway 101 in downtown Hoquiam. Greg never planned to become an ice cream shop owner, but his passion for the future of Grays Harbor had him stumbling into the role.

“I’m pro-Grays Harbor and I want to see it get back on its feet,” he said. “We bought this building because we wanted to make something better for downtown rather than these nasty, beat-up, old buildings.”

The steady decline of the area’s timber industry since the late 1970s has forced the local economy to readjust. Tourism, retail, and other new industries offer a way forward.

But getting these businesses off the ground has proven to be a logistical challenge exacerbated by the lack of affordable retail spaces.

“I see no future. I see no development coming in,” said Michelle Conrad, owner of Tectonic Comics on Boone Street in Aberdeen.

Tectonic Comics was located at the Shoppes at Riverside until the mall closed permanently last March due to structural issues. The mall suffered roof damage due to a snow and ice storm on the weekend of Feb. 13, 2021. Tenants had until March 21, 2021 to move out, but finding a new location proved difficult.

Conrad first set her eyes on the Market Place building located at 822 E. Wishkah St. The property is owned by Oregon businessman Terry Emmert, founder and owner of engineering and transport service company Emmert International.

According to records from the Grays Harbor County Assessor’s Office, Emmert began purchasing property in the county in July 2019. He now owns more than 40 properties in Grays Harbor, many of which are located in the downtown areas of Aberdeen and Hoquiam.

Conrad, who runs what she deems to be a “fairly successful business,” was prepared to drop $2,000 a month on rent for the 5,000-square-foot building.

She was told renting the Market Place building would cost her $4,000-$5,000 a month, or about $1 per square foot.

She believes such rent prices are unsustainable for local businesses.

“With the economy and the population in Aberdeen, you can’t provide enough services or sell enough services to spend that kind of money on a space you don’t know. Nobody can pay all their employees and that rent —nobody has that kind of money to come in and revitalize downtown,” she said.

Conrad purchased the VFW building at 105 E. Heron St. on Sept. 17, 2021. Despite concerns over costly FEMA-mandated flood insurance, her monthly mortgage payment is approximately $1,600, significantly below what her monthly rent costs would’ve been on Wishkah Street.

Relocation woes

Tectonic Comics isn’t the only former mall business that struggled to find an affordable new storefront.

Tracy Towns runs the retail store A Bit of Everything located inside 122 E. Heron St. in Aberdeen. The space serves as a co-op for vendors of quirky vintage wares and handmade products. Towns rents out space to vendors at $1 per square foot. With her overhead, she believes $0.50 per square foot is her maximum rent cost for the entire space before the business becomes unsustainable.

She loves her great location downtown, but is fearful that a recent change in ownership may force her out of her storefront.

This July will mark one year into a three-year lease contract that Towns had with the late John Yonich. According to Towns, she will write her first rent check to Terry Emmert on May 1.

“I’m actually really nervous, I can’t afford to move,” said Towns. “I’m scared to move my business again, we’re still being found again by people who knew us from the mall and it’s almost been a year.”

Towns was a part of a small group of former mall businesses that approached Emmert about dividing the Moore’s Interiors building at 201 S. Broadway St.

According to Towns, rent was going for around $1 per square foot in addition to extensive renovation and utility costs.

One of the business owners interested in joining Towns in the Moore’s Interior building was Norma Roman of Trinkets and Treasures. She had hoped to rent the old Country Closet storefront inside the building before receiving a final quote of $2,500 a month.

“I don’t even know what kind of money I’d bring to that, I’m not going into business with that kind of overhead,” she said.

“Now there’s an empty, ugly building there because he would rather have it empty than have someone not paying top dollar.”

Roman is now a vendor at A Bit of Everything, but is worried that high rent prices will drive small businesses out of the downtown area.

“It’s sad times. They’re all leaving because they keep pumping up the rents and it isn’t feasible,” she said.

“Can’t you help out some of us small guys? We just want to make a living and make those buildings downtown look nice.”

Emmert’s vision

Emmert, who was drawn to the area by a friend, began investing in Grays Harbor with dreams of revitalization of Grays Harbor after the decline of the timber and fishing industries.

“It’s an area with some cool, old buildings and I thought ‘It’s a shame that no one is doing anything,’ so I ended up buying the vitamin store (in Aberdeen),” he said. “At that time, there was a health food market, so we had the building painted, and did some renovation. We bought some other buildings, and I bought the Becker Building as well.”

According to Emmert, public safety has created a major obstacle to successfully leasing his buildings located in the downtown Aberdeen area.

“Every time we go up to try and rent something, we have people with grocery carts camping in the doorway. It’s been that way for the last year and a half; we’re still sticking in there, and we’re trying to make every stride and change,” he said. “We can buy the property, we can paint it, but how can you rent something cheap when you get people breaking in and causing damage? They need to be prosecuted — period.”

He also attributes Washington state property taxes and the cost of flood insurance to the high rent prices that many local businesses have been unable to meet.

Over 3,100 properties in Aberdeen and Hoquiam are expected to be removed from a FEMA-designated flood plain when the Aberdeen-Hoquiam Flood Protection Project is completed. Aberdeen and Hoquiam residents currently pay over $2 million in flood insurance a year.

“We’re trying to make things workable and work with people, but unfortunately because the Aberdeen area had been so depressed for so long, and you have the mall where people were getting rent for less than insurance and taxes, it doesn’t always work out,” Emmert said.

One of the businesses for whom the rent didn’t work out is Furniture 2 Go, located on West Wishkah Street. Owner John Gray has been in the furniture business with his family for more than 37 years, and moved to Grays Harbor three years ago for the small-town feel coupled with the promise of future growth.

When he began to consider expansion, he was initially interested in the Moore’s Interior building across the street, but was then offered the Furniture World building at 101 E. Heron St. Like other potential renters, Gray was told he could expect to pay $1 per square foot.

“I was very, very interested, but the price just didn’t add up. The price was way outrageous compared to what I think this population can maintain,” he said.

Given the uncertainty of the coronavirus pandemic and ongoing concerns about the homeless population in downtown Aberdeen, Gray wound up putting the possibility of expansion on hold. He’s optimistic that property owners like Emmert have good intentions toward downtown, but also believes their approach may not be in line with the realities of the area.

“If their rents were lower, the storefronts would fill up quickly. I think they have a bit of a big-city mentality in our small town,” said Gray.

According to Emmert, public safety concerns will not halt his plans for a vibrant downtown Aberdeen. He hopes to dedicate the “main drag” to the cultural history of Grays Harbor, including statues to the musical artists that have come out of Aberdeen.

He hopes to turn the D&R Theater into a bustling entertainment space, and to bring back pride of ownership and cleanliness to the downtown area in the process.

“We need to clean it up. We need to lighten it up. We need to make it festive. We need to bring it back by enforcing the laws, or else it’ll become like Seattle, or it’ll become like Portland,” said Emmert. “We’re going to go ahead and work on it, we’re just not going to do it all at the same time. We need the cooperation of the city to enforce the laws and clean it up so that we can have an inviting, safe, atmosphere for our citizens and the people that work here.”

Some residents and business owners are skeptical about Emmert’s intentions, and believe the stagnant growth of the downtown Aberdeen and Hoquiam areas in recent years will persist.

“He’s taken a huge chunk of what’s downtown and it’s set up for failure — it’s set up to be a ghost town. If he’s going to continue what he’s been doing, downtown will die” Towns said.

Larson has adopted a buy-first approach when it comes to scooping up available property in downtown Hoquiam. In order to achieve his dream of bringing the area back to life, he has to ensure his ability to be competitive in the unprecedented local real estate market.

“When properties come up, we have to jump on it first and foremost,” he said. “If it’s a good building and it’s a practical building, I don’t want it going in someone else’s hands because then we can’t even consider doing anything that would benefit the community.”

Opportunity Zones

After years of watching outsiders with grand plans fail to deliver, Larson is wary that nonlocals like Emmert can truly facilitate the growth the area needs.

He hopes that impassioned locals like himself, with the help of local government, can “get back in the driver’s seat” and push the economy forward.

“They do not care about what happens here, they care about their tax breaks and taking advantage of the Opportunity Zone — that’s why they’re here,” he said. “I call it the ‘pimping out of Grays Harbor’ because we have people from out of town taking advantage of us.”

Opportunity Zones (OZs) are a part of a Trump-era economic policy that provides tax incentives to investors who fund businesses in designated underserved communities. OZs were created by the federal Tax Cuts and Jobs Act (TCJA) of 2017 and are determined by a state nomination process based on census tracts, which is then certified by the Secretary of the U.S. Treasury.

There are three OZs in Grays Harbor County: a large swath of eastern Aberdeen, most of western Hoquiam, and a substantial portion of the North Beach area from southern Ocean Shores all the way up to Moclips.

Investors file with the IRS to create a Qualified Opportunity Fund (QOF), which is structured as either a partnership or corporation for the purpose of investing in an OZ. These funds allow investors to delay paying taxes on capital gains.

If the fund is held for at least five years, the investor can reduce their capital gains tax by 10 percent. If it is held for seven years, that reduction becomes 15 percent. If the investor holds the fund for 10 years, then they do not have to pay capital gains tax on any new investment in the fund.

It is still unclear whether the original intention of OZs to benefit economically depressed communities has been realized. Loose investment requirements have spurred a series of unobtainable investments like high-end apartment buildings and luxury hotels that have only exacerbated wealth inequalities in those communities.

According to Emmert, who purchased his first property in Grays Harbor in 2019, the existence of OZs had no bearing on his decision to invest in the local community.

“I paid no attention to the Opportunity Zones. If there’s a way that would help us bring business in and make things more affordable, that’d be wonderful, but I haven’t found a way yet to bring a business there that would have some merit,” he said.

OZs have certainly stood in the way of community-minded investors like Larson, who will continue to work to make sure available properties are turned businesses that improve the community’s aesthetics and economy.

“I’m 51 and until the day I die I’m going to do everything I can to make it better,” he said.