Kitsap Peninsula Business Journal 25/06

June 2012 Vol. 25 No. 6

The Voice of Kitsap Business since 1988

Cash Mobs Page 5

Carmichael retires after long tenure at helm of Kitsap Bank New Bremerton Cinema Page 14

Inside Special Reports: Real Estate, pp 8-18 Technology, pp 26-28 People, pg 2 Financial, pp 24, 25 Human Resources, pg 33 Automotive, pp 34, 35 Editorial, pp 36-38 Home Builders Newsletter, pp 19-22 Jim Carmichael, center, is retiring as president and CEO after 35 years with Kitsap Bank. Tony George, left, and Steve Politakis will take over the bank’s top management positions.

By Tim Kelly, Editor He’s not a well-traveled guy, and that suits Jim Carmichael fine.

Carmichael, who will retire at the end of June as president and CEO of Kitsap Bank, accepted a job with the bank 35 years ago partly because he wanted to get off the road.

His previous job as head bank examiner with the Federal Deposit Insurance Corp.

involved covering the territory of the San Francisco regional office, as well as trips to Washington, D.C., as an instructor for FDIC training classes.

“He wanted to be home,” recalls Helen Langer Smith, a longtime member of Kitsap Bank’s board of directors who, along with her mother, hired Carmichael in 1977.

Years later when she was board

chairwoman, Smith wanted to give him a trip to Hawaii as a bonus after the bank made it through a challenging year.

Carmichael passed it up.

During a recent conversation in his office overlooking the waterfront in Port Orchard — where he and his wife, Sherry, raised their four children — Kitsap Bank’s longest-serving CEO said he’s enjoyed his

career as a community banker.

“I had no desire to go to a big bank and be transferred throughout the country,” Carmichael said.

The bank he’s retiring from is a whole lot bigger than it was when he joined the Cover Story, page 13

Big changes for SAFE Boats Company lands Navy contract, will build bigger patrol boats at Port of Tacoma site

By Tim Kelly, Editor Building big boats for the Navy means big changes for SAFE Boats International.

But it doesn’t mean the company is scaling back its operations at the Port of Bremerton’s Olympic Industrial Park or preparing to transition out of that site.

SAFE Boats will begin manufacturing a new

generation of patrol boats — the MK VI, known as the Mark Six — for the Navy this summer at a leased waterfront facility in the Port of Tacoma.

The company had to find a site on the water to build those boats because at 78 feet in waterline length and 85 feet overall, they are too large to be Cover Story, page 4

Nelson receives Lifetime Achievement Award for work in affordable housing Clarence Nelson, a local affordable housing professional, was recently presented the Lifetime Achievement Award at the 2012 NW Affordable Housing M a n a g e m e n t Association convention Clarence Nelson

held in Coeur d’Alene, Idaho.

Nelson has spent over 20 years working in affordable housing in Kitsap County and lives in Poulsbo with his wife, Easter.

Gig Harbor’s Java & Clay Café recognized with Main Street award Java & Clay Café, a locally owned pottery painting studio and coffee lounge in Gig Harbor, and owners Randy and Kelly Blue were recognized as a “Business

Success Story” at Washington Main Street’s Excellence on Main awards ceremony May 23 in Chelan. The event was held in conjunction with RevitalizeWA, the state’s Preservation and Main Street Conference.

The couple bought Java & Clay Café two years ago and began work to stabilize and expand the business. This included extending their hours until 8 p.m. and expanding their offerings to include beer, wine and live music in the lounge. The Blues also purchased several electric bikes and began offering bike rentals in the

downtown area.

“We are delighted to recognize Java & Clay Café and owners Randy and Kelly Blue for their continued success and commitment to Gig Harbor,” said Sarah Hansen, Washington State Main Street coordinator. “Randy and Kelly’s energy, attitude and business savvy are vital to the success of the Gig Harbor waterfront. Their commitment to being involved with the Main Street program, local schools and clubs illustrates their broad dedication to the success and vitality of Gig Harbor.”

The Gig Harbor Historic Waterfront Association, a Main Street Organization, brings together community and waterfront stakeholders to encourage economic vitality and to preserve the historic character and quality of the area.

For more information on the association, visit their website at www.gigharborhistoricwaterfront.org, or contact Mary DesMarais at info@ghhwa.org or (253)514-0071.

2 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

Kitsap Credit Union adds two new members to Supervisory Committee After completing a six-month training period, Pete Schlicher and Gerda Oostman recently began their appointments as members of Kitsap Credit Union’s Supervisory Committee.

A former Harrison Medical Center vice president , Schlicher has served as a board member and past president for several nonprofit organizations prior to his appointment at KCU. Schlicher views Pete Schlicher credit unions as an important means for communities to meet their financial needs and as a strong cornerstone to a successful community.

With her professional background as an administrator at Stanford University and a bachelor’s degree in organizational behavior, Oostman is well suited for her role on the Supervisory Committee. Gerda Oostman A self-professed credit union cheerleader, Oostman is a strong believer in the “refreshing” credit union philosophy of not for profit, not for charity, but for service, and the priority KCU places on the financial well being of its members.

KCU members also recently voted to reelect Wendy Johnson as chairperson while promoting longtime board member Mary Lou Addy to vice chair. Board members serve as nonpaid representatives for member interests.

Kitsap Credit Union is a not-for-profit financial cooperative serving a membership of over 80,000 from 17 local branch offices.

Membership eligibility is open to those who live and work in Washington state.

Gold Mountain’s longtime director of golf stepping down at year’s end

By Tim Kelly, Editor Scott Alexander said when he took the job as head professional at Gold Mountain Golf Club in 1984, there was “no way to go but up” for the municipal course owned by the city of Bremerton.

And that’s indeed what happened, as Gold Mountain developed into one of the top public courses in the Puget Sound region, adding the acclaimed Olympic Course in 1996 to the Scott Alexander original Cascade Course.

Now, citing a desire to “simplify my life a little bit,” Alexander has decided to step down at the end of the year as Gold Mountain’s director of golf.

“I’ve absolutely loved it, but the timing just feels right for me to try a new challenge,” he said recently.

The new challenge will be focusing fulltime on his golf cart rental business, which Alexander said has expanded in the last few years. That venture with his friend Mark Knowles, a former golf pro, rents space from the city of Bremerton for their fleet of 500 carts, which they rent to other golf clubs for big tournaments, as well as to the University of Washington for football games, to Seafair in Seattle, and to county fairs around the Northwest.

“It’s turned into a good, solid business,” Alexander said. “It’s a seasonal business, with five employees rather than 100 (at the golf club operation), so you have some down time.

“I’m really excited about it.”

After improving course conditions and raising Gold Mountain’s profile in the region’s golfing community, Alexander convinced the city to build a second 18hole course by tracking how many requests for tee times the club was unable to accommodate when demand was high in the 1990s.

“As we promoted it and got more people coming over, the city had the foresight to take the extra revenue and put it back into the course and make it better,” he said.

The Olympic Course was one of the most notable projects designed by golf course architect John Harbottle, who died unexpectedly last week in California.

Harbottle, 53, and Alexander played golf together at Seattle University.

Alexander said Harbottle “did an amazing job building such a great golf course; it surpassed anything I ever thought about.”

Olympic, which hosted the 2011 U.S. Junior Amateur Championship and the 2006 U.S. Amateur Public Links Championsip, was recently ranked the eighth-best municipal course in the country, Alexander noted.

When he steps aside, he thinks Gold Mountain will be in good hands with the longtime duo of golf pro Daryl Matheny, a likely candidate to take over as director of golf, and greens superintendent Ed Faulk.

And Alexander said he’ll continue to be involved with the municipal course that “feels like a part of me.”

Awards gala celebrates women business owners Since its first monthly meeting in 2010, the Alliance of Women Owned Businesses has celebrated local entrepreneurs. The organization hosted its inaugural Crystal Star Awards on May 17 at the Canterwood Golf & Country Club in Gig Harbor to shine a light on six local women business owners, chosen out of more than 30 candidates in the West and South Sound

after a monthslong application and interview process. The event exceeded expectations and drew 170 people, according to Julie Tappero, founder of AWOB and owner of West Sound Workforce.

The six finalists were divided into two Awards, page 7

June 2012 Kitsap Peninsula Business Journal • KPBJ.com 3

Shirley DeFord Photography

Terese Garrett-Miller accepts her AWOB Rising Star award from Julie Tappero.

SAFE BOATS

from page 1 transported by road from SAFE Boats’ manufacturing site in Bremerton to the water for testing.

“We looked locally in Kitsap for a place to manufacture these boats on the water,” but couldn’t find a suitable site, company spokesman Bryan McConaughy said.

The 22,000-square-foot Port of Tacoma site needs some upgrades, such as heating the building and adding a natural gas line for use in aluminum welding, to be operational for SAFE Boats by mid-July, he said. The company will be able to have six boats in production at a time at the facility.

The $30.5 million contract with the Navy is for five of the new boats, with a $6 million option for a sixth.

McConaughy said the first MK VI will be delivered within a year from when SAFE Boats starts its manufacturing operation in Tacoma, and the company will deliver another boat approximately every four months after that to complete the contract.

The company said the new craft is a larger version of its versatile Archangel class

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patrol boat and has a hull optimized for both performance and fuel economy. The MK VI will be powered by twin diesel engines and waterjets, capable of speeds in excess of 30 knots at full load.

With a range of more than 600 nautical miles, the patrol boats will be used by the Navy as part of the Naval Expeditionary Combat Command.

According to Defense News, the Navy plans to eventually order 48 of the larger patrol boats.

But SAFE Boats sees the potential for selling even more of them internationally.

“The need for this type of platform is pretty significant all over the world, not just in the U.S.,” McConaughy said. “We’re very excited about the opportunity.”

But he emphasized that SAFE Boats still has plenty of work to keep its manufacturing operations humming at the Port of Bremerton, where the company is a key tenant in the industrial park.

“Based on our current pipeline of other contracts we have going on, Bremerton will see an increase,” McConaughy said, adding

that SAFE Boats is “close to extending our current lease with the Port of Bremerton.”

Some workers will transfer to the Tacoma site, which will initially have a workforce of 20 that will gradually increase to about 50. But SAFE Boats will hire more workers to maintain its 270-employee operation in Bremerton, and to expand it in the future as the company continues to produce a range of smaller boats, McConaughy said.

“The small boat market is still a huge market for us, and we’re not going to turn our back on that,” he said. “We envision that Bremerton is going to continue to grow, and continue to produce a great product.”

According to an article in The News Tribune, the Tacoma shipyard where SAFE Boats will lease space employed 33,000 workers during World War II and built 74 ships, including escort aircraft carriers, tankers and cargo ships.

The nearly century-old site was first operated by Seattle’s Todd Shipyards Corp. in 1916, and two dozen ships were build there during World War I.

State will appeal ruling striking down supermajority vote requirement for tax increases OLYMPIA — The Washington State Attorney General’s Office will continue to defend against a lawsuit challenging the state’s voter-approved law requiring a supermajority vote by legislators to raise taxes, and voter approval of tax increases that exceed the state spending limit.

King County Superior Court Judge Bruce Heller ruled May 30 that Initiative1053, approved by the voters in 2010, is unconstitutional. The court held that the supermajority and voter approval provisions restrict the Legislature’s constitutional authority to raise taxes.

“We thank Superior Court Judge Heller for his thoughtful consideration of this matter,” state Attorney General Rob McKenna said in a news release. “However, we will appeal this decision because we believe these voter-enacted laws are constitutional, and we are determined to defend the will of the voters, just as we defend laws passed by the Legislature.

Several times, voters have sent a clear and

consistent message about tax increases, and it’s within their legal rights to do so.”

The court denied the state’s motion to dismiss the lawsuit filed by several state legislators, the Washington Education Association and the League of Education Voters. The Attorney General’s Office will file an appeal to the Washington State Supreme Court.

“We believe that this suit is not appropriate for judges to resolve, in part because the Legislature has not chosen to enact a tax increase by majority vote. We also believe the challenged laws are well within the authority of Washington’s citizens to enact. We’re optimistic that we and the voters will ultimately succeed,” McKenna said.

The “two-thirds requirement” was approved by voters in 1993, 1998, 2007 and 2010. The Legislature also has re-enacted the two-thirds requirement and referendum provision.

Cash mobs connect local folks who like discovering, supporting local businesses

Cash mobs, page 6

Customers browse colorful displays during a recent cash mob visit to Nancy’s Green Garden in Kingston.

Photo courtesy Lisa Jakimowicz

June 2012 Kitsap Peninsula Business Journal • KPBJ.com 5

By Tim Kelly, Editor What’s behind the recent phenomenon of “cash mobs,” and is it likely to have a significant impact on small businesses beyond a one-day boost at the cash register?

Other than the basic template of using social media connections to get a sizable group of people to show up together and spend money at a local business, cash mobs take different approaches and basically operate however their organizers choose.

In some places cash mobs might adopt the style of a flash mob, when people suddenly assemble in a public place for some random activity or performance.

That’s not how they roll in Kitsap County, though.

“We don’t have an element of spontaneity, because we don’t want to cripple a business,” cash mob organizer Lisa Jakimowicz said. The Poulsbo woman explained that the visits are arranged in advance — they’ve even had special Tshirts printed — to make sure business owners are prepared and have enough staff and inventory on hand to handle an atypical rush of customers.

That was a bit of a challenge for Julie Krucek, the first area business owner to experience a cash mob visit, at Jak’s Café and Espresso in Poulsbo. She said she volunteered to host the first one when a group of Facebook friends, who meet weekly at her café for personal contact, talked about joining the cash mob trend.

Although she knew what was coming and was preparing for a busy lunch on the designated day, the place filled up earlier than Krusek expected.

“They hit me first thing in the morning, and by 9:30 I was full,” she said.

So she called her pregnant, 19-year-old daughter to come in and help, and Krusek said the cash mob folks and other customers who filled her café were patient and understanding.

“We pulled it off and it was great,” she said. “We were busy all day; my sales were probably close to double that day for an average Saturday at that time of year.”

Other businesses have reported similar results, and when that happens it means mission accomplished for the cash mob organizers.

“We want to really help people in need,” Jakimowicz said, although she’s realistic about what impact the group visits can have. “It’s not that our one day is going to solve all their problems, but it may help pay the bills at the end of the week.”

Or it can provide a boost to a place like Bella Luna Pizzeria in Suquamish during its slower season, when rainy spring weather isn’t conducive to visiting boaters tying up

CASH MOBS

from page 5 at the dock in front of the waterfront eatery.

“I think it’s a great idea,” said Bob Rowden, owner of Bella Luna, site of a recent cash mob visit.

“I’m 100 percent sure there will be some sort of return customers, especially from people who have never been here before.”

Rowden, who said he studied marketing at Seattle University, has done “guerilla marketing” in the past, bringing an occasional load of free pizzas to an area school, and making a similar delivery every year for the local Relay for Life, the 24-hour walkathon fundraiser for cancer research.

“I show up at two or three in the morning with 10 or 12 pizzas,” Rowden said, “and I walk about a mile.”

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“Right now, this is the hot, latest thing to get people’s attention and get them out of their house.”

Lisa Jakimowicz

Cash mobs work the other way around.

Rather than a business providing its product free at an off-site special event, a cash mob is free marketing that draws a crowd of customers who happily plan to spend a minimum amount at the designated business. And positive word-ofmouth buzz hopefully will spread after that.

“I like it because instead of going to Walmart or somewhere else and spending $20, I’m supporting local business, and keeping them in business,” Cindy Price said while sharing a pizza with cash mob friends at Bella Luna.

“And I’m learning about all these cool places,” she added, “and I live here and didn’t even know about them before.”

Price, who has a home-based business selling cookware, said she hadn’t been going out much because her husband just recently went back to work after being unemployed for several months.

“Things are getting back to normal for us,” she said, “and when I start going out more, I’m gonna go to these places I’m

finding out about.”

Jakimowicz, who created a Facebook page for Kitsap County Cash Mobs in March, has recruited people from communities around the county to help select businesses in their areas that would benefit from a cash mob visit.

Those organizers’ recommendations have steered cash mobs in the past few weeks to the jewelry and gift shop Clever Inc. in Kingston, the Naturally 4 Paws pet supplies store in Silverdale, Rockit Roost in the Silverdale Mall, Caffe Perfetto in Bremerton on the day of the annual Armed Forces Day Parade, and a twofer that started at Nancy’s Green Garden in Kingston followed by a gathering at the Brownsville Deli.

Besides helping local businesses, Jakimowicz has plans for the cash mobs to contribute in other ways. The recent event at Rockit Roost, for example, included donating a share of that day’s proceeds to the Wounded Warrior Project that helps injured service members.

Cash mobs are essentially a focused, social media-driven variation of the “shop local” theme that’s long been promoted in communities everywhere. And the phenomenon isn’t rooted in philanthropy; rather, cash mobs are thriving because the participants have fun meeting new friends as they shop together to support local businesses.

“Right now,” Jakimowicz observed, “this is the hot, latest thing to get people’s attention and get them out of their house.”

6 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

Kitsap Tours receives Certificate of Excellence for TripAdvisor ratings Kitsap Tours, the “Seattle” tour that starts with a ferry ride, has received a TripAdvisor Certificate of Excellence award. The award, which honors hospitality excellence, is given to establishments that consistently achieve outstanding traveler reviews on the TripAdvisor website.

To qualify for the Certificate of Excellence, businesses must maintain an overall rating of four or higher, out of a possible five, as reviewed by travelers on TripAdvisor. Additional criteria include the volume of reviews received within the last 12 months. Kitsap Tours has a fivestar rating.

“Kitsap Tours is pleased to receive a TripAdvisor Certificate of Excellence for the second time, especially considering we have only been in business for t wo years,” said Jean Boyle, who owns the Suquamish-based business with her husband, Jim. “We strive to offer our customers a memorable experience, and this accolade is evidence that our hard work is translating into positive traveler reviews on TripAdvisor.”

Kitsap Tours (www.KitsapTours.com) brings travelers from Seattle to Bainbridge Island on the Washington State Ferries, then takes them in luxury vans to a range of destinations on the Kitsap Peninsula.

Local company’s product praised at LightFair show At the recent LightFair International trade show in Las Vegas, Differential Energy Global Ltd. drew praise from the judges for its entry in the category of Replacement LED Lamps.

According to Rick Flaherty, CEO of Port Orchard-based parent company Leader International Corp., the judges rated the LED Hi-Lamp entered by Differential Energy Global as one of the top five products in the category and said “these products embody innovation and show great promise.”

The LED Hi-Lamp is a dimmable 25100 watt replacement for 70-400 watt HID (high-intensity discharge) lamps. It has an innovative spring-loaded tip allowing for 360-degree rotation.

The company said it expects to have its LED Hi-Lamp product line ready for commercial sales by late August or early September.

3 nominations for Boxlight in Amer. Business Awards Boxlight, a Belfair-based lighting company, was named a finalist in three different categories in the 2012 American Business Awards, and will ultimately be a gold, Silver, or Bronze winner in the Stevie Award program.

More than 3,000 nominations from organizations of all sizes and in virtually

judging committees determined Stevie Award placements from among the finalists during final judging, which was scheduled to be completed May 25.

All organizations operating in the U.S. — public and private, for-profit and nonprofit, large and small — are eligible to submit nominations for the American Business Awards. For the first time, the awards will be presented at two events: the ABA's traditional banquet on June 18 in New York, and a new tech awards event on Sept. 17 in San Francisco.

Details about The American Business Awards and the list of finalists in all categories are available at www.stevieawards.com/aba.

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categories: Rising Stars, who have been in business for less than five years; and Crystal Stars, who have been in business longer than five years.

The Rising Star award went to Terese Garrett-Miller, owner of Bella Kitchen and Home in Gig Harbor. The other two finalists were Cheryl Iseberg, owner of Blue Zone Consulting in Lisa Chissus Fircrest; and Mary Lou Guinn, owner of Point of View by Lou Photography in Gig Harbor.

Lisa Chissus, owner of CFM Consolidated of Fife, was the Crystal Star award winner, and the other two finalists were Monica Downen, owner of Monica’s Waterfront Bakery and Café in Silverdale; and Julie Thomson, owner of Family First Adult Family Homes in Gig Harbor.

The winners thanked their families and supporters, and emphasized the importance of customer service in making their businesses successful.

The judges were David Zeeck, president and publisher of The News Tribune; Patty Lent, mayor of Bremerton; and Julie Anderson, Pierce County auditor.

Tappero anticipates the awards will be an annual event based on the success of the inaugural gala and feedback from both participants and finalists.

“One of the nominees told me that the application process was fabulous,” Tappero said. “The packet of questions they had to complete made her really think about her business, her goals, what contributed to her success, and why she was doing what she was doing. She felt like the process had been so beneficial to her, it didn’t matter whether or not she was the winner.

“All of our members felt inspired and excited about their own businesses from learning about our Crystal Star and Rising Star finalists’ stories,” Tappero added. “It was a powerful and moving process and experience for all of us who participated.”

every industry were submitted this year for consideration in a wide range of categories, including Most Innovative Company of the Year, Management Team of the Year, Best New Product or Service of the Year, Corporate Social Responsibility Program of the Year, and Executive of the Year, among others.

BOXLIGHT was nominated for three different awards including • Fastest Growing Tech Company • Most Innovative Tech Company • Tech Innovator of the Year Finalists were chosen by more than 140 business professionals nationwide during preliminary judging in April and May. More than 150 members of 10 specialized

Tall order to fill large, long-vacant commercial sites

8 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

Tim Kelly, Editor Some big commercial spaces that have long been vacant — and there are plenty of such sites around — may be getting new tenants in the not-too-distant future.

One of the largest and most noticeable empty places is the 4200 block of Wheaton Way in Bremerton, where a vast parking lot stretches in front of buildings that used to house Lowe’s, Albertson’s, Kmart and — until a month ago — a Rite-Aid store.

Andrew Miller of Jones Lang LaSalle, the real estate firm handling the search for a new tenant in the former Kmart building, said that East Bremerton area might see some significant changes this year. It’s obviously been a daunting challenge, though, to find new businesses to fill such a large-scale location during a tough economy.

“It’s a massive big-box site in Bremerton, so that’s an understatement,” Miller said.

“Any big place anywhere is more difficult to fill than a smaller space, and in a depressed area, of course it’s harder to fill.”

Another former Kmart site, on Olney

Avenue in Port Orchard, also is typical of the difficulty in filling long-vacant commercial spaces.

“Right now it’s hard to place tenants in any of these larger spaces,” said Gary Anderson of Kitsap Commercial Group.

He said big companies that were

considering expanding to Kitsap County a few years ago may have shelved their plans because of the recession. For example, Home Depot has completed most of the permit process but has not moved forward with its plan to build a store on Bethel Road in Port Orchard.

The mostly empty retail center in the 4200 block of Wheaton Way in Bremerton includes large buildings that once housed anchor tenants Lowe's, Albertson's, Rite-Aid and Kmart. The property owners said they hope to bring in some new tenants in the near future to fill some of the vacant commercial space.

Elsewhere in Port Orchard, which has numerous vacant buildings on Bay Street along the downtown waterfront as well as in other parts of town, redevelopment efforts are seeing mixed success. An ambitious plan to convert a former Bay Street nightclub into an indoor market has run into delays, but a new coffeehouse and yoga studio just opened in a renovated building next to the Annapolis passenger ferry dock, and a new restaurant and sports bar will be opening soon at the former site of the Clubhouse Restaurant on Mile Hill Drive.

There are other signs that things are starting to turn around in Kitsap County.

The four-story structure known as the D4 building in downtown Bremerton has been empty since Dimension 4, Inc. closed its business at the end of January, but it may not be vacant for long.

“We’re in negotiations with two different local companies... that want the whole building,” said Lisa Phipps, principal broker with Sound West Group.

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AN INTERVIEW WITH HBA’S TERESA OSINSKI

Positive signs from the home building side but across all county zip codes the price per square foot is flat and in some cases slightly higher and that’s positive …because if you’re buying, one of the worries consumers have is that they don’t want to buy a home that’s declining in value.

KPBJ: What else makes new construction appealing?

Osinski: New construction is a good, solid investment and you’re not going to find lot values as good as they are now. There are good mortgage packages. Now that you see

positive, flat indicators, it means it’s a good time to buy. It’s a safe time, particularly for the first-time homebuyers, but also for those trying to sell and move up, hire a builder to build their dream home.

KPBJ: What are builders building more of currently?

Osinski: We know builders work in a competitive environment so they will put on the market the product they know customers need and can get financed — around the county, generally the product

that’s going to sell is in the $200,000$300,000 range. …Kitsap’s an interesting place because we have a very diverse demographic, diverse geography and we probably have a product here to accommodate every lifestyle.

KPBJ: Some builders have said that new homes are a lot more affordable now compared to past markets; is that having an impact on demand?

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By Rodika Tollefson New home construction has been in limited demand during the past few years, with remodels dominating the builders’ project lists. However, things are starting to shift as several indicators show a positive change. That includes the slight increase in the number of new home permits — 64 issued in unincorporated Kitsap County during January through April this year, 12 more than the same period a year ago.

Kitsap Peninsula Business Journal sat down with Teresa Osinski, executive vice president of Home Builders Association of Kitsap County, to discuss the latest local trends in home building and issues that impact the industry. The HBA represents about 300 members including contractors and other professionals associated with the industry.

KPBJ: What are you seeing in the residential construction market locally and how are things different from a year ago?

Osinski: What we can discern from the real estate market report — and it depends on where specifically you are in the county — is that the market is flat with regards to closed sales compared to a year ago. … Each area of the county has a sweet spot and if you’re selling in that price r ange, you are doing good. One would assume builders are building product within the speculative side in that sweet spot, but our custom builders are also building in ranges higher than that, they’re building homes for specific buyers.

It’s been more difficult to build speculative homes but that’s not to say there are no speculative homes out there.

KPBJ: What are builders looking for in terms of indicators?

O sinski: What builders are looking for is the inventory on the market to diminish. Their business is acutely affected by supply and demand. …There was a significant number of pending sales in March — over 100 more this year than last year — and that should translate in more sales in April. …Builders see the increase in pending sales as a positive thing if that absorbs existing inventory.

KPBJ: Are you noticing any other trends?

Osinski: One interesting fact this year compared to last is that short sales have stayed fairly flat but the amount of real estate owned and sold by the banks has come down significantly. Those (homeowners) with the potential of having foreclosures have come down in numbers — to see those numbers declining fairly significantly over a period of a year is a positive thing.

The other thing that’s interesting about the market is that for traditional sales, the median price has stayed flat — it’s slightly different from a year ago — and by that you could assume we’ve reached the bottom in prices. That’s not to say there won’t be a person out there with a different experience,

AN INTERVIEW WITH MIKE ELIASON

Real estate industry turning the corner

By Rodika Tollefson Mike Eliason has served as the government affairs director for Kitsap County Association of REALTORS for nine years, and as association executive for more than seven years. The trade organization has about 525 members.

Formerly a licensed real estate broker, Eliason has worked in the industry for more than two decades and recently was selected to the state association’s strategic planning task force. KPBJ met with Eliason to talk about issues facing the local real estate industry today.

KPBJ: Your membership reflects the market, in a way. How have your numbers changed?

Eliason: Five years ago at peak, we were over 1,000 members. Last year, we had 550, compared to 525 this year. It’s much more stable because in the past we had more members leaving than coming in. In May, the board approved 10 new members — every month we’ve consistently approved new members.

KPBJ: What have you seen happening in the market past six months?

Eliason: A dramatic increase in pending sales and corresponding closings. About six months ago we noticed pending and closed sales in King County escalated and we knew we’d have an increase in Kitsap a few months later, and that’s what’s happening.

This month’s numbers (for April) showed the largest month-over-month increase in pending sales: 39 percent increase compared to April of last year.

KPBJ: Are realtors more optimistic?

Eliason: The sentiment is of much more encouraging market conditions.

We’ve returned to a much more stable market in the past year.

KPBJ: What has helped the market improve?

Eliason: The Kitsap economy is different than the rest of the country because we have government employees and we depend on the DOD (Department of Defense) and those commuters to King County who have technology and higherpaying jobs. The biggest impact was on declining incomes and consumer confidence. There was pent-up demand in the market by consumers and now as we’re having a re-emergence in consumer confidence, the market improves.

KPBJ: Are some things still uncertain though?

Eliason: I think we’ve turned the corner. One thing we don’t know is the

effect of the presidential election. …Short sales and foreclosures are still impacting the market and will be for the next few years.

But even some of those properties now are getting multiple offers; there are still a lot of them out there.

KPBJ: Is there still a shortage of inventory?

Eliason: Our goal is to have a stable market so we have affordable homes. We’re moving in that direction. Now that sellers are coming around, I think the inventory will increase. To make the real estate market function, you need an adequate supply of homes and adequate number of consumers but you also need the lower-priced homes to sell so you have move-up buyers. During difficult economic times the hardest hit is the midrange and upper-priced homes; you need to have turnover in the lower-priced market and that’s happening.

KPBJ: Are mortgages getting any easier to obtain?

Eliason: The difficulty is the creditworthiness of consumers. Many haven’t saved enough for a down payment on a conventional loan. There’s also been talk at the federal level about increasing down payment requirements for underwriting and any time you increase the down payment, you’re forcing more people out of homeownership. They (government officials) are trying to apply a political

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decision to an economic problem.

KPBJ: Any other trends that are worth mentioning?

Eliason: Consumer confidence is a big one since two-thirds of consumer spending drives the economy. The biggest problem is that Americans generally don’t save money. …We also have significant national debt and sooner or later that catches up with how it impacts consumers.

KPBJ: What’s next for the industry locally in the next six months?

Eliason: New people are moving to the county because of civilian jobs at Bangor and the shipyard, and the arrival of the Navy ships, plus King County doesn’t have enough housing for workers. It’s a positive outlook for demand. At least we’ll have enough of resale supply, but definitely not enough demand for new construction because of regulations and land availability.

To me, the biggest problem area is the lack of lots, and future construction will be affected by the new UGAs that will be adopted by the county in August. It will further push consumers into either leaving the county or moving to rural areas. …The good news about the downturn is there’s more affordable housing now where in the past people were being priced out of the market. That’s the positive outcome, we’ve given as many people as possible the opportunity to afford a home.

A slow and steady increase (in the market) is a positive thing.

New business offers property maintenance and foreclosure preservation service Clarence and Easter Nelson have formed Secure Assets, LLC to offer property maintenance and preservation services throughout the Puget Sound area.

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In addition, they will offer a preservation solution for banks, lenders and commercial and residential real estate companies that handle foreclosures.

Services will include debris removal, securing the property and photographic documentation, repairs and lawn maintenance.

Clarence has been in the conventional and affordable housing property management business for over 30 years and most recently worked with the Bremerton Housing Authority as director of contract administration.

The company is located in Poulsbo and can be reached at (360) 731-1609, or email at secureassets1@aol.com.

Commercial real estate market recovery lags Countywide, the lowest vacancy rates are in Silverdale and highest in Port Orchard, but in Poulsbo commercial vacancies have gone up because of new construction activity.

“No matter what type of property, filling vacancies is difficult. Not a lot of new businesses are coming here or getting started,” Gartin said. “We’re at least stable at this point and seeing some improvement.

That’s positive compared to where we were.”

Mike Brown of FPH Construction and the Sound West Group, which offers commercial real estate brokerage, management and a host of other services,

said he also sees things slowly improving.

“It’s a tough market, but there’s still activity,” he said.

He noted that a lot of the space left behind by the closing of big-box retailers has been absorbed and repurposed. “That was the biggest drag on the market,” he said.

Silverdale is especially popular in the medical market, which Brown said has overall the best activity throughout the county.

“There’s a big surge of doctors wanting to locate or relocate to Silverdale. Those buildings are very financeable now,” he said. “Their practices are growing or they’re

updating their spaces. It’s good for the industry overall.”

The historically low commercial real estate rates are compelling some people to “come off the fence.” The 25-year terms on commercial loans, for example, are unprecedented, according to Brown — traditional terms are usually based on 10 years. But instead of building new, many property owners are retrofitting instead.

Brown, too, thinks the sector has hit bottom and is slowly coming back up. “It’s a slow journey but it’s a nice feeling,” he said.

“There’s optimism across the board.”

June 2012 Kitsap Peninsula Business Journal • KPBJ.com 11

By Rodika Tollefson The past year has not brought much good news for the commercial real estate market.

But some commercial property brokers and managers are seeing a positive trend.

“I feel we’ve reached the bottom in both (commercial and residential) markets,” said Matt Smith, president of The Rush Cos., which includes a commercial division.

“The office market is starting to slowly pick up and the retail market remains fairly flat.”

Rush develops and manages commercial properties in a wide area that includes Gig Harbor and Kitsap. Smith said medical space continues to be the market leader while the multi-family housing market is also strong in Kitsap due to the military presence.

“Our occupancy is 90 percent overall in the entire portfolio, up from about 87 percent,” Smith said, adding that lease rates in the office market have also stabilized, where in the past couple of years prices were being drastically cut in many cases.

“Right now people are taking advantage of the space on the market and positioning themselves for future growth. They’re coming out of the woodwork and taking the risk,” he said.

Bremerton-based Bradley Scott Inc. has been providing Kitsap County data for the Central Puget Sound Real Estate Research Report since 2001. (The report, created for the Central Puget Sound Real Estate Research Committee, is provided to paid subscribers.) Gary Gartin, Bradley Scott leasing agent who has been compiling the Kitsap numbers, said the lowest countywide office vacancy rate since 2001 was at 6.6 percent in March 2005, and the highest was 17.7 percent in July 2010.

“Each of the three surveys since reaching the highest vacancy rate has shown a slow but steady decrease in vacancy,” he said.

In its 2011 year-end report, the company reported the vacancies at 16.2 percent. Gartin noted, however, that the vacancy rate in itself does not give a clear picture of the market, because the net increase in square footage and the vacancies can both indicate businesses opening/closing and tenants relocating, whether they are reducing or adding space.

“We haven’t turned a corner yet but it’s possible we’re starting to see it,” he said. “…It’s getting better in most areas — the problem is, some of the buildings in the county, particularly in the downtown core, are older buildings and especially harder to lease in this market.”

He noted that even government contractors have had reduced interest because the Navy is placing many of its contractors on base.

“There are many companies doing really well and they’re positioning themselves to be able to purchase owner-occupied properties.

But the financing is so challenging on nonowner-occupied commercial properties that it has brought the investor market to its knees,” said Vic Ulsh, Bradley Scott designated broker.

He said lending practices and bank regulators are contributing to the slow economic recovery because it’s “exceptionally difficult to get non-owneroccupied financing” after lenders made an overcorrection in underwriting.

High supply, high demand keeps rentals market balanced

By Rodika Tollefson The housing rental market is one of the sectors of the economy where the impact of the military presence is evident in Kitsap County. Local property management companies say that due to a shortage in military housing in general, there’s usually strong demand for rentals. The most popular single-family homes — threebedroom, two-bathroom properties renting for under $1,000 a month — have remained in demand during the downturn as well.

Unlike the real estate market in general, the rental market has remained fairly balanced, and vacancy rates are low.

“We don’t have renters waiting in line, but demand has been steady for the past few years,” said Brett Huff of Port Orchardbased Kitsap Property Management, which had six vacant rentals in mid-May out of the 175 it manages. “What’s changed is homeowners taking properties back to live in, manage themselves or give to family; we’ve also lost homes to foreclosures.”

Despite some rentals coming off the market due to those factors while more people are looking to rent, the supply is equally good. One of the reasons is

homeowners unable or unwilling to sell, are a good way to go right now,” said and turning to the rental idea as a Chrysztyna Montanez, owner of Silverdaletemporary measure. based Lighthouse Cove Properties, which Geri Jordan, senior property manager at had 23 vacancies available in 410 total units Peninsula Property Management based in and homes. “More investors are getting Silverdale, said she has into the noticed a slight increase business — in the number of renters. because of the “People are afraid to “Now really is the time for amount of get into the market so investors — if you can put a f o r e c l o s u r e s we’re seeing renters who few thousand dollars into a on the market, would normally be bargain and make it selfit has allowed buying,” she said. “More sustainable, rentals are a people to enter people are renting than the market buying, but we have good way to go right now.” who normally plenty to go around don’t have the because new rentals get — Chrysztyna Montanez means, and listed every day. It’s a they’re fixing great balance right now.” them up and Some investors — both new and those renting.” with other properties — are also showing One major change all property more confidence in the market. Huff said managers have seen is in renter his company has been getting more calls qualifications. Due to changes in the law, from people trying to learn what a home they can’t use credit scores “without a slew would rent for, while figuring out if buying of declarations,” according to Montanez, it would be a good investment. but the companies themselves have also “Now really is the time for investors — changed the criteria they look for in credit if you can put a few thousand dollars into a histories. bargain and make it self-sustainable, rentals Each company has relaxed in different

areas because, as Jordan noted, perfect credit is very rare. So property managers have to balance the need to minimize risk with the need to make housing available.

Huff said one thing Kitsap Property Management takes into consideration is credit history affected because homeowners are waiting on loan modifications. And where previously no late payments were acceptable, now the company only looks at the past two years.

Jordan of Peninsula Property Management said the type of late payments are also considered — for example, late payments on student loans may be forgiven, where late utility payments are a different matter.

“If credit history is too checkered, we could look at a guarantor or a higher deposit,” she said.

The consistent demand is compelling some companies to build apartment units as well. As one example, The Rush Cos. of Gig Harbor is in the process of building 106 units in Port Orchard, at the corner of Sedgwick and Sidney roads.

“It’s a sign that folks are still not ready to go buy real estate and a lot of folks are looking to rent,” Rush president Matt Smith said.

12 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

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Planned opening of Port Orchard indoor market delayed Summer’s imminent arrival won’t coincide, as hoped, with the unveiling of an ambitious indoor market development in a renovated space on Bay Street in downtown Port Orchard.

Don Ryan, the developer and 2012 president of the merchants’ association on Bay Street, had originally announced a July 1 target date to open the Port Orchard Indoor Market in a building that’s been vacant for several years since the Slip 45 nightclub closed.

Issues involving asbestos removal during work to clear out the building’s interior have contributed to the delay.

“We know we’re going to have a 30- to 60-day delay” beyond the originally

planned opening, Ryan said.

Since that means the market wouldn’t be open during prime summer months when community events and festivals draw large numbers of people to the waterfront, it’s possible the opening could be delayed until next spring.

Ryan said a decision will be made after he meets in June with the property owner, Mansour Samadpour, to assess the development schedule.

“We just want to make sure that when we roll this out, we want to do it in the best way to make this a destination in Port Orchard,” said Ryan, who owns the 110 Lounge on Bay Street. He said the concept Delayed, page 16

community. A longtime Rotary member in Port Orchard, he is on the board of directors for the Washington Bankers Association and YMCA of Kitsap and Pierce Counties, and he is past board chairman of the Kitsap Economic Development Alliance.

He said he’s proud of his bank’s tradition of community involvement, noting Kitsap Bank’s generous support of local causes and charities through financial donations and volunteer hours by its employees.

Carmichael and Kitsap Credit Union CEO Elliott Gregg have worked closely together at KEDA, and Gregg succeeded him a couple years ago as chairman.

Although they are business competitors who are often lobbying on opposite sides of legislation affecting their respective

companies, both men said they enjoyed working together for economic development that benefits the wider community.

Gregg, who joined the credit union a dozen years ago and said he’s “a newcomer compared to Jim,” paid the Kitsap Bank chief a compliment that could only come from a rival.

“When I was the No. 2 (executive) at a bank in California, the president made a statement that ‘The worst thing you can have is dumb competition,’” Gregg said, such as taking unwise risks that can result in throwing local market conditions out of whack.

“I think Jim and I …we both understand the importance of caution and conservatism. That’s why I liked competing with Jim, because he’s smart competition.”

The Skinny on the Real Estate Market...

Buying bank-owned investment properties Unless you’ve boycotted television, newspapers, Facebook, Twitter and phone calls from grandma — you’re already well versed in the idea that the real estate landscape has significantly changed. But there is still significant money to be made in real estate investments — if you’re smart about it.

Think about it. Real estate prices are down and bank-owned properties are abundant.

These bank-owned or distressed properties are priced low due to the fact that many of them are not lendable through conventional means. During the long foreclosure process, properties are sometimes stripped of important things like light fixtures, appliances, hot water heaters and even toilets by previous owners. Or, they may have sat empty through the winter, and suffered minor damages due to not being winterized.

Banks are just not in the business of home rehab. Rather than investing funds in fixing the issues, they’re selling them “as is.” This presents a financing problem since the large loan investors like Fannie Mae and Freddie Mac simply won’t do loans for properties that are not in average condition.

With so few buyers able to pay cash, the demand is low for a large number of properties on the market, resulting in falling prices. Seems like a great deal, but many people are hesitant to commit the cash and run the risk of having all their eggs in one basket.

Rescuing properties in distress Enter The Legacy Group. A respected, employee-owned mortgage banker, Legacy has a unique loan program that can fund both the purchase price and rehab cost, based on the projected value of the home upon rehab completion. The goal is for the buyer to quickly refinance to a conventional loan with very little cash out of pocket.

I’m currently seeing a lot of custom homebuilders buying distressed properties, repairing them and returning them to the market place at a nice profit. It’s a huge benefit to our community to have these houses flipped, instead of just sitting empty.

It’s also a great time rehab a bank-owned property and turn it into a long-term rental investment property. Very rarely do you find a market that allows an investor to purchase a property for pennies on the dollar that provides instant cash flow and returns on investment ranging from 20 to 75 percent. But it’s happening in today’s market.

The real estate bubble may have burst, but there’s still significant opportunity for solid investments — maybe more so than ever.

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June 2012 Kitsap Peninsula Business Journal • KPBJ.com 13

from page 1 executive management of Kitsap County Bank, which had $47 million in assets and four offices back then.

Carmichael has shepherded Kitsap Bank’s steady growth into an institution that has more than $900 million in assets and operates 21 locations across five counties in Western Washington.

“I have experienced both triumphs and great challenges during my tenure,” Carmichael said in a news release announcing his retirement. “We have achieved record growth, numerous mergers and acquisitions, assumed a failed bank, raised capital for the first time in over 50 years, and successfully navigated through the worst economic downturn since the Great Depression.

“I feel very pleased and satisfied that I am leaving the bank in excellent condition and in very capable hands. Now it’s time for me to move on.”

Tony George, the bank’s chief financial officer, will assume the role of President/Chief Operating Officer. Chief credit officer Steve Politakis will become Chief Executive Officer. Both have been with Kitsap Bank for more than a decade.

“The master plan was that there would be continuity in our executive management,” Carmichael said, just as there was when he was the heir apparent and succeeded Don Rickett as the bank’s president and CEO in 1985.

Carmichael, 69, began his career in finance in 1965 when he was hired by the FDIC after graduating from the University of Idaho. But he said the recent years weathering the recession and the housing market collapse are the toughest economic times he’s ever seen.

“In 2007 we saw that this economy was in a situation that was deteriorating pretty rapidly,” he said. The bank had to “tighten up on credit … and we got out of construction lending.”

The bank also significantly cut its operating expenses, primarily through a staff reduction of about 20 percent over a two-year period, although Carmichael noted that was achieved mostly through attrition.

Despite those prudent steps to limit risk as the financial crisis unfolded, “We took

our lumps,” he admitted.

But from the low point in early 2010 when about 4 percent of the bank’s assets were “nonperforming” (bad loans), the bank has seen a turnaround and that figure is now down to around 1 percent, he said.

“We’ve had a couple pretty good years since then,” Carmichael said.

During his long tenure as CEO, “he grew the bank, but he grew it soundly,” Smith said.

She also said Carmichael’s leadership was critical to Kitsap Bank surviving a time when many of the region’s other small banks failed.

“It wasn’t easy for him when all these other banks were getting … all these profits from risky financial loans” before the housing bubble burst, she said. “He didn’t waver, and I think we were very fortunate that he was so smart and strong in handling that.”

Kitsap Bank, which acquired the assets of the failed Westsound Bank in 2009, is coming off its best year since 2008, with a reported earnings increase of 260 percent in 2011, and first-quarter earnings this year are up 18 percent.

So even though economic recovery remains slow and unsteady at both the local and national level, Carmichael is leaving the bank in stable condition.

The institution founded in 1908 needed someone to help it navigate through a time of major banking changes in the 1970s, and Carmichael came highly recommended by his previous employer.

“My mother called the FDIC and asked if they had anybody interested in coming to work for a small bank, and that’s how we got Jim,” Smith said.

Her parents, Frank and Hannah Langer, had managed the bank for half a century until Hannah stepped down as president in 1972. She was still chair of the board of directors and a majority shareholder when Smith accompanied her to interview Carmichael at the Washington Athletic Club in Seattle.

“We decided right on the spot that we'd hire him,” Smith recalled. “We immediately had confidence in him, and it's never changed.”

Carmichael, who grew up in the Seattle area and played baseball at Skagit Valley Community College and the University of Idaho, is active in the local business

14 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

New Bremerton cinema hopes to start showing movies in mid-June opens — with a restaurant that will be located at the corner of Fourth and Burwell.

Jimmy John’s, a sandwich shop franchise, has signed a letter of intent to locate in the complex, but the eatery wouldn’t be ready to open until near the end of the year.

The $6 million cinema will also have a coffee shop next to the box office, Santos said.

Inside, one of the screens will have VIP rooms with special seats and a bar.

“This is our third large project in d o w n t o w n Bremerton,” said Santos, whose business partner is contractor Brian Fyall.

They previously developed and built the Kitsap Credit Union Building and the Harborside The developer of SEEfilm Bremerton Cinema hopes the 10-screen complex. movie theater at the corner of Fourth and Park avenues will open in “It’s a been a mid-June. decade of little steps” in downtown, Santos The new 10-screen movie theater is said, “and after a decade you realize you’ve nearly ready to open, and the developers come a long way.” hope to soon finalize a deal to bring in a Their next step is a housing project restaurant in at the complex that also added to the cinema complex. Santos said includes a three-level parking garage. they hope to start construction by the end The SEEfilm Bremerton Cinema, with of the year on a 72-unit apartment complex its prominent marquee at the corner of above the parking garage on Burwell.

Fourth and Park avenues, is hoping for a Santos was a partner in Opus NW when mid-June opening. he first got involved in Bremerton several Developer P.J. Santos of Seattle-based years ago developing the Harborside Lorax Partners said he expects a lease to be complex. signed — possibly by the time the cinema

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businesses. That’s because Rite-Aid had a master lease, essentially acting as landlord for all the buildings on Merit’s property, including the huge spaces that Lowe’s and Albertson’s vacated years ago.

“We had petitioned Rite-Aid for a number of years to let us take over and lease the site,” Zarelli explained, but that never happened, ultimately resulting in a mutual decision not to renew Rite-Aid’s lease when it expired April 30.

Merit plans to spruce up the site and Zarelli said he hopes to get about half of the vacant space leased within the next year or so, but that depends a lot on what happens in the economy.

“We’re in discussions now with several retailers,” he said, although he doesn’t expect to get an anchor tenant that will lease 60,000-80,000 square feet. “You’re probably going to see more like a 15,00030,000 square-foot tenant.

“I prefer to break it up into smaller spaces.”

Although the location has been eyed for an assortment of potential new uses, Zarelli said not all of them are viable.

“The person who was previously listing the property for Rite-Aid sent me a list of people who had an interest, and it varied from go-kart tracks to common retailers,” he said. “We don’t have an interest in putting in paintball courts, shooting ranges … or those sorts of thing. Our interest is renting to retailers.”

Although he wouldn’t say if he’s lowered the rent to attract new businesses, Zarelli noted that “no matter where you’re at — whether it’s in Bremerton, Seattle or Tacoma — lease rates have been adjusted according to the economy.”

from page 8 The building at 423 Pacific Ave. has 22,500 square feet of space and in 2005 it was completely refurbished, with executive suites on the fourth floor.

“We should know in a few weeks what’s going to happen with the building,” Phipps said.

Miller noted that his company filled about 60,000 square feet of vacant space last year in a center that includes Petco and a Goodwill store on the opposite side of Wheaton Way from the site Rite-Aid recently vacated. The new tenants there include Harrison Medical Center, which has about 25,000 square feet of office space, One Life Church and several smaller businesses.

“There was a while there when nothing was being done on Wheaton, but now y ou’re seeing an uptick,” Miller said. “That area could have a big facelift in the future.”

There could be a deal in place fairly soon to lease the old Kmart building, Miller said, but he wouldn’t identify the potential tenant he’s negotiating with.

One deal that has been confirmed is Kitsap Transit’s purchase of the former Parker Lumber site a block south of the Petco/Goodwill center. The transit agency plans to relocate its bus transfer center from the corner of Sylvan Way and Wheaton to the site of the longtime lumber yard, which closed a couple years ago.

Adjacent to the old Kmart site, the larger section of that mostly empty retail center extends to Riddell Road and is owned by Merit Co. Carl Zarelli, one of Merit’s owners, said Rite-Aid’s departure changed the situation with regard to improving the rundownlooking property and recruiting new

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five years. The new hospital will help these patients remain close to home for orthopaedic and joint replacement surgery," Bosch said.

The building was designed by Rice Fergus Miller architects, and Anderson Construction Co. is the contractor for the project.

The orthopaedic hospital is the next phase of Harrison's plans for the Silverdale campus, where the medical center that opened in 2000 primarily provides maternity care and a 24/7 emergency room.

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Harrison Medical Center has begun construction of a new orthopaedic hospital at its Silverdale campus, and the $23.5 million facility is expected to be finished by the end of next summer.

A few hundred people, many from the medical community, were on hand for the May 17 groundbreaking ceremony for the three-story, 54,000-square-foot building that will connect to the existing medical center at the corner of Myhre Road and Ridgetop Boulevard.

The new hospital's ground floor will have four operating rooms with state-ofthe-art surgical systems specifically suited for orthopaedics, plus 16 pre- and postsurgical rooms; the second floor will have 24 single patient rooms that will be larger than standard hospital rooms; and the third floor will be shelled in so that 24 more patient rooms can be added in the future.

The hospital will have special features such as a large family room for patients and their families to use in preparing for their return home, and a specially designed rehabilitation gym and a rooftop rehab trail.

"Our overarching aim is to make the center the destination for orthopaedic care in Kitsap County," Dr. Gordon Cromwell told the crowd at the groundbreaking.

He is one of 11 surgeons who formed The Orthopaedic Alliance on the Peninsula, which will manage the new center under a contract with Harrison, which will build and own the hospital.

That unique operating arrangement, Orthopaedic Alliance administrator Mindy Markley said, will create a synergy in the efforts of surgeons and all the clinical staff so that "patients can see this army of people that come together on their behalf to see that they have a great outcome."

Such a management approach "is not totally new, there are some relationsips like that at Harrison," Markley said, "but nothing on that large of a scale."

Harrison CEO Scott Bosch said the new facility will help accommodate the increasing number of patients who need orthopaedic care.

"The number of people needing orthopaedic care in Kitsap County will grow by another 20 percent in the next

Heronswood Gardens in Kingston up for auction

Heronswood Gardens, a 15-acre estate with diverse botanical gardens in Kingston, will be sold at auction.

16 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

Heronswood Gardens, a 15-acre estate in Kingston that features a world-renowned private complex of botanical gardens, is going up for auction.

Racebrook Marketing Concepts, a private investment firm, will sell the property via a sealed bid auction at a starting price of $749,000, which is a 58

percent reduction off the previously listed price of nearly $1.8 million. Bids must be submitted by June 15.

Considered one of the finest and most diverse private botanical gardens in the United States, Heronswood features more than 10,000 plants derived from over 7,000 genera and species. Many of the plants were

collected during expeditions to Central America, South America, China, Nepal, South Africa and other exotic locales by Dan Hinkley, acclaimed horticulturalist and builder of the estate, who founded it with Robert Jones in 1987.

Heronswood Gardens is credited in helping to establish the Pacific Northwest as a place of great renown for horticulture.

The gardens have been toured by thousands of visitors over the years.

A wide array of herbaceous and woody perennials, shrubs, trees and other plants sit among the dozens of carefully planned woodland gardens, French parterres, Chinese pergolas, ponds and terraces. The property encompasses six separate components, including three homes and

three parcels of land.

The sale includes the three residences, a two-story office and warehouse building, and assorted nursery facilities located on the property.

The sale is being done under the direction of the estate’s owner, W. Atlee Burpee & Co., the largest gardening company in America.

“We hope to sell the gardens to someone who loves it as much as we do, and agrees to maintain the living work of art that spreads over these acres,” says George Ball, Chairman of W. Atlee Burpee & Company.

For additional information on the auction and to view the property by appointment, call (800) 962-0931 or visit www.HeronswoodAuction.com.

DELAYED

being part of the market.

Those potential tenants include a fresh seafood vendor, a bakery, a coffee roaster, a barbecue stand and South Kitsap Helpline, which plans to offer fresh produce, plants and flowers from its nursery.

“The whole concept is to have fresh consumable goods throughout the market,” Ryan said.

from page 13

for the market came about through the Port Orchard Bay Street Association’s exploration of “how to revitalize our town.”

Potential tenants that Ryan had lined up were notified about the delayed opening, and he said they remain committed to

5 Great Reasons to Buy or Remodel 1. LOW INTEREST RATES Mortgage rates are not expected to remain low. Buying or refinancing now can reduce monthly payments substantially.

2. GREAT PRICES Housing affordability is the best it’s been in years. As the supply and demand in our housing market comes back into balance, prices will begin to rise again.

3. OUR HOUSING MARKET IS IMPROVING Don’t see your dream home on the market? Call one of our professional custom home builders — they can make your dream a reality.

4. ENERGY EFFICIENCY Today’s new homes are designed to save you money on your monthly utility bills, and increasingly incorporate exciting new green technologies.

5. PROFESSIONAL BUILDERS, REMODELERS & LENDERS The Home Builders Association of Kitsap County has hundreds of member companies to guide you through any housing questions you have. Visit our website at www.kitsaphba.com or call us at 360-479-5778.

www.KitsapHBA.com

POSITIVE

Kitsap Transit to buy old lumber yard for bus transfer center A vacant lumber yard will become the new location for Kitsap Transit’s bus transfer center on Wheaton Way in Bremerton.

Kitsap Transit will purchase the former Parker Lumber site for $875,000, although executive director John Clauson said it could be two years before the site is cleared and equipped to operate as a transfer center for buses on seven routes.

The current transfer center for those buses is only a few blocks away, on leased space in a shopping center parking lot near the corner of Wheaton and Sylvan Way. One reason for relocating the center is that Kitsap Transit will own the property

and won’t have to worry about losing access to the site, as happened last year with an agreement the agency had for another bus transfer center at Kitsap Mall.

Clauson said not being able to use the mall “was a major disruption to our riders and our operations, but also financially.”

Buses have used the Sylvan Way transfer center for more than 20 years, but Clauson said there have been times when “we came very close to being asked to leave” because certain shopping center businesses didn’t want the bus traffic there.

The Wheaton Way site where Parker Lumber was a longtime occupant has been empty for two years and is now owned by Kitsap Bank.

With another potential buyer submitting an offer for the property, Kitsap Transit had to arrange to get the deal done quickly, Clauson said.

So the agency will buy the 2.5-acre property while seeking a hardship waiver from the Federal Transportation Administration to speed up the process of obtaining federal grant funding for the purchase.

Clauson said Kitsap Transit would seek separate grant funding for design and construction of the new transfer center. Plans include park-and-ride lot as part of the project.

There will also be an opportunity for joint developments at the site, he said, possibly with Bremerton Housing Authority.

June 2012 Kitsap Peninsula Business Journal • KPBJ.com 17

from page 9 Osinski: The opportunity to negotiate prices hard (from two years ago) has probably passed but there is reduction in land values. That’s one way they’re able to lower costs. What I hear consistently from our members is that one thing that has not changed and has increased as a percentage of home-building costs is cost of government — regulations have increased dramatically. Stormwater codes are more restrictive and the Washington state energy code is extremely aggressive, exceeding international energy code components.

When you pass restrictive codes while construction is struggling, you’re not encouraging the activity that would be implementing those new codes.

For example, Kitsap adopted a more restrictive stormwater code than the state.

There’s a reason code cycles address issues but unfortunately the cycles don’t do a costanalysis to see the impact and whether they are thwarting people out of the market.

KPBJ: Kitsap County has to make its urban growth areas (UGAs) smaller; what are some of the concerns builders are raising?

Osinski: There were a series of appeals and litigation after Kitsap County’s 2006 comprehensive plan update and the county has been directed by the Growth Management Hearings Board to go back and adjust the size of total land designated as urban growth area. The county is contemplating where to redraw the lines. The problem in Kitsap County is that we don’t have good plat land. We have difficult topography and a lot of wet properties. When you start talking about the UGA, there’s a lot of scary issues associated with that proposition.

Additionally, since 2006 landowners understood whether their property was in the UGA or not and now a significant number of properties are in limbo. People purchased land in specific locations with the expectation they would develop if it was within the UGA. For some people, it’s a perfect storm — they invested into property with the intent to potentially develop, land values have significantly dropped and now they may not be in the UGA. I don’t want to be that guy. It’s not a minor issue.

KPBJ: How do all these real estate issues affect everyone?

Osinski: Homeownership is the springboard for economic stability. That hasn’t changed. … The thing I point out frequently is that the cost of regulations indirectly and directly affects the ability of Kitsap County’s economy to improve. One of the factors often referenced in the media is the number of housing starts. The reason is that housing is a major driver of the national, regional and local economy…

(Before implementing regulations), our elected officials need to ask, how will this address health, safety and welfare, and the next question is, how it will improve the economy. If it doesn’t affect those three aspects and it doesn’t improve the economy, I beg them to reconsider. Development is how government pays for all the needs — we need to increase the revenue side.

BJC Group completes renovation of Sedgwick Professional Building

The BJC Group has completed extensive renovations at the Sedgwick Professional Building in Port Orchard. The project at 2021 Sedgwick Road was completed in three phases in an effort to minimize disruptions to the tenants, Fischer Distinctive Dentistry and the Coldwell Banker Bain real estate office.

The renovation included interior work to upgrade the finishes as well as to improve the layout into more functional and efficient

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18 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

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office suites. A major component of the interior work was to retrofit the building to accommodate a new elevator. A new spacious lobby and reception area also wascreated to complement the new executive office suite.

Exterior improvements involved a total facelift of the building. The roofline was changed to create additional headroom to accommodate the elevator hoist way.

This was done by the addition of a secondstory dormer. The entrances to the three office suites were highlighted by extension of the existing dormers over the entries.

The faded metal roofing was replaced with laminated architectural-grade shingles and the building was painted with a new contemporary color scheme.

Mortgage Debt Relief Act set to expire at end of year Homeowners who may be considering a short sale of their home this year will need to act quickly in order to take advantage of a tax break. The Mortgage Debt Relief Act expires on Dec. 31, and Congress has not given indication of whether it would extend the deadlines set by the act.

In a short sale, homeowners work with the bank to settle their debt for an amount less than they owe, which allows them to avoid foreclosure. Homeowners have to meet certain criteria, which include owing more than their home is worth and experiencing a specific financial hardship.

Although short sales will still impact the borrower’s credit history, homeowners may avoid a bigger, long-term impact on their credit as well as other negative consequences of foreclosure, such as being evicted on the bank’s terms.

Forgiven debt may be considered income by the IRS and be subject to income tax. However, the MDRA created an exception. According to the IRS, “The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.”

The act has set a deadline of Jan. 31, 2013, for the completions of short sales in order to qualify for the tax relief. Since many short sales take an average of four to eight months to complete, homeowners are running out of time.

“People who are underwater with their mortgage need to figure out if they’ll go into a short sale or let it foreclose,” said Penny McLaughlin, owner of Penny’s Team based in Poulsbo and a certified distressed property expert (CDPE). “It used to be ‘horrible’ to do a short sale … but it’s better on their credit. I’ve had people who’ve done a short sale and are now being able to buy, 18 to 20 months later.”

Real estate brokers who are certified distressed property experts have gone through additional training specific to foreclosures and short sales; there are at least a dozen CDPEs on the Kitsap Peninsula. To find one, go to www.cdpe.com.

June 2012 Edition

Events And Activities Wednesday, June 6th Forklift Class @ HBA - 1 p.m.

Schedule via BIAW 360-352-7800 Open to All Thursday, June 7th Developers Council Meeting-7:30 a.m.

Thursday, June 7th Special Meeting of the Govt. Aff. Cmt. Legislative Candidate Interviews 2 p.m. - 5 p.m.

Tuesday, June 12th Home & Remodel Council Mtg. - Noon Wedensday, June 13th RSVP for 1st Annual Builders Best Awards June 20th.

Wedensday, June 13th Golf Tournament Cmt. Mtg. - 4 p.m.

Putters @ Rolling Hills Thursday, June 14th RSVP to HBA for Tuesday, June 19 Pizza & Beer Friday, June 15th Golf Classic EARLY BIRDIE DEADLINE Register and PAY for you or your team & SAVE $20 per player!

Tuesday, June 19th Meet & Greet at Jennings-Heins Assoc.

HBA & Kingston Lumber Sponsor PIZZA & Beer 4:30 p.m.

Wednesday, June 20th FIRST ANNUAL Builders Best Awards Cocktail Reception and Awards Ceremony Oxford Inn Suites, Silverdale 5:00 p.m.

Thursday, June 21st Executive Committee Meeting - 2 p.m.

Gov’t Affairs Meeting - 2:30 p.m.

Board of Directors Meeting - 3:30 p.m.

Wednesday, June 27th Golf Tournament Cmt. Mtg. - 4 p.m.

Putters @ Rolling Hills

According to the National Association of Home Builders, Nationwide Housing Affordability Reaches New Record High.

Bremerton — Silverdale Metropolitan Statistical Area more affordable than Seattle-Bellevue-Everett.

Nationwide housing affordability hit a new record high for a second consecutive quarter in the first three months of this year, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released in May. Yet tight lending conditions continue to pose a major obstacle to many prospective home buyers.

The latest HOI data reveal that 77.5 percent of all new and existing homes that were sold in this year’s first quarter were affordable to families earning the national median income of $65,000. This beats the previous record set in the final quarter of 2011, when 75.9 percent of homes sold were affordable to median-income earners.

“Homes in this year’s first quarter were more affordable than they have been at any time in more than 20 years, yet many potential sales are not happening because of overly tight lending conditions that are keeping hardworking families from obtaining a suitable mortgage,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “Without this significant hurdle, the housing and economic recovery could be proceeding at a much stronger pace.”

The most affordable major housing market in this year’s first quarter was Indianapolis-Carmel, Ind., where 95.8 percent of homes sold during the period were affordable to households earning the area’s median family income of $66,900.

Also ranking among the most affordable major housing markets in respective order were Dayton, Ohio; Lakeland-Winter Haven, Fla.; Modesto, Calif.; Grand Rapids-Wyoming, Mich.; and Buffalo-Niagara Falls, N.Y.; the latter two of which tied for fifth place.

For our local market, the HOI lists the Bremerton-Silverdale market’s median home sale at $228,000 putting our market at 72.1% of homes being affordable to those families earning the area’s median family income of $75,600.

This rank sets Bremerton-Silverdale over two percentage points more affordable than the Seattle-Bellevue-Everett market’s index. In that market the median home sale is $272,000 and requires a family median income of almost $12,000 more per year than our local median income.

Please visit “www.nahb.org/hoi” for tables, historic data and details.

NAHB EDITOR’S NOTE: The NAHB/Wells Fargo Housing Opportunity Index is a measure of the percentage of homes sold in a given area that are affordable to families earning that area’s median income during a specific quarter. Prices of new and existing homes sold are collected from actual court records by First American Real Estate Solutions, a marketing company. Mortgage financing conditions incorporate interest rates on fixed — and adjustable-rate loans reported by the Federal Housing Finance Board. The NAHB/Wells Fargo HOI is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public.

2012 OFFICERS President . . . . . . . . . Wayne Keffer, CGR, CAPS First Vice President. . . . . . . . . . . . . . . Robert Baglio Second Vice President . . . Judy Mentor Eagleson Treasurer . . . . . . . . . . . . . . Randy Biegenwald Secretary . . . . . . . . . . . . . . Dee Coppola, CGA Immediate Past President. . . Justin Ingalls, RCS

2012 BUILDER & ASSOC. DIRECTORS Derek Caldwell, CGB • Judy Granlee-Gates Jason Galbreath • David Godbolt, CAPS, CGP, CGR Kevin Hancock • John Leage Robert Lubowicki • Leslie Peterson, CGA Shawnee Spencer • Jim Way, CGB

2012 STATE DIRECTORS Robert Baglio • Derek Caldwell, CGB Lary Coppola • Judy Mentor Eagleson Justin Ingalls, RCS • Wayne Keffer, CGR, CAPS Robert Coultas • Ron Perkerewicz

2012 ALTERNATE STATE DIRECTOR John Armstrong • Karla Cook • Walter Galitzki Greg Livdahl • Brent Marmon

LIFE STATE DIRECTORS Bill Parnell

2012 NATIONAL DIRECTORS Derek Caldwell, CGB • Judy Mentor Eagleson

2012 ALTERNATE NATNL. DIRECTORS Michael Brown • Jeff Coombe

LIFE DIRECTORS Rick Courson • Jim Smalley • Bob Helm Bill Parnell • Larry Ward John Schufreider • Dori Shobert

2012 COUNCIL & CHAIRS Build a Better Christmas. . . Randy Biegenwald Built Green . . . . . . . . . . . . . . . . Walter Galitzki

By Laws & Nominations . . . . . . Justin Ingalls Developers Council . . . . . . . . . . . . Rick Cadwell Golf Classic . . . . . . . . . . . . . Shawnee Spencer Govt. Affairs Cmte . . . . . . . . . . . Robert Baglio Remodelers Ccl Chair. . . David Godbolt, CGR, CAPS Membership . . . . . . . . Judy Mentor Eagleson Parade of Homes . . . . . . . . . . . . . Dee Coppola Peninsula H&G Expo. . . . . . . . . . Ardi Villiard Peninsula H&R Expo . . . . Volunteer Needed

HBA STAFF Executive Vice President . . . Teresa Osinski, CGP tosinski@kitsaphba.com Expo & Events Director . . . . . . . . Toni Probert hbaevents@kitsaphba.com Administrative Coordinator. . . Kathleen Brosnan info@KitsapHBA.com

Home Builders Association of Kitsap County 5251 Auto Center Way, Bremerton, WA 98312 360-479-5778 • 800-200-5778 FAX 360-479-0313 www.KitsapHBA.com

THE 2012 FORD F-SERIES TRUCKS TORTURE TESTED

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June 2012 Edition

At the HBA this month there has been lots going on and there is lots of opportunity for members to get involved.

Wayne R Keffer The Kitsap HBA Remodelers Construction Inc. Council had Frank Romero 2012 President from BIAW ROII program speak at the last meeting. The discussion was focused on employees and how to hire employees that are not claims in the making (apparently there are guys out there that personally injure themselves in order to be on L&I). If your company is starting to grow again and needing to hire a couple new employees, talking to Frank first about the steps to take would be a great first step ensuring a good (safe) hire. (The ROII is a very important program that reduces job site injuries, decreases time off when injured and returns a portion of the overpayment for L&I services to the business owner).

The annual auction was a great success! Robert and the auction committee ensured that the evening would be fun; if you weren’t there you missed a great opportunity to meet other members and build those relationships. I would also like to thank all the elected officials and candidates that were there. We always like the opportunity to interface in a less formal environment. (The auction is the primary fundraiser for our political action committee).

The annual HBA golf tournament is another opportunity coming up to meet other members. Every year this is one of our best-attended events. If you are not a great golfer, no worries, the tournament is a “best ball” format, meaning you (me) get to pick your ball up and drop it next to the best drive of your team.

Consider attending — it’s just plain fun. (Can I say again, that it is FUN?) Watch the HBA schedule very closely in the next month, as there are many opportunities to interview candidates running for office.

This is important because the more members we have present at these interviews the better job we can do of making good endorsements for office. As the largest trade association focused on construction and housing, our endorsement is important to the candidates.

This is a great time to let everyone know about the power of membership. We are strong, diverse and united in our efforts to create a better environment in Kitsap County for the building and development community. If you have subcontractors that are not yet members, educate them to the benefits of membership so that they can join our strong voice for the industry and the citizens of Kitsap County.

Wayne Keffer CGR, CAPS

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The HBA continues to be seen and heard on your behalf.

Recently, the members of the 2012 Executive Committee have CGP been visiting the City Council meetings and speaking during Executive the “non-agenda” public input Vice President period. The purpose is to remind the councils that the HBA is available to them as they contemplate codes and other important issues. Those meetings are being followed up with individual meetings with area Mayors and Council Presidents.

As the economy shows signs of some improvement it continues to be essential that our local elected officials understand their role in the recovery. Often times the connection is missed between what their staff may propose and its impact to the economy. Something I have said to many elected officials in the last 18 months, and will likely continue to say is this: When contemplating any public policy you should evaluate it on two points. The first is this — Will this proposal help to protect the health, safety, and welfare of the community? If the answer to this first question is no, then ask yourself this — Will this proposal help to improve the economy in our community? If again the answer is no, then the proposal must be set aside. Further, even if the answer is yes to the first question, further consideration is needed, including if the benefits of the proposal will outweigh the costs. Government doesn’t pay for anything. Programs are paid for by area tax and fee payers.

The Government Affairs Committee has been busy holding interviews of candidates. Recently, the GAC recommended to the Board of Trustees of the Affordable Housing Council of the HBA of Kitsap County to endorse Superior Court Judge Candidate Jennifer Forbes as well as endorsements of recently appointed judges Steve Dixon and Kevin Hull. The recommendations were made after the GAC held a Judicial Forum here at the HBA. It was a fascinating discussion with all the candidates for Superior Court. Meetings like that Forum, and all Government Affairs Committee meetings are open to all HBA members. You are welcome and encouraged to attend. In June, the committee will be holding interviews on June 7th beginning at 2 p.m. and will also hold its regularly scheduled meeting on June 21 (2:30 p.m.). I hope you will take the time to attend.

I wanted to take a few minutes to thank our members that have taken the time to get a quote for medical insurance. Many of you have taken the next step and become insured with this member benefit, and we are pleased you have. We are happy to continue to be able to offer competitive health insurance options for our members and hope that all of you will take the time to shop it and see if it works for you.

Additionally, we have received great news from BIAW on the health of the Retrospective Ratings Program (ROII). While the program was in dire straights for a couple cycles, Art Castle, Frank Romero, Laura Hastings, Jenn Wright and all the other ROII staff at BIAW have turned the program around. We are pleased to report that those members participating in ROII should see encouraging returns in their checks due in a few weeks.

Additionally, those that are participating in the 2011 Retro Select program should see positive outcomes when the first disbursements are paid out in the future.

Finally, during this election season I want to remind everyone about the importance of being registered to vote and voting. An informed vote is important for effective government, but frankly you can spend lots of time learning the issues and forming an opinion but if you don’t register to vote and then cast your ballot, democracy is not helped. Registering to vote is easy. Please visit www.secstate.wa.gov and click on the “MY VOTE” icon on the home page.

Teresa Osinski

June 2012 Edition

Government Affairs Committee

A GALA EVENT

The annual Home Builders Association auction occurred on May 11 this year. This event Robert Baglio raises money for our political The BJC Group action committee, the Affordable Housing Council of 2012 Chair the Home Builders Association of Kitsap County. The funds generated from this event allow us to lend support for the candidate(s) we believe will best represent the interest of the construction industry. In this current economic malaise, the importance of supporting pro-construction and pro-business candidates cannot be overstated. Not only is it an event that raises money for a good cause, it is well attended, has many wonderful auction items, and is a lot of fun. The theme this year was, “The 80’s.” It was complete with theme tables such as Miami Vice, Top Gun, Caddie Shack, Valley Girl, and Dynasty/ Dallas. Many in attendance fixed up their big hair, dug out their leggings, and donned their stone washed apparel.

Reminiscence of the 80’s, we had a Rodney Dangerfield golf cart in middle of the 2nd floor banquet room, a Karaoke machine, and a community 6-person rapid consumption beer distribution station. It was pretty entertaining.

As the Chairman of the Government Affairs Committee, the auction was my responsibility, but I had plenty of help. I would therefore like to say “Thank You,” to everyone that volunteered and participated in this event. To all of you that donated items for the auction, to the Table Sponsors, to the HBA Staff, to Brian from Stokes Auction, and to all of you winners that were fortunate enough to be the high bidder and take home a prize possession; thank you so much for your participation. I would like to specifically mention our main sponsors.

Table Sponsors • Mentor Company • Liberty Bay Bank of Washington • The BJC Group • Kitsap Trident Homes • 1st Choice Housekeeping Cash Sponsors • A Kitchen That Works LLC • Amalani LLC • Armstrong Homes of Bremerton • Northwest Door & Window Co. Inc. • Central Highlands Inc. Once again thank you very much for participating and making this event a huge success.

This year is a busy election year. The Government Affairs Committee will be interviewing candidates for all the State, Local, and Federal races. As an HBA member you are welcome to attend these meetings. Get involved and get informed. Come on down and attend one or all of the Government Affairs Committee meetings and meet the candidates, ask questions, and find out where they stand on the issues. It is your responsibility as a voter to get informed. It is a very important election year. Do your part. For dates and times when the Government Affairs Committee meets contact the Home Builders Association.

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Small or large, are you curious how the HBA’s insurance option stacks up against your current carrier? Have you checked into the HBA health insurance plan recently?

Please call the HBA for an application. You do not need to be a current member to get a health insurance quote.

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June 2012 Edition

Welcome New Members Lowe’s Robert Morgan 2221 NW Myhre Rd. Silverdale, WA 98383 360-662-3005 Ext. 804 FAX: 360-662-3006 Robert.W.Morgan-2@store.lowes.com www.lowes.com Sponsor: Wayne R. Keffer, WRK Construction, Inc.

Peninsula Electric Corp Jennifer Fredericksen PO Box 1401 Poulsbo, WA 98370 360-697-1416 FAX: 3602-697-2145 Peninsulaelectric@yahoo.com www.peninsulaelectric.com Sponsor: Justin Ingalls, Kitsap Trident Homes, Inc.

Thank You Renewing Members 15 Years or More Mentor Company (16) Eklund Electric Inc. (16) 10 Years or More Ullrich Contracting Inc. Newton Construction Inc. John S Trapp Construction All Trades Mechanical Inc

2 Years or More Creative Countertops Inc (9) Hudson Residential Construction LLC (9) Inspection & Permit Services Absolute Concrete Works LLC NL Oslon & Associatates Inc The Legacy Group FIRST YEAR ANNIVERSARY The Cadwell Group/Silverdale Real Estate Goller Grade & Gravel LLC

BE an EARLY “BIRDIE” Register & Pay by June 15 to save some “GREEN” on the green!

Fees: Until June 15th: $100.00 per player ($400 foursome) AFTER June 15th: $120 per player ($480 foursome).

Registration includes: 18 holes of golf w/ cart(s), 2 free drink coupons per player (for use on the course only), Fun All Over the Course, Player Packs, Door Prizes, Dinner, and Tournament Awards.

BE A SPONSOR! Sponsorships range from $50 to $500. Get your company’s name in front of the HBA members, friends, and guests by sponsoring! Please call the HBA for the details.

Mark your calendar for the Peninsula Home and Remodel Expo!

This three day event is scheduled for October 5, 6 & 7. Returning vendors will be receiving packets in the coming weeks.

Interested in having a booth but not a returning vendor? Please call the HBA (360) 479-5778 to have your name added to the mailing list. Space is always limited, so don’t delay!

This is a great way to meet hundreds of potential customers.

We keep booth spaces affordable and admission tickets low. This combination makes our fall event, the best investment for you!

Have questions? Please call our experienced and excellent Expo staff at 360-479-5778.

Remember:

Peninsula Home and Remodel Expo October 5, 6, & 7 • Don’t miss out!

“American Pickers” is coming to Washington History Channel show is looking for cool stuff (Taken from May 15 Press Release)

The History Channel’s show “American Pickers” is coming to Washington, and looking for locations to shoot in Kitsap County.

“We’re looking for interesting characters with interesting items...and lots of them,” according to the show’s producer Cristin Cricco. “Our favorite picks feature multiple buildings crammed with piles of cool stuff,” Cricco added.

The show features pickers Mike Wolfe and Frank Fritz. They are on a mission to recycle America, even if it means diving into countless piles of grimy junk. Hitting back roads from coast to coast, the two men earn a living by restoring forgotten relics to their former glory, transforming one person’s trash into another’s treasure.

American Pickers follows them as they scour the country for hidden gems in junkyards, basements, garages and barns, meeting quirky characters and hearing their amazing stories The show is looking for Kitsap County residents with movie and music memorabilia, sports memorabilia, and basically any other oddball, one-of-a-kind, or interesting historical item you can think of. They are only looking for people with large collections, not folks with just a few items, and we don’t go to shops, antiques malls, auctions, or flea markets. They are not currently looking for any fine furniture, agricultural or farming items/equipment, Depression glass, appliances, or pottery. For more information, or to have your collection considered, contact Cristin Cricco at ccricco@cineflix.com or 646.873.6518.

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Institutional amnesia: What happens when you can’t remember the past training in place, you can effectively run an internal mentoring program. Invest in your business by doing it right from the beginning, or you are more likely to see frustration and failure. This is too important an issue to skimp on.

• Create redundancies for critical organizational information like passwords, client relationships, and crisis management.

Businesses spend countless hours and money to design high tech redundancies for data. They spend less time establishing human redundancies that are caused by illness, injury, termination, retirement, or

any other loss of services. Why would you leave your most valuable asset – the smarts inside your employees’’ heads – to chance?

• Avoid gravitational pull. On the road to any desired future state there lies many speed bumps and traps. The biggest one I call gravitational pull. It’s basically the default position; the crutch of sameness and safety. It’s easy to go back to that place when time and patience are short, money is tight, or supervisors stop holding employees accountable.

Avoiding the crisis of gravitational pull requires patience, awareness, discipline,

and culture. This may be the toughest part of the entire process. You can invest time, money, and resources on training and processes. Everyone can walk away excited and ready to roll. But if six months later you are back to where you were, you’ve wasted all that you’ve invested. This final step is the most critical point.

• Bonus Bullet – Institutional smarts grows and changes. In this fast-paced, technological world, the change is even more mercurial. You need to be prepared to Weedin, page 25

June 2012 Kitsap Peninsula Business Journal • KPBJ.com 23

By Dan Weedin As Baby Boomers start the process of exiting the business world, they take with them a tremendous amount of institutional knowledge and smarts.

Are you prepared to preserve your past so you don’t destroy your future?

I recently worked with a client who told me that over the next five years, 86 percent of their workforce would be eligible to retire. This is a startling number and caused this organization to pause and take note. The “veterans” hold incredible knowledge that can’t just be transferred via Dropbox or Evernote (if you don’t know what these are, it’s time to catch up). We worked on creating a leadership development program that will systematically transfer that experience-based knowledge through a professionally based mentoring model.

Regardless of the size, scope, or industry of your business, you will benefit from instituting a thoughtful, intentional mentoring model in your business.

Otherwise, you may end up suffering from institutional amnesia. Consider these four points…

• Employees leave either due to retiring, finding a new job, or dismissal. If they’ve spent any time in your organization, they have knowledge that’s valuable – operations, technology, human resources, sales, and administrative. What’s that worth to you?

• In many cases, you will have set up protections for sharing vital information and proprietary property.However, what you may not have thought of are the shortcuts, efficiencies, contacts, and operational processes attained over the course of years that improves productivity and saves valuable time.

• If it’s not broken, don’t fix it. Without gleaning organizational “secrets of success,” you’re bound to actually break what might be a smooth running machine. How long does it take to fix that?

• Preserving instructional memory is a business strategy that most businesses haven’t even considered, but will be a huge topic in the future. Who is better capable of teaching than those valued employees who made your success possible? Why not keep them engaged and motivated by offering them this challenge? You will find that they are more valuable as a teacher than potentially just playing out the string.

But all is not lost. You have the opportunity to retain your memory with a few easy and relatively painless steps …

• Institute a formal mentoring program.

Train your veterans on how to show the young guns the ropes. Create joint accountabilities and engage all sides by showing them why it’s important to the organization and to them individually.

The best way to accomplish this is to hire a professional to come in and train your administrative team and your mentors. Once you have the process and

Automatic investing can pay off for you

By David Hawley To achieve investment success, you don’t have to start out with a huge sum or “get lucky” by picking “hot” stocks. In fact, very few people actually travel those two routes. But in working toward your investment goals, you need to be persistent – and one of the best ways to demonstrate that persistence is to invest automatically.

How do you become an “automatic” investor? You simply need to have your bank automatically move money each month from a checking or savings account into the investments of your choice. When you’re first starting out in the working world, you may not be able to afford much, but any amount – even if it’s just $50 or $100 a month – will be valuable. Then, as your career progresses and your income rises, you can gradually increase your monthly contributions.

By becoming an automatic investor, you can gain some key benefits, including these: Discipline – Many people think about investing but decide to wait until they have “a little extra cash.” Before they realize it,

24 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

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they’ve used the money for other purposes.

When you invest automatically, you’re essentially taking a spending decision “out of your hands.” And as you see your accounts grow over time, your investment discipline will be self-reinforcing.

Long-term focus – There’s never any shortage of events – political crises, economic downturns, natural disasters – that cause investors to take a “timeout” from investing. Yet if you head to the investment sidelines, even for a short while, you might miss out on some good opportunities. By investing automatically each month, you’ll maintain a long-term focus.

Potential for reduced investment costs – If you invest the same amount of money each month into the same investments, you’ll automatically be a “smart shopper.” When prices drop, your monthly investment will buy more shares, and when prices rise, you’ll buy fewer shares – just as you’d probably buy less of anything when prices are high. Over time, this type of systematic investment typically results in lower costs per share.

Furthermore, when you invest systematically, you’re less likely to constantly buy and sell investments in an effort to boost your returns. This type of

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frequent trading is often ineffective – and it can raise your overall investment costs with potential fees, commissions and taxes.

(Keep in mind, though, that systematic investing does not guarantee a profit or protect against loss. Also, you’ll need the financial resources available to keep investing through up and down markets.)

Clearly, automatic investing offers some major advantages to you as you seek to build wealth. Of course, if you’re contributing to a 401(k) or other employer-sponsored retirement plan, you’re already automatically investing

WEEDIN

from page 23 change with it.

Bottom line — if you have employees who hold institutional knowledge, or as I like to call it, “smarts,” then you are in danger of getting amnesia. The results of institutional amnesia include institutional death. The scary thing is it may be happening and you don’t know it until it’s too late. By implementing these three simple strategies, you can go a long way to preserving your memory and thriving in the

process.

Editor’s Note: Dan Weedin is a Poulsbobased management consultant, speaker, and mentor. He helps entrepreneurs and small business owners to significantly transform their businesses and their lives. He is one of only 24 consultants in the world to be accredited as an Alan Weiss Master Mentor.

Reach Dan at 360-697-1058, dan@danweedin.com, or visit www.danweedin.com.

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because money is taken out of your paycheck at regular intervals to go toward the investments you’ve chosen in your plan.

But by employing automatic investing techniques to other vehicles, such as an Individual Retirement Account (IRA), you can continue your progress toward your long-term goals, including retirement.

So, do what it takes to become an automatic investor. It’s easy, it’s smart – and it can help you work toward the type of future you’ve envisioned.

(Editors note: David Hawley is a financial planner at Edward Jones in Belfair.)

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Buy low, sell high. It sounds so easy Stock market strategies may be based on ‘science of investing’ or ‘art of investing’

By Jason R. Parker I remember as a kid my dad used to say, "Jason, don't put all your eggs in one basket." I didn't realize it at the time, but he was talking about diversification. Diversifying your investments in retirement is a different ballgame than while you're in the accumulation phase.

Retirement diversification really requires two levels: first across your time horizon, and second across investments for each time segment. Retirement really is all about cash flow as your income is what allows you to do the things you want to do. Preparing for retirement requires having a strategy for generating a lifetime of inflationadjusted income.

The money you invest in the stock market is to help you outpace inflation so you don’t lose purchasing power

over a long period of time. I believe the two primary ways you can intelligently invest your money in the stock market are through Modern Portfolio Theory and Tactical Investment Management.

The first is what I call the "science of investing," which is built upon Modern Portfolio Theory (MPT) and the Efficient Market Hypothesis.

William Sharp and Harry Markowitz won the 1990 Nobel Prize in economics for developing this theory. This theory asserts that markets are efficient, provides guidance for how risk assets should be priced and proposes a way for rational investors to diversify their investments and participate in these efficiencies.

Essentially the key with this theory is broad diversity across the entire globe, across ass et classes and sectors, and to rebalance your portfolio as necessary to maintain your asset allocation over time.

This method has a long list of academic research behind it to back it up.

However, some behavioral economists are critical of MPT and the Efficient Market Hypothesis.

They argue that humans are emotional in nature and engage in often irrational decision making. They point out that this method didn't hold up very well in the market crash of 2008 when fear was the driving force for investment decision making.

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rather be right 50 percent of the time than wrong 100 percent of the time.”

How you choose to invest your money in retirement is a highly personal and a very important decision.

If you make a mistake at this period of your life, you may not have enough time on your side to make up for any sustained losses, especially if you need your money to supplement your income in retirement. Investing doesn't have to be complicated, just remember to buy low and sell high.

Editor’s Note: Article provided by Jason Parker. He is president of Parker Financial LLC, a fee-based registered investment advisory firm specializing in wealth management for retirees. His office is located in Silverdale. The opinions and information voiced in this material are not intended to provide specific advice or recommendations for any individual, and do not constitute a solicitation for any securities or insurance products. All information is believed to be from reliable sources; however, no representation is made as to its completeness or accuracy.

Please consult your trusted professional for advice and further information. Jason Parker is insurance licensed and offers annuities, life and long-term care insurances as well as investment services.

June 2012 Kitsap Peninsula Business Journal • KPBJ.com 25

Gary Lucy / CPA, CFP • Alison Fong • Brian Cox • Don Cox / CPA

So if the "science of investing" has some holes in it, what are the other options? An alternative to MPT is Tactical Investment Management.

Tactical investment management means different things to different people, but usually involves someone actively managing your retirement funds. When hiring a tactical investment money management firm, you should look for managers who are seeking opportunities to avoid or reduce risk by actively trading and managing a portfolio. I call this type of investment management the "art of investing." This management style cannot be academically proven, however many tactical money managers have had an impressive long-term track record of helping to reduce stock market volatility and provide attractive returns. The emphasis of this strategy is usually geared toward preserving principal and outpacing inflation than trying to beat the returns of the markets.

There are no magic bullets when it comes to investing in the stock market.

And you can make a strong argument for the "science of investing," or the "art of investing." I often recommend employing both types of investment management in your overall retirement strategy. As I have said many times “I’d

Heads in the cloud: ‘Next big thing’ in tech innovation

By Charles Keating For anyone watching the news, advances in technology are a daily fixture. At the same time, the economy has been struggling to break out of the doldrums the last few years.

When the last recession started in 2008, economists held out hope that technology — clean, green, IT and other forms — would lead the recovery. This makes sense given both the dynamism of technology and how broadly it modifies other economic sectors.

Statistically the recession ended in 2009, but the gains have been uneven and slow.

Surveys show most workers feel the recession is continuing, with persistent unemployment, under-employment, and structural changes — with more people contracting or working part-time and fewer traditional full-time job openings. It’s all part of the "new normal."

Has tech helped soften the blow? Probably, but tech definitely is creating new opportunities, for both established firms and startups/entrepreneurs who are transforming markets and creating new ones. Innovation is at the core of this cycle of creative destruction and renewal, not "if it works, don’t fix it" but

"that works, now find a better way." During the downturn, mobility and Internet access exploded. Smartphones, tablets and e-book readers went from novelties to mainstream in a few years. Now finding directions, reading a book or article, looking for a new restaurant, or searching some obscure fact can be done from the palm of your hand.

What seems just a new daily experience is still creating longterm changes in our personal and business worlds. As Internet bandwidth and device capabilities improve, digital downloads of software, music, videos, books and newspapers are continuing to displace their physical counterparts. Key skills for new economy workers are the ability to efficiently search for and assess quality of information, to synthesize useful results, and ensure new products and services created can be found by others. Social media sites link millions of users worldwide, making new connections possible

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between people, business and the marketing of products and services. These new economy tools and impacts are still evolving.

In step with this revolution (or evolution?) is the vast expansion of Internet “cloud” services that makes this possible. The cloud has been around for some time with email and web hosting, and BBS systems before that — but now an iPad2 has the processing power of a 1985 Cray super computer. On the other end of the pipe are data centers with vast arrays of managed virtual servers, inexpensive storage, and fast and redundant Internet connections.

The increasing capabilities on both ends are making voice recognition and the semantic web (where the computer understands the context of what you are saying and not just keywords) a reality. Finally, and a crucial step for small businesses, the cost of hosted ser vices has fallen in the last year as these services move from early adopters to mainstream markets.

This all leads to the "next big thing."

Mobility and the cloud are here. As an IT consultant who has been working with firms since the ’80s, I see the next shift inside organizations when they leverage these new tools.

For example, I now run a tech association that formed in 2000. Over the years we’ve built a large body of paper and electronic records, yet just a month ago we moved them to the cloud. Now, all board members have the same access, 24/7. Dead paper files were sorted, scanned and accessible. We keep an offline backup and encrypt sensitive information, but this raises collaboration to a new level.

We also recently held a meeting at Olympic College where participants eagerly discussed the issues and b enefits of online learning. None doubted that education has changed beyond sitting in physical classrooms.

Another big thing for the region is the 10th of October, when West Sound Technology Association (www.westsoundtechnology.org) hosts its 11th annual summit at Kitsap Conference Center. This year’s theme is innovation and leadership, and our keynote is Gary Shapiro, CEO of Consumer Electronics Association and host of the world’s largest Consumer Electronics Show. Gary has also authored "The Comeback: How Innovation Will Restore the American Dream." This message is directly in tune with our association’s message and mission: education, innovation and entrepreneurship are at the core of restoring our economy and building a prosperous future.

Sponsorship opportunities are available and together we will connect the region to an international audience. Now is the perfect time to seize the future, and Kitsap is the place to be.

(Editor's Note: Charles Keating is president of West Sound Technology Association (WSTA).

He is also president of Keating Consulting Service (www.kcsco.com), an IT consulting practice which has been in business for nearly 30 years. He is also a principal in K2 Strategic Solutions (www.k2strategic.com), a partnership between Professional Options and Keating Consulting Service which has a combined 50year history of providing technology, policy and management consulting.)

26 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

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By Wendy Davis, The Daily Online Examiner Last year, shortly before Black Friday, two malls announced plans to track shoppers' physical locations via their mobile phones. The malls -- Promenade Temecula in California and Short Pump Town Center in Virginia -- put up small signs notifying people of this plan and telling shoppers that they only way to avoid the tracking was to turn off their cell phones.

The malls intended to track people until the end of the year, but once news of the initiative got out, a backlash forced the shopping centers to retreat.

At the time, observers suspected that most consumers wouldn't be fond of this type of surveillance.

Now, researchers from UC Berkeley Law have confirmed that virtually no one thinks this type of tracking is acceptable. In a report issued this week, "Mobile Payments: Consumer Benefits & New Privacy Concerns," researchers say 96% of respondents in a recent survey said they didn't think their phones should share browsing information with stores. Seventynine percent of respondents said they would "definitely" not allow this type of tracking, while 17% said they "probably" wouldn't allow it.

Physical tracking by retailers is only one potential privacy issue raised by mobile phones.

Another stems from the fact that phones can be configured to transmit data about users -including email addresses and phone numbers -- when people use mobile payment systems This type of disclosure also raises consumers' concerns, the researchers report.

More than eight in 10 survey respondents (81%), said they wouldn't want to let their phones transmit telephone numbers or addresses to stores. People weren't quite as protective of their email addresses, but 67% said they either "definitely" or "probably" wouldn't allow it.

"Overall, Americans strongly reject systems that would track them as they browsed stores and those that would share personal information with the merchant at the register," the report states.

Results are based on a survey in January and February of more than 1,200 people.

Read more: http://www.mediapost.com/publications/article/173295/mobile-users-rejecttracking-by-retailers.html#ixzz1tHjS3YQO

Free apps not truly ‘free’

By Rodika Tollefson Anyone who owns a smartphone or tablet is likely to have a favorite free app worth raving about. And with more than half a million apps each in the Android marketplace and Apple’s iTunes, people’s love for apps (free or otherwise) is only going to grow.

One issue the average consumers may not consider is how exactly they are paying for those freebies. They may not be handing over their credit card but they are paying in other ways — whether it’s privacy, security or device efficiency.

A large portion of the free apps — such as the uberpopular game Angry Birds and other games — are supported by advertising. A recent study by Purdue University found that as much as 75 percent of energy required to run a free app is spent on modules fo r advertisement delivery (Angry Birds and the popular free chess Android app, fchess, for example, spend less than 20 percent of their energy use on the core gaming module). The study also found bugs in popular apps such as Facebook’s that caused more energy use than should have been necessary.

Battery drain may be more of an inconvenience but it’s worth noting that many of today’s smartphones don’t have the option of replacing batteries. And a battery can only be drained and charged so many times over its lifetime. The more drain on the battery, the shorter the

phone’s lifespan — in some cases, much shorter.

Another inconvenience, or at least annoyance, is the trend of “free” apps to include “in-app” purchase options to compel users to add paid features. Some of them sneak up on people only after the app is dow nloaded and launched, though the phone should in theory prompt the owner before making an actual purchase.

Privacy is another big issue. A large number of apps track GPS location, whether they need it for obvious reasons or not.

“Location tracking is the biggest issue, especially for mobile phones with built-in GPS. These applications and their providers know where you are at all times… It’s a borderline in vasion of privacy,” said Brian Morkert, owner and president of Audit West, a consulting firm in Bremerton that works with regulatory compliance issues including privacy and security.

Morkert recently went through his own Android phone’s apps to check out what permissions they requested, and as a result deleted a couple of them. To his surprise, “Brightest Flashlight” included not only GPS location tracking but also full Internet access, hardware controls for taking photos/videos and reading the phone’s state and identity — all that for a flashlight app. Blockbuster wasn’t much better — location and phone state/ID were among the permissions it required.

So both of those apps had to go.

Like other users, Morkert knows he would have to give up some of his privacy for convenience — as in the case with apps like Ye lp or Google. But giving access to a game to the phone’s address book, for example, is another story.

Another issue, especially for the Android platform, is the risk for malware.

Several months ago the Zeus Trojan, designed to steal banking information, was discovered on the platform, and Morkert frequently sees Department of Defense alerts about those kinds of issues.

He said at minimum, Android users should not buy apps on the secondary market.

John Bower, whose Poulsbo-based company, eAcceleration, has developed an app for the Kitsap BlueJackets among others, said one other step he takes to vet Android apps is checking to see if it’s available for iPhone. Apple has a rigorous approval process for apps sold through iTunes, while anyone can easily place an app in the Android marketplace.

“I have a lot more confidence in it if the app is available in the Apple store because of the checks and balances used (by Apple),” he said.

Although there is almost no such thing as a “free” app, Bower said it all comes down to the developer or owner’s intentions. His company, for example,

recently developed an app for the Washington Beer Commission to promote the state’s microbreweries, and he said the application doesn’t reque st any personal information from users. “It’s a great example of a free app that’s not asking for anything. They (the beer commission) are paying for the development and making it available for free and the end goal is to promote, not get additional revenue,” he said.

Even apps associated with well-known brands should be vetted, he said — as he found out recently from his own experience when he downloaded a Klout app that turned out to be made by a secondary vendor, versus being officially commissioned by Klout.

Jon Delmendo, director of interactive media with eAcceleration, said the key to approaching free apps, including those popular with Facebook users online, is education and experience. Geolocation tracking and similar practices are issues many average users don’t even realize are happening.

“You have to be aware that there’s no such thing as a free lunch and in many cases, no such thing as a free app. There’s a certain thing that you’re giving up,” he said. “People need to realize they may be giving things up without realizing they’re giving them up.”

Mobile shopping on the rise, tougher for small retailers to implement help session — anyone can come into the shop to ask questions about e-readers and even take one for a test drive. She also uses QR codes regularly to direct customers to spe cific books.

“Business online is increasing every month, especially e-books,” Droppert said.

Droppert has noticed a growth especially in the use of iPads, while many customers also come into the store with a book they want to buy already pulled up on their smartphones.

“Any time I go on the ferry and look what people are reading, they’re reading on their phones and iPads,” she said.

Doña Keating, owner of Popcorn Chef based on Bainbridge Island, said she knew early own she wanted her e-commerce business to be mobile-friendly. Popcorn Chef’s customer base is all over the world, with most orders coming in from other parts of the country. Keating uses various services including Google and Exclusive Offers to track traffic statistics.

But, she said, most of her customers still prefer the ease of online shopping ins tead of using mobile devices.

“We do get a lot of mobile traffic but the majority is still coming through the Mobile, page 28

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By Rodika Tollefson The Consumer Electronics Association forecasted earlier this year that 90 percent of consumers own a cell phone or mobile device (including smartphones), and almost 40 percent of those people engage in m-commerce (mobile commerce). With smartphones continuing to saturate the market, it’s easy to see where the trends are going.

National retailers are paying attention — Lowe’s, Staples, Wal-Mart and others have come up with various ways to capture that market, which CEA estimated at $124 billion a year. App developers, too, are trying to capitalize on it, as was the example with Shopmox, which developed an app that is supposed to simulate the mall shopping experience, only on an iPad. Susanne Droppert, owner of Liberty Bay Books in Poulsbo, is one of the local merchants who are trying to keep up with those kinds of trends. She has been heavily promoting online shopping for her business for about seven years, and uses the American Booksellers Association’s templates for the site while customizing it for her own needs; the site is mobile-friendly. The store also sells ebooks for all e-readers (except the original Kindle) and every Friday, hosts an e-book

28 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

Is it time to move to ‘the cloud’?

By Rodika Tollefson Microsoft may have been the first to bring the idea of cloud computing to the general masses a couple years ago — who didn’t see the television commercial about a couple stuck at the airport victoriously proclaiming “to the cloud”? And while Amazon.com offered cloud-based services to customers as far back as 2006 and many businesses began switching from company servers to cloud-based storage about three years ago, individual consumers and smaller businesses have been slower to embrace the idea.

What exactly is the cloud? Definitions vary and are often challenging to wrap one’s arms around — much like the clouds in the sky.

The U.S. Department of Commerce’s National Institute of Standards and Technology, after years of work and 15 drafts, provided this definition: “Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction.” The NIST says the cloud-computing business model has five essential characteristics: ondemand self-service, broad network access, resource pooling, rapid elasticity or expansion and measured service.

Some online sources say the term cloud is simply a metaphor for the Internet, covering servers and computing infrastructure, similar to the electricity infrastructure.

“Cloud computing is nothing more than a hosted service solution — it can be in your business (private) or it can be ‘public,’ which means someone else is managing the infrastructure. It’s accessed by Internet, typically via a web-based interface,” said Charles Keating with Keating Consulting, who is president of West Sound Technology Association.

The concept of the cloud as a utility network dates back to the 1960s, but the term of cloud computing itself was coined in 1997 by an information systems professor. As more cloud-based solutions became available, the industry has exploded. According to Forbes magazine,

revenues for cloud-related services were around $58.6 billion in 2009 and some estimates show that tripling by 2014 if not next year.

“The public cloud has been around for a long time — most people used that solution for email and hosting websites ….

Most software developed before 2000 was originally developed for mainframes and then networks,” Keating said. “Because of all the new devices showing up — tablets and smartphones — and people wanting to access their data, new software was developed.”

For an individual consumer, the many applications of the cloud are much about convenience, but for businesses, it could mean significant savings in addition to improved efficiency. In a 2009 survey by F5 Networks of 250 enterprise IT managers, 77 percent said efficiency was a major driver in adopting public computing, 68 percent said it reduced costs and 61 percent said it eased staffing issues. The numbers were slightly lower for private cloud computing.

“Typically the public cloud has the efficiencies of scale, so it’s a bit more costeffective,” Keating said. “If I run a big server internally, there’s the cost of the server space and running the software. A lot of customers still run internal servers but for some, there’s no benefit because they have a distributed workforce.”

Cloud-based data storage is one of the applications that’s gaining popularity.

Dropbox and Apple’s iCloud are two of the more popular among the many available services, and Microsoft recently stepped up its promotion of SkyDrive. In April, Google turned up the heat with its own version, called Google Drive. Each service is different but at their essence, they allow users to not only store their documents but also share them seamlessly with others, in real time.

Keating sees those kinds of services as the future of doing business. He has recently been working with the WSTA board to adopt Dropbox in order to become paperless. “We used to have paper files and documents and now we’re moving it all into the cloud with Dropbox. We just want another level of collaborating using the cloud,” he said. “We’re now instantly, on any computer or tablet, can be looking at

Coming Next Issue...

the same files or information.”

Cloud storage is not without its risks, and some IT techs have outright banned services like Dropbox from their clients’ computers because of security concerns stemming from giving third-party software a “back door” access to computers.

As far as storing in the cloud, sensitive documents could be encrypted (Keating said a simple way to do that is “zip” them and add a password), and there’s also the risk of the service losing the data due to server crashes. Although those chances are minimal, it can happen even to the bigger providers — as demonstrated in 2009 by Microsoft, which lost its cloud data due to a catastrophic failure. And in February last year, reportedly 160,000 Gmail users lost their accounts. While Google eventually recovered the data, the crash left many people without access to their email for days.

What that means for users is the need to take extra steps to protect themselves — just as a desktop or laptop should have regular backups, it would be prudent for a business to have backup plans for its cloud-

stored information, in addition to implementing other security measures.

And not all cloud services are created equal — reading the fine print, or the “clickwrap” agreement, is a good business practice. For example, many services disclaim any liability in those agreements in case of lost data, and more and more court cases are taking up those kinds of issues.

The potential of the technology is unlimited, in Keating’s view, not only for efficiency but also collaboration — especially as more and more people become their own agents, with virtual offices, and more companies embrace telecommuting or a mobile and distributed workforce.

“I think this is the next killer app. The idea is that people have so much information to manage but aren’t necessarily very good at managing it — I think we’re going to be at a point where synchronizing with the cloud and the desktop will become common … Security and authentication will get better,” he said.

“The ‘next big thing’ is already here, it’s a question of getting people to use it.”

MOBILE

power of mobile shopping, many do not have the budgets for implementing a fullscale mobile-shopping site — or in some cases, even full-scale e-commerce sites.

“We’re a small company and don’t have a ‘website guy,’” said Tami Bowen, who owns CB’s Nuts in Kingston with her husband. “What I’d like to do first is make our website more dynamic.”

Bowen said the business receives online orders on a daily basis, but like many small business owners who wear multiple hats, they don’t have a lot of resources to invest into that side of the business. Still, that’s the plan — the couple hope to overhaul their site eventually to make it more onlinefriendly.

“It is absolutely necessary to be online,” she said. “We have a lot of companies whose business is to offer value-added products to get exposure and we need to develop our online presence and grow that part. …Your credibility is based on how your website looks and you really need to design it so people get excited about it.”

from page 27 website because it’s easier to maneuver,” she said. Still, she is excited about the potential the technology could bring — giving as one example Japan, where smartphone users can scan a code and instantly purchase a product after seeing an advertisement.

“This is something that should be happening here,” she said.

Some companies are currently experimenting with their own versions of that idea. Starbucks bein g one example — wave your smartphone by the scanner, grab your latte, and off you go. Google Wallet, launched as a pilot last year, took the idea one step further to enable consumers to pay for in-store and online purchases by tapping their phones. Some of the big mobile-service providers are testing their own grounds as well.

For the small local retailers in general, however, the world of m-commerce is much less attainable than the major stores. While merchants are realizing the

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Bainbridge, Gig Harbor maintain accreditation in Main Street program Association president Gary Glein said he is, "very pleased with the designation, as the accreditation recognizes the faith and support of the waterfront merchants, our many volunteers, the City of Gig Harbor and others who have worked so hard to make the Waterfront Association an effective force in the community."

The mission of the GHHWA is to bring together community and waterfront district stakeholders, encourage economic vitality and preserve historic character. For more information about the organization, visit

www.gigharborwaterfront.org.

The National Trust Main Street Center, established in 1980, helps communities of all sizes revitalize their older and historic commercial districts.

One of the key benefits available in fully accredited Main Street communities is the allowance for businesses that contribute to revitalization efforts to receive a B&O tax credit for 75 percent of their donation, which allows businesses to steer the taxes they pay to help in their local community.

Working in more than 2,200 downtowns and urban neighborhoods over the last 30 years, the Main Street program has leveraged more than $53.6 billion in new public and private investment.

Port Orchard is the latest Kitsap County community to seek Main Street accreditation. Several members of the interim board of directors of the recently formed Revitalize Port Orchard group attended the state Main Street conference in May in Chelan.

June 2012 Kitsap Peninsula Business Journal • KPBJ.com 29

The Bainbridge Island Downtown Association and the Gig Harbor Historic Waterfront Association have been awarded National Main Street Program accreditation for meeting the commercial district revitalization performance standards set by the National Trust Main Street Center.

Each year, the National Trust and its partners announce the list of accredited Main Street programs that have built strong revitalization organizations and demonstrate their ability in using the Main Street Four-Point Approach methodology for strengthening their local economies and protecting the historic character of their downtowns.

“We congratulate this year’s nationally accredited Main Street programs for meeting our established performance standards,” said Doug Loescher, director of the National Trust Main Street Center.

“Accredited Main Street programs are meeting the challenges of the recession head on and are successfully using a focused, comprehensive revitalization strategy to keep their communities vibrant and sustainable.”

Both the Bainbridge Island Downtown Association and the Gig Harbor Historic Waterfront Association have an annual performance evaluation by the Washington State Main Street Program, which works in partnership with the National Trust Main Street Center to identify local programs that meet 10 performance standards.

Evaluation criteria determine the communities that are building comprehensive and sustainable revitalization efforts and include standards such as developing a mission, fostering strong public-private partnerships, securing an operating budget, tracking economic progress, and working in partnership with local preservation efforts to protect historic buildings.

Andrea Mackin, director of the Bainbridge organization, underscores the importance of the Main Street approach in helping local businesses survive the economic hardships of the recent recession and last year’s Winslow Way Reconstruction Project. “Without the support of the resources provided by the state and national Main Street model, we would not be seeing the enthusiastic recovery that’s happening in downtown Winslow.”

The Bainbridge Island Downtown Association’s mission is a commitment to building and sustaining a vibrant downtown. BIDA provides activities and advocacy that create a catalyst for locally owned independent small businesses, fostering economic revitalization and community pride.

BIDA and its 11-member board of directors continue to work with the local merchants and small businesses to ensure that revitalization efforts meet the needs of a broad range of members of the downtown business community.

Gig Harbor Historic Waterfront

Next Washington C.A.S.H. business training sessions include first classes in Mason County

Now Accepting Online Nominations!

We are now accepting nominations for the Kitsap Peninsula Business Journal’s annual 40 Under Forty leadership recognition program!

30 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

Do you know someone outstanding in their industry or profession who is deserving of recognition? Help us highlight the best and brightest young business leaders on the Kitsap Peninsula. Individuals must be under the age of 40 on Sept. 15, 2012 for consideration.

C O R P O R A T E

S P O N S O R S

Washington Community Alliance for Self-Help (C.A.S.H.) will offer two free business boot camp and orientations for summer business start-up classes in Kitsap and Mason County.

This is the first time Washington C.A.S.H. has offered its boot camp and orientation in Mason County. The orientation will be June 14 from 6-9 p.m. at the Port of Allyn. Those who qualify will begin 10 weeks of the C.A.S.H. Business Development Training classes on June 21, from 6-8:30 p.m. in Allyn.

The Kitsap boot camp and orientation will be June 19 from 6-9 p.m. at 1201 Park Ave. in Bremerton. Classes will begin June 26 in Bremerton.

Washington C.A.S.H. has trained more than 1,000 entrepreneurs in its Kitsap program since 2000 and maintains a business support group program of 55 entrepreneurs in Bremerton, according to Stuart Walton, program director in Kitsap.

“We have had many start-up clients from North Mason in the past years and we want to test the waters to see if we can sign up at least 18 for our summer classes,” Walton said.

Local business owner Marcia Hamilton of Belfair has been instrumental in arranging to bring the orientation to Allyn and the North Mason Chamber has endorsed the program.

Those receiving state unemployment benefits through Work Source may be eligible for the Self Employment Assistance Program (SEAP).

Topics included in the 10-week business training include developing a clear

definition of your business, taxes, insurance, sales, marketing, calculating the break-even point, learning cash flow techniques, developing a pricing strategy, preparing financial statements, projecting sales and selling.

There is a strong focus on developing profit-and-loss statements and learning how to make a business profitable.

Students in the training class will prepare a business feasibility plan, taught by experienced working professionals and assisted by volunteer coaches.

“We expect our entrepreneurs in this program to actively participate in class and we work hard on presentation and sales skills. And, yes, there is weekly homework,” said Walton who teaches the classes with local entrepreneur and marketing expert Bill Hoke.

Local volunteer business coaches support the entrepreneurs-in-training.

Following graduation, students may apply for ongoing business support training to continue in the business support group program that meets every two weeks.

Washington C.A.S.H. provides business training, supportive community and capital to help enterprising individuals with limited financial resources gain access to market and achieve self-sufficiency through small business ownership.

To preregister, interested participants should contact Walton at stuart@washingtoncash.org or call 206914-4824 or 360-698-4088, or Marcia Hamilton in Mason County at marciahamilton@msn.com or call 425444-4590.

TIPS FROM WSU SMALL BUSINESS DEVELOPMENT CENTER The State Department of Labor & Industries has free videos available to borrow, copy and/or download that can help keep your employees safe and your workers compensation rates down. Many are eight to 20 minutes long and well-suited to showing as part of a new employee orientation program.

Go to: www.lni.wa.gov/Safety/TrainTools/Videos/Library/default.asp, and there are many online sessions as well at www.lni.wa.gov/Safety/TrainTools/Online/ Courses/default.asp. Sample titles include: • Is It Worth Your Life? (responding to a robbery in a retail setting) • Oops Your Office Is Showing: An Office Safety Program • Taking Charge of Claims for Your Business • Fall Protection in Construction The WSU Small Business Development Center provides one-on-one advising, research and training for Kitsap County business owners with up to 500 employees at no cost to the client. Calll Elaine Jones at 360-307-4220 for information or an appointment

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Comparison of destination-based versus origin-based sales tax who ship their goods within the state to track the sales tax rates of all destinations where they deliver within Washington.

There are currently 364 local taxing districts in the state. “It’s not streamlined [the destination-based sales tax], it’s not simple. It’s incredibly expensive for small businesses,” said one small business owner.

Returning the state’s tax law to origin-based was one of the top seven recommendations from the small business owners who attended Washington Policy Center’s Statewide Small Business Conference last year.

Background Washington’s change from origin-based to destination-based sales tax collection is rooted in the growing battle over whether remote sellers — businesses that sell products to customers using the Internet, mail order, or telephone, without having a physical presence in the customer’s state — should collect and remit states’ sales taxes.

In 1992, the U.S. Supreme Court ruled in North Dakota v. Quill that remote sellers who do not have a physical presence in a state cannot be required to collect and remit sales tax for that state. The Court held the burden of collection for remote sellers was unreasonably high given the number of taxing districts in the country and variations among states as to what products are taxable and at what rate. When the Quill case was decided, there were 6,000 sales tax jurisdictions in the U.S. — today there are 9,600. Given the complexity of taxing conditions, the Court ruled that requiring remote sellers to collect sales tax would place an unconstitutional burden on interstate commerce.

The Court’s decision in Quill, however, did not dismiss the possibility of mandating sales tax collection in interstate commerce: “The underlying issue is not only one that Congress may be better qualified to resolve, but also one that Congress has the ultimate power to resolve.” The Court left the door open for Congress to require the collection of sales tax in interstate commerce.

The ensuing boom in tax-free Internet sales convinced states to take action. A University of Tennessee study estimates states have forgone more than $52 billion over the past six years in untaxed Internet sales. Washington state’s share of that estimated uncollected tax is $1.2 billion, including $282 million in estimated

untaxed sales from out-of-state retailers in 2012.

A movement was organized among some states to simplify state sales tax systems in order to lobby Congress to overturn the Quill decision.

Washington’s 2008 implementation of the destination-based tax was part of a multi-state tax uniformity effort asking Congress to change the federal law that allows remote retailers to avoid collecting sales tax from their customers.

The Streamlined Sales and Use Tax Agreement (SSUTA) is a 44-state nationwide effort that simplifies sales tax collection and administration by retailers and states in order to reduce the burden of tax compliance. One of the requirements of the agreement is that participating states use a destination-based system for collection of local sales tax. Currently 24 states have passed legislation conforming to the simplification measures called for by the Agreement.

Upon passage of SSB 5089, Washington State became a member of the SSUTA, which includes a seat on the governing board of the agreement and the ability to vote on amendments to and interpretations of the SSUTA. Membership as a Streamlined Sales Tax state also allows Washington to receive the sales taxes voluntarily collected from Washington residents by 1,200 retailers (online and mail order) who have agreed to collect the tax from customers living in SSUTA states, even if the retailer does not have a physical presence in that state. The state collected $5.6 million in new sales tax revenue from out-of-state SSUTAregistered retailers in 2009 and $7.1 million in 2010.

This revenue is significantly lower than expected. The state predicted it would collect new sales tax revenue of $49.1 million in 2009 and $59 million in 2010 from this voluntary compliance by SSUTAmember retailers.

The theory behind SSUTA is if enough states pass legislation conforming with the agreement, thus simplifying the sales tax process and reducing the burden on remote sellers, Congress will be encouraged to pass a federal law requiring all remote sellers to collect sales tax.

Washington’s decision to shift the local sales tax collection from origin-based to destination-based was one step in the

national effort to harmonize states’ sales tax and to lobby Congress for passage of a federal law requiring all online and mail order sellers to collect and remit state and local sales taxes.

Washington State Department of Revenue spokesman Mike Gowrylow confirmed the motivation for changing the state’s tax rule: “This is a necessary evil.” “If enough states are able to pass the streamlined sales tax legislation, it may prompt Congress to require all remote sellers to collect sales tax. The long-term goal is to get Congress to say that the states have done a good job of streamlining the sales tax process, reducing the burden on remote sellers, so that these businesses should pay tax in the state that’s the point of sale.”

Why Some Businesses Support the Destination-based Sales Tax As online sales increasingly capture a greater share of the retail market, many of the state’s brick-and-mortar stores say they are at a competitive disadvantage with remote sellers. As a result of the Quill decision, remote sellers are not required to collect and remit sales tax for any state in which they do not have a physical presence.

This often enables remote sellers to offer products to consumers at a lower price than their brick-and-mortar counterparts.

The competitive disadvantage extends to online and mail order retailers with a physical presence in a state, which means they must collect Washington sales tax while remote sellers — those with no presence in the state — do not.

While the change to a destination-based sales tax does not itself directly benefit the state’s retailers, the change allowed Washington to join the organized group of SSUTA states pushing Congress to pass federal legislation requiring remote sellers to collect and remit sales tax to the jurisdiction of the buyer. Supporters argue every state that joins SSUTA adds pressure for Congress to adopt a national law they say is desperately needed to level the playing field for all retailers. The change also has the benefit of setting up the tax collection system that would be used should Congress pass a law requiring all online retailers to collect sales taxes on consumer purchases.

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Sales tax, page 32

June 2012 Kitsap Peninsula Business Journal • KPBJ.com 31

By Erin Shannon Washington Policy Center In 2008, Washington state changed how most businesses must collect local retail sales tax for products sold to customers through the mail or delivered to your home or business. SSB 5089, passed by the legislature in 2007, required a switch from origin-based to destination-based collection of sales tax for some of the state’s retail businesses.

Under the pre-2008 origin-based system, all Washington state retailers collected local sales tax based on the pointof-sale jurisdiction — the location from which a product was purchased. The local sales tax collected by retailers was the same for goods purchased by walk-in customers as for goods shipped to another locale within the state. The new destination-based tax structure requires retailers shipping their goods within the state to collect the tax based on the delivery location of the customer; that is, the destination of a product.

Only retailers shipping or delivering their goods within the state are affected by the change. Retailers who deliver products outside the state, or sell their product overthe-counter at a “brick and mortar” location, are not impacted.

The change does not affect wholesale sales, services, sales of vehicles, aircraft, mobile homes, boats, towing companies or florists.

The small business community in Washington is divided over the issue of origin-based versus destination-based taxing.

The Washington Retail Association, representing 2,800 retail storefronts, believes the tax rule change to destinationbased taxing was necessary to bring state tax law “in line with the new economy … when our sales-tax based structure was put into place, there wasn’t an Internet, there wasn’t a lot in catalog sales. We need to keep up with the times.” These retailers believe the change will help small businesses by keeping sales tax revenue stable and making them more competitive with online retailers. They also worry state governments that rely heavily on sales tax revenue, like Washington, will increase other business taxes and fees to make up for sales tax shortfalls.

Many small businesses, however, find the change to be burdensome, forcing those

SALES TAX

from page 31

Why Some Businesses Oppose the Destination-based Sales Tax According to some small businesses, the state’s change from origin-based to destination-based tax collection currently does little to level the playing field for brick-and-mortar stores versus online retailers. Until Congress changes the law, remote sellers are still under no obligation to collect sales tax in states in which they do not have a physical presence.

Some out-of-state retailers who are members of the SSUTA have voluntarily agreed to collect the tax in SSUTA states, but the number of participating retailers

is a fraction of the tens of thousands of online retailers selling products via the Internet. The tax revenue generated so far has been relatively insignificant.

Many of the state’s small business owners argue the playing field has been made less level by the change in tax structure, because over-the-counter customers are charged an origin-based sales tax while customers taking remote delivery are charged a destination-based sales tax. This means brick-and-mortar stores that do not ship their goods are only required to keep track of and charge one sales tax rate — the tax rate of the jurisdiction in which their business is located. But stores that ship their goods are required to keep track of the 364 taxing districts and charge the appropriate sales tax.

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Another complaint from some small businesses is the exemption for florists.

Qualified florists — those whose flower sales comprise at least 50 percent of sales — enjoy the simplicity of a single, originbased sales tax, while businesses that don’t qualify as florists but still deliver, such as grocery stores, must calculate a destination-based sales tax based on the delivery address. Other high-volume delivery retailers, such as pizza sellers, must also calculate sales tax based on the delivery address.

Conclusion While some small business owners say the change from origin-based to destination-based sales tax is burdensome and unfair, advocates of the destination-based tax say the benefits will be reaped when Congress passes a federal law giving states the authority to require all online retailers to collect and remit state sales tax.

That effort appears to be gaining momentum. There are several bipartisan bills under consideration in Congress that would give states the authority to require all online retailers to collect sales tax. H.R. 3179, the Marketplace Equity Act, would allow all states to collect sales tax from remote sellers, with an exemption for online sellers with less than $1 million in remote sales annually, or less than $100,000 in remote sales in a

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• Erin Shannon is director of the Center for Small Business at Washington Policy Center, a nonpartisan independent policy research organization in Washington state.

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specific state. S. 1832, the Marketplace Fairness Act, would exempt online sellers with less than $500,000 in annual remote sales. S. 1452/H.R. 2701, the Main Street Fairness Act, would provide sales tax collection authorization only for the 24 states that have adopted SSUTAcomplying legislation.

In April 2012 Congress held two hearings on these bills, and support for the idea of collecting sales tax on Internet purchases is growing. Numerous statespecific polls show clear support for the collection of online sales taxes, and a national poll conducted by the National Retail Federation in October 2011 revealed strong backing by a majority of voters.

A vote on the issue is all but certain in the near future as in-state retailers demand sales tax equality and cashstrapped states, facing declining retail sales tax collection as shoppers shift to online retail purchases, eye new revenue to plug their deficits.

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Be careful using criminal history checks in hiring decisions • Johnson v. Locke, the class action lawsuit against the U.S. Census Bureau for excluding people with criminal records from temporary positions with the Census.

• Mays v. Burlington Northern Santa Fe Railroad Company, Burlington Northern is accused of discrimination due to their blanket policy of not hiring people with felony convictions within the past seven years.

As the EEOC cracks down on these types of policies, we all want to stay out of their line of sight. You may be applying the rules correctly, but even if you are, you still have to be sure your job postings are accurate.

The NELP website has many job postings with examples that clearly violate EEOC guidelines. Some well-known companies, such as Domino’s Pizza, Adecco and Berkshire Hathaway are among them. If their job postings aren’t in compliance, it’s probably a good idea to review our own! Statements such as “no felonies of any type, no exception” are the types of statements that will get your company in trouble.

So, your policy in action might look something like this. You conduct a criminal background check on an employee who handles the company’s finances. If he/she has had a conviction for embezzlement in the last 10 years, that could be a reason to not hire them. If they have had a conviction for drunk driving, that would not be a reason to bar them from employment, as it doesn’t relate to the job they are applying for. If they had a conviction for forging checks 25 years ago, served two years, and have worked successfully as an accountant for the last

23 years, you would not have good cause to bar them from employment.

If you are considering arrests that have not yet resulted in a conviction, you are required by the EEOC to use your judgment. You must give the employee the opportunity to explain the situation, then you’ll have to use your best judgment to decide if the employee is guilty. But, even if you think that he or she is guilty, you must still apply the same rules. What is the nature and gravity of the offense?

How does it relate to the position? If it’s for domestic violence, for instance, how does that relate to the position?

Remember, we’re all innocent until proven guilty, so this is delicate territory.

And, if someone was arrested, and found innocent, you must not consider that arrest.

Employment Security has a helpful website with information on preemployment inquiries. Here’s the link to it: w w w . n e l p . o r g / p a g e / /SCLP/2011/CriminalBackgroundCheck sBestPracticesGuide.pdf?nocdn=1 NELP has a desktop guide on the use of criminal background checks in preemployment which you can print out and give to supervisors and hiring managers.

Here’s the link: www.nelp.org/page//SCLP/2011/CriminalBackgroundCheck sBestPracticesGuide.pdf?nocdn=1.

We often hear of companies misapplying these rules, putting themselves at risk of lawsuits. Hopefully with some guidelines and tools helping us to apply the rules, we’ll find it easier to abide by them.

recruiting company based in Poulsbo and Gig Harbor. She can be reached at julie@westsoundworkforce.com. View her LinkedIn profile at www.linkedin.com/in/jtappero.

The recommendations and opinions provided are based on general human resource management fundamentals, practices and principles, and are not legal opinions, advice, or guaranteed outcomes. Consult with your legal counsel when addressing legal concerns related to human resource issues and legal contracts.)

(Editor's Note: Julie Tappero is the President and owner of West Sound Workforce, a professional staffing and

June 2012 Kitsap Peninsula Business Journal • KPBJ.com 33

By Julie Tappero West Sound Workforce The National Employment Law Project (NELP) says that one in four American adults has an arrest or conviction that will show in a criminal background check. This can be a huge impediment to employment, as a Society of Human Resource Management poll last year showed that 92 percent of businesses polled use criminal background checks for some or all of the jobs they fill.

The Equal Employment Opportunity Commission (EEOC) has stated that “an absolute bar to employment based on the mere fact that an individual has a conviction record is unlawful under Title VII.” Why is it unlawful? Because it is believed that arrests and convictions have a “disparate impact on some racial and ethnic minorities,” meaning that if you implement an absolute bar to employment based on arrest and/or conviction, it may result in racial discrimination.

This does not mean that you have to disregard an applicant’s convictions. It does mean that you must consider each person individually and apply judgment based on the position and the individual’s circumstances.

Here are some guidelines to help you.

• How long has it been since the conviction and/or the completion of the time served?

Washington state’s guidelines on the Employment Security site suggest that you should not consider anything past more than 10 years.

• What was the nature and gravity of the offense?

Petty theft is one level of offense and first-degree murder is a whole different magnitude. You might be concerned about crimes such as theft or burglary if your construction company does remodeling in occupied homes. But would a reckless driving offense apply?

• What is the nature of the job sought?

Are you hiring a day laborer, or a Chief Financial Officer? You might consider their criminal histories in a different light.

For one, crimes relating to finance will be appropriate, while they might not relate to the other.

• Does your business have certain requirements by law or statute?

Some organizations have special exemptions, such as law enforcement agencies, financial institutions, school districts, those caring for vulnerable citizens such as children and those who are mentally ill or developmentally disabled.

To give you some idea of the minefield your company could create with a blanket policy, here are some recent lawsuits which were filed in 2010:

2013 CHEVY MALIBU:

Midsize Detroit Iron every bit as good as Camry or Accord

By Lary Coppola The 2013 Chevrolet Malibu, which hit showrooms about 60 days ago, is all new — inside and out. The benefits of its more aerodynamic styling are better fuel efficiency thanks to a drag coefficient of about 0.29 — among the best in the industry — and a quieter ride. It blends a smooth ride and that quiet interior with responsive handling, effective crash-test performance and outstanding build quality that holds its own against the Toyota Camry and Honda Accord — the mid-size sedan segment’s benchmark vehicles.

Chevrolet claims the safety package on the new Malibu includes the stiffest, strongest body in the class, eight standard air bags with rear side bags optional, and five-star NCAP crash performance in all markets around the world.

Built on the same platform as GM’s Opel Insignia, Buick LaCrosse and Buick Regal, Chevrolet says the new Malibu will be sold in as many as 100 countries, with additional engines and hybrid versions to be offered later on.

Model Lineup: Like the previous version, the 2013 Malibu is offered in LS, LT, and LTZ trim levels, all with new

interiors seemingly inspired by the Camaro.

Our test vehicle was the new Malibu ECO 2SA. Walkaround: The exterior design is similar to the 2012 model in the front, but features an entirely new rear end design that showcases very prominent taillights and an integrated decklid spoiler similar to the Camaro coupe.

Like its sibling, the Chevy Volt, the 2013 Malibu offers active shutters in the grille that open and close to improve highway mileage by corresponding with vehicle speed and engine cooling needs.

The new Malibu has a three inch wider stance than the previous model, which means more interior space for the driver, passengers and cargo, including 1.5 more front and 3.5 more rear inches of shoulder room, plus 2.7 inches of additional front hip room, and 2.8 inches more rear hip room.

The total interior volume — using EPA standards — is four cubic feet larger than 2012.

The styling changes are quietly bold, with an attractive wheels-at-the-corners look that is substantial, yet clean and crisp, resulting in a smooth-sided, sleek profile with an appealing roofline that could

34 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

CHEVY MALIBU ECO

belong on any luxury car.

Interior: Chevrolet’s signature dual-cowl dashboard interior is obviously inspired by vintage Corvettes. The design is updated into the 21st century with wood and metallic trim and blue-onwhite instrumentation.

Overall, it’s nicely designed and more spacious than previously, boasting premium, upscale materials, with excellent fit and finish. Chevy claims it’s been engineered to be the quietest interior in the midsize segment The seats are quite comfortable, and offer plenty of front-seat room, and generous rear legroom. All the controls are easy to operate, although some hard plastic surfaces detract from an otherwise topquality interior, which is bathed in ice-blue ambient lighting at night.

A new touch-screen display controls the AM/FM/CD/XM Satellite radio, as well as OnStar with Turn-by-Turn navigation, portable and streaming music from Pandora through the new MyLink feature.

It also handles other functions, such as the rear-view camera. and a host of new features like lane-departure warning, and forward collision alert.

Under The Hood: There is two powertrains offered — The Malibu ECO comes with a brand new Ecotec 2.4-liter DOHC In-line four-cylinder, with GM’s eAssist, while the LS, LT, and LTZ offer a 2.5-liter Ecotec engine. Both powerplants have direct injection, variable valve timing, and are married to a 6-speed, Hydra-Matic 6T40 transaxle. The 2.4 ECO, engine is rated at 182 horses and 172 lb. ft. of torque, while the 2.5 LS, LT and LTZ engine puts down 197 horses with 191 lb. ft of torque. Both engines utilize all the new technologies including dual overhead cams, four valves per cylinder, direct fuel injection, electronically variable valve timing, a variable-displacement oil pump and a two-stage electronic thermostat for peak fuel efficiency.

The EPA fuel economy rating for the 2.4-liter ECO is 25/City and 37/Highway Serving Kitsap County for 30 years

for a combined rating of 29 mpg. Figures for the 2.5-liter were not available at presstime.

Behind The Wheel: I found the Malibu pleasurable to drive. It’s quiet, smooth and comfortable, striking a nice balance between well-controlled handling and an even ride. The Ecotec 4-banger delivers acceptable acceleration, but isn’t quite as strong as the four-bangers offered by Honda or Nissan. However, the Malibu’s 6speed automatic, which increases fuel economy and improves acceleration, brings it up to about par with them.

The Ecotec In-line four also features electric power steering, to save drag on the engine, which aids both fuel economy and performance.

Steering is reasonably quick and precise, but has less road feel than I personally prefer — although that’s a subjective measurement.

Whines: The steering wheel is a bit too large in diameter for my personal taste, and a smaller wheel would give it a sportier feel, but that too is somewhat subjective.

Bottom Line: Choosing among the best midsize sedans basically comes down to nitpicking and personal preferences. The 2013 Chevy Malibu offers the size, room, features and conveniences a family sedan requires. Fit and finish inside and out are world-class. Personally, I think the Malibu faces off well against the benchmark Camry and Accord. They may have the edge on resale value, but at $26,845 base price, and pretty well loaded at $29,380 as tested, the Malibu offers something Camry and Accord don’t — traditional Chevrolet value.

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2012 HONDA CR-V:

Big rig room with small car fuel efficiency a quality sound and feel. The rear liftgate opening is large with a low lift over height for the extra low, flat cargo floor (both heights are one inch lower than the previous CR-V). The hatch will just brush the hair of people over six-feet tall. The rear

seats fold effortlessly, but they have a slight upward slope. Cargo capacity is 37 cubic feet with the seats up and 71 cubic feet when folded down.

We’re very particular about steering wheel ergonomics. Honda wheels are exactly what we like — thick and perfectly contoured for a comfortable grip. The leather CR-V wheel has tilt and telescopic adjustments that make it easy to find an ideal driving/comfort position. Auxiliary controls were great as was the sound system they manage. The navigation system and backup camera were also high quality, although not all the navigation functions were as intuitive as we’d like. It takes some time to master the navigation system instead of letting it “think” for you (we disagreed that the nearest Costco was in Washington, D.C.).

Under The Hood: A single 2.4-liter four-cylinder engine is the sole powerplant, but with an output of 185 horsepower and 163 lb-ft of torque it offers performance comparable to many V-6 engines. The only transmission is a 5-speed automatic, which is smooth and efficient. The transmission is more frugal than fast, but that’s expected in this segment.

There are two drivetrain choices — front-wheel-drive and all-wheel-drive (a $1,250 price difference). We tested the AWD (Honda calls it their Real Time 4Wheel Drive System) and recommend it for the varied Pacific Northwest driving conditions. The EPA rates the AWD CR-V at 22-mpg city and 30-mpg highway. The front wheel drive model only gains one mile per gallon (23/31 mpg), so the AWD CR-V

can’t be faulted for excessive fuel consumption. The EPA numbers are up from the previous model — an indication of how important fuel economy is to crossover SUV buyers. Towing capacity is rated at 1500 pounds.

Behind The Wheel: The steering wheel was great, but the road feel it transmits was a little vague for our taste (which might be just fine for most drivers). We prefer to be closely connected to a car’s driving dynamics, but the electric power steering reminded us of old school Detroit luxury car power steering systems. It wasn’t as overboosted as a sixties Cadillac, but it wasn’t as organic as we like, either. We preferred the previous model’s hydraulic power steering.

The overall driving experience is pleasant and that’s all most people want from a compact SUV. Power is sufficient for daily driving and the ride is comfortable.

The car’s size is fine for ever-shrinking mall parking spaces.

Whines: We’re still not crazy about the current front end styling. We preferred the earlier versions, but the new CR-V still looks better than some of its stable mates.

Bottom Line: The redesigned 2012 Honda CR-V isn’t a radical departure from previous models, but that’s a good thing when you have a compact SUV as successful as the CR-V. It’s a right-sized outside, generously sized inside multipurpose vehicle that gets excellent fuel economy. A fully loaded, top-of-the-line edition just kisses the $30,000 barrier and as such represents an excellent value.

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June 2012 Kitsap Peninsula Business Journal • KPBJ.com 35

By Bruce Caldwell You could say that the redesigned 2012 Honda CR-V has acquired a little middle age spread as it has grown from its original cute Ute size to a mid-size. A more positive (and accurate) viewpoint is that the Honda CR-V has positioned itself in the SUV sweet spot. Even with rising and unstable fuel prices many people still want and need a multipurpose vehicle. They’ve forsaken the road dinosaur Hummer H-1 mentality, but they still need functionality. Add 30-mpg fuel economy to spacious practicality and you’ve got a winner — a.k.a. the 2012 Honda CR-V. The CR-V is a unibody style SUV, not a body-on-frame rock crawler, but the reality for northwest drivers is that they seldom (if ever) venture off improved roads. During those rare snow/ice events the excellent all-wheel-drive system safely gets the CR-V where it needs to go. The everyday ride is passenger car comfortable with foul weather confidence always on tap.

Walkaround: The 2012 Honda CR-V doesn’t look radically different from the previous iteration. It shares familiar Honda styling cues. The Honda CR-V has long been the benchmark model for the compact SUV segment and the redesigned 2012 model is well positioned to retain that leadership role.

Interior: Hondas and Acuras consistently provide a superior interior experience and the new CR-V is no exception. Seating construction, materials, adjustability, comfort, and legroom are excellent. Exterior dimensions belie the amount of usable inside space. Front legroom is just shy of stretch out length, even for drivers over six-feet tall. The back seat easily accommodates tall passengers with the front seats in their most rearward position. The flat floor makes it more comfortable for middle position passengers.

The CR-V is a five-passenger vehicle, although it’s ideally suited for four adults.

The wide, soft surface fold-down center armrest is a plus for both outboard passengers. Rear door bins are small, but there are two seatback pouches.

Storage areas are large and abundant around the front seats. The center console bin is huge as are the door bins. Power points for all types of electronic devices are plentiful.

All four doors open extra wide, but there is some rear wheel well intrusion. Like all Honda products the doors shut firmly with

Publisher Lary Coppola Editor Tim Kelly Advertising Sales Dee Coppola Creative Director Steve Horn Webmaster/IT Greg Piper Graphic Design Kris Lively Office Administration Jennifer Christine Web Host PCS Web Hosting LLC Contributing Writers Rodika Tollefson Don Brunell Dan Weedin Ron Rada Julie Tappero Jason Parker

36 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

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The Kitsap Peninsula Business Journal is a special interest publication dedicated exclusively to providing news, information and opinions to the business communities of the Kitsap and Key Peninsulas, and North Mason County. It is published monthly by Wet Apple Media. Copyright, 2012, with all rights reserved. Postage is paid at Tacoma, WA. The Kitsap Peninsula Business Journal is read by more than 26,000 business, professional, political and military leaders in Kitsap, Pierce, and Mason counties. Additional copies are available for $1.50 each. Annual subscriptions are available for $25.

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Kitsap’s Economic Future — Leadership’s Role

By John Powers, Kitsap Economic Development Alliance Context — there are 3,068 counties and over 300 regional economies in the United States.

Virtually every county across our country, and 39 in Washington, promote economic development within their respective jurisdictions.

Many participate in multicounty regional economic development districts (EDDs) sanctioned by the US Dept. of Commerce.

An EDD’s primary purpose is to plan for, develop, and leverage their respective region’s unique and competitive assets and attributes to drive inquiry, attract investment, and grow jobs by executing a comprehensive, integrated economic development strategy for a region.

Kitsap is one of four counties in the Central Puget Sound EDD (Snohomish, King, Pierce, Kitsap). An EDD, and its member counties, compete for business and market share much like for-profit companies compete by investing in and executing strategic business plans.

Competitiveness — To understand and evaluate Kitsap’s competitiveness, market value and growth potential, it may be helpful to look at Kitsap as though it was an operating division of an internationally recognized Fortune 100 company — the Central Puget Sound Region (CPS), aka The Seattle Market. Think of “CPS” as a parent company with four distinct divisions and 2 million employees researching, developing, producing and marketing 14 global-leading products, services, and industries: aerospace; defense; maritime; information technology; bio-technologies;

health care; advanced manufacturing; clean technologies; e-commerce; interactive media-entertainment-education; specialty food and beverage; tourism; corporate headquarters; and international trade and logistics.

The CPS’ regional economic development strategy — Prosperity Partnership — is currently undergoing a major update with completion expected this summer. This new edition, Prosperity Partnership 2.0, will provide an enhanced blueprint from which the four member counties, working together, can orchestrate enhanced economic opportunities throughout the region, thereby positively impacting their respective counties’ economies.

In looking closer at the role Kitsap County plays within the overall enterprise (CPS), the following facts begin to frame the size, impact and value of Kitsap’s contributions to CPS; to wit: 250,000 population /100,000 employment base (7 percent of CPS’s workforce and population); 8 of the region’s 14 economic clusters are present in Kitsap; most dense per capita concentration of defense output and engineering talent in region; above region’s average employment rate; above region’s average household incomes; above region’s average development of intellectual property; and above region’s average educational attainment/job credentials; below region’s average cost of living and cost of doing business; and, arguably, the highest quality of life and most sustainable environment in the CPS. On a per capita basis Kitsap competes, Kitsap contributes … Kitsap plays an integral role in one of the most diverse, innovative and competitive regional economies in the world.

Balance Sheet — To more fully

appreciate Kitsap’s value and potential, it’s instructive to examine the essential components of its economy — the assets that define and drive its economic output and the attributes that shape its culture, community and future. These capital assets are: Human, Financial, Infrastructure, Innovation, and Social/Political. Like a company’s balance sheet, these assets define Kitsap’s economy and impact its workforce, product development and economic output.

Leadership’s Role: Building The Balance Sheet — As directors of the Kitsap Economic Development Alliance (Kitsap’s countywide sanctioned economic development organization), we have the responsibility and opportunity to direct, develop and drive Kitsap’s economic future. Effective economic development leaders understand and articulate the role that they, their respective organizations, or particular economic sectors, play in building the balance sheet of the overall local/regional economy.

Retreat… Forward — To build our economic development knowledge and leadership capacity, KEDA’s 36-member board of directors (18 elected officials and 18 business leaders) will come together later this month to participate in a 24-hour strategic planning retreat. This retreat will provide a focused platform from which our directors can share their perspectives and insights on the role they and their respective organizations play in shaping and developing Kitsap’s economic future.

This retreat presents an opportunity for our community leadership to learn together, dream together, strategize together, and recommit to act together to shape our collective economic future. I look forward to sharing the outcome of our upcoming board retreat. On Kitsap!

Will the Northwest economy be a casualty of the war on coal? the U.S. Corps of Engineers to change the rules. They want the Corps to conduct a special analysis of the so-called cumulative effects of all the proposed terminals.

Even if this extra layer of analysis didn’t ultimately block the projects, it would delay them for years. The opponents’ presumed goal is to create delay and legal gridlock, making it so difficult, time-consuming and expensive that the backers ultimately give up.

Call it “death by a thousand lawyers.”

Eric Johnson, executive director of the Washington Public Ports Association, agrees that these projects should undergo rigorous review. “However,” he notes, “this review should be of the project itself, not of the overall system of commerce across our region, the United States, or as urged by some commenters, the entire world.”

Johnson warns that requiring an additional layer of analysis for these projects would set a dangerous precedent in a state where one of every three jobs is linked to trade. “If this precedent is applied to all products imported and exported through our port transportation system, we will bog our project review timeline down in needless process.”

Consider the possibilities.

Want to expand an aircraft manufacturing facility? Why not require the study of the pollution impacts of all of the manufacturer’s subcontractors worldwide?

Why not examine the greenhouse gas effects of jet engine exhaust around the globe?

Would it ever go this far? No one knows for sure, but would you want to take that chance?

For employers trying to decide whether to locate or expand their business in the Northwest, the uncertainty is enough to convince them to take their business — and their jobs — elsewhere.

• Don Brunell is president of the Association of Washington Business. Formed in 1904, AWB is Washington’s oldest and largest statewide business association, and includes more than 7,800 members representing 700,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.

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June 2012 Kitsap Peninsula Business Journal • KPBJ.com 37

By Don C. Brunell, Association of Washington Business Activists waging a national war on coal have turned their sights on the Pacific Northwest, targeting proposed shipping terminals in Washington and Oregon that would export coal to China.

They’re aggressively lobbying federal officials to change how these projects are evaluated. If they succeed, our economy could become a casualty of the war on coal.

Currently, such projects undergo a rigorous environmental review known as an Environmental Impact Statement (EIS) involving months or even years of public hearings and analysis by federal, state and county regulators. The EIS for each project must also examine the cumulative impacts of other potential activities in the area.

But opponents want to insert a second, more expansive layer of environmental review, which some are calling a Programmatic EIS (PEIS), which would have to be completed before each individual project EIS could begin. This additional review would include all of the Washington and Oregon proposals and expand to analyze their potential “cumulative” economic and environmental impacts across the region, the United States or perhaps the world.

A PEIS is historically reserved for assessing the broad national impacts of a federal action or a new federal policy. But the activists want to apply that same scope of review to a local shipping terminal.

For example, what would be the collective impacts on air, water, wildlife and so on, if all the proposals are built? And what are the additional environmental impacts of the coal mines in Wyoming and Montana? What are the additional environmental impacts along the rail lines from the mines to the terminals? How about the environmental impacts of shipping the coal to Asia? Or the global impact of Asia burning U.S. coal?

Opponents argue that all of these issues should be part of an additional environmental review.

Couldn’t happen? Think again.

Oregon Gov. John Kitzhaber, the Washington State Department of Ecology, the Region 10 office of the Environmental Protection Agency, the City of Seattle and the Yakama Nation are among those urging

The Commissioner Decision…

As you probably know, I have filed to run for the District 2, Kitsap County Commissioner position. To be honest, it was a decision that was as much of a surprise to me, as it may have been to many of you. I’d stated publicly, numerous times, that after losing re-election as Port Orchard’s mayor by five votes, after a very nasty campaign, that I didn’t particularly want to relive the election experience.

Losing that election was extremely hard on our family, and for reasons I won’t go into, particularly difficult for my wife, who endured months of harassing phone calls from blocked numbers. After the election, it also became very difficult for some local business people who were very supportive — and one in particular, a close friend of ours — whose business took a hard hit, suffering the brunt of a word-of-mouth boycott by some of my opponent’s supporters. Needless to say, I felt responsible, and wasn’t anxious to put my family, friends, or supporters — not to mention my own sense of self — through any of that pain again. However, I’m pleased to report that our friend’s business is steadily recovering.

So what changed my mind?

After leaving office, I took a sabbatical to my favorite place on the planet, the Florida Keys — a magical place for me where I’m totally at peace with myself. I did some fishing, reading, relaxed in the sun, and did a lot of thinking about my future while watching glorious sunsets. I made a number

of decisions, including one involving my role as editor of the Business Journal. I had the option of returning to work here, and did for awhile, creating new digital strategies, which are now being implemented, in reaction to our industry’s paradigm shift to electronic news delivery.

But I’m a person who thrives on, and does my best work, conquering new challenges. And after 33 years, while this economic environment is certainly challenging, it’s LARY COPPOLA time for me to The Last Word move on. When Tim Kelly became available, I knew he was the right person, at the right time, to step into the editorial shoes I’ve filled for the past 24 years, and his fresh perspective would help elevate this publication to the next level of excellence.

I truly enjoyed being Mayor of Port Orchard, and I worked hard at it — 50 to 60 hours a week. In the strong mayor form of government, the mayor is basically the city manager, running the city’s day-to-day business operations. The mayor reports to the council, and is essentially the CEO, in Port Orchard’s case, of a $30+ million municipal corporation.

When I took office, Port Orchard was dipping into reserves to make payroll. Its

comprehensive plan was four years out of compliance with the state’s Growth Management Act, there were over 500 unprocessed permits, and numerous other major challenges.

I’m very proud of what was accomplished in four years. I didn’t do it all myself, and thank a dedicated staff of very resourceful individuals, and a supportive City Council that trusted and believed in me. When I left office, Port Orchard was one of the few cities in our state steadily building reserves. Together, we proved that you can run government like a business if you actually mean to, and have the political will, knowledge and experience to do so.

Relying on expertise learned in Port Orchard, I began searching for a city manager job, and with my news media credentials, public information officer positions. I’ve been a finalist for several of both, as well as executive director positions.

As of this writing, several potential jobs — and one private sector CEO position — are still pending.

However, about two months ago, I began getting calls — one or two a week at first — along with private messages on Facebook, many from people I’d never even met, urging me to run for commissioner. I was polite, but firm with all of them, saying that while I sincerely appreciated their support and confidence in me, that I really wasn’t interested. As the filing deadline got closer, the frequency of the calls increased.

The week of filing, without exaggerating, I

received over 150 calls — from Democrats and Republicans alike — including past and present elected officials. Frankly, I was stunned, but remained firm.

But it was two last-minute calls from Democratic electeds — one former and one current — as well as a surprisingly frank conversation with my wife that finally convinced me.

She said, “You’re a person who lives to make a difference. It drives you, and it’s who and what you are at your core. You know that. You’re smart, pragmatic, not afraid to make hard decisions, and politically astute. You already know how all the boards you’ll serve on work, what their issues are, and the people who serve on them, so there’s no learning curve. You took on a huge mess in Port Orchard with great results. You can do it again.”

I was still uncertain until she asked, “Why would you want to leave here to go run some city somewhere else, or someone’s company, when you’re needed here in Kitsap County? Why wouldn’t you put your energy and abilities to work making a difference where you live?”

I honestly made a final decision about 2:45 p.m. on the last day of filing.

So now that I’m in, I’m asking for your support and your vote. I pledge to work as hard as I did in Port Orchard, and to give you my best effort every single day. I believe I can make a difference for Kitsap County. I hope you do too.

38 • Kitsap Peninsula Business Journal • KPBJ.com June 2012

When commendable conduct violates workplace policy Two employees, both “average Joe” types, did good deeds while at work. Their actions — which were commended by police — led to one of the men being fired, while the other was suspended without pay for more than a month.

Employees of the contractor hired by the state of Washington for the $587 million project to build the new SR 520 floating bridge were drinking on the job.

What happens to them?

They get sent to alcohol awareness counseling.

You think John Chevillot would get the same treatment if he cracked open a cold beer while doing his job? He's a county employee who mows lawns in Detroit.

Or how about RyanYoung, if he'd been enjoying a little Miller time while he was cutting meat at the Safeway in Del Rey Oaks, Calif., where he works?

Actually, he's been off work since April 21, the day he saw a guy roughing up his pregnant girlfriend in the store. Young — whose wife is six months pregnant herself — came out from behind the meat counter to intervene, and a confrontation ensued with the bully, who was subsequently arrested and sentenced to three years’

probation on a battery charge.

Store officials agreed with police officers who investigated the incident and said Young did the right thing.

But Safeway then did the wrong thing — as judged in the court of public opinion on the Internet — and suspended TIM KELLY Young, because his actions Editor’s View recorded on a store security camera supposedly violated the company’s zero-tolerance policy for workplace violence.

A generation ago, before the Internet’s unprecedented transformation of our communications and culture, Safeway’s corporate folly might have gone largely unnoticed and unchallenged. But fortunately for Ryan Young, a public outcry led to more than 180,000 people signing an online petition supporting him, and Safeway was pressured into reinstating him with back pay.

At one point in the furor over this injustice, the Del Rey Oaks mayor called for

Safeway to release its video of Young in action, which the company declined to do.

Mayor Jerry Edelen said at the time that Safeway was “doing everything wrong with regard to public relations."

The same could be said about Wayne County, where John Chevilott has been a public works employee for 23 years. Two more and he’d be eligible for retirement, but he was fired after finding a loaded pistol in the grass where his crew was mowing May 3.

Chevilott told his foreman, secured the gun and waited for a police officer to collect it. At the end of his shift no officer had come by, so he took the gun home and later delivered it to a police station. Turns out the gun had been stolen in a nearby town several years before.

It also turns out that Wayne County has a policy forbidding employees from possessing weapons on work property, and that was the basis for Chevillot’s firing. The foreman who knew about his actions was suspended for 30 days.

The county has no policy, though, about what employees should do if they find a loaded gun lying in the grass where a passing kid might have picked it up.

Although this case didn’t involve a battered pregnant victim, it has stirred up a lot of support for Chevilott, who like Young has a union to represent him. There’s a Facebook page and an online petition at Change.org to help him get his job back.

The county reportedly offered to hire him back and reduce his discipline to a 10day suspension, but Chevilott wouldn’t go along with that, understandably, since he feels he did nothing wrong.

As for those workers on the 520 project, some folks think they weren’t doing anything wrong if the drinking on the job — and this was not on a construction site; these were office workers involved —took place after hours, which is not uncommon, though it is prohibited by state law.

Maybe the Seattle TV station that broke this story in a typically sensational manner will follow up to see if anyone is fired or suspended. But it seems unlikely that anybody working for a huge contractor on on a major construction project will have to endure anything more punishing than alcohol awareness counseling for violating a workplace drinking policy.

It’s not like they caused a scene in public by defending a pregnant woman.

PROPERTY AUCTION ★ ★Seller Directed Silent Auction Opening Bid = $99,975 All Bids Due By 5:00 p.m., Sunday, June 24, 2012 Sunday June 17 — noon to 3:00 p.m.

Saturday June 23 — 11:00 a.m. to 3:00 p.m.

Sunday June 24 — noon to 5:00 p.m.

I Can Live There and Make Income Too? “This home gave us the opportunity to create additional income for us, live in a place where we could work and not sacrifice any quality of life whatsoever. If we needed to anytime we could convert the shop into a home rental and pay half of our payment and we still have the garage and upstairs studio for creativity.”

PROPERTY FOR SALE OR LEASE Bremerton CBA486951 $108,000 Pacific Avenue in Bremerton offer one level Commercial retail/office space with 1,240 SF, 2 restrooms, 5 parking spaces plus on street parking in an area of redevelopment.

Victor Targett, CCIM for details 360-731-5550.

Bremerton CBA481338 $187,000 Location - Location! This 5021 SF investment building with office/retail areas, loading ramp and lay down areas is situated on 3/4 acre lot. Close to Bremerton Shipyard, located on St. Hwy 3 in Gorst area. Victor Targett, CCIM for details 360-731-5550.

Bremerton CBA# 119144 $250,000 Bremerton based moving & storage co. in operation since 1920’s, same owner last 48 years. Sale price less than asset value! Fleet of 14 vehicles & trailers. Below market value lease rates for 22,660 sq.ft. Warehouse on 1.44ac. Prime location close to HWY 3. Mark Danielsen 360-692-6102/360-509-1299.

3891 W Frontage Road, Port Orchard, WA 98367 Commercial Zoning (HTC), Owner Occupied or Cash Flow

For auction details and conditions, visit:

KPBJ.PROPERTYAUCTIONPS.COM Offered By Jim Freeman Guaranteed Sale Team COLDWELL BANKER PARK SHORE 4235 SE Mile Hill Drive, Port Orchard, WA 98366 Owner Occupied Financing Availaible.

Call 360-329-2190

Kingston #306623 $270,000 Newer 3,360 sq.ft. building with plush office and kitchen, large loft area, and two bathrooms. Building is insulated and has four, 12' bay doors. The office, bathrooms and kitchen are very well appointed and presentable to customers. Bob Guardino 360-692-6102/360-710-7844.

Silverdale #CBA321998 $5,300,000 Outstanding visibility from this "main street" location in Silverdale. Across from 2, major hotels and surrounded w/retail activity and the 2, main arterial - Silverdale Way & Bucklin Hill Road. Bob Guardino & Joe Michelsen 360692-6102/360-710-7844.

Silverdale #CBA475911 Office for lease. Fully built out offices with restroom, kitchen and easy freeway access. Competitive rents and very close to hospital annex. Joe Michelsen 360-692-6102/360-509-4009. $250,000 Silverdale #321878 Fully Developed industrial lot in an eight-lot development.

Prices vary based on public visibility. Lots 1-5 have strong public visibility. Quality controlled by CC&Rs. Retail activity may include - plumbing, electrical, tools, paint, fasteners, auto parts, home decorating, etc. Owner can build-to-suit.

Bob Guardino 360-692-6102/360-710-7844.

Bremerton CBA498642$1,092,500 This 2.18 acre Commercial parcel is across the street from new WINCO foods and located at uptown Bremerton plat of Bay Vista. Excellent access and some exposure from St. Hwy 3. Victor Targett, CCIM for details 360-731-5550.

Pending

$275,000 Bremerton CBA468464 9000 Sq Ft building in the Bremerton Charleston area. Available for lease at .30 per foot, loading ramp, good parking and centrally located. VictorTargett, CCIM for details 360-731-5550.

Pending

Bainbridge Island CBA478028 Class A Ground Floor Office Space in Winslow Core - San Juan Bldg. Efficient ground floor office space w/views to the Sound. Open floor plan, built in large-format filing cabinets and shelving. Generous shared amenities and underground parking garage. Building is directly adjacent to ferry terminal and provides easy access to Historic Winslow. $16/sq. ft. Kelly Muldrow 206-780-1500.

June 2012 Kitsap Peninsula Business Journal • KPBJ.com 39

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