The economy: Where does Yakima stand?

The Yakima Valley's economy is decidedly mixed.

Retailers nationwide are scaling back expansion plans, yet one of the nation's largest chains is moving ahead with a West Valley superstore.

In other places, housing prices continue to decline and foreclosures increase steeply. But in Yakima, prices are more stable and foreclosures have grown only modestly. Still, new home construction is slowing here.

The region's economic engine, agriculture, generally continues returning fair prices to farmers. But a cold freeze damaged what could have been another record year for cherries and apples and the latest unemployment rates are at a four-year high.

Record fuel prices have yet to put a noticeable dent in tourism, but they are blamed for Delta Air Lines' decision to pull out of Yakima. The following is a snapshot of a few key areas of the local economy.

In June, Yakima County posted an unemployment rate of 7.4 percent, a huge leap from the 5.2 percent rate a year ago.

It's a reflection of job losses in several industries, including construction, business and professional services and manufacturing.

Some of those losses could be attributed to national trends. Many manufacturing jobs were lost after Western Recreational Vehicles closed in April.

But Western RV was not the only company in danger. Other firms have laid off workers as RV sales decline.

Declining housing values reduced the number of potential buyers, because many of them no longer had the equity to buy such a high-ticket item.

Other industries, however, are thriving.

Last month, the county saw 1,000 more jobs in health services. With more retirees moving to the Valley, demand for more doctors, dentists and other medical care providers has increased, said Don Messeck, regional economist for the state Employment Security Department.

Other industries showing growth, according to the latest figures from Employment Security, include leisure and hospitality, local government, and transportation and warehousing, a reflection of growth from Ace Hardware and Wal-Mart warehouses.

Jobs lost in construction likely reflect a softening of the housing market.

During the first quarter of this year, sales of existing homes in Yakima County declined 19 percent from the same period a year ago, according to the Washington Center for Real Estate Research at Washington State University.

There are other signs of slowing residential activity. The city of Yakima, for example, has issued 14.8 percent fewer permits for residential construction activity so far in 2008.

"When the financial crisis hit, underwriting guidelines went to more conservative (standards)," said Doug Rich, broker of Prestige Realty in Yakima. "It eliminated a lot of people's ability to buy a home."

In addition, there were a small percentage of people who wanted to move to the area, only to cancel their plans when they could not sell their existing homes, causing a slowdown in buying activity for homes in the $300,000 and up range.

But the Yakima market has not seen anything close to the meltdown of Las Vegas and cities in Southern California.

While home sales have been soft, the median price for homes sold in Yakima County during the first quarter this year increased 10.3 percent.

And Yakima has not seen a high number of foreclosures, either. Homeowners who did have unmanageable loans were likely able to sell and come out ahead as values were still increasing, Rich said.

According to RealtyTrac, an Irvine, Calif., firm, one of every 2,164 households was in foreclosure, a much lower rate than the state rate of one in 984 households, or the rates for cities such as Stockton, Calif. (one in 72 households) or Merced, Calif. (one in 77 households).

"I would say generally we're holding up better than most," Rich said.

Speaking of subprime lending, the Yakima Valley Credit Union issued a news release last week to assure its customers that it was not in financial jeopardy.

Among the many things noted in the release was that the percentage of defunct loans for the company was a mere 0.28 percent, thanks to nonparticipation in subprime lending.

It was clear why the credit union wanted to set the record straight.

"The news coverage for financial institutions and the mortgage companies has not been positive," the news release said. "This can cause concern for consumers who have money deposited with a financial institution. Yakima Valley Credit Union remains financially strong and YVCU members can rest assured their funds are safe."

Other local financial institutions are likely to provide the same assurance. Many institutions limited subprime lending to the 5 percent to 10 percent range, and some refused to provide such loans at all.

Yakima Valley residents may have to wait a little longer for the arrival of new stores to the area, as retailers scale back expansion plans while they weather declining sales.

Last year, many were certain that Yakima would get a Cabela's, the outdoor sporting goods store based in Sidney, Neb.

But earlier this year, the chain, citing economic conditions, announced it was reducing its expansion from seven stores in 2008 to just four over the next two years. Yakima wasn't on the list.

Yakima's not on J.C. Penney's short list, either. Many wondered when the department store chain would return to the Yakima urban area after it left the Yakima Mall about eight years ago.

But J.C. Penney, like many of its competitors, has scaled back its new store openings in the past year.

The Plano, Texas-based company previously planned on opening or relocating 50 stores a year for the next five years. Now it plans to open 36 stores this year and just 20 stores in 2009.

"We decided to bring (expansion) more in line with the reality of the current economy," said Tim Lyons, a company spokesman in Plano.

Yakima isn't listed as a new location in the near term, but Lyons stressed that could easily change.

"That doesn't mean we wouldn't be interested if the right opportunity came along," he said.

So who IS coming to Yakima?

Fred Bruning, president of CenterCal Properties in Tigard, Ore., is moving forward with plans to expand the Valley Mall in Union Gap, which his company owns. He met with city officials last week to discuss his plans. He also was looking at several possible expansion sites.

He believes that the mall has and will benefit from higher gas prices as shoppers stay closer to home to save on gas costs. The numbers support this -- the Valley Mall's last monthly sales report shows an increase of 17 percent from the same period a year before.

Several other large-scale commercial projects are joining Bruning in forging ahead.

Riverpointe Landing, the 85-acre shopping complex at 16th Avenue and U.S. Highway 12, is inching toward the next step of development.

Jack Evans, of First Western Properties, which is representing the developer, Bellevue-based Northward Real Estate Group, was in town last week to finish up the design for a proposed roundabout, a key component of the center's transportation infrastructure.

On the west side of town, Wal-Mart is moving forward on its plans to build a new supercenter at 64th Avenue and Nob Hill Boulevard.

Jennifer Spall, a Wal-Mart spokeswoman in Bellevue, said the Bentonville, Ark., chain expects to have a store ready by late 2009 or early 2010.

She said the company has received numerous complaints about how the Terrace Heights store is too crowded and is always out of merchandise. That's why it decided to keep moving forward on its plans for West Valley.

* Reporters James Joyce III and Jean Guerrero contributed to this story.

* Mai Hoang can be reached at 577-7685 or mhoang@yakimaherald.com.

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