Oct. 30, 2012--BLAINE -- Semiahmoo Resort Co. has announced the Dec. 1 shutdown of the Semiahmoo Hotel, putting more than 200 people out of work.

Blaine City Manager Gary Tomsic described the shutdown of the city's largest employer as "on the Richter scale, probably about an eight" for Blaine's people, and for city tax revenues.

"This is like a nuclear bomb hitting me today," Tomsic said.

In a press release, the resort company said Semiahmoo Golf & Country Club and Loomis Trail Golf Club would remain open, but the hotel has been unable to survive the collapse of its conference booking business beginning with the recession in 2008.

The Upper Skagit Indian Tribe is majority owner of the hotel. Harry Chesnin, a tribal attorney, said the tribe would continue to try to find a buyer for the hotel.

"We still want to pursue that avenue, and we're hopeful that something will be worked out in that respect," Chesnin said. "We've been trying to sell the operation for some time."

An earlier sale planned in 2010 fell through when the buyer could not arrange financing.

Tomsic said about $200,000 in annual hotel tax money from Semiahmoo provides pretty much the entire budget for Blaine's tourism promotion activities, including its visitors' center, special events such as the jazz festival, the Plover ferry and some July 4 events.

The hotel also has been generating $125,000 to $150,000 a year in sales tax for Blaine's general fund, which pays for a wide range of city services such as police protection.

Tomsic said he met Tuesday, Oct. 30, with city department heads, but no quick solutions are available. Tomsic said department heads and City Council members already were struggling to close a $350,000 budget gap for 2013 before the news about Semiahmoo.

"At this point, I don't know what we're going to do," Tomsic said.

The blow to city finances could be light if a new owner quickly emerges and gets the hotel up and running again. Tomsic said he had no idea how likely that was.

In August 2012, Chesnin confirmed that the tribe was discussing a possible sale to Warnick + Co., a Phoenix-based firm that handles turnarounds for resorts and hotels experiencing financial problems. But that sale has not materialized.

The press release from Semiahmoo also said the bankruptcy reorganization of a part-owner, David Syre, "has complicated the financial condition of Semiahmoo Resort Co. LLC."

Syre is the Bellingham developer who launched the resort and the surrounding development in the 1980s. The hotel first opened for business in 1987.

The hotel had been part of the collateral securing loans from now-defunct Horizon Bank to the resort company. Washington Federal Savings took over those loans after state and federal bank regulators shut down Horizon.

In proceedings in U.S. Bankruptcy Court in Seattle, attorneys for Washington Federal contended that Syre had personally guaranteed those loans. In a recent ruling, the court upheld Washington Federal's lien on the hotel. The hotel is still partly owned by Trillium, which Syre owns.

The press release said employees will get their current salary and benefits through Dec. 31, 2012, even though the hotel is set to close on Dec. 1.

Larry MacDonald, general manager of Best Western Lakeway Inn in Bellingham, said in an email that his own business has been good, and he may be able to offer seasonal employment to some Semiahmoo workers as well as alternatives to Semiahmoo customers with bookings after Dec. 1.

"It's sad and disappointing to see this happen in our industry at anytime, especially before the holidays," MacDonald said.

Gary Smith, manager of WorkSource Northwest, said his agency will arrange rapid-response meetings to help the displaced hotel workers get back on their feet. They will get information on filing for unemployment benefits and finding news jobs, as well as retraining at local technical schools, if necessary. Employees who are veterans will be guided toward any additional help that is available to them.

Semiahmoo Resort is located on the end of Semiahmoo Spit, a narrow stretch of land on the west side of Drayton Harbor that once housed a salmon cannery. It is among the largest resorts in the state, with close to 200 guest rooms and suites.

Trillium sold a majority ownership share to the Upper Skagit Indian Tribe in 2003.

Reach JOHN STARK at 715-2274 or [email protected] . Read the Politics Blog at blogs.bellinghamherald.com/politics.

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