Ferndale Mayor Gary Jensen said a Costco Wholesale representative has told him that the retailer wants to build a new store in Bellingham, not Ferndale.

Meanwhile, Bellingham Mayor Kelli Linville said she's talked with Costco about whether a Bellingham property the company is looking at would work for a new store.

Linville is working to put together a proposal to bring to City Council, she said.

"We're very interested in having Costco remain in Bellingham, and we're willing to work with them on their site to do things that are appropriate to keep them in town," she said. "The main thing to know is we are still working with Costco to keep them here, and we are interested in citywide policies to allow the businesses we have to stay and expand within the city limits."

It's still in negotiations so details aren't public, she said. She wouldn't identify the property.

For years, rumors have circulated the retailer was interested in building a new store in Whatcom County. Since 1991, it has operated a store off Meridian Street in north Bellingham, but it's substandard in size, an attorney representing the company previously said.

Ferndale has tried to attract the store, which would bring substantial sales tax revenue to city coffers. Costco officials have met with Ferndale staff to inquire about development requirements.

Steve McArthur, a broker for Northwest Atlantic, confirmed he called Jensen on Tuesday, July 10, but wouldn't comment further. Northwest Atlantic acquires property for new Costco stores. McArthur directed calls to Costco board Chairman Jeffrey Brotman, who couldn't be reached by The Bellingham Herald Tuesday afternoon.

Jensen said he was told Costco was looking at two sites - one off Slater Road in Ferndale and another in Bellingham - and had decided to remain in Bellingham. The representative said the company doesn't like to leave communities, and acknowledged that staying in Bellingham might be more expensive.

Jensen asked about Bellingham's size cap for retail stores and about wetlands.

"He said, 'Well, we've been told those problems can be alleviated,'" Jensen said.

Jensen wasn't given any specifics on the assurances the company was given, he said.

Linville said the city needs to do things that benefit the city as a whole, and that they're "no one-business policy makers."

"They're telling us what they need and we are looking to see, 'Is this something we can do?' It's not based on just what one company needs," she said. "It's based on what that site would need, which would be a policy discussion that would have to come before the council."

The property is larger than just one business would be interested in, and it involves other property owners and roads the city is responsible for, she said.

She has kept council members apprised of discussions, she said. No deals have been cut behind closed doors, she said, and she is a strong defender of public process.

"Nothing will happen in private that the public should know about," Linville said.

City Council member Michael Lilliquist said he doesn't know about any specific assurances given to Costco. The majority of the council would be accommodating to Costco "within reasonable bounds," he said, but that's never been translated into any specific requests or assurances.

"The council has not discussed this. The council has made no assurances. The council has not talked within itself about how we feel about these things," said Lilliquist, chairman of the council's finance committee.

"It's fair to say that I know that the mayor has been concerned about this and is working on solutions to keep our major retailers in Bellingham," he added.

Costco is looking with particular interest at new markets with populations of more than 200,000 people and infill of existing Costco markets, according to the Northwest Atlantic website. The optimal site size is at least 16 acres, which, depending on the configuration and location, will accommodate a 160,000-square-foot building with 850 parking spaces and a gas station, the website says.

Bellingham law currently caps the size of retail stores at 90,000 square feet, except for specific areas of north Bellingham, where they can build larger stores as long as they're not superstores and meet certain environmentally friendly development and building standards. Costco wouldn't fit the city code definition of a "superstore" because it's a membership warehouse club.

Costco has looked at Slater Road land that, in April 2010, Ferndale leaders approved for "regional retail" zoning, which encourages development of large retail stores. In March, that city increased transportation impact fees but offered a rebate to large retailers based on the amount of sales tax revenue they generate.

Reach JARED PABEN at jared.paben@bellinghamherald.com or call 715-2289. Read the Politics Blog at blogs.bellinghamherald.com/politics.