BELLINGHAM - The city has released the full text of a letter that Mayor Kelli Linville sent to a Costco executive on June 20, proposing a variety of measures aimed at making it less expensive for the retailer to build a bigger store on a West Bakerview Road site inside the city limits.

An earlier version of the letter, released to The Bellingham Herald in early August, had many details blacked out by city attorneys, on grounds that those details were not covered by Washington's public disclosure law.

Among those details newly public:

• The city has been working with West Bakerview Road property owners in hope of developing a regional wetland site that would make it less expensive for Costco and other potential property users to meet wetland protection regulations as the vacant site is developed.

• The city is also pursuing potential development of a single regional stormwater facility to serve Costco and other eventual users of the West Bakerview acreage - a move that would reduce the cost of meeting stormwater regulations.

• The city is "willing to propose modifications to its municipal code" that would reduce the transportation impact fee to Costco by about $600,000, perhaps by setting up a new tax credit mechanism.

• Linville's letter estimates that her proposals could save Costco close to $3 million, and "potentially millions more" if the regional stormwater facility is built.

In an earlier interview, Linville stressed that the regional wetland site and stormwater facility would serve other possible users of the 207-acre West Bakerview site, not just Costco, and those facilities would be useful even if Costco decides not to build there.

"That's the last big site we have to do anything" inside city limits, Linville said. "It doesn't mean we're doing things for Costco. It means we're planning for that site. ... If you're going to develop a site like that, you have to have a plan. ... This isn't a secret deal for Costco in the back room."

A development strategy for the entire 207 acres would be more efficient for the city than a piecemeal approach, Linville added.

Brian Heinrich, the city's executive coordinator, said the transportation impact fee proposal is also not unique to Costco, and if such a measure is enacted by City Council, it will be a tool to help the city attract or retain other businesses, too.

Will Costco build at the West Bakerview site, or is there still a chance the Issaquah-based retail giant will move outside the city limits?

As far as Linville knows, the company hasn't made a final decision but is inclined to build in Bellingham.

"Personally I think it's our opportunity to lose," Linville said. "That doesn't mean we still can't lose it."

Costco has a store on Meridian Street but has said it is too small.

The loss of Costco would mean a significant loss of sales tax revenue for a city still struggling to balance tax income and demands for city services amid a prolonged economic downturn. The impact would go beyond the direct loss of taxes paid by Costco and its customers, because Costco's departure probably would pull other retailers out of the city as well, in Linville's view. The result would be noticeable cuts in public services.

"There would be a significant impact on services if Costco was no longer here," Linville said. "If Costco moved and took other stores with them, it would be devastating."

She also noted that all the proposals in her letter would have to get ample public scrutiny in front of City Council before they became reality, and no deals have been struck.

In releasing the full text of Linville's June 20 letter to Costco on Wednesday, Sept. 5, Assistant City Attorney James Erb wrote that the city was making the disclosure "to avoid undue speculation about the nature of the city's deliberative processes."

In his own letter addressed to The Bellingham Herald, Erb said he still believes that the city had valid legal ground for not disclosing the letter's full contents, because they had to do with "deliberative process" that cities may keep confidential, based on court rulings in similar cases.

"Some have speculated about the contents of the letter," Erb wrote. "However, no potential tenants (including Costco) have applied for a building permit for construction on the Bakerview site. Nor has the city entered into contracts with any businesses (including Costco) to use the regional wetland site or the regional stormwater facility."

But after reviewing the full text of Linville's letter, Assistant Washington Attorney General Tim Ford said he believes much of it should have been disclosed the first time.

"Knowing now what the letter says, I believe the city's belated disclosure was appropriate," said Ford, who is the attorney general's open government ombudsmen.

In an email message, Ford added that he regretted his earlier statement that the city's decision to withhold some of the letter's contents could have withstood court review.

"Not knowing the content of the redacted information, I should have taken a wait-and-see approach," Ford wrote.

Reach JOHN STARK at 715-2274 or john.stark@bellinghamherald.com . Read the Politics Blog at blogs.bellinghamherald.com/politics.