Everett firm among wholesale auto dealers hit by new law

OLYMPIA — Shifting political currents in Olympia will force an Everett business to restructure or move to another state to operate.

Dealer License Experts will likely close its Evergreen Way office where it serves holders of wholesale auto dealer licenses after state lawmakers enacted a law last month imposing new rules on the industry.

An attorney for the firm said the changes do not directly drive them out of business but makes their business model impossible in this state.

“It’s pretty disappointing. We’re exploring other states but as far as Washington is concerned, we’re basically done,” said Joshua Malher, attorney for the Chicago-area based company. “It would seem we have about 60 days to close up shop.”

Sellers of these same licenses in the Eastern Washington communities of Wilbur and Spokane Valley also face the same challenges. Collectively the companies serve about 600 license-holders living in other states.

“There’s really not much we can do,” said Diana Korrin, whose Washington Wholesale Auto Dealers in Spokane Valley has three employees and 40 clients. “It is going to dismantle us.”

It’s been a whirlwind couple of weeks for these companies which the state worries are conduits for individuals who use the licenses in illicit activity in other states.

Lawmakers overwhelmingly approved Senate Bill 6606 in the regular session. But it was one of 27 bills that Gov. Jay Inslee vetoed March 10 in response to the failure of lawmakers to reach agreement on a budget.

Then, as lawmakers put the finishing touches on a budget deal, Inslee announced March 28 that he wouldn’t object if all those vetoes got overturned. And they did. The bill took effect immediately after the House acted March 29.

Washington is one of about a dozen states offering the special license which gets holders entry into dealer-only auctions where they can buy vehicles to re-sell to retailers around the country.

Anyone in the country can buy one from the state Department of Licensing. Under the old rules, Washington only required the licensee to keep a desk, operating phone and business address in the state. They had to have their records available for review. But the actual holders never needed to be present.

Dealer License Experts, for a fee, provides all the means necessary to comply. The result is essentially an empty office with a desk and phone for each of its 112 clients.

Under the new law, no more than three licensed wholesale dealers can share the same office space in the same building. It requires licensees to do most of their transactions with other Washington-based businesses.

“I think it’s a business model we find very problematic across the country and the Legislature did too,” said Tony Sermonti the agency’s policy and legislative director.

State licensing officials sought the changes after receiving complaints from consumers and law enforcement about alleged unscrupulous activities involving those with Washington-issued licenses.

No action had been taken against the Everett firm or any of its customers, state officials have said.

In the meantime, people who’ve recently applied but not received a license will be eligible for a refund, Sermonti said. This may affect as many as 70 people, he said.

Companies like Dealer License Experts and their clients have 60 days to comply. After that, the state agency will move to enforce the law.

“It is important to us to give them a chance to become compliant or withdraw their license,” Sermonti said.

For Dealer License Experts to continue it would need to secure 40 separate offices in Everett or elsewhere in the state. That’s not going to happen, Malher said.

Owners of other companies — not Dealer License Experts — are reportedly considering suing to block or overturn the law, Mahler said.

“The Legislature might not be off the hook yet but they are with us,” he said. “It’s unfortunate. I think there was a way for both sides in this equation to have benefitted.”

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

Gov. Jay Inslee vetoed 27 bills on March 10 when lawmakers ended the regular session without passing a budget. Lawmakers voted to override all of them once they agreed on a spending plan.

Here are a four other bills revived by overturning the governor’s veto.

Senate Bill 6206: It legalizes the growing of industrial hemp and authorizes the state Department of Agriculture to license growers, conduct research and oversee a program to certify hemp sees. Washington State University will be conducting a study of the feasibility and desirability of and industrial hemp industry in the state.

Senate Bill 6398: It requires the state Department of Health to consider new standards for the safe consumption of Asian rice-based noodles and Korean rice cakes sold in restaurants. The intent is to recognize some prepared noodles can be kept at room temperature for four hours or longer without spoiling, and putting them in the refrigerator may cause spoiling.

Senate Bill 6354: It directs the state’s four-year universities and state Board of Community and Technical Colleges to come up with a policy to allow eligible students the ability to transfer credits from a four-year institution back to a two-year community or technical college to use towards an associate degree. The policy is due by Dec. 31, 2017.

Senate Bill 6341: A marijuana grower or processor may provide marijuana retailers with branded promotional items such as lighters, postcards, pencils, matches, shirts, hats or visors with a nominal value of $30 or less. These items cannot be given directly to customers.