Fairhaven Highlands killed by FDIC?

Doug karlberg  //  Tue, Dec 08, 2009, 1:21 pm

Congratulations, Larry.

You have been proven correct, and the NW Citizen deserves credit for this also.

With both parties that own this land teetering on the verge of bankruptcy, it is only a matter of time before this property comes on the market at an attractive price.

For the right price, this would make a great park. We need jobs more, but opportunities like this do not come along according to any plan.

Horowitz Heights.

Has a nice ring to it.

John Erickson  //  Tue, Dec 08, 2009, 2:48 pm

After many years of fighting the Chuckanut Ridge project and wanting the bank to fail in developing the site I never thought it would come to this. I almost feel sorry for the shareholders, I believe most will lose all or most of their investment. After the closure of Horizon I think that I’ll frame mine as a reminder of what has been.
Thank you to all who have worked so long and hard against this developement. We must wait at least another month to see where it goes. Untill then a special holiday feeling to all.

Tip Johnson  //  Tue, Dec 08, 2009, 3:45 pm

‘Taint over yet.  This is only the second killing of this project. Next time it may be called the Phoenix Project.  We still have plenty to do.

In reviewing the storyline I recently posted, I noticed that I had left out the bizarre occurrence of the Bank spending $14 or $15 million on a property appraised by the City at under $4 million. Now that the Bank’s arbitrary price inflation may finally be correcting, we should prioritize making sure it isn’t done again.

We still need to parlay the realization that this project is going nowhere into a Council review of the zoning.  They have been loathe to do it, but <u>IF</u> the review usually due any rezone was ever actually done for this property, we would see far, far fewer units allowable. Then it would be much, much more reasonable to discuss what value the environmental functions of the site are worth to the public and public resources downstream.

Scott Wicklund  //  Wed, Dec 09, 2009, 9:20 am

As usual, the dead tree media failed to report the relevant details in the morning Herald.  No attribution given to any other sources, and scant coverage of a big story.
Thanks Larry and Tip for reporting this!

Larry Horowitz  //  Wed, Dec 09, 2009, 9:45 am

Scott,

You are correct.  Herald business reporter Dave Gallagher?s story does not address the development-related issue I wrote about here (i.e., the fact that the FDIC has directed Horizon Bank to take no further action to develop real estate as previously allowed under the 1994 FDIC Order).  Presumably, the Dec 3 Directive prohibits the bank from continuing to finance the EIS or any other professional fees related to the Fairhaven Highlands project.

Dave?s story focuses on the primary business and financial aspects of the FDIC Directive, which I have ignored.  I believe Dave would claim that the development aspect of this story is the responsibility of Herald growth reporter Jared Paben.  Perhaps Jared will cover that in a separate article.  Perhaps not.

I chose to ignore the financial aspects of the directive, much as Dave has chosen to ignore the development aspect that is my focus.  My decision is based on the fact that I really don?t want Horizon Bank to fail.  I simply oppose the bank?s pursuit of a project that is bad for the community. 

I believe that losing the only Bellingham-based bank is also bad for the community.  Unfortunately, that may not be preventable.

In any event, your point is well taken.  Although I have nothing against the Herald or its reporters, I agree that the Herald does not (cannot?) cover every story that is important to local residents. 

Perhaps it?s time we properly thank John Servais for providing this venue.  Thanks John!

Scott Wicklund  //  Wed, Dec 09, 2009, 11:07 am

The retired banker who runs Calculatedriskblog.com has extensive coverage of bank failures and problem banks.  It is a good resource to keep track of FDIC developments that end on BFF (bank failure Friday.)  See the list of problem banks.

Daniel Warner  //  Wed, Dec 09, 2009, 11:13 am

The asset (the interest in the real estate here)is going to be acquired by or sold to some new entity after Horizon is taken over by the FDIC. Mind you, I know nothing about this kind of deal, but why would we think the new owner would be less inclined to ruin the Hundred Acre Woods than Horizon?  If the acquisition price is attractive, it would make the financing of the new project all the easier. 

Not to be a crepe hanger, but how does the failure of Horizon help our cause?

Thanks.

Larry Horowitz  //  Wed, Dec 09, 2009, 11:27 am

Scott,

Thanks for the link to Calculatedriskblog.com.  I find their list helpful, but somewhat limited.

SNL Financial also prepares a list, which is published by TheStreet.com.  Unfortunately, this list is sorted by state, which is not very useful.  I have re-sorted this list based on Tier 1 leverage ratios.  A link to my list and TheStreet.com?s list is provided under ?Related Links? above.  As you can see, Horizon Bank was the 7th most undercapitalized bank, with a Tier 1 leverage ratio of 0.77% as of Sep 30.  Three of the ?top? seven banks have been closed by the FDIC since this list was prepared, moving Horizon to the 4th spot.

Dan (the crepe hanger),

As I stated previously, the failure of the only bank headquartered in Bellingham is bad for the community.  That being said, if the price of the land falls to the point where it becomes an attractive acquisition for the city, that could be good for the community.

True, a low price MAY attract other bidders.  But, really, with so many cheap properties on the market that are NOT encumbered by widespread critical areas and an entrenched opposition, why would ANY developer worth his salt bid on THIS property.  It is so unattractive from a development perspective, considering the other options available.

In fact, because of its environmental liabilities (and angry mob), this property has never been worth very much from a development perspective.  Is anyone crazy enough to take on this problem asset?

Have I answered your question?