Anatomy of a project
Part one: concept to groundbreaking

“One thing that it takes a lot of is money.” – Mike Bradburn

Legendary film director Cecil B. DeMille was noted for his epic productions involving the proverbial cast of thousands. Developers are modern day DeMilles. The successful ones are organizational wizards who face challenges no less complex than the director of the latest special effects blockbuster.
We drive by new development projects every day without really seeing them. Yes, we see the buildings under construction and often workers and equipment on the site, but those of us who are not in the construction or development business rarely understand the enormity of the task. With that in mind, Business Pulse set out to document a project from beginning to end.
It quickly became apparent that such a story would be far too long to present in one piece, so we broke it into two parts: concept to groundbreaking and groundbreaking to ribbon cutting. The first challenge we faced was which project to document. We contacted a number of construction and development professionals for their advice rather than choosing a project at random.
One of the criteria we used was visibility. We wanted to document a project that had a high profile both because of its location and because of its potential impact. After much deliberation, we decided to document the 12th Street Village project. It is located at the southeast corner of 12th Street and Old Fairhaven Parkway and involves both residential and commercial spaces.

DRAMATIS PERSONAE:
Mike Bradburn The Developer
Dick Nord The Builder
Fred Sexton The Residential Realtor
Lydia Bennett The Commercial Realtor
Carla Williams The Banker
Fred Wagner The Architect
Kris Desper The Civil Engineer
Jody Biermann The Designer
Plus a cast of…well, you know, thousands.
“It all began when I heard a rumor that the property might be for sale,” Bradburn said. “I knew it had great value because of its exposure. Then, I was in Ken Imus’ office one day and saw a picture of a building in England with a steep pitched slate roof. It hit me like a bolt out of the blue.”
The bolt got modified substantially along the way.
“I had this idea, but I wanted feedback from others,” Bradburn said. “There was a lot of concern about style, how to make it fit in with Fairhaven. There’s a need for a certain amount of conformity in this community. I didn’t want to impose myself on the neighborhood.”
That involves thousands of often expensive choices in order to achieve that Fairhaven look.
Architect Fred Wagner was closely involved in the evolutionary process
“This was a unique opportunity to work on a site that had been vacant for so long,” he said. “People in Fairhaven have been talking for years about what might happen here. Once we decided to make it more like the traditional Fairhaven core, we started designing the anchor building on the corner. Once the commercial space was designed, we wrapped the residential buildings around it, giving them a sympathetic style.”
Realtor Sexton was also in on the process.
“When we first talked about buying the property, a lot of visualization took place,” Sexton said. “The idea that gradually took hold was that of an old European village.”
Purchasing the property was very straightforward with little negotiation required.
“The previous owner had taken the property through the plan development stage,” Sexton said. “That’s a city process resulting in a contract that enables the owner to do a planned development. That contract was purchased along with the property. The previous owners probably wish they had waited for Fairhaven to take off the way it has lately. We paid about $23 a square foot for the property. People said that was too much at the time. Now, it looks like a good deal.”
Dick Nord is a partner in the development, as well as the builder.
“Mike and I are taking this project from beginning to end,” Nord said. “One of our first questions was, ‘What will the market bear?’”
Bradburn’s first inclination was to build apartments. Nord persuaded him to do a combination of condominiums and commercial space instead.
“You have to have a marketable concept,” Nord said. “You’ll go broke it it’s not marketable. Every piece of property in town has had multiple designs that haven’t been built.”
Financing is a crucial step.
“You have to convince the bank that there is value in the development,” Sexton said. “Appraisals have to come in high enough and that depends on finding comparable properties. Banks also look at potential income.”
Past relationships can help smooth the way.
“Dick had a great reputation with Horizon Bank,” Bradburn said. “That made things much easier.”
It also helps that lenders are sitting pretty.
“Banks have a lot of money right now,” Nord said. “They’re trying to get it out there, but they don’t want to make loans on risky projects. I have a solid track record of paying back loans.”
Lending institutions can also do something called double dipping wherein they make both construction loans for a project and also finance the purchase of condo units. Both banks and customers have had some concerns over condos.
“Everyone has heard about the scandals over leaky condos and mold problems and it really slowed the market,” Bradburn said. “Laws have now been revised to make things easier for builders, but insurers are still reeling and have to recoup their losses.”
Insurers and attorneys created havoc with unrealistic settlements, according to Nord. He also has some strong opinions about impact fees.
“They are the bane of our business,” Nord said. “Where do those fees go? Once you put an impact fee in, it artificially inflates the value of all other homes in that market. It makes housing that much less affordable.”
Bradburn and Nord took a proactive approach to neighborhood associations in the area, which resulted in several trips back to the drawing board.
“We went to the South Hill and Happy Valley associations, along with the Fairhaven merchants,” Bradburn said. “We asked the Parks Department to work with us since the property abuts Fairhaven Park and Padden Creek. This needed to be an environmentally and neighborhood friendly project.”
It’s more than public relations
“This is not just about us having an image of being good guys, it’s good business,” Nord said.
Kris Desper at the engineering firm David Evans & Associates came up with some ingenious solutions.
“We didn’t want to endanger salmon, so we took extreme measures to protect the creek,” Bradburn said.
Desper was able to locate a previously constructed outfall that could be used for the storm water retention system and saved the company thousands of dollars.
“When you create an impervious surface, you have to deal with runoff,” Bradburn said. “We’re using underground vaults for storm water retention. That’s a lot more expensive than a pond, but it’s better for the environment and we didn’t want to breed mosquitos.”
The project will recycle rainwater for use on the landscaping.
“That may be overkill, but it’s worth it,” Nord said. “We wanted to reduce any disturbance of our surroundings.”
Fitting in to the Fairhaven ambiance was a priority.
“As architects, we have tried to blend Fairhaven’s historic Victorian architecture into a creek side wooded setting with abundant wildlife,” Wagner said. “Most of the residential buildings are sited to take advantage of southern solar orientation.”
Getting architects, engineers and builders to work together can be a challenge.
“Architects and engineers are not always practical when they design,” Nord said. “They don’t always consider that each line they draw has a cost. Builders know ways to save money. Grinstad & Wagner and David Evans & Associates are wonderful. They listen to us and ask us why we are doing things. There’s a lot of back and forth. We had this huge challenge with getting storm water down to the creek because of a substantial cliff. Kris Desper walked the property until she found that existing outfall. Everybody won.”
Setting prices for the condos was like juggling hand grenades.
“We’re pre-selling the condos, so we have to make sure they’re priced in the right range,” Sexton said. “Costs are escalating every day, but the market is growing along with costs. There’s a nationwide trend among boomers to downsize from houses to condos once the kids have left the nest. Our original concept was for two story buildings atop a parking garage. We changed that to three stories to accommodate the larger condo units that are in demand.”
“When you get in a situation where you’ve pre-sold units, you have an obligation to the buyers,” Nord said. “We will not cut corners. That’s not the way we do things. Our goal is for the buyers to get the same quality as if they’d bought a finished unit. That’s another burden for us, deciding what involvement the new owners have.”
They created the Creekside Condominium Association to manage the residential units.
“There are covenants, declarations and by-laws that have to be assembled into a public offering statement. This is a large document, but it helps people understand what they’re buying. It has to be recorded and the customers have to accept it.”
Setting up the association is a complex process in itself.
“We had to create a budget and dues structure for the association,” Nord said. “Decisions have to be made as to how much to charge for utilities, repairs and maintenance. Those are all pro-rated according to the size of the unit. We have to define the relationship of the condos to the common areas.”
Once 90 percent of the units have been sold, Bradburn and Nord will meet with the new owners and turn the condo association over to them.
“If the association calls us, they’re probably not happy,” Nord said. “We want them not to have to call us. Until the owners move in and take it over, we are the association. All of us contributed articles to our first newsletter.”
They also brought interior designer Jody Biermann on board to work with condo buyers.
“Jody gives customers someone to deal with on an ongoing basis,” Nord said. “We set up an office in Finnegan’s Alley and condo buyers will be meeting with Jody at least three times before moving in. They have to option to upgrade appliances and fixtures, but not full customization.”
Biermann had to balance the need for aesthetics with the budget constraints imposed by the developer.
“Customers are more educated about options these days,” she said. “We’ve provided enough of those so that the odds are great against any two units looking alike.”
All but three of the eventual 28 condo units had been reserved by April with backup reservations on several of them.
“There have already been a few unit exchanges involving prospective buyers who made early first position or backup position reservations,” Sexton said. “These occurred after architectural plans were redrawn for buildings B, C and D.”
Marketing condos that don’t yet exist requires a different approach.
“First, we put together a Web site,” Sexton said. “Windermere belongs to two multiple listing services, one local and one regional, so our reach is greater than most. We had to paint a picture in words for the customers of an upscale development. It would help if we could be assured a restaurant on the retail level. We emphasized that Fairhaven is a walking community with lots of transportation options. Where else do you have the train, the bus and the ferry all in one location?”
Washington State law requires that a unit be substantially built before purchase and sale agreements can be executed.
“Common interpretation of ‘substantially built’ is when the framing is up and the buyer can physically see where the interior walls are located,” Sexton said. “This means purchases of units in building A can now be executed.”
Securing clients for the commercial spaces is also a ticklish task.
“We’re making an effort to bring in local merchants,” Bradburn said. “But that means either recruiting new businesses or stealing them from elsewhere. It’s not our goal to bring in national chains, but we had to deal with that issue.”
Windermere Real Estate helped out by reserving space. Nord has a long-term relationship with the company and has built several of their offices
“They’re the ones who suggested I partner with Dick,” Bradburn said. “They’re taking 20 percent of the commercial space and we have some ideas for the rest of the tenants. We want an upscale coffee shop, but not a giant chain. It should open up into the courtyard, where we hope to have music and events in the evenings. We wanted some kind of water feature and what I call a giving wall, a place where people could donate to charities. I still don’t know how that’s going to look.”
Overshadowing everything was the permitting process.
“We finished the site plan that had been started by the previous owner,” Wagner said. “Then, we had to go through the design review process with the planning department. That has to be done before you can apply for permits. We’re doing this building by building rather than all at once. Normally, you’d do the whole project at once, but because of our limitations as a small office and the city’s backlog, we thought we could do it better in steps.”
The agonizingly slow bureaucracy had the partners gnashing their teeth.
“Bellingham has a challenging process,” Nord said. “This project was impacted by the rush at the end of last year to beat new water system fees. The rush overburdened the city and we fell into that turmoil.”
If there is one subject that unites builders, developers, architects, engineers, designers and lenders, it’s the permitting process.
“It costs money in interest when projects are delayed,” Bradburn said. “The city is not service or customer oriented. Permitting delays put us three months behind on the first building and we’re also behind on permits for the second building.”
Nord corrected the public perception that developers make a lot of money.
“We will make a profit, but we will work our butts off and take incredible risks,” he said. “We provide jobs for a huge number of people. My employees are proud of their work. I expect them to do a good job and they respond to those expectations. That attitude permeates the whole project. There are other rewards besides money. I enjoy the process of creating relationships that work. Mike is very concerned about the community and the quality of this project. That’s what sold me. We’re in this for the long haul. We’re not just going to build this project and walk away.”
Developers have to be visionaries.
“We’re building a concept here, not just sticks and stones,” Nord said. “We sell dreams, a different way of life.”
Now that ground has been broken for 12th Street Village, those dreams are turning into reality. Next month we’ll examine the equally arduous process of getting from ground breaking to ribbon cutting.