Vancouver Business Journal

Sat12202014

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Details emerge on 101 Main Street building

Details emerge on 101 Main Street building

Local developer Killian Pacific is preparing to break ground early next year on ...

Pacific Continental announces major SW WA expansion

Pacific Continental announces major SW WA expansion

Pacific Continental Bank has inked plans to expand its presence in Southwest Was...

Freshii to open two additional Vancouver locations

Freshii to open two additional Vancouver locations

Less than one year ago, Doug and Rich Gillespie brought the Freshii franchise to...

Best practices for business seeking loans

Best practices for business seeking loans

With the right approach, applying for a loan doesn’t have to be painful. The fol...

Fit Right owners sell company

Fit Right owners sell company

Dave Sobolik and Robb Finegan, owners of Fit Right, a running store with locatio...

Women in construction: Building their success

Women in construction: Building their success

Some industries have been clearly dominated by one gender or the other; perhaps ...

Banking & Money Management

Best practices for business seeking loans

Best practices for business seeking loans

With the right approach, applying for a loan doesn’t have to be painful. The following best practices, garnered from local experts, can help business owners successfully obtain a new loan or restructure an existing one.

“Right now is a great time to restructure debt because interest rates are so low,” said Dave Hansen, Columbia Bank’s senior VP and regional manager for the Portland/Vancouver area...

Design & Construction

Women in construction: Building their success

Women in construction: Building their success

Some industries have been clearly dominated by one gender or the other; perhaps no industry more so than construction. However, in Southwest Washington, women are finding their place and respect amongst their male counterparts.

Leading to construction

As with most careers, there are a variety of paths that lead us to our chosen industry.

“I have always been fascinated with building things,” say...

News Briefs

Ridgefield named ‘Port of the Year’ by Washington Ports Association

The Washington Public Ports Association (WPPA) has named the Port of Ridgefield as the recipient of its annual Port of the Year Award. The annual award recognizes a WPPA member that has demonstrated exceptional success in the industry. There are currently 75 member ports operating within the state.

Spotlight

SmartRG: Riding the technology wave of the connected home

SmartRG: Riding the technology wave of the connected home

Recently more than doubling their office space, from 2,600 square feet to almost 6,000 is just one sign that SmartRG Inc. is a rising star in Vancouver’s high-tech community. SmartRG designs and produces hardware and software solutions to help Internet service providers and broadband operators monitor, manage and monetize the connected home.

Before the expansion, Jeff McInnis, CEO, said they were...

Tapped out

 By John H. Baker, Jordan Schrader Ramis

What happens when a development project runs out of money before the work is done? Today’s tight credit and uncertain market prospects cast a shadow of risk on once-promising projects.

Each party – a tapped-out developer, undersecured lender, or unpaid contractor or consultant – has a stake in the project. Each party can protect its stake by cooperating with the others to maximize the property’s value and minimize dispute costs.

 By John H. Baker, Jordan Schrader Ramis

What happens when a development project runs out of money before the work is done? Today’s tight credit and uncertain market prospects cast a shadow of risk on once-promising projects.

Each party – a tapped-out developer, undersecured lender, or unpaid contractor or consultant – has a stake in the project. Each party can protect its stake by cooperating with the others to maximize the property’s value and minimize dispute costs.

To achieve the best outcome possible:

Determine the total value actually at risk

The typical project under review in this situation is unfinished, late and will require more money to finish than anybody expected to contribute. Given those factors, the parties need to realistically determine the value of the unfinished versus the finished project.

Whether or not the projected finished value is equal to the original pro forma appraisal isn’t the issue - the critical consideration is what its completion will contribute to the value.

Analyze options

The lender may face the burden of injecting more funds into the project than its authorized loan-to-value ratios. The owner or developer may have to liquidate other assets. Contractors may have to discount work or extend payment terms.

These analyses must consider the cost of further delay and litigation. The parties’ contractual rights to recover delay costs, attorney fees, appraisal costs and other expenses may not outweigh the cost of losing tenants or buyers because the project did not make it to market.

Parties must determine their bottom-line position

Each party may find itself unable to participate in a solution on a true pro rata or proportional basis. The owner or developer may have no other assets to liquidate or contribute. The contractor may face unpaid tax claims or other liens that threaten its ability to remain in operation.

But within the range of financial contributions that each party can accommodate, a workable solution can often be found.

How it might work: a recent case history

The project in question was 90 percent complete but the expected cost to finish would substantially exceed the original budgets. The owner’s resources were depleted, credit limits were maxed out and the contractor was owed a substantial sum.

The lender suspended funding, work stopped and the contractor filed its lien. But the contractor chose not to immediately exercise its right to terminate the contract and foreclose its lien, leaving room for all parties to maneuver.

After multiparty discussions, a contract change order ultimately led to completion. The contractor received more than 90 percent of its lien claim but agreed to an absolute maximum fixed cost to finish the work. The lender agreed to fund the final work, given the limit and received an additional supplemental guarantee for payment from the investors and the owner.

A short-term completion schedule was agreed to by all parties. Every party gave up something, but no party was forced to bear the total burden or expense of the problem. Finishing is obviously the ultimate goal of any construction project and should remain the goal even when problems develop.

 

Douglas P. Cushing is a member of Jordan Schrader Ramis’s business practice group. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. . John H. Baker, AIA, LEED AP, is a member of Jordan Schrader Ramis’s Dirt Law practice group. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .

Opinion

Focus Column

Five planning tips to help your business succeed in 2015

Five planning tips to help your business succeed in 2015

As we look forward to watching the ball drop in Times Square at midnight on Dec. 31 and the start of a new year, it’s a ...

The small print in loan documents

The small print in loan documents

Part of the small print in the stack of papers making up your loan documents is the rules you are promising to follow fo...

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