Vancouver Business Journal

Fri10242014

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WSU Vancouver: Enhancing the business community for 25 years

WSU Vancouver: Enhancing the business community for 25 years

25 years ago, Washington State University opened its Vancouver branch on the Cla...

Maruichi Northwest to invest $30 million in port steel mill

Maruichi Northwest to invest $30 million in port steel mill

A new steel mill is coming to the Port of Vancouver USA’s Centennial Industrial ...

Tidland Corporate Center sold for $3.3 million

Tidland Corporate Center sold for $3.3 million

Tidland Corporate Center, a 64,000-square-foot industrial building and 6.03-acre...

Introducing the Accomplished & Under 40 Class of 2014

Introducing the Accomplished & Under 40 Class of 2014

The Vancouver Business Journal is pleased to announce the Accomplished and Under...

East county bridge proposal causes contention within freight industry

East county bridge proposal causes contention within freight industry

After $200 million taxpayer dollars were spent on the botched Columbia River Cro...

Angels bringing ideas to light

Angels bringing ideas to light

Most new businesses come to being with a great idea. How to get that great idea ...

Banking & Money Management

Angels bringing ideas to light

Angels bringing ideas to light

Most new businesses come to being with a great idea. How to get that great idea from concept to marketplace reality is often what separates them.

Entrepreneurs can come into business with substantial investment and savings of their own, enjoy a low overhead-quick return scenario or be completely reliant on financial help.

“When you are in a position where you get to decide if you wish to seek ou...

Education & Workforce Development

WSU Vancouver: Enhancing the business community for 25 years

WSU Vancouver: Enhancing the business community for 25 years

25 years ago, Washington State University opened its Vancouver branch on the Clark College campus. From the very beginning, the university has been closely tied to Clark County’s business community, and those partnerships have grown even stronger over the last quarter-century.

WSU-Vancouver Chancellor Emile “Mel” Netzhammer joined the campus in July 2012, and has glowing praise for the relationsh...

News Briefs

From the List: Private Schools (2014)

What are the largest private schools in Clark County? We ranked them by total number of students enrolled in the 2013-2014 school year.

Spotlight

Dynamic Events finds success in service & technology solutions

Dynamic Events finds success in service & technology solutions

When you attend a conference or a large corporate event, you might assume that the registration process will be smooth, dinner will be served on time, and the speakers’ presentations will work flawlessly. But Allison Magyar, president of Dynamic Events, doesn’t take any of these details for granted.

“We provide complete meeting and event management and software, plus registration services and gra...

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

Now is the time for apprenticeships

Now is the time for apprenticeships

There is much talk of the “skills gap” – the widening space between the technical skills that employers need and the ski...

Towne Square project is a win for the local workforce

Towne Square project is a win for the local workforce

Our economy continues in fits and starts to recover. Workers struggle to find employment providing a living wage. Famili...

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