Vancouver Business Journal

Tue07292014

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More businesses helped by WSU Vancouver program

More businesses helped by WSU Vancouver program

Since 2011, more than 100 small businesses in the Vancouver area have received c...

Workforce Development: A return to personnel investment

Workforce Development: A return to personnel investment

It is a common reaction to economic downturn: companies understandably tighten t...

Aerospace grant to fuel expansion of Clark College

Aerospace grant to fuel expansion of Clark College

Clark College is growing its presence in the Columbia River Gorge thanks to a st...

Local alliance ready to shape state health care reforms

Local alliance ready to shape state health care reforms

Backed by local industry leaders, members of the Southwest Washington Regional H...

Self-taught filmmakers driving local industry

Self-taught filmmakers driving local industry

Ask a local about the film scene in Southwest Washington, and you’re likely to b...

Legal marijuana sales underway in Washington state

Legal marijuana sales underway in Washington state

A year and a half after voters legalized recreational marijuana in Washington st...

Banking & Money Management

Challenges & successes in local lending

Challenges & successes in local lending

Reaching the two-year mark is a milestone for small businesses. Not only can owners celebrate the survival of their life’s work, but doors to one of the most vital resources – capital – also begin to open up.

G6 Airpark in Vancouver recently reached this milestone. The local business is a trampoline park, a place where children and adults alike can play on wall-to-wall trampolines. But for owner ...

Education & Workforce Development

Workforce Development: A return to personnel investment

Workforce Development: A return to personnel investment

It is a common reaction to economic downturn: companies understandably tighten their budgets; non-essential or slow-to-return investments get nixed pretty quickly. During the Great Recession, this was the case not only in Southwest Washington, but throughout much of the nation, as investing in a company’s most valuable asset – their employees – fell victim to the reigning in of purse strings.

Wit...

News Briefs

Subaru delivers one-millionth car to Port of Vancouver

Subaru of America and the Port of Vancouver recently celebrated a milestone as a red 2015 Forester became the one-millionth Subaru vehicle to cross the port’s docks.

Spotlight

Wacom eyes continued growth of product lines

Wacom eyes continued growth of product lines

As Doug Little is being interviewed, he motions to the ball-point pen taking notes in my hand.

“You’re using a pen [and paper] right now, but you could be doing that with our tablet,” he said. Little is the senior public relations manager for Wacom Technology Services, a Tokyo-based company whose headquarters for the Americas are located in Vancouver.

Wacom specializes in creating a more intuiti...

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

Improve payment processes by making them more integrated

Improve payment processes by making them more integrated

You’ve probably heard the saying that there’s nothing good that cannot be improved on. In the changing world of payables...

Don’t let your business become a victim of bank fraud

Don’t let your business become a victim of bank fraud

Your bank or credit union is the lifeblood of your business and critical spoke in the wheel of daily commerce. To their ...

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