Vancouver Business Journal

Tue09022014

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New study examines economic impact of Vancouver Energy project

New study examines economic impact of Vancouver Energy project

A new report that estimates the short- and long-term socioeconomic impact of the...

Survey: ‘Likely voters’ approve of proposed crude oil facility

Survey: ‘Likely voters’ approve of proposed crude oil facility

A pair of surveys conducted in June by Portland-based DHM Research related to th...

Care providers ‘all in’ on infrastructure improvements

Care providers ‘all in’ on infrastructure improvements

Across Southwest Washington, healthcare providers are making significant capital...

Tracking Vancouver’s new waterfront park

Tracking Vancouver’s new waterfront park

The redevelopment of the old Boise-Cascade Mill site in downtown Vancouver has l...

Nutter Corp. to install utilities at Vancouver waterfront

Nutter Corp. to install utilities at Vancouver waterfront

Nutter Corporation has been authorized by the Port of Vancouver to make stormwat...

Northwest Grain Handlers, ILWU reach tentative agreement

Northwest Grain Handlers, ILWU reach tentative agreement

A two-year long dispute and eventual work stoppage over workplace rules between ...

Accounting & Finance

Getting money from the crowd

Getting money from the crowd

Crowdfunding is defined as the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the Internet. In 2013, according to Forbes, the crowdfunding industry grew to be over $5.1 billion worldwide. Southwest Washington entrepreneurs are increasingly turning to crowdfunding to launch their ideas.

Easier access to money

Crowdfunding is...

Health Care & Hospitals

Care providers ‘all in’ on infrastructure improvements

Care providers ‘all in’ on infrastructure improvements

Across Southwest Washington, healthcare providers are making significant capital investments in infrastructure, in response to an increased number of patients (due the Affordable Care Act) and growing pressure for interoperability and integration among healthcare providers.

According to Ryan Ball, Peacehealth’s chief information officer, Peacehealth is in the midst of the second-largest capital i...

News Briefs

Local schools to benefit from $4 million STEM investment

Washington STEM, a statewide nonprofit advancing excellence, equity and innovation in STEM education, announced this week nearly $4 million in investments to regionally-based programs aimed at improving teaching and learning of science, engineering, technology and math across Washington state.

Spotlight

Clients flocking to The Tummy Team in Camas

Clients flocking to The Tummy Team in Camas

What began as a personal quest for Kelly Dean, owner of Camas-based The Tummy Team, has become a successful business venture and an opportunity to help heal thousands of people afflicted with the same injury she suffered from.

“I’ve been a physical therapist for over 15 years and I had three kids and my stomach kind of blew apart after my kiddos. I was told I could only have surgery,” Dean said. ...

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

The sweeping change in finance

The sweeping change in finance

There are big changes afoot in finance. The back office and middle office are moving forward by creating value for the b...

Succession planning starts with a trusted advisor

Succession planning starts with a trusted advisor

As baby boomers retire, a large gap exists across the business spectrum for finding the next generation of leaders withi...

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