Vancouver Business Journal

Wed04162014

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 Business Growth Award finalists announced

Business Growth Award finalists announced

14 businesses have been named finalists for the Vancouver Business Journal's 201...

Is Food Processing part of Port “Comprehensive Scheme”?

Is Food Processing part of Port “Comprehensive Scheme”?

The leaders of a Clark County food processing company will bring their efforts t...

Developers cautious but developing

Developers cautious but developing

Although the Great Recession is behind us, many businesses and individuals are s...

Exploring Business Case for Tesoro-Savage Oil Terminal

Exploring Business Case for Tesoro-Savage Oil Terminal

In a few weeks, Tesoro-Savage will publish an economic impact study, conducted b...

The Art of the Deal

The Art of the Deal

Local business transaction attorneys agree -- deals are deals. However, they als...

Excursion company bringing riverboat, regional office to Vancouver

Excursion company bringing riverboat, regional office to Vancouver

The American Queen Steamboat Company (AQSC), a Memphis-based excursion/tour comp...

Design & Construction

Commercial development: Building for tomorrow

Commercial development: Building for tomorrow

If commercial developers feel like circus performers walking a tightrope, there is good reason.

Limited financing, escalating regulatory and raw material costs, and still-low property valuations make penciling out a project difficult. And yet, workforce trends and emerging technologies demand designs that look to the future.

Build to the budget

According to Ron Frederiksen, president of RSV Bui...

Real Estate & Development

Developers cautious but developing

Developers cautious but developing

Although the Great Recession is behind us, many businesses and individuals are still feeling the effects. Local developers were some of the hardest-hit, and for a few years now have been consistently saying that they’re still digging their way out. As building season for 2014 gets underway, we checked in with a few local developers to see how business is looking for this year and beyond. Are we fi...

News Briefs

Ten things: How to better connect with your legislators

Seven state legislators gathered at the Heathman Lodge this afternoon to discuss the previous legislative session in Olympia with members of the business community.

Participants in the second annual “Legislative Review Luncheon” included Sen. Don Benton; Sen. Annette Cleveland; Rep. Paul Harris; Rep. Ed Orcutt; Rep. Liz Pike; Sen. Ann Rivers; and Rep. Brandon Vick.

Spotlight

Blind Onion Pizza poised for future growth

Blind Onion Pizza poised for future growth

Gene Schwendiman brought 30 years of restaurant management and operations experience to Blind Onion Pizza in 2001. Over the years, the number of stores expanded and contracted, slicing into new territory until three separate markets developed – Portland, Vancouver and Reno. The ownership group agreed to divide and conquer, each partner retreating into individual entities, with Schwendiman focusing...

The real estate developer’s recipe for success

It may be odd to talk about how one might approach development activity when we are in the depths of a real estate market abyss, unless we discuss the issues for purposes of enabling a company to better prepare itself for times like these in the future.

It may be odd to talk about how one might approach development activity when we are in the depths of a real estate market abyss, unless we discuss the issues for purposes of enabling a company to better prepare itself for times like these in the future.

The Federal Reserve is engaging in such proactive preventative measures, proposing now to adopt rules cracking down on shady lending practices in an attempt to prevent a future mass mortgage crisis.

Never mind the hypocrisy of the Fed’s recent liberalization of its own lending practices that will certainly cost all taxpayers dearly in years to come – bailing out investment firms, Freddie Mac and other institutions … but enough about the Fed.

Real estate developers can, to a degree, determine their own fate. I asked an officer of a successful residential development company how the company is doing amid the current slowdown, and he replied, “Better than most of our competitors. We should survive – we’ve made it a policy to never borrow our equity.”

You might ask, “What did he mean by that?” In essence, he meant that they project realistic end-product sales prices for their proposed projects or lots, determine realistic land acquisition and construction/development costs and having determined the prospect for profit margin between the realistic sales price and realistic costs, they limit their borrowing to the costs – or less.

They do not, as some foundering contractors and developers may have done, build a “reasonable profit” component into the loans they obtain similarly to the way a residential lot owner’s loan for construction of his own house would include funds for the reasonable profit of his hired builder.

Successful developers do not see the bank loan as their end game, disbursing funds from it for new Cadillac Escalades for each of their family members and counting on 100 percent lot sales to pay off the bank before the loan matures. Their end game is the sale or lease of the developed property for profit – profit being the amount of money they take in from sales over and above their loans and other costs.

Projecting sales and profit takes real skill, planning, and self-control. It is more than pitching a project’s value to a bank at the project’s maximum potential value based on escalating lot prices in an upswinging market, borrowing the maximum amount possible and assuming the debt will be covered by prompt sales – which in manic times appear infinite. Project pro formas should not be substituted by blind trust that the bank’s crystal ball is accurately forecasting the project’s successful payoff of the debt.

There are various methods for evaluating a proposed development and limiting risks. It is conservative borrowing, however, that seems to distinguish the surviving developers – not superior salesmanship to a banker who may, himself, be running to the Fed for a loan, having guessed wrong on projects before.

David W. Meyer is an of-counsel attorney with of Bullivant Houser Bailey PC. Meyer can be reached at 360-737-2301 or This email address is being protected from spambots. You need JavaScript enabled to view it. .

Opinion

Focus Column

Building “failures” and how to avoid them

Building “failures” and how to avoid them

The recent collapses of the I-5 Bridge over the Skagit River and the floor of the Vancouver Warehouse and Distribution C...

“THINK”ing about construction

“THINK”ing about construction

A surprising resource in Clark County is the “THINK!” program, which is a collaboration between the Building Industry As...

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