Vancouver Business Journal

Fri08292014

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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 ...

Design & Construction

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 long been a top priority for city leaders. And while the mixed-use project has the potential to be a game-changer for the city, the key to its success may very well lie at the water’s edge.

The 32-acre project will include one million square feet of office space and 250,000 square feet of retail space, including propos...

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

Group of nonprofits receives $1.1 million YouthBuild Grant

A group of nonprofit organizations has banded together and received a $1.1 million YouthBuild Grant from the U.S. Department of Labor. The grant will be used to support up to 60 at-risk Clark County youth with academic and construction skills training.

Spotlight

Spoiled Spa & Salon: ‘Sharing’ in success

Spoiled Spa & Salon: ‘Sharing’ in success

“Life can be stressful enough as a 25-year-old mother of a 17-month-old and expecting a second child – imagine starting a new business at the same time. That’s exactly what April did almost three-and-a-half years ago when she opened the doors to Spoiled Spa and Salon,” says Diane McWithey, executive director of Share, a Vancouver-based nonprofit.

April Truong is indeed a success story. Armed with...

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

Healthcare changes increase appeal of company wellness

Healthcare changes increase appeal of company wellness

Whether they are referred to as “Wellness Programs,” “Lifestyle Management Programs” or “Health Coverage Premium Incenti...

Hearing loss and its impact on income and quality of life

Hearing loss and its impact on income and quality of life

Hearing – one of our most important senses for communication and interaction with other human beings (recall the Helen K...

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