Chuckanut Ridge: Good Deal, Bad Deal?

By Tip JohnsonOn Sep 26, 2011

For thirty years the City has created an expensive problem by adopting and defending inappropriate zoning for Chuckanut Ridge. It was adopted without any of the reviews and notifications that normally precede this exercise of police power. No one except a few realtors, the owners, and maybe a couple attorneys knew about it for years. And it wasn't the only such zoning secret. Such anomalies would gradually prove poisonous to the public trust in City planning that had been painstakingly built during the evolution of the first Comprehensive Plan and it's neighborhood approach.

When a project was proposed fifteen years later, the community first learned the awful fact of the zoning. A property the CIty had recently appraised at slightly over $3M suddenly boasted an asking price of over $20M. Developers taunted, “We bought density.” The huge increase was based solely on zoning termed “a mystery at best” by one of the City's lead planners at the time.

CItizens and neighbors rose to the challenge. They passed levies in hopes of acquiring the property, to no avail. A battle of locally epic proportion was waged while the City, inexplicably, advantaged the project at every turn. At great expense to themselves, citizens defeated the project - almost twice - except it finally defeated itself. Environmental review showed it unfeasible and the economy turned. The City finally had an opportunity and took it. They paid a high price - a fitting end for having created the phantom value. Now, how can we learn from it?

Today the City considers selling parts of this property to pay off value that never should have existed. With all due respect, it's a foolhardy aim. Just review the DEIS. Should the City tread the development quagmire that took down one of Bellingham's most established developers and a bank?

I made the same mistake. I theoretically parceled out 15 acres along Chuckanut Drive to consider for development - development in close proximity to services, in keeping with neighborhood character, not overburdening the bridge, not compromising school safety or emergency access. I considered 20 or so prime southside lots that might fetch nearly $4M, if they could be marketed. Then I overlaid the topography and wetlands. Less than half these units could actually be placed. I looked at how to get the rest. The same tar pit that plagued the owners prevailed. You can't punch roads without compromising wetlands. Wooded hilltops, sensitive slopes, and critical habitat must be compromised - all contrary to existing policies.

Yet, abstractly, the model has merit. The City should be able to buy strategic properties for public purposes, plat some development parcels to pay the freight, and preserve most. It's far better than handing unrealistic entitlements out to developers like candy on credit and scrambling to prevent catastrophies. It's just not going to work here. It's too late. The value is all phony. The City made it's mark and tainted the opportunity. But the model could work if we had good neighborhood-based planning. And therein lies the rub.

Trust has eroded. A comprehensive plan designed, ahead of its time, for neighborhood based planning was stripped of power, neighborhood goals, policies and objectives routinely trammelled. After decades of anticipating the daylighting of Padden Creek to improve fish habitat, we see planners recommend density that will turn it into a storm sewer instead. Wetlands and other critical areas are routinely developed. Time and again development forces stable neighborhoods into transition - around the University, in Birchwood, Happy Valley - everywhere. Look at the base of Alabama Hill. That's bad planning, and costs taxpayers money. Citizens do not trust the City to make good planning decisions.

Let me underscore this point: Bad City planning created the problem at Chuckanut Ridge and today undermines the public's trust in creative solutions to better planning. Today's proposal makes a mockery of the Greenways Levies that featured this acquisition and of citizens' efforts to save the property. It continues the mockery of neighborhood planning, upon which our Comprehensive Plan is supposedly based. Moreover, it is doomed to failure. There's nothing to get. The reason this property has remained undeveloped to this day is because it is essentially not developable.

In any case, if we are looking to cover shortfalls or even leverage gains in Greenways, we would more profitably and more equitably look at all Greenways together. Let's reasonably assess which might best be developed and assist with funding. Which do not compromise ecosystems, or parkland integrity, require little infrastructure, fit with neighborhood plans? Where is our best bang for the buck? Don't fixate on one property with such well documented development problems and a record of failure. Take a look around. There may be many good options.

But before we even try, let's start by restoring the neighborhood-based planning we agreed to thirty years ago, as the very purpose of our Comprehensive Plan is still expressed, even if not practiced. Let's use our land-use authorities to first help people put down roots and build community. Then help us make it even better. Let's not just build, let's build community. The cut and run development we have encouraged is the cause of expensive municipal problems - like Chuckanut Ridge. Good neighborhood-based planning is the cure.

Give it a try. Heck, we live here!

About Tip Johnson

Writers • Member since Jan 11, 2008

Tip Johnson is a longtime citizen interest advocate with a record of public achievement projects for good government and the environment. A lifelong student of government, Tip served two terms on the Bellingham City Council and has worked on many community boards and committees. He travelled with the Federal Transit Administration and Department of Commerce on mass transit trade missions in SE Asia and Africa before settling down to focus on keeping public interests at the fore of local government and the course of growth and development.

Comments by Readers

Mike Rostron

Sep 26, 2011

Excellent points Tip!  The same sort of scenario is playing out now at the former D.O.T. site in Sunnyland where the developer feels he has bought high density and the hundreds of hours of time and good faith efforts of neighborhood residents were summarily shoved aside by the machinations of the planning department.

You are right to say this is a general problem, not just site-specific.  It is an unfortunate fact of life that the relationship between developers and neighborhood residents is very often adversarial, and that needs to be acknowledged.  Ideally the city should mediate that conflict with a view of preserving and augmenting neighborhoods, or improving them according to the wishes of those who live there.  The desires of the developers for maximum profits should be secondary.  One has to only look at certain areas of this town (Northwest Ave., Sunset, Telegraph, etc.)  to see what results from allowing developers to do as they wish, unfettered by neighborhood interests and encouraged by “build it and they will come”  city policies. 

I suggest we begin to ask some of the following questions of our candidates for city offices:

*Do you support preserving the character of Bellingham’s various historic neighborhoods?
*Will you stand for the citizens of Bellingham whose homes represent most of their net worth and lifetimes of labor, hopes, and dreams?
*Are you willing to defend residents from the practices of developers out to make a profit regardless of the impact to city neighborhoods and residents?


Larry Horowitz

Sep 26, 2011

Yes, Tip, it’s true.  The city HAD created the phantom value problem.  But the problem no longer exists, and it’s not necessary for TAXPAYERS to pay for the CITY’s bad deeds.

Every potential buyer of this property already knows:

1) The land is barely developable because - as the Draft EIS clearly states - “Environmentally critical areas cover almost the entire site.  The flattest areas on the site are either wetlands or would need to be set aside as wetland buffers. Most of the remainder of the site contains erosion-prone soils that have slopes of 15 percent slope or more, steep enough to heighten concerns about erosion potential, and some limited areas are considered landslide-prone.” (1)

2) The vesting, which theoretically allows circumvention of the city’s 2005 Critical Areas Ordinance (CAO), is on shaky legal footing and is easily challenged.  Be assured, it will be legally challenged. More importantly, the Dept of Ecology (DOE) which has jurisdiction over the five Category 1 wetlands, has stated in writing it will require best available science, a regulatory requirement that essentially re-establishes key safeguards of the CAO.  In other words, vesting has become essentially meaningless and utterly worthless.

3) The requirement to either build a connector road or widen the bridge still exists; but cannot be satisfied and still pencil out economically.  During the “Special Meeting” of the 1978 Planning Commission which established the connector road prerequisite, Planning Commission Chair Mark Packer asked Planning Director Greg Waddell, “What can go in these areas where you have a prerequisite before the prerequisite goes in?”  Waddell’s answer:  “Nothing.  Nothing could happen.”  Bottom line:  The property is essentially undevelopable as is.

4) The angry mob (which mostly resembles Grateful Dead groupies) is not likely to disappear into thin air.  This group has experienced a very steep learning curve and has established itself as a force to be reckoned with by any developer.  Who wants a piece of that?  Especially when there are so many cheap properties available that are not encumbered by such a passionate opposition, not to mention the physical and logistical encumbrances.

Given that every potential buyer is already aware of these significant flaws, why would anyone - including us taxpayers - pay a premium for this tainted property.  Sure, we want it; but are we willing to pay substantially more than anyone else?  Does Washington Federal really need our money that bad?  I thought WA Fed was the bank that wants to “invest here.”  I guess I was wrong.

In any event, considering this is the most expensive single acquisition of parkland in the city’s history, BEFORE CLOSING ON THIS DEAL, the city would be wise to hire a professional appraiser to critically review the bank’s 2010 appraisal with the above factors in mind.  Perhaps even start from scratch with a new appraisal.  If this were a corporation, it would be legally negligent not to do so.  You cannot perform due diligence without a critical analysis of the property’s value.  The time for ‘government work’ is over. 

Let’s do it right.  Now!

(1) DEIS Section on page 1-7 @


Tip Johnson

Sep 26, 2011

I agree, except the problem does still exist and will until the City does what is supposedly required but was never done - review the zoning for consistency with adopted policies, goals, objectives and regulations.  Wouldn’t an appraisal done before that still be wrong?


Larry Horowitz

Sep 26, 2011

An appraisal is neither intrinsically ‘right’ or intrinsically ‘wrong’; it is an estimate of value based on a whole host of assumptions.

We know for a fact that the bank’s appraisal is based on assumptions that have proven to be invalid.  A professional appraiser can incorporate valid assumptions into the bank’s appraisal or can create a new appraisal based on valid assumptions.

The city should ask the appraiser, “What would a developer pay for this property?”  The appraiser would then be required to consider the fact that the current zoning could never be permitted based on the fact that it violates a variety of comp plan goals and policies, violates DOE’s best available science requirement, and precludes satisfying the connector road prerequisite.  The appraiser would properly advise any developer that the property is not developable to the extent of the zoning and would reduce the value accordingly. 

Ultimately, the appraisal will have a range of values based on valid assumptions.  It would be appropriate for the city to pay the high end of that range.  But the city should not pay for value based on invalid assumptions, including the one that 739 units can ever be built.


David Camp

Sep 26, 2011

To discover the value of the land, it should be auctioned off with a minimum bid of say, $3 million. Why should the City pay a premium over this determination of value?

I suspect the City would pick it up for $3 million. WHo would bid more given the current real estate market and the severe limitations to development, physical and political?


Dick Conoboy

Sep 26, 2011

You said, ?Trust has eroded. A comprehensive plan designed, ahead of its time, for neighborhood based planning was stripped of power, neighborhood goals, policies and objectives routinely trammelled. After decades of anticipating the daylighting of Padden Creek to improve fish habitat, we see planners recommend density that will turn it into a storm sewer instead.?

You bet.  This is the reason for which the Samish Neighborhood Board* is in opposition to the rezone of Padden Trails,  approximately 113   acres (upstream of the daylighting) on the edge of the city, south and east of the park and ride at Connelly and 34th Streets.  Currently zoned single family (just over 200 homes), the developer, Padden Trails LLC, has applied for a rezone to multi-family residential in order to use the Infill Tool Kit to stuff the property with 200 multi-family units AND 292 single family/duplexes.  Of course, we all remember during the Tool Kit discussions that the ?kit? was not for use in single family zoned areas.  The developer?s solution is a rezone to multi-family to skirt the Tool Kit proscription just as opponents of the Tool Kit had predicted when Tim Stewart pushed this infill goat-rope onto the city before slinking off to Mercer Island.  The rezone also goes contrary to the Samish Neighborhood Plan which does accept increased density but in the appropriate areas.  This is not one of those areas.

The Coalition of South Neighborhoods has also come out against the project.  You can read their letter to the City Council and the Planning Commission at:

The Samish Neighborhood Association letter to the Planning Commission can be read here:

If the rezone is approved, the Samish Neighborhood will eventually have its own version of Magnolia Hills, that horror show of planned density (adjacent to the Clean Green) with small homes on small lots that turned into rental hell in a very small place.

*[Note:  For disclosure purposes, I am a member of the Samish Neighborhood Board.  In this case, however, I am speaking only for myself, as a Samish resident, and my comment does not necessarily reflect the opinion of the Samish Neighborhood Board or any of the members of that Board individually]


John Watts

Sep 26, 2011

CR is a good deal because it was available at a price the City could afford -almost. That’s the problem; the City can’t afford it all because there are not sufficient funds available for this purpose.

But, there’s a catch! The property can serve as its own collateral; meaning the $3.2 Million or so the City wants to borrow from the Greenways endowment fund can be borrowed, but must be paid back, with interest as an inter fund loan.

But wait, there’s another catch; there exists no other funding to pay back an inter fund loan -plus interest- except by selling off a portion of the property purchased! That is exactly what the City must do, and commit to doing it now -up front and publicly while the Council members & Mayor who put this deal together are present and accountable.

Everybody wins in such a scenario, the Council, the Mayor, the Greenways program is kept whole & trustworthy, the public at large is happy & faith in local government is not compromised -everyone! Nothing but heroes here. Can’t beat that with a stick, can you?

That’s the best deal possible, although there may be a few who will gripe no doubt.

Should the Council fail to do the right thing and instead make the mistake of letting the $3.2 Million -plus interest- just hang around, then there will be more losers than winners!

Think about it; keep two-thirds by selling off one-third. Seems like an elegant solution to me.
How about you?

So, that’s my answer; a GOOD deal if its done right, but a BAD deal if its not.

We’ll know soon, maybe even tonight. But, if the Council needs more time to agree on a good plan, there are two more Council meetings between now and the closing date on this purchase - October 11, I believe.


Larry Horowitz

Sep 26, 2011

Just because something is available at a price you can ‘almost afford’ does not make it a good deal.  If the price you can almost afford is substantially more than the item is worth - and substantially more than anyone else would pay for it - it is NOT a good deal at all. 

The theory that two-thirds would be retained is simply a theory.  In reality, if a developer would only pay $5 million for CR, then only ONE-THIRD will be retained if the city needs to raise $3.2 million and TWO-THIRDS will need to be sold.  Guess which one-third the city will keep?  The one-third comprised of wetlands & buffers and steep slopes - the same one-third that cannot be developed and the city would get for free.  A good deal?  In your dreams!

To claim that’s the best deal possible is ridiculous.  It is far from being the best deal.  Does anyone really believe a shrewd developer would accept that deal?  Why doesn’t the city act like a shrewd developer itself?

And why aren’t future park impact fees (PIF) collected in the five Coalition of Southside Neighborhoods between now and 2017 not available to repay any interfund loan that might be necessary?  Or real estate excise taxes (REET) collected in those same neighborhoods?  Who took those items off the table?

No, everybody does not win in that scenario.  In fact, we all lose.  The public won’t be happy and will not have faith in local government.  Wishful thinking perhaps; but unrealistic as hell.

The key to making this a good deal is to actually get a good deal on the land.  $8.23 million is far from a good deal and is way more than anyone else would be willing to pay.  That price is based on a 739 developable-unit fairly tale - a wet dream not even the dumbest developer would fantasize about.

For heavens sake, hire a professional appraiser and critically evaluate the bank’s appraisal.  Perform due diligence and honor your fiduciary responsibility to the taxpayers you are elected to represent.  Get us a good deal by negotiating one; not by being negligent.


Rick Anderson

Sep 27, 2011

The Mayor and Council have come up with a default plan but the majority of the Council doesn’t seem concerned about having a specific repayment plan in place before the fact for the money borrowed from the Greenways Endowment (Maintenance) Fund.  They will work that out sometime in the next 6 years.  It’s really easy to borrow money when you are both the lender and the borrower.


Tip Johnson

Sep 27, 2011

Larry, I agree the price is too high.  You know my position.  We have a deal.  We deserve to pay more because, 1) We screwed the value up and, 2) The “public” always has to outbid developers to guarantee preservation, and (you offered why and it is true that), 3) It is impossible for a municipality to “act like a shrewd investor”.  OK, so what’s the fair price?  WAFed already ate over $6mm of the CIty’s decades long FU w/ this project. They have a fiduciary duty to the FIDC (and that’s us, too).  How far is it worth testing the kill point of a deal that has already been struck?  Why try to stick someone else with the tab for the City’s philandering? 

John, I respectfully disagree. There is no advantage to pinning the shortfall to this property.  Why insist your pet egg be constrained to one basket?  It’s a loser. Its already been proven the most expensive development option possible.  Ask Greenbriar or the ex-bank.  If you intend to turn Greenways into an enterprise fund, then please consider the benefit of including all of Greenways.  Don’t paint yourself in a corner.  Why name the most problematic parcel as the only “collateral”.  That’s dumb.  Be sensible.  There are far better acres afoot.  If you want to start selling off Greenways, then pick the smartest ones. Ones that will make money, not cost more. That means taking the long view, not making a petty game of it.  Please read the article completely before commenting.  Thank you, John.


Larry Horowitz

Sep 27, 2011

Tip, I could not disagree more:

1) Taxpayers do not “deserve to pay more” because of the city’s prior misdeeds related to zoning.

2) More than 15% of all real estate transactions never make it to closing.  Every purchase & sale agreement has a clause in the event either party backs out.  It’s very common to re-negotiate when new information becomes available.

3) It is not impossible for the city to act shrewdly - not at all.  Why you think so is a mystery to me.

4) None of us have any idea of the financial impact of CR on WA Fed.  The transaction involved the purchase of Horizon Bank’s Westward Financial subsidiary that had a negative net worth, coupled with the purchase of loans owed by the bank to itself.  To say the least, it’s a complicated mess.  On the other hand, we do know that WA Fed reported a $50 million profit on the purchase of Horizon Bank’s assets in the first quarter after acquisition.  We also know that the FDIC reimbursed WA Fed for 80% of any loss incurred.  Trust me, WA Fed is not hurting.

5) The FDIC is not us.  “The FDIC receives no Congressional appropriations ? it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities.”  Losses incurred by the FDIC are paid by bank and thrifts through insurance premiums.

6) The real fiduciary responsibility here is the city’s responsibility to its taxpaying citizens.  Wasting taxpayer funds collected for the sole purpose of acquiring park land and facilities is negligence.

7) I believe a fair price is substantially less than $8.23 million.  In order to determine a fair price, the city must hire a professional appraiser as I’ve stated over and over again.  There’s still plenty of time to do that before our sole source of funds to acquire Chuckanut Ridge is pissed away.


Ham Hayes

Sep 27, 2011

Thanks for the excellent article Tip!

More than likely a bad deal, as other costs have not been considered. When it comes to the discussion of value vs price, there are some additional factors beyond development value that might be considered.  These factors are based on the intended uses of the property and include recreational uses, protection of environmentally critical habitat, and other possible public uses. 

Protecting critical habitat has been accomplished through regulatory means, so any of the land in this category should have zero economic value and the public shouldn’t be asked to pay for it.  Fait accompli.

Other public uses.  It is hard to imagine the property being used for waste water treatment, a transfer station, public safety or health facilities. The property just doesn’t fit with those community infrastructure uses.  No value to the community there.

Which leaves parks and recreation as the only other possible use of value.  The question then is how much more money will be needed to develop the property of that purpose. What is the plan or a plan for that, and how much capital and operating money will be required?  Letting the land lie fallow is probably not a good option as most our citizens would not receive any value and they will know it. 

Our elected officials are on the spot.  Protecting this property by buying it and then selling off part of it without being able to state the value proposition to the community smacks of politics and maybe even incompetence.  At best, the city’s approach is missing a complete think through of what this can mean for the city and what it will really cost us.

An unjustified deal at this point, and therefore an ill omen.


Doug Karlberg

Sep 28, 2011

Mayor Pike, is no Donald Trump for sure.

To overpay in this real estate market, is a travesty to the tax payers. This property has been on the market for a decade with no tire kickers, until the Mayor showed up with our money in his checkbook.

Clearly the zoning on this property was in question. That was obvious.

The City should have gotten its own appraisal with a price for the current zoning, and one with an appropriate zoning downgrade, and then began his negotiations. Any private real estate professional would have done so.

Exuberance, and lack of real estate inexperience, are a bad combination.

Of course the City could have just waited for the property to sit on the market longer, as there were not other buyers in sight. With no buyers in sight and disputed zoning, this property should have been had cheaper ... and the City Council should have never rubber stamped it either.

There really is no adequate excuse for overpaying by any amount, nevertheless millions.


John Watts

Sep 28, 2011

Hey, Tip, et al;
Could’a, should’s, would’a doesn’t cut it.
That is past history that only clever revisionism can touch.
The reality is, what’s done is done.
Now, we have to deal with it.
The best way to balance out this series of dumb moves is to cut our losses, right now, not later!
This property busted its budget and some others as well, so it is the only responsible way to get back on track and not keep kicking this political football down the field.
Read Pooh Bear’s Easter Party all the way through and see what piglet wanted; the big oval rock that looked like an egg, but was too heavy for him to lift and too big to put in his basket!
[Hint: the rock is CR]
You know, we can argue about this until the cows come home, but the basic facts are still there!
Were you or anyone really counting on the City to buy the entire property?
Get serious!


Larry Horowitz

Sep 29, 2011

Clueless :-(