How Horizon Bank chose greed over the safety of its community

I really pity Horizon Bank’s CEO Rich Jacobson. His predecessor, Laury Evans, sure left him a bad hand to play. Not only is Mr. Jacobson faced with the same loan portfolio problems plaguing most banks nationwide, but he’s stuck with a moral dilemma that his buddy Mr. Evans created more than four years ago.

Although banks are generally prohibited from acting as real estate developers, it appears that one of Horizon’s subsidiaries, Westward Financial Services, was grandfathered under prior law. In 2004, Westward Financial entered into a real estate development joint venture with David Edelstein’s Greenbriar Northwest, whose primary holding is the Chuckanut Ridge property on which they hope to develop the 739-unit Fairhaven Highlands project.

Enter the moral dilemma.

The Chuckanut Ridge property is essentially an 82-acre swampy hill with some very steep slopes and environmentally-sensitive mature, forested wetlands. Because of its desirable southside location, most of the land surrounding this property, with the exception of some land to the south, has been developed for many years. For sure, if this property weren’t so chock full of critical areas, it would have been developed long ago.

About the time Horizon Bank & Edelstein acquired Chuckanut Ridge, the city of Bellingham began working on its Critical Areas Ordinance (CAO), a law whose primary goal includes the protection of the community from injury, loss of life, and property damage due to landslides, steep slope failures, erosion, seismic events and flooding. The law itself states that critical areas may “pose a threat to human safety or to public and private property.”

In November 2004, the Bellingham City Council issued Resolution 2004-36, which resolved that the city would adopt its CAO by July 1, 2005. As we all know by now, the city missed its deadline and did not adopt its CAO until November 21, 2005.

Naturally, real estate developers don’t want to be restricted by any regulations, even if they are designed to protect public health, safety and welfare. So it’s no surprise that Horizon Bank & Edelstein submitted their applications to develop Fairhaven Highlands before the CAO was adopted. In fact, its application to destroy many of these wetlands was submitted just 3 days before.

Fortunately for them, good ole Jorge Vega (former planning director) was only too happy to determine that this application was “complete” - even though there are numerous documented errors and omissions. Having submitted a “complete” (wink ;-)) application, Horizon & Edelstein considered their application vested in the laws that existed before the CAO was adopted. Problem solved.

Unfortunately for our heroes, the Washington state Supreme Court doesn’t look kindly on this tactic. In City of Seattle v. Hinckley, the Supreme Court wrote, “There is no such thing as an inherent or vested right to imperil the health or impair the safety of the community.

But, to be protected against such impairment or imperilment, is the universally recognized right of the community in all civilized governments; a protection which the government not only has a right to vouchsafe to the citizens, but which it is its duty to extend in the exercise of its police power.” (Emphasis added)

Of course, it shouldn’t take a Supreme Court case to recognize the obvious. Nevertheless, Horizon & Edelstein continue to pursue a development that totally disregards all of the safeguards unique to the CAO that are designed to protect the community from injury, loss of life and property damage. It’s no surprise that Mr. Edelstein would be willing to risk the public safety for his own personal profit. But for Horizon Bank - a bank that relies on strong relationships with members of its own community – to mimic Mr. Edelstein’s greed is quite astonishing indeed.

Mr. Jacobson’s predecessor, Mr. Evans, never seemed to care that he might be biting the hand that feeds the bank. Now that Mr. Jacobson has been promoted to CEO, many of us wonder if he’ll continue to choose greed over the safety and welfare of the bank’s community. For the sake of Horizon Bank and our community, let’s hope not.

About Larry Horowitz

Posting Citizen Journalist • Member since Jan 16, 2008

Comments by Readers

Tip Johnson

Feb 03, 2009

I agree with Larry, I pity anyone having walked into playing Horizon Bank’s hand on Chuckanut Ridge.  I don’t pity the bank, though, and I predict the hand will become less and less tenable as the eighteen year ardent effort of many, many citizens necessarily shifts to inevitably address the issue to the bank’s depositors.

Maybe I should feel some compassion for a local community bank.  It’s one thing to destroy an important natural resource. All developers do that to some extent.  Sure, this project’s destruction is significantly more extensive than most.  But I reserve another emotion for those who would promote a project that in an earthquake could slough residential towers off of known landslide hazards onto dense-pack ticky-tack townhouses already sinking into swamps that should have been preserved - all the while knowing that emergency services could be stuck at the bridge, unable to respond.  Ridicule the ridiculous. And since it is known that runoff from the development will unavoidably decimate a teeming population of freshwater shrimp in publicly owned wetlands downstream, I feel like I’m getting ripped off, like all our public effort and expense for habitat and trail corridors was merely a ruse for the appetite of a few important people intent on personal profit.

In my opinion, they never even wanted to build their so-called “substantially complete” plan of application.  They just hoped they could extort the money from Greenways. That scare tactic didn’t work out, but I think they knew all along it couldn’t be built. This is borne out by their subsequent “enhanced buffer” alternative and the fact, soon to be reported in the preliminary Draft EIS, that soil and blasted rock equivalent to at least fifty volumes of an average home would need to be removed from the site to accommodate development.  I’m sure that makes economic sense!

Anyway, according to the news, banks are introuble and there is every reason to expect that more and more will have to be shuttered. Maybe Greenbriar and the perennial attorney for the project sold the bank a bill of goods.  Maybe the seller and buyers thought they had an inside track, that the system was wired in their favor.  It sure seems they had reason to think so.  But times change. 

Let’s make some change in Bellingham.  We can’t withdraw the application but in these times, we are likely able to remove the applicant! So if we can mitigate a problem bank by moving deposits to a better bank, I say, “Vote with your dollars”. I expect most will vote for the environment, not the bank.

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L.S. King

Mar 02, 2009

Apparently Horizon Bank’s activities have drawn the scrutiny of Federal regulators. The new story posted on the Seattle Times website earlier this afternoon by business reporter Drew DeSilver, includes this statement

“Among other things, the bank must raise new capital, get bad loans off its books, cut back its construction and land-development lending and get the board more actively involved in overseeing operations.”

There is much more of interest in this article. It seems like the bad hand drawn by Horizon Bank has grown considerably worse.

Does the EIS even matter now? If, as the article states, the situation is so dire that the bank may be closed…

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