BELLINGHAM — The city wants to buy Chuckanut Ridge — long the focus of community efforts to protect it from development — for $8.23 million in a deal that is expected to close by Sept. 29.

On Monday, Aug. 15, the Bellingham City Council unanimously authorized Mayor Dan Pike to enter into a purchase and sale agreement with seller Washington Federal for the 82 acres on the south side to add to the city’s greenways.

Money for the city purchase will come from a mix of sources:

- $4.5 million from the Greenways III levy that voters approved in 2006;

- $500,000 from parks impact fees collected from the south side;

- and a loan of about $3.23 million from the Greenways endowment fund.

None of the purchase money will come from the city’s general fund, which pays for everyday expenses of government and which has been cut in recent budget cycles.

Known alternately as the 100-Acre Woods or Fairhaven Highlands, the controversial property has been the focus of intense debate for some 20 years.

Many area residents oppose housing construction on the wooded site and have worked for years to block development — including, most recently, of Fairhaven Highlands — or to convince city officials that it should be acquired as public park or open space.

“There’s a sense of elation,” said Frank James, who founded Responsible Development, a nonprofit group that opposed Fairhaven Highlands.

“The community, in general in Bellingham, has been very supportive of the acquisition of Chuckanut Ridge for many, many years,” James added. “I’ve been confident the community would not allow a massive development to take place on this parcel of land.”

Chuckanut Ridge is one of the last large wooded areas remaining within city limits. The idea of buying the property was included in the Beyond Greenway levy that voters passed in 1997 and Greenway III, according to city officials.

Three of the current City Council members — Stan Snapp, Seth Fleetwood and Jack Weiss — all served on the Greenway Advisory Committee back in 1997.

“We’ve worked on this a very long time. We never expected to get the full parcel and to get it at this price, so we’re very pleased,” said Snapp, who is president of the City Council. “It was very emotional on council last night.”

The purchase would add significant recreation land and open space within city limits, Bellingham officials said, and provide an important link between Fairhaven Park and the Interurban Trail.

James praised Pike for his leadership, the City Council for its unanimous vote to acquire the property, and Washington Federal for making it affordable for the city to buy the land.

“I’m extremely grateful,” he said.

Pike also referred to history when talking about the city’s move to acquire the parcel.

“It means that the people that have worked for 20 years or more to try to bring this under public stewardship can now know their efforts were not in vain,” he said.

Proposed by Greenbriar Northwest Associates — a partnership of developer David Edelstein and Bellingham-based Horizon Bank — in 2005, Fairhaven Highlands envisioned 739 housing units in the South Neighborhood within Bellingham city limits.

The proposed housing development sparked public furor that at one point resulted in protest signs being put in the front yards of homes, particularly in the Fairhaven neighborhood.

When the building boom was at its height, the cost of a city purchase seemed out of reach; Greenbriar Northwest had paid about $16 million for the land in 2004 and offered to sell it to the city for $26 million.

But after the failure of Horizon Bank, Pike expressed renewed interest.

“One of the upsides of a down economy is sometimes there are opportunities that are presented,” he said, noting that the sale price is less than what the previous owner was seeking for it in the mid-1990s.

When Horizon Bank failed in January 2010, its assets were taken over by Washington Federal, which announced its intention to sell the property and began working with the city on a deal.

Washington Federal also went through the foreclosure process to completely acquire the property from Greenbriar Northwest — getting the land in a trustee sale last month as the only bidder at the auction with an offer of $11.9 million.

The $8.23 million price tag is lower than the appraisal condition on the property in 2010, when it was valued at $8.87 million. The current assessed value of the property is $11.7 million.

“I think a lot of it was political,” Snapp said of one reason for the lower price. “The bank realized that this was a very contentious issue in the community and had been for a long time.”

Washington Federal officials could not be reached for a comment Tuesday.

In a news release, Tom Kenney, the bank’s regional executive in northern Washington, said that the bank was “very pleased to have played a role in helping the people of Bellingham secure this beautiful property as protected public space.”

“We appreciate the patience and support of those who worked with us during this lengthy process,” Kenney said.

Next on the City Council’s plate is figuring out how the city will repay the $3.23 million loan, with interest, from the Greenways endowment fund.

There was some discussion at the City Council meeting Monday of an estimated $1 million pledge that had been made by Responsible Development for the project.

Snapp characterized it as a pledge made to the mayor, adding that the city will ask Responsible Development about those dollars.

He said one idea for paying back the loan from the Greenways endowment fund is to bring another Greenways levy before voters, and the hope is that the city wouldn’t have to ask for as much money from voters if Responsible Development provides that $1 million.

“You’ll hear more about that when we get the financing package put together,” Snapp said.

Pike was reluctant to talk about the Responsible Development piece, saying it was premature and that he didn’t know what the outcome would be.

No such pledge exists, according to James of Responsible Development.

“I can tell you for certain that Responsible Development as a board never took such an action,” he said, calling it a rumor that’s been widely circulated.

James said he believed that members of Responsible Development would be willing to do additional fundraising, adding that he made a commitment to the mayor to raise additional funding if it was needed.