BELLINGHAM - The City Council is taking steps to clarify its strategy for covering the $8.2 million cost of the 82-acre Chuckanut Ridge purchase.
On Monday afternoon, Sept. 26, the council finance committee met to discuss the matter and all seven council members attended. The key issue is finding a way to repay as much as $3.3 million of the purchase price that is being covered with a loan from a city parks Greenways endowment fund that is supposed to be used for maintenance, not land purchases.
Councilman Seth Fleetwood said it was incorrect to say the council has no plan for repayment of that loan. Ultimately, Fleetwood said, the property itself serves as collateral for the loan, and some portion of it could be sold for residential development to pay the loan back, if no other revenue sources can be found.
"Nobody hopes that this happens," Fleetwood said.
Mayor Dan Pike agreed.
"The ultimate fallback plan is we sell off as much of the land as we need to," Pike said.
Council members agreed to consider adding language to that effect to the ordinance authorizing financing for the Chuckanut Ridge purchase. The seller is Washington Federal, the bank that obtained the property through foreclosure. The property had previously secured loans made by Horizon Bank, and Washington Federal took over those loans after regulators shut down Horizon in early 2010.
The ordinance was slated to come before the full council for a final vote late Monday, with an addition that reads, "Until paid in full, the 82 acres of real property shall serve as collateral for any unpaid balance" from the $3.3 million loan from the endowment fund.
The council has six years to repay the money.
Also at the Monday committee meeting, council members appeared to be backing away from any insistence that loan repayment could not come from a new Greenways IV levy that would, if voters approve, replace the current Greenways III levy that expires at the end of 2016.
At a Sept. 22 finance committee meeting, committee members recommended that the city not rely on potential Greenways IV revenue for Chuckanut Ridge, since that reliance might turn some city voters against the future levy.
Pike said the content of the next Greenways levy would be up to a future Greenway advisory committee and City Council, and said the current council has no business trying to dictate that levy's possible uses, years in advance.
Council members Terry Bornemann and Stan Snapp agreed. Both also said they thought it was up to the mayor to develop a financing plan for the land purchase and to bring the plan to the council for review and approval.
Pike agreed, suggesting that the matter was becoming a political issue. He faces a re-election challenge from former state legislator Kelli Linville.
"I think what I would like to do is come back (with financing ideas) some time after the election is over," Pike said. "Everything will be calmer."
He also took the opportunity to defend both the land purchase and the price. Many city residents had been urging public purchase of the wooded site for years, and the bank's asking price was a fraction of what previous owners had been quoting, Pike said.
If the city failed to move quickly, Washington Federal could have chosen to auction off the property, leaving the city to try to negotiate a deal with a less motivated seller, he said.
"This is just an example of 'No good deed goes unpunished,'" Pike said.
Instead of moving toward some kind of firm commitment to a specific strategy for loan repayment, council members agreed to collect public input on the issue, using the city's website.
