Controversial Fairhaven Highlands project falls into foreclosure

Keith Kemplin of Bellingham walks through the proposed Fairhaven Highlands site in this 2005 photo.
Keith Kemplin of Bellingham walks through the proposed Fairhaven Highlands site in this 2005 photo. THE BELLINGHAM HERALD

BELLINGHAM - The controversial Fairhaven Highlands project has now entered into the foreclosure process, which could mean the land is one step closer to being acquired by the city of Bellingham.

On Wednesday, March 9, Washington Federal filed foreclosure documents at Whatcom County Superior Court, seeking to place the Fairhaven Highlands property under bank receivership. If the bank gains control of the property, that would be an important step forward in the city's efforts to purchase the property for $8.87 million, said Bellingham Mayor Dan Pike. A court hearing on the question of receivership is scheduled for March 18.

"Legal steps taken today bring us closer to placing this property in public ownership, to protect it today and steward it for future generations," Pike said in a press release. "Securing public ownership of this property meets our community's commitments to protecting natural green settings and access to open space and preserving neighborhood character."

Fairhaven Highlands - also known as Chuckanut Ridge - is a housing development proposed by Greenbriar Northwest Associates in 2005 that includes 739 housing units on approximately 82 undeveloped acres. The property is in the South Neighborhood within Bellingham city limits, between Chuckanut Drive, the Interurban Trail, Old Fairhaven Parkway and Old Samish Highway.

Pike said discussions between the city and the bank have been ongoing for months, including the potential purchase price of $8.87 million. The property has been offered for sale at a variety of prices over the years, including at $26 million a few years ago, Pike said. The $8.87 million is also significantly less than the assessed value of around $11.8 million.

"I think it's a very fair offer," Pike said.

The reason a potential sale would be in the $8.87 million range is because that is the most recent appraised value done by the bank, said Tom Kenney, senior vice president and northern regional executive for Washington Federal. He said the city has been the only real significant party interested in the property.

"If we get control of the property and the city wants to buy it, we intend to sell it to them," Kenney said. "We've made it clear all along that we want to do what's best for the community."

He said the bank tried to work with Greenbriar Northwest on a settlement but said deals were repudiated, leaving them with the foreclosure process as the only option.

Bob Tull, an attorney representing Greenbriar Northwest Associates, was out of town and could not immediately be reached for comment Wednesday afternoon.

Pike believes the process of acquiring the property could be completed in the next several months, or less than a year, depending on what happens with the foreclosure process.

If the offer is formally made to the city, Bellingham would use a variety of resources to pay for it, including voter-approved Greenways funds and park impact fees collected from Bellingham's south side. Pike estimates about $1 million of it would come from non-city sources.

Washington Federal acquired a portfolio of Bellingham-based Horizon Bank loans when Horizon failed Jan. 8, 2010. That included a loan made to Greenbriar Northwest secured by a deed of trust on the Fairhaven Highlands property. Greenbriar Northwest has defaulted on that loan, according to Washington Federal.

The property has been controversial for decades. Several proposals have been made by developers to build housing in the area, while Bellingham citizens - particularly in the south side - have fought to keep the property undeveloped.

"This controversy has been around a long time, and it'll be nice to finally put this to bed," Pike said.