Prime real estate at Governors Point goes on auction block

Bill Handsaker, a retired engineer from Minnetonka, Minn, makes pictures of Governors Point from an overlook on Cleator Road on June 16, 2008.
Bill Handsaker, a retired engineer from Minnetonka, Minn, makes pictures of Governors Point from an overlook on Cleator Road on June 16, 2008. The Bellingham Herald

Governors Point, the 125-acre peninsula south of Bellingham that has been in the same family for a half century, will go to the highest bidder next month at auction.

Roger Sahlin, whose father acquired Governors Point piece by piece in the 1960s, is seeking Chapter 11 protection in U.S. Bankruptcy Court, Western District of Washington.

The auction will be held Oct. 8 in Seattle. Only bidders who have paid earnest money will be able to attend, said Douglas Johnson, managing director of CBRE Auction Services. Bids will start at $3.5 million.

“They have a really, really low opening bid to start at, and it would go up from there,” Johnson said.

Sahlin put Governors Point on the market for an undisclosed price in 2014, but it never sold. Sahlin tried to sell the property after his business, Governors Point Development Co., lost in 2013 in a state Court of Appeals. The developer had tried to convince the judges that Bellingham needed to make good on a 40-year-old promise to provide city water.

The appeals court let stand a lower-court ruling, which said there was no implied contract for water between the city and the developer.

Policy changes intended to prevent urban sprawl caught up with Sahlin’s vision for Governors Point. Although Bellingham had decided to provide a water line to Governors Point in 1972, the city shortly afterward changed its rules to limit water going outside the city limits.

Sahlin had proposed a 141-home gated community. The land currently has an allowed density of one house per five acres, or 25 houses total, which is standard for rural areas.

Under Chapter 11 rules, if a majority of Sahlin’s creditors approve, he will be able to reorganize his finances and may continue to operate his businesses.

The sale of Governors Point would be a key part of the reorganization. Money from the auction sale would first go to pay $4.9 million in liens against the property, according to Sahlin’s attorney, Bill Malaier of Ogden Murphy Wallace in Seattle. Any money left over would go to other creditors, in the order agreed upon in bankruptcy court.

Bankruptcy documents give the value of Sahlin’s land on Governors Point as $11.2 million.

In addition to Governors Point, bankruptcy filings show that Sahlin owns property on Savary Island, B.C., along with lots in Bellingham and Winthrop, and on Lake Samish.

Sahlin once owned Chuckanut Ridge with plans to build homes on that property in the South neighborhood of Bellingham. Instead, Sahlin and other investors sold the property to developer David Edelstein in 2004. The 2007-09 recession put a dagger in plans to develop the property, and Bellingham bought the 85 acres, part of what would become the “100-Acre Wood,” in 2011 to turn it into a park.

Sahlin did follow through with the Shorewood development in Bellingham’s Edgemoor neighborhood.

Reach Ralph Schwartz at 360-715-2289 or ralph.schwartz@bellinghamherald.com. Follow him on Twitter at @BhamPolitics.