Christian Hill of The Olympian filed this update on what was & what has now become the Thurston Highlands debacle:
“Two partners are wrestling for control of what is thought to be the largest property in Thurston County caught in the collapse of the housing market, court records show.
A hearing before a federal bankruptcy judge in March could be key to the fate of Thurston Highlands, a 1,250-acre property in Yelm…
According to court records associated with the bankruptcy case:
Thurston Highland Associates LLC (THA) owns the property and filed for Chapter 11 bankruptcy on June 4, the eve of a foreclosure sale. Local developer Steve Chamberlain manages the limited liability company.
Starting in 2005, Frontier Bank loaned $12 million to THA to develop the property. The bank began foreclosure proceedings after the property owner defaulted on the loan in September 2008.
The loan fell into default after THA was unable to secure refinancing. Frontier Bank, hit hard by the housing collapse, conditioned any further lending on an additional guarantee by THAs minority owner, Dr. Paul Liao. He refused. Chamberlain had guaranteed the original loans.
With the auction approaching, DDD Washington LLC, formed by Liao and his son, Darwin Liao, purchased the loan from the bank. The bankruptcy filing stopped the auction.
Chamberlain indirectly owns 51 percent of THA through another limited liability company. Paul Liao holds a 29 percent interest in the limited liability company, and his son holds the rest.
Under Chapter 11 bankruptcy, Chamberlain continues to manage the property under court supervision as he works to settle debts and restructure the business to move the development project forward with creditors approval.
Meanwhile, DDD Washington is seeking to foreclose on the property and likely would take over its ownership. The limited liability company is owed nearly $13 million, including interest and late fees, on the purchased bank notes secured by the property. The property is THAs sole asset.
A ruling by a federal bankruptcy judge in Tacoma on two motions last week did little to determine the outcome.
U.S. Bankruptcy Judge Paul Snyder denied THAs request to borrow $3 million to help realize its reorganization plan. He also continued a hearing until March 18 on DDD Washingtons request to allow the foreclosure sale to proceed…
In addition, Snyder wrote, he wasnt persuaded that the loan proceeds would make the property more marketable, because no money would be used to secure water rights to serve the proposed development. THA purchased a golf course in part to secure those rights, but it needs to pay another $1 million to the seller to gain the authority to transfer them to the city of Yelm. The city would need approval by the state Department of Ecology to use them. …
THA said in court records that it has secured preliminary approval of the conceptual master site plan, but Grant Beck, the citys community development director, said thats simply not true. He said his department is awaiting revisions to the plan based on an environmental impact statement finalized in November 2008. THA also owes the city $121,500 for staff time working on the environmental assessment.
‘We wont do anything until we get paid and until we see a revised conceptual plan,’ Beck said.
Beck said the city was aware of the discrepancy in the court record, but didnt seek to correct it because ‘we dont have a dog in the fight.'”
EXCUSE ME — THE CITY DOESN’T “HAVE A DOG IN THE FIGHT???”
WHAT ABOUT ALL OF THE UNPAID BACK TAXES, FEES, & PRO-RATA SHARE OF A WATER STUDY OWED TO THE CITY ON THE PROPERTY?
HELLO, ANYONE HOME OVER THERE AT CITY HALL?
THE CITY’S NUMBER ONE FIDUCIARY RESPONSIBILITY IS TO PROTECT THE PUBLIC’S WELFARE & ASSETS!
WHERE IS THIS CITY LOOKING OUT FOR THE PUBLIC’S INTEREST IN NOT FILING LIENS TO GET IN LINE TO COLLECT THE BACK TAXES, FEES & PRO-RATA WATER STUDY SHARE FOR THEIR TAXPAYERS???