Developer planning Smokey Point project

Not ready to retire, “Red” Jacobsen plans a hotel, retail and condo complex.

By John Wolcott
For The Herald

SMOKEY POINT — Developer “Red” Jacobsen, creator of Park Place Center, Creekside Village and other structures in the Mill Creek Town Center, is dreaming again.

This time, he has plans for a 10-story hotel, recreation, retail and condominium complex in Smokey Point that could cost $100 to $200 million to build, depending on bids. Construction could begin in 12 to 18 months on land Jacobsen owns west of I-5 between the south end of the Lakewood Crossing shopping center and the adjacent Twin Lakes Park.

At 74, Jacobsen refuses to retire, as his family and others have urged. A recent survivor of cancer, a heart attack and a stroke, he still has a quick mind, easy going sense of humor, a full head of his trademark red hair and twinkling eyes that light up when he talks about the newest project that won’t let him retire.

“I’ve always wanted to build a project like this. Besides, I’m too young to retire,” he said.

He’s still inspired by the thoughts he’s had painted on his office wall in Park Place Center at Mill Creek Town Center: “Risk more than others think is safe. Care more than others think is wise. Dream more than others think is practical. Expect more than others think is possible.”

This time he’s really dreaming big.

He already has design approval from the city of Marysville for a nine-story hotel but wants to add another floor. Inside, the hotel lobby will feature two multistory waterfalls, glass elevators, atriums and entrances to two 1,000-seat performance stages, one at each end of the 880-foot-long, glass, steel and concrete building.

A huge fitness and wellness center will be at the center of the complex, along with a giant food court with 26 restaurants. Space on the first three floors is designed for 162 retail specialty stores. The top seven floors will be for condominiums, tentatively priced from $266,000 on the lower floors to $499,000 on the top floor.

The front of the hotel, which would become the tallest building in north Snohomish County, will face south, offering views of Mount Rainier, the Cascade and Olympic mountain ranges and Puget Sound. Jacobsen plans to dredge the Twin Lakes, improve the water quality for swimming and even add sparkling sand to the beaches.

He’ll also add a six-story parking garage on the north side, adjacent to the Lakewood Crossing shopping center’s array of stores that include Costco, Best Buy, Office Depot, Petco and a variety of restaurants and retail outlets.

Just as imaginative as the hotel complex design is Jacobsen’s financing plan for the giant project. He’ll do it without bank loans.

“The banks are just not lending now, and it’s really disappointing. But I don’t need them. This will be financed by my partners, including my architect and construction contractor. We’ll price retail and condo space below the market to make sure we fill up fast. As condos and retail space is sold in the building, we’ll use the revenue to pay back investors.

But each investor will also get a percentage of the project’s revenue afterward as profit. By the time the building is finished, pre-sales and retail leasing will have paid off the building so profits from operations go directly to the original investors,” he said.

He does have a bank commitment for financing the condo sales.

“It’s the right project on the right site at the right time,” he said, noting that population and business growth in Seattle and King County can only grow northward, “which means north Snohomish County, where there’s enough space.”

The Icelandic flag on his desk, alongside his bottle of pure Icelandic spring water, is a constant reminder to Jacobsen of how far his dreaming, imagination and hard work have brought him.

“When I came here I was only 10 and didn’t speak any English,” Jacobsen said. “I went through Seattle schools and graduated from Garfield High School, where I learned to play American football. I made good money for many years as a factory rep for auto parts and accessories on the West Coast, then got into construction, which led to my buildings at Mill Creek Center. This new project is going to be really, really nice. People will love it.”

© 2010The Daily Herald Co., Everett, WA

The following article is courtesy of Ken Tharp with Iowa Equity Exchange. For the complete article, please visit http://www.iowaequityexchange.com/Page.aspx/56. Thanks Ken!

David had sold the farm that he had owned for many, many years and realized a capital gain of $800,000. With that money, he entered into a Section 1031 tax-deferred exchange with us and went out to find his new property. His intention was to find an apartment building that would provide a nice income.

What he found was a property that he could purchase for $650,000, which left him with $150,000 on which he would owe taxes to both the federal government and the state in which he lived. At that point, he considered trying to find another property such as a duplex or a nice single family home. After discussing the situation with us, we jointly reached a different conclusion. The property he had agreed to purchase for $650,000 could benefit from new windows, new siding, and a new roof, which would use up the remaining $150,000 in David’s exchange account.

In order to include the improvements in the exchange, we set up an Exchange Accommodation Titleholder (”EAT”) to hold title to the new property during the course of the improvements. An EAT is an LLC that exists for the sole purpose of holding title to such a property so that the closing that would transfer title to the exchanger (David, in this case) can be delayed. Once the improvements were completed, a closing to transfer title of the new property from the EAT to David was accomplished and David had successfully used all of his exchange funds in the new property.

The timing requirements of an exchange state that the entire exchange must be completed within 180 days. This requirement applies to an improvement exchange as well. The 180 days allowed starts from the date that the relinquished property closes, so in some cases this can create some complications. However, with proper advance planning, morphing your exchange into an improvement exchange can salvage the complete tax deferral that might otherwise not be available.

In his Wall Street Journal op-ed piece, Mr. Greenspan stated: “Don’t be fooled by today’s low rates. The government could very quickly discover the limits of its borrowing capacity.” He also added that the present low inflation and low long-term rate environment has fostered a “sense of complacency (within the government) that can have dire consequences.”

What Mr. Greenspan is saying is that the government, rather than cutting budget deficits and showing fiscal restraint is taking advantage of this low rate and low inflation environment to accumulate more debt - and the consequences can be very bad…just look at Greece.

Mr. Greenspan also said Treasury yields could spike, and in a hurry…

Greenspan said, “Long-term rate increases can emerge with unexpected suddenness. Between early October 1979 and late February 1980, for example, the yield on the 10-year note rose almost four percentage points.”

Mr. Greenspan’s sobering comments should not be taken lightly. The fact is, there are no fundamental reasons why rates - including home loan rates - should be as low as they presently are. The confluence of factors all coming together at the same time have made for an incredible low rate opportunity, but it won’t last long and can change very quickly.

And, like Maria Robinson’s words of wisdom, once rates begin to change, there’s no way to go back to take advantage of them. The time for that is today!

The above article is courtesy Greg Rielly at Mortgage Advisory Group in Everett.  Thanks Greg!

The Senate has approved a plan to give homebuyers an extra three months to finish qualifying for federal tax incentives that boosted home sales this spring.

The move by Senate Majority Leader Harry Reid would give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000. Under the current terms, buyers had until April 30 to get a signed sales contract and until June 30 to complete the sale.

Under this measure, buyers will have until Sept. 30 to close on sales that went into contract by April 30.  There are about 180,000 homebuyers who will miss the current closing date, so keep your fingers crossed the extension will pass.

The extension measure is part of a wide-ranging bill of tax policy extensions and federal program renewals.

Also, the Nevada Democrat added the proposal to a bill extending jobless benefits through the end of November.

The Senate will likely vote on the larger measure later this week or next, then it heads to the House. I’ll be following developments. Stay tuned.

On May 26, Department of Agriculture Secretary Tom Vilsack, authorized the issuance of Conditional Commitments for USDA’s Section 502 Single Family Housing Guaranteed Loan Program beginning immediately and continuing until $2.5 billion in loan limits is exhausted. The decision to increase the commitment authority will provide the guarantees needed to assist rural families, local housing markets, create jobs and generate new tax revenues.

The preceeding information is courtesy Richard Garcia with People’s Bank.  You can find Richard anytime at (206) 297-2854 or Richard.Garcia@peoplesbank-wa.com.

The housing recovery is just around the corner – at least that’s the consensus among a panel of 92 well-known industry economists and analysts.

The Madison, New Jersey-based analytics firm MacroMarkets LLC, founded by Robert Shiller, real estate sage and father of the closely-watched Case-Shiller Home Price Index, polled the group of housing market experts and strategists from the likes of Alliance Bernstein, Columbia Business School, Deutsche Bank, Moody’s Analytics, and the GSEs.

Based on their responses, the onset of price recovery in U.S. single family real estate is widely expected by 2011.

Between 2010 and 2014, the panelists forecast a rise in home prices of more than 12 percent.

“The survey results are important because they represent a consensus view among experts with rich and diverse knowledge,” Shiller said. “In the May survey they see only the slightest hint of a downdraft in home prices this year, and after that a respectable uptrend in prices, well ahead of the likely inflation rate.”

But Shiller added, “However, there were a number of panelists more or less sanguine than average, some significantly so, and this reflects continuing volatility and risk in the U.S. housing market.”

The views of those questioned by MacroMarkets didn’t all align. Joe LaVorgna, the chief economist at Deutsche Bank, pegs home prices to rise 37 percent over the next four years.

At the low end of the scale, both Gary Shilling, president of A. Gary Shilling & Co., and Anthony Sanders, professor of real estate finance at George Mason University, expect prices to have fallen by 18 percent by the end of 2014.

“The expectations within this first survey were provided following the end of the homebuyer tax credit and of the Federal Reserve’s $1.25 trillion mortgage-backed securities purchase program,” Shiller said. “It will be interesting to see how panelist views evolve in future months.”

According to the Federal Reserve, the aggregate value of real estate owned by households at the end of 2009 was $16.6 trillion.

Terry Loebs, MacroMarkets managing director and co-developer of the survey, put that figure into perspective when he said, “This asset class is still larger than U.S.-listed stocks in aggregate market capitalization terms.”

Loebs said, “The scale of the U.S. housing market, coupled with the powerful wealth effects of prevailing home equity levels, warrant close attention to future home prices. For example, if the cumulative 12.4 percent improvement in aggregate national home value follows the path that this panel’s year-by-year averages are suggesting, consumer balance sheets will improve by $2.1 trillion in less than five years.”

To read the full article, please visit http://www.dsnews.com/articles/housing-recovery-starts-in-2011-says-panel-of-industry-experts-2010-05-21

Brand New! Partial Views of the Sound & Mountains

1915 Elhardt St, Camano Island, WA 98282

MLS# 3528
Offered at $199,950.  SOLD for $207,950!

Brand New 3bd/2ba rambler on over 1/4 acre! Partial views of sound & mountains from kitchen & master. Wonderful open kitchen w/dining space, & spacious living w/gas f/p. Vaulted ceilings grace your living areas. Master w/private bath creates a luxurious feel. Covered porch & deck in back for entertaining. Private feeling lot w/RV parking & access to 3 private beaches! Make sure you’re under contract by 4/30 to take advantage of the tax credit!

Visit www.tourfactory.com/574000 for additional photos. Please call or email me with any questions!

Want to see this add on the go? Text 32685 to 79564 in order to see a mini version on your phone!

Jen Hudson
206-293-1005 cell
360-652-1200 office
jen@jenhudsonhomes.com
CCIM Candidate, CDPE, GRI, Realtor
Windermere Real Estate/M2, LLC
Want to learn more about real estate? Visit my website at www.jenhudsonhomes.com

May 6, 2010 - The Puget Sound Business Journal

The Washington state Department of Ecology said it’s fined a Mount Vernon real estate developer $134,000 for destruction of a steelhead and salmon stream.

David Milne, according to the state, mismanaged a 40-acre construction site two years ago, destroying about a mile of salmon spawning and rearing habitat. The state is requiring Milne to restore the damaged streams.

Here’s a copy of the Department of Ecology press release:FOR IMMEDIATE RELEASE - May 6, 201010-103Developer fined $134,000 for destroying Skagit salmon streams

BELLINGHAM - The Washington Department of Ecology has fined real estate developer David Milne $134,000 after continued mismanagement of a 40-acre construction site caused the destruction of steelhead and salmon streams in Mount Vernon in 2008.

Ecology also has issued an administrative order requiring Milne to restore the damaged streams.

On May 21, 2008, a detention pond wall failed on Milne’s construction site for the Creek at Parkwood development, releasing a torrent of muddy water to Thunderbird and East Thunderbird creeks. The mud, water and debris scoured the bottom of the two creeks and settled in Trumpeter Creek.

About a mile of salmon spawning and rearing habitat was destroyed. The creeks have documented populations of Coho and Chinook salmon and steelhead trout. Chinook and steelhead are listed as threatened under the federal Endangered Species Act. Washington Department of Fish and Wildlife employees had seen juvenile salmon in the creeks a week earlier.

The detention pond failure was the culmination of a year of little or no effort to properly manage the construction site under state and federal law, as outlined in a construction stormwater permit granted to Milne.

Milne hired a series of contractors to prepare a 40-acre tract of land - about 20 acres of which was cleared of vegetation and leveled - for construction of his Creek at Parkwood residential development. Ecology and city inspectors repeatedly found violations, including unstable soil, muddy water flowing from the site, the unfinished detention pond and poor recordkeeping and reporting.

The inspectors worked with the contractors to correct problems, but when Milne stopped paying for work, the contractors left the site unsupervised, and conditions deteriorated until the detention pond failed.

“This series of violations is one of the most egregious we’ve seen from a construction site,” said Ecology Director Ted Sturdevant. “The destruction of habitat and blatant disregard for neighboring property is unacceptable. This was entirely preventable. This is exactly why we need to regulate stormwater on construction sites.”

Private investors have taken over the property and hired a contractor to temporarily stabilize the site.

This is the third penalty for Milne in the last year, whose company David Alan Development was fined twice in 2009 for similar violations at the Horstman Heights construction project in Port Orchard. Ecology fined the company $28,000 in late January and $48,000 in April. (Read the news releases at www.ecy.wa.gov/news/2009news/2009-077.html and www.ecy.wa.gov/news/2009news/2009-033.html).

A bank that was in the process of taking control of the Horstman Heights property made site improvements to control water pollution.

Milne may appeal the penalty to Ecology or directly to the Washington State Pollution Control Hearings Board within 30 days. Funds from Ecology water-quality penalties go into the department’s Coastal Protection Fund for environmental enhancement projects by local and tribal governments and state agencies.

Construction stormwater permitting and enforcement are part of Ecology’s ongoing efforts to meet the state’s goal of protecting and restoring Puget Sound’s water quality by 2020.

###

Media Contact: Katie J. Skipper, Ecology media relations, 360-715-5205,

360-510-0682 cell, katie.skipper@ecy.wa.gov.

For more information:

www.ecy.wa.gov/programs/wq/stormwater/construction/Ecology’s Web site: www.ecy.wa.gov

(Ok, their actually discussion was like watching people speaking different languages trying to get a point across to each other.. as the federal funds rate is not related to interest rates.. but I digress).

Regardless, her point was well taken. Keep interest rates low or it will hurt the consumer and housing market recovery. I whole heartedly agree, given everything else today.

Well, Congresswoman Waters of the House Financial Services Committee recently voted for HR 5072 which increases the Annual Mortgage Insurance Premium on FHA loans. This particular bill will raise the premium from the current .55% to 1.55%. What does a 1% increase mean? Let’s look at an example.

If you have a loan today for $200,000 and a 5% interest rate, your principal and interest payment will be $1,074. If you add the annual premium of .55% to that, you get an additional $92, or $1,166/month for your total payment.

Now, with the increase if you take that same loan of $200,000 and an interest rate of 5%, your principal and interest payment is still $1,074. However, when you add the additional annual premium of 1.55% to that, you get an additional $258 for a total monthly payment of $1,332.

That’s a $166 difference each month in your payment. That amount is equivalent to a 7.01% interest rate!

Now, why would anyone want to increase the Mortgage Insurance Premium on an FHA loan?

Well, the only thing I can figure is that when the Mortgage Insurance goes up, the government makes more money. But, when the interest rate goes up, banks make more money. Of course they want to favor increased Mortgage Insurance Premiums.

I urge you to talk to your representative and tell them your feelings on this topic. We need our housing market to continue to lead the country out of the recession.

2110 140th Place NE, Marysville

Asking $155,000.  SOLD for $147,000 with $8,000 is bank-paid repairs!

Huge yard, great piece of property!! This home needs TLC. Completely livable while you fix it up. One bay of the garage was made into a family room.