The officers of Bellingham's Horizon Bank said it plainly, in their quarterly earnings report published this week: "There is substantial doubt about the corporation's ability to continue as a going concern." That's their own bank they're talking about.
Horizon Financial Corporation, the bank's holding company, lost more than $35 million ($2.93 per share) in the 90 days ending Sept. 30. Its share price fell to 28 cents on Tuesday, from $1.16 in September and more than $25 as recently as 2007. Horizon's report suggests that the Federal Deposit Insurance Corporation is poised to take over, "placing the bank into conservatorship or receivership, to protect the interests of depositors insured by the FDIC." It would mean the end of an 87-year old institution, with 14 offices in Whatcom, Skagit, Snohomish, and Pierce Counties.
A bank's quarterly earnings report might not be hot reading ordinarily, but Bellingham residents are paying more than passing attention to this one. Horizon has been the center of a civic storm around the wooded hillside that rises above Bellingham's Fairhaven Historic District. Through a partnership known as Greenbriar Associates Northwest, Horizon proposes to build a huge subdivision on the hill, with 181 single-family houses and 558 condominium and townhouse units.
It's a prime location for high-priced homes, with views across Bellingham Bay and the San Juan Islands. But the planned development, called Fairhaven Highlands, is just beginning its journey through the city's approval process, and opposition is fierce. Local hikers and other Bellingham residents, who know the 85 acres of woods and ponds as Hundred Acre Wood, have formed an organization called Responsible Development to fight the loss of the town's scenic backdrop. There are mature, forested wetlands to be fought over, with implications for active salmon streams downhill from the site. There's potential traffic turmoil during and after development; a two-lane road and an aging, narrow bridge connect the site to the rest of Bellingham. Responsible Development members hired veteran land-use attorney David Bricklin of Seattle to contest every step of the city's approval process. They've effectively made Horizon Bank a target, and critics of the Fairhaven Highlands project have taken their business to other banks.
The absorbing question, now that Horizon has acknowledged the wispiness of its future: What happens to Fairhaven Highlands, and the wildland it encompasses, if regulators close the bank? The FDIC's history indicates no desire to be in the real estate business, and it seems the land will be for sale before long, barring a miraculous intervention by big money sources Horizon Bank hasn't managed to find.
At the same time, however, Horizon continues to push for approval of its housing development plan. "We'll continue to move toward approval of our entitlements," Board Chairman Lawrence Evans told Crosscut. "We're nearly through the public comment period on a draft environmental impact statement, then our consultant will write the final EIS and we'll go back to the city for approval."
It's a long way from an environmental impact study to logging permits, grading permits and building permits. And the bank's own quarterly report raises doubts whether it will be around long enough to complete the EIS, gain city approval and withstand the court challenges of its opponents. In the meantime, if the FDIC takes over the bank's assets, will there still be a Fairhaven Highlands project to approve? "I really don't know," Evans said. "You'll have to ask the FDIC."
There have been efforts in the past few years to persuade the city to buy the ridge and add it to the extraordinary park and trail system that traverses Bellingham and Whatcom County. But it's expensive. The Horizon partnership paid $16 million for the property and once valued it at $26 million, a price the city can't afford to pay. Whatcom County assessed its valuation for tax purposes at $13,336,000. Those values assume a compliant city government will permit the high-density development.
Bellingham has a special fund, supported by voter-approved "Greenways" tax levies, that can be spent only for acquiring parkland. The Bellingham City Council decided during budget sessions last winter to set aside $8 million in Greenways money for buying Southside parkland.
Just in case federal regulators should hold a going-out-of-business sale on behalf of Horizon Bank.