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Published August 2005

Developer sees tough
challenges ahead

This is one of three giant Haggen supermarket stores and shopping centers developed by Barclays North of Lake Stevens, including one in Marysville, another in Arlington and this one in Beaverton, Ore.

 

By John Wolcott
SCBJ Editor

As a land developer, builder and co-founder of Barclays North, Patrick McCourt sees some rough challenges ahead in Snohomish County.

Meeting the increasing demands for more housing, more retail centers and more industrial development isn’t going to be easy in Snohomish County, he believes.

For 16 years he’s invested his life, money and real estate savvy in the county, always planning for the future and working with county and city governments to help them resolve land development issues. Yet, he’s seeing development opportunities diminish rapidly, forcing him to seek projects in Nevada, Idaho and other regions outside the Pacific Northwest to maintain the company’s rate of business expansion.

“One of our major concerns is that the supply of land available for development is shrinking so rapidly in Puget Sound. Projects are becoming more densified,” McCourt said. He and many of his peers foresee a significant shortage of land, with remaining sites dominated by 3,000-square-foot lots and multi-story condominium developments.

“The ability to subdivide properties outside of urban growth boundaries certainly exists but that market involves almost economic discrimination against lower income families because of growth management trends,” he said. “It’s not uncommon today to invest $200,000 into a rural lot— including a septic system, well and other infrastructure expenses — before you even build a house. That’s what happened in Portland after 10 years of growth management regulations.”

What McCourt perceives in the near future is continued rapid development of property inside growth management boundaries, including “a ton of in-fill projects and a trend toward buying existing homes, tearing them down and rebuilding,” he said. That’s the reason he’s begun venturing into other areas to ensure the continued growth of Barclays North. “It’s quite interesting to get involved in the local government of other jurisdictions where they welcome high-rise developments.”

Citing the lengthy discussions, often including strong opposition, to high-rise development in downtown Everett and Lynnwood, McCourt believes “there’s a huge need to look into the comprehensive plans for all towns in the county to consider approving high-rise projects, since there’s only so much land, limited by urban growth boundaries.”

Among his concerns about limiting land development is that transition areas allow gradually reduced densities between urban and rural areas don’t seem to be getting much attention. Also, cities are being limited in extending their urban growth boundaries. Arlington, for instance, proposed several hundred acres for expansion. That has since been reduced and has had new complex regulations, like Transfer of Development Rights, proposed as an extra step prior to expansion.

Yet that area in north Snohomish County is experiencing “tremendous in-migration, with prices rising so fast that land is attracting more and more investors, which only drives costs up even more,” he said. “The more land is limited the faster and higher the prices will rise, squeezing increasing numbers of potential home buyers and business developers out of the marketplace.”

Noting that conflicting public moods hamstring finding effective solutions, McCourt said “a lack of necessary public sewer systems and the need for basic transportation infrastructure are major concerns in the development community.”

“We live in a society that wants $30 license tabs, for instance, but that change, and others, have limited funds for fixing our transportation system. Now, after the public pounded on desks in Olympia to get funding for transportation improvements, others are backing a move to reject the 9.5-cent per gallon gas tax solution. That would take the heart out of the attempt to solve some of our current road problems,” he said.

To make matters worse for both the economy and the development of new businesses and homes to meet the needs of the 250,000-plus additional people expected to be in the county by 2025, some areas may be sealed off from further development because of over-stressed roadways.

The county’s 2004 “concurrency report” on county arterials noted that five segments had already reached saturation levels or were in danger of reaching maximum use soon, including Bunk Foss Road from South Machias Road to SR 9; Airport Way from 99th Ave. SE to SR 9; 35th Ave. SE, Grannis Road to 168th St. SE; 180th St. SE, from the southwest county urban growth boundary to SR 9 and 180th St. SE from Broadway Ave. to SR 9.

In the Apil 2005 update of that county report, the Bunk Foss Road and 35th Ave. SE segments were taken off the list because of construction projects that improved their capacity. However, four new arterial segments were added to the at-or-near-capacity list, including 20th St. SE, from SR 9 to SR 204 and from SR 9 to South Lake Stevens Road; 79th Ave. SE, from 20th St. SE to 8th St. SE, and Marsh Road, from Lowell Larimer Road to SR 9. Further, another eight arterial segments were listed as being “at risk of falling into arrears,” the county’s terminology for road areas with serious capacity problems.

“Road areas that have reached maximum capacity will be areas where the county will begin to refuse further development, reducing the amount of available land for housing development even more,” he said.

“As an example of how the lack of land is raising prices, we sold 5,000-square-foot lots in our Mission Ridge development in 2002 for $62,000. Today those lots are valued at $125,000 each.”

While he sees a lack of “affordable” housing for many potential homebuyers, he doesn’t expect that will stop people from moving to the area.

“People love the Northwest, despite the rising cost of housing and transportation problems, because of the environment. Also, we are developing a biotech community, Boeing is growing and the China connection is making Northwest ports, including Everett, increasingly important. All of this will continue to drive population growth here,” he said.

The traveling public has to “get their arms around the fact that they have to develop a mechanism for funding and building transportation or get used to I-5 becoming as congested as traffic is in Los Angeles,” McCourt said.

“It’s a great time for government to build needed infrastructure. Never in the last 40 years has bond money been so inexpensive for state and local government to finance these projects ... but when funding legislation has failed or been repealed, government’s infrastructure money has disappeared along with the ability to more aggressively (use) bonds for improvements,” McCourt said.

“Further, with declining reserves, smaller cities and towns face the possibility of declining bond rates, which then make bonding — and the cost of infrastructure — more expensive. I don’t know why Snohomish County and its 20 cities couldn’t get together for a massive general obligation bond sale, with participation from all taxpayers in the county, to start building some of these necessary infrastructure projects. Growth isn’t going to stop and we can’t avoid it by the old ostrich approach of ignoring it,” he said.

As for “affordable” housing, McCourt feels that word is “way over used ... when we’re approaching $300,000 in Snohomish County for the average home price.”

Still, McCourt has tried to do something about that by proposing a development near Lakewood of 2,200 “mobile homes,” with a community center and other amenities.

But Barclays North withdrew the project when it was determined there was no way to immediately finance adequate roads and sewer systems for the site.

One reason for the proposal had been to offer an alternative to single-family subdivision homes for people who can’t afford those residences or those who simply enjoy the mobile home park lifestyle, he said.

That would include those having to move from the Eagle Point Mobile Home Park north of Marysville that Barclays North bought recently to build nearly 400 condominium units. To ease the strain, the company even hired a firm to help residents relocate, and offered to pay the state’s $7,000 moving assistance for each mobile home up front, to be reimbursed after the move.

“Our company has always been concerned with affordable housing and trying to meet the needs of first-time homebuyers,” said David Toyer, vice president for government affairs at Barclays North. “Through our acquisition of the Eagle Point Mobile Home Park and our efforts to redevelop that site, we’ve seen first hand that there is a crisis of affordable housing options in Snohomish County.”

Barclays’ research has found an estimated 140 mobile home parks in the county, with only 132 vacancies out of 7,270 spaces. The company has urged county officials to include low-income housing solutions in its amendments to the county’s proposed comprehensive plan, due to be completed by the end of this year as part of a periodic 10-year review.

“Affordable housing is almost always part of planning discussions,” Toyer said, “but we never seem to get past discussing that there is a problem. Our hope as a company is to take the dialogue to a level that leads to the county and cities implementing solutions. If we don’t address affordable housing as part of this 20-year comprehensive growth planning process, then when we will address the issue?”

McCourt said that “even the county’s attempts to set aside or expand urban growth areas for affordable housing attract so much attention that every lower-cost parcel proposed for that market is bought almost immediately by speculators and developers.”

For the last three years, Barclays has been preparing for the worsening land shortage by its own “land-banking” program, buying up property to hold for future development.

“Presently, we have enough developable land for 5,000 single-family homes in the future,” McCourt said, noting his firm already has a contract to provide 1,000 home sites over the next three years in Snohomish County to Quadrant Homes.

 

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© 2005 The Daily Herald Co., Everett, WA