An $80 million Tacoma waterfront condominium project, caught in the financial whirlpools of the recession, faces foreclosure by late August unless the developer can find new sources of funding.
The Esplanade, a nine-story condominium on the west side of the near-downtown Thea Foss Waterway, has until Aug. 21 to escape from the imminent foreclosure, said sources close to the project who were not authorized to speak publicly.
Just 10 of the 162 housing units in the building at 1515 Dock St. have been sold, and none of the retail spaces on Dock Street or facing the waterfront walkway has been leased.
The Esplanade was part of a grand plan by the Foss Waterway Development Authority to encourage private developers to build new housing and a hotel along the formerly industrial inlet of Commencement Bay.
The hotel never broke ground, but California developer Mark Ossola and his Thea Foss Holdings LLC erected the handsome condo building. The owners of the adjacent hotel property now have their land for sale and are negotiating with a Bellingham hotel developer about completing the hotel project.
“It’s just a tragedy,” said Don Meyer, the waterway authority’s executive director of the Esplanade’s financial trouble.
“The developer built a first-class building,” he said.
The condo project was built later than the developer originally had projected, hitting the market last year just when the housing collapse was beginning.
Ossola didn’t return several phone calls this week seeking his comments.
Judy Mayfield, sales manager for the Esplanade, said the market conditions and the financial crisis conspired to make selling units difficult.
She has more than 100 potential buyers who showed strong interest in the building, but the tender condition of the economy has kept most of them from committing.
“We’ve had a great response to the building,” she said, “but other factors are keeping people from completing their deals.”
Some of those potential customers say they want to buy in the Esplanade, but they must sell their existing homes first. They’re seeing little interest in their own property.
Buyers who need financing are finding it difficult, but not impossible, to find banks willing to finance their condos.
The building’s low occupancy erects barriers to obtaining conventional financing, said Mayfield. Fannie Mae and Freddie Mac, the quasi-federal housing finance agencies, now require a condo building to be 70 percent pre-sold before they’ll buy the mortgages from that building. In some cases, the percentage can be reduced to 51 percent, still a long way from the Esplanade’s occupancy percentage.
Some owners in the building qualified for private financing or plunked down cash for their units.
The 10 sold units are scattered throughout the building, some facing the city, others facing the water. They’re located on several different floors.
The developers haven’t made wholesale price reductions in part to protect the value of the condos sold during more prosperous times, said Mayfield, but they’re willing to negotiate with buyers to suit their particular needs, she said.
If the Esplanade is foreclosed upon, said Meyer, it will be an unfortunate setback for the developer who worked hard to see the building was completed.
But at least the structure is done, he said. That’s a better circumstance than for other projects in Tacoma and elsewhere who saw their financing frozen midproject.
John Gillie: 253-597-8663