Economy claims another Tacoma-area condo project

Another major Tacoma-area condominium project, conceived in an era of booming real estate demand and prices, has taken refuge in bankruptcy court.

The Commencement Group LLC, owner of the seven-story Commencement luxury condominium project in Ruston, has filed for bankruptcy reorganization.

The project at 5204 N. Bennett St. features upscale condominium units with sweeping views of Commencement Bay, the Cascades and Browns Point. When the building was being actively marketed, prices ranged from $900,000 to $1.4 million.

The structure has been in trouble for more than a year. Construction halted on the building early last year when the bank that provided financing for the building itself, United Commercial Bank of California, ran into financial issues. That bank was taken over by another lender, East West Bank, under an arrangement worked out by the Federal Deposit Insurance Corp.

A handful of units in the building are occupied, but work needs to be done to put the finishing touches on the structure. Most unit interiors lack flooring and painting. Appliances remain in boxes inside some of the units. The building’s grand entrance pavilion is still wrapped in building paper, and some of the outside walkways are covered with plywood. No landscaping has been installed.

The limited liability corporation that owns the project listed scant details in its Chapter 11 bankruptcy petition filed late last month.

That petition lists the corporation’s assets at between $0 and $50,000 while debts are listed as being between $1 million and $10 million. Calls to those associated with the company weren’t returned Tuesday.

Among the 20 largest unsecured creditors listed in the petition were two Tacoma arts organizations: the Tacoma Symphony and Broadway Center.

Symphony Executive Director Andy Buelow said The Commencement had signed on as a major sponsor for the orchestra’s annual fundraising gala and for a concert performance. The bills, which amounted to $10,000, were never paid.

Buelow said he talked with the organization’s marketing director several times, and she told him that the funds were tied up by the bank.

The Commencement Group’s lack of follow-through meant the symphony board had to mount a full-court press for new funds to balance the budget, he said.

“It was extremely difficult, but we succeeded,” he said.

He hopes that funds will eventually be paid after the corporation reorganizes.

Broadway Center Executive Director David Fischer said The Commencement owed the performing arts center $20,000 for marketing promotions. He, too, has discussed collecting those funds, but the developer said its money was frozen.

Broadway Center had offered a Commencement condominium as a grand prize in a raffle last year, but the center shifted that grand prize to a condominium in the 505 Broadway development when it appeared The Commencement was mired in financial problems. Not enough of the $99 raffle tickets were sold to trigger the award of the condo. The grand prize winner received $25,000 instead. The $20,000 debt listed in Commencement Group’s bankruptcy petition had no connection with that raffle, Fischer said.

The corporation’s largest unsecured creditor was listed as communications provider Qwest. The developer owes Qwest $100,712. Other creditors include two law firms, several painting and construction companies, sign companies and fencing businesses.

While no one from the developer was available to discuss the specifics of the project’s financial situation, developers often file bankruptcy to stave off collection and foreclosure actions while they search for new financing.

The Commencement is the latest major housing project in the Tacoma area to hit rough waters. The Esplanade condominiums on the Thea Foss Waterway near downtown Tacoma was sold in a foreclosure sale 18 months ago, and a large Hilltop apartment project, the Jackson Building, has seen construction halt because of financial issues.

John Gillie: 253-597-8663
john.gillie@thenewstribune.com