SPOKANE, WA-High-end residential developer Marshall Chesrown, who put in the winning bid for 77-acres of former railroad land on the north bank of the Spokane River, is pleased with the $12.8-million purchase price. The property, which looks across the river to Downtown Spokane, is master planned for hundreds of millions of dollars of residential, office and retail buildings but is by no means ready for development.

“In my opinion it was extremely cheap or I wouldn’t have bought it,” Chesrown tells GlobeSt.com. “Finding 80 acres of entitled land right across from Downtown is pretty rare.”

Kevin Daniels, president of Nitze-Stagen, who was the development partner with former owner Metropolitan Mortgage & Securities, also thinks it was a great price, but only because he is a creditor of Metropolitan, which is undergoing a bank-ordered liquidation. Daniels tells GlobeSt.com he did not even bother to bid on the property because it was so far overpriced.

“Based on our history with the property, our financial analysis and other research, we didn’t think the value met the asking price, it didn’t justify what they were asking,” says Daniels. “We had an independent appraisal and (development) analysis done earlier this year for our dense urban village plan and the land value came in at about half (what was paid).”

Daniels believes the land price should have been less in order to offset what his analysis found would be extraordinary costs for soil remediation and infrastructure such as streets and power. “Some of the best deals are the ones you don’t make,” says Daniels. “As a creditor, I might add I am thrilled at the price the company got for the land.”

Generally speaking, the eastern third of the property, which sits across from Downtown Spokane, would be an employment center, with a mix of commercial uses that complement the Downtown core and blend in with the existing county and city buildings on the same side of the river. The western two thirds would expand the neighborhoods that already border the property. The amount of residential development would depend on the type of product that was built; the employment center is earmarked for about 1.5 million sf of office space and an undetermined amount of retail space. Downtown access will be via the Monroe Street Bridge, which is currently under reconstruction and scheduled to reopen in the spring.

Although some environmental cleanup was completed during the master planning process in the 1990s, there are still issues with the property will require cleanup. Developing the land will take several years, says Chesrown, adding that he plans to develop the residential acreage on his own and expects to sell the commercial land.

“We will be in there immediately and get the (environmental issues) resolves once and for all,” says Chesrown. “We hope to be under construction (on the residential portion of the project) by the time the bridge work is complete.”

Chesrown is a Spokane native who made millions selling his Colorado auto dealerships to AutoNation. He then developed Club at Black Rock, a 650-acre, gated community and golf course on Lake Coeur d’Alene. He now also owns the Cedars Floating Restaurant on Lake Coeur d’Alene, as well as acreage along the Spokane River there for which he plans to build waterfront condos.

Chesrown says he did not even hear about the court-ordered property auction until the day before it was scheduled. At the time, there was only one confirmed bidder, Seawest Investment, so the judge put off the sale for one week to give Chesrown a chance to due some quick due diligence. Seawest’s bid came in $800,000 higher than Chesrown’s, but the judge chose the lower offer because it was more of a sure thing. Whereas Chesrown’s bid included $500,000 earnest money, Seawest’s bid included no earnest money and gave the company a three-week window wherein it could back out of the deal without any penalty.

“Development of the Summit property is a great opportunity for Spokane to really get that Downtown area moving,” says Chesrown. “There’s been some great stuff going on, including the new convention center that’s under construction, but it really takes more residential living. We see tremendous upside if the business plan is executed properly.”

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