An economic outlook released today by Global Insight predicted that construction of new homes in the United States this year will dip to the lowest levels since World War II. One of the main problems: Financing. According to the Global Insight release, “Many regional banks, which homebuilders depend on for financing, are running into problems because of rising delinquency rates. Even banks with solid balance sheets are reluctant to finance any project related to housing.”

Construction is off locally. In the second quarter, which includes all of April, May and June, permits issued to build houses (excluding condominiums) in the county dropped by 53.9 percent compared to the same period last year, according to statistics provided this afternoon by Bill Riley, vice president of government affairs for the Washington Realtors and an owner of GMAC Real Estate in Puyallup. For some additional perspective, I wrote in May about local builders leasing unsold homes, rolling out the incentives and slowing construction as they grapple with today's market.

When I was reporting my story about new construction that ran last week, I had a long and interesting conversation with Gayl Van Natter at Bennett Homes about the urban village concept in Gig Harbor the builder started selling in September. And why sales, which she called disappointing, aren’t coming together as she had expected they would.

The homes at Harbor Crossing built by Bennett Homes are priced starting in the mid-$400s and range in size from 1,800 to 2,600 square feet. (The Dwelling Co. also is building homes at Harbor Crossing.) Because they are meant to mimic an urban setting, the homes are close together – 10 feet between them – and some have shared access to driveways and minimal yard spaces. They are a few blocks from a new Costco and YMCA and other retailers, so the expectation was that buyers would seize the opportunity to live and play in one place.

But Van Natter said locals aren’t taking to the urban village idea.

“The people who come from Gig Harbor go through our models, love them, but just can’t wrap their brain around them being so close,” said Van Natter, who added that perhaps proximity to the water would make the urban-ness an easier sell.

Also, she said, buyers tend to associate Gig Harbor with larger properties. Van Natter said that completion of the hospital, as an additional amenity and a supply of workers who might become home buyers, should help. But, so far, all buyers have come from out of state.

“I think the product is way ahead of it’s time in Gig Harbor,” said Van Natter, who emphasized that the company continues to expect great things from its harbor-area projects.

What do you think? Is this kind of close-knit neighborhood out of place in Gig Harbor? If so, aren’t there homes in highly desirable North Tacoma on similarly small lots and quite close together? Do people want to walk to Costco and the Y? Do people want urban-type settings as much as builders think they do?

Don’t forget about the Tour of Urban Living this weekend – a self-guided tour of downtown Tacoma condos and apartments. You’ll find 13 condominium buildings split primarily between the downtown core near City Hall and a group around South 23rd Street. (Though you’ll also find the Marcato between the two clusters and The Esplanade along the water.) Some have full-size models to stroll through and others have a sales center.

There are also three apartment projects. Hours are 10 a.m. to 5 p.m. Saturday and Sunday.

Go here for a map of what’s on the tour.

UPDATE
Some of the condo projects on last year's tour won't be reappearing, because they sold enough to not need another round or have hit delays, according to Roxanne Murphy, community relations specialist at the City of Tacoma.

Those with enough units sold:
201 Broadway, 201 Broadway
Bridge Condominiums, 744 Market St.
Classic Urban Townhomes, 2307 and 2309 S. I St.
Dorothy Condominiums, 301 N. Tacoma Ave.
Galleria, 2520 S. Jefferson Ave.
Triangle Townhomes, 408 6th St.
The Vintage Y, 714 Market St.

Those from last year's tour that have since been delayed, Murphy said:
The Ansonia, 219 N. Tacoma Ave.
Broadview Condos
Chelsea Heights, 603 S. J St.
Jay Heights, 613 St. Helens Ave.

And these are new this year:
505 Broadway, 505 Broadway
Lexington Square, 2303 S. G St.
Metro City Homes, 2131 S. Yakima Ave.
Walker Condominiums, 405 6th Ave.

The owner and buyer of North Shore Golf Course say the City of Tacoma erred in its appeal of an order to give the go-ahead to an application to build 860 homes on the course, according to court records.

It comes down to a legal technicality: Court records say that city officials did not “timely and properly serve” Northshore Investors, which filed the development application, course owner North Shore Golf Associates or Save NE Tacoma. Attorney Aaron Laing has asked that the appeal be dismissed, along with a stay that put the plan’s processing on hold. (This particular case differs from the one involving some of the same parties I covered last week, when Northshore Investors and North Shore Golf Course sued the city for more than $22 million in damages.)

What Laing filed last Friday in court points out the city should be familiar with the strict requirements for serving an appeal “having recently succeeded in dismissing a land use appeal for failure to timely file a petition.”

Elizabeth Pauli, city attorney, said: "We’re preparing our response to the motion, but it wouldn’t be appropriate to comment on it at this time."

The appeal and stay are scheduled to be heard Sept. 7.

The North Shore plans were controversial from early on. Residents who live near the 115-acre course say the project would ruin their quality of life. Others have cited environmental concerns. The day after plans were submitted, the City Council passed an emergency moratorium on such projects, called planned residential developments. City staff later deemed the plans incomplete, subjecting them to the moratorium.

In the further escalation of the dispute over what will become of the North Shore Golf Course, the owner and prospective buyer have sued the City of Tacoma for close to $22 million.

Northshore Investors, which submitted an application in late January to build 860 homes on the course, claims that city officials illegally singled out the project and dragged their feet on processing the paperwork. The day after the application was turned in, the City Council enacted an emergency moratorium prohibiting such projects, known as planned residential developments. Northshore Investors is buying the 115-acre course from North Shore Golf Associates.

In the complaint, filed in Pierce County Superior Court this month, Northshore Investors says the city lied about its motives for employing the moratorium on planned residential developments (officials at the time said
the city needed to examine inconsistencies between rules governing planned residential developments and the city’s comprehensive plan) and strategized to delay the application.

I’m waiting for word back from the city. Northshore Investors and the city are scheduled to be back in court in September to resolve a stay acquired by the city in August to not process the application. Also, a hearing is to be held on the city’s appeal of a July decision by the hearing examiner that ordered city officials to reverse their determination that the developer submitted an incomplete application.

Here are some details on damages claimed by Northshore Investors and North Shore Golf Associates, according to city records.
• Northshore Investors: City application fees ($94,919), inflation and lost revenue ($2.2 million), engineering ($253,423) and other costs to-date, totaling $5.3 million.
• North Shore Golf Associates: At least $17 million – the difference between the property’s value if developed and the value if the property is subject to city restrictions.

The first two houses are in escrow at Harbor Crossing, a subdivision in Gig Harbor to ultimately contain about 180 units. The project is notable for its location (next to the new Costco and YMCA and planned hospital) and for the urban-inspired style of homes: close together, some with shared driveways and others (deemed cottages) that don’t get any bigger than 1,300 square feet.

The Dwelling Co. plans to build 111 homes – a combination of houses, town homes and duplexes, according to Noree Milligan, Dwelling’s marketing manager. The first six being sold by the company (the ones already in escrow are Dwelling’s) range in size from 1,268 to 2,349 square feet and are priced at $344,990 to $539,990. Models will be available in November, Milligan said.

Bennett Homes, which is building the remainder, plans to begin selling Sept. 1, when a sales trailer will open, said agent Linda Kepler. (Models should be ready later in September.) Square footages range from about 1,800 to 2,600 square feet and prices are expected to start in the $400s. Notable attributes include minimal yards and master bedrooms on the first floor, which Kepler said appeal to retired buyers. Several are under construction with the first to be ready no later than January, she said.

I asked Kepler this week if she’s concerned about getting the units sold in today’s slow real estate market.

“Not really,” she said. “Bennett Homes is still selling homes.”

“Our research shows there’s a real need and market for this kind of housing. There’s nothing like it in the Gig Harbor area. We’re cautiously optimistic we’ll do really well.”

One added note: The Gig Harbor area had Pierce County’s highest supply of homes in July, at 9.7 months, which could present a location-specific challenge to anyone selling a home in the harbor area. You can read the story I wrote on the supply issue here.

Attorneys are scheduled to be back in front of a City of Tacoma hearing examiner Tuesday at 9 a.m., sparring over a rejected application to close Northeast Tacoma’s North Shore Golf Course and build more than 800 houses.

The hearing -- an appeal of the city's finding that the application was incomplete -- had to be continued after it ran past its allotted two days last week. Called The Point at Northshore, the project has been criticized by residents worried about the potential for crowded streets and whether putting homes on the course will hurt their property values.

The city has yet to call some of its witnesses and both sides will give closing arguments. If it’s needed, a fourth hearing day has been scheduled for Wednesday.

A decision on the appeal is expected in a number of weeks.

With the first homes at Cascadia more than a year away, many details on the makeup of the massive housing-biz park-golf course-retail development have yet to be filled in. But I got a few this afternoon on a dirt-road tour of the property with Chuck Lappenbusch, director of development for Cascadia Development Corp.

Model homes should be open next spring with houses ready for move-in by September 2008. Three builders – Centex Homes, Shea Homes and Bennett Homes – have bought the first 500 or so lots. And though Lappenbusch wasn’t sure about pricing, he said homes on lots with views of both Mt. Rainier and the Olympics would likely go for between $500,000 and $700,000, if sold today.

Being planned since 1999, Cascadia is expected to be complete in 20 years with more than 6,000 places to live, 9,000 jobs and 1,200 acres of parks. It’s located south of Bonney Lake on the plateau above Orting.

Expect at least some of the houses to be close together and condos and town homes to be part of the later mix. Original plans, Lappenbusch said, were for four units per acre but that has since grown to an average of six per acre.

Lappenbusch showed off efforts to make the development friendly to the eye – a major road that aligns with Mt. Rainier and buffers of trees that shield the view of homes from the valley below.

When asked about whether the slowing housing market is of concern, Lappenbusch said: “In the Puget Sound region, relative to other parts of the country, we’re doing pretty good.”

What it looks like now.

Devona is down at city hall listening to the hearing on a proposed housing development on the North Shore Golf Course.

This is what she reports:

Today's North Shore Golf Course hearing got off to a slow start this morning after it was discovered that a key witness was missing: Peter Katich, land use administrator.

City of Tacoma staff said Katich was unavailable, though he was on the witness list. So hearing examiner pro-tem Philip W. Dufford issued a verbal subpoena at 9:20 a.m. requiring he testify. Twenty-five minutes later, Katich was in council chambers.

"I did not know that I was expected to be here to testify today. I typically don't on these matters," Katich said, after he arrived.

By noon, Katich was still fielding questions from Aaron Laing, attorney for Northshore Investors LLC.

Look for a roundup of the hearing, an appeal of the city's decision to reject the application to replace the golf course with hundreds of homes, in tomorrow's News Tribune.

Remember that proposal to replace the North Shore Golf Course with more than 800 homes? It hasn't gone away, just underground for a bit while Northshore Investors LLC, which is buying the land, and Tacoma city officials awaited tomorrow's session with the city hearing examiner.

Northshore Investors appealed the city's rejection of its application. (SBI Developing, a subsidiary of Soundbuilt Homes, is the developer.) At the hearing, expected to last up to two days, look for claims that city planners assured the developer that its application was complete but then changed their minds. City officials have said SBI was informed of what would be required in the application.

The hearing should look something like a mini-trial with witness testimony, cross examination, etc.

It's scheduled to start at 9 a.m. in City Council chambers on the first floor of City Hall, 747 Market St.

A couple readers called or wrote after my story about the hundreds of new homes in Fife ran, complaining about traffic and the construction of houses on prime industrial/farm land.

Charles McDonald, a Fife resident for 49 years, had this to say:

New residents are getting a rude awakening to their new town. When the population of Fife was 500, we had 2 stores. An IGA and a Shop Rite. Now the population is about 5,000 and we have no store. Nice!!

Fife used to be a nice place to live. Would you like to live near a warehouse? How would you like to buy a brand new home, with a beautiful view of Mt. Rainier, and then 6 months later have a huge warehouse built and your view gone?

I wonder how others in and outside of Fife (lots drive through the city to get where they're going) feel about all the new subdivisions.

Plans to build hundreds of homes on Northeast Tacoma's North Shore Golf Course were deemed incomplete today by city staff.

Called The Point at Northshore, the project would have closed the 115-acre public course to make room for duplexes, fourplexes and houses. Nearby residents, hundreds of them with golf-course views, criticized the plans at meetings and on blogs as certain to clog streets, overcrowd already-full classrooms and disrupt quality of life.

According to city documents, the application failed to address potential impact to wetlands and a stream on the golf course and did not adequately account for the loss of open space. The application was submitted by North Shore Investors LLC, which is purchasing the golf course. The project’s developer is SBI Developing, a subsidiary of Soundbuilt Homes, one of the Northwest’s largest homebuilders.

Kurt Wilson, who manages Northshore Investors and SBI, said the city’s determination that the application was incomplete will be appealed. “We were surprised by the ruling,” he said this afternoon. “We worked with the city staff for nearly half a year and followed their guidelines and advice.”

You can find the city's press release here.