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Financial situation less than heavenly for Capitol Hill townhouse project The Sanctuary

In an economic environment where even the simplest real estate projects don’t have a chance in hell, one of the more improbable redevelopment projects on Capitol Hill is in financial purgatory. We first learned of the project’s plight from Matt Goyer’s Urbnlivn real estate blog with his brief post titled simply, The Sanctuary is in Limbo. We’ve now learned from court documents that the developers behind The Sanctuary are the subject of a $9 million complaint brought by the bank that provided the construction loan to help rebuild the 1906 church into one of the most ambitious — and, it turns out, financially precarious — development projects on the Hill.

The Sanctuary
1841 16th Ave. at Denny Way, adjacent to the Seven Hills Park at 16th and Howell

Unit Size and Mix: 12 two-bedroom townhouses ranging between 1,543 sq. ft. and 2,624 sq. ft.

Price Range: $799,000 – $1,575,000

Team: Joe Sacotte and Joel Lavin (developer), Runberg Architecture Group (architect), Sechrist Design Associates (interior designer), Babbs Weissman and Erica Clibborn, Windermere (realtor)

In 2006, the First Church of Christ Scientist building was acquired for $2.28 million. The Church was actively considering another bidder who had planned on demolishing the building, but developer Joel Lavin told CHS in May the Church selected him and partner Joe Sacotte because their redevelopment plan included the preservation and adaptive reuse of the building.

To finance the construction, the developers borrowed $9.3 million from Charter Bank’s Seattle office in December, 2007. According to the complaint filed this July, the note was originally supposed to come due in January 2009 but Charter extended the maturity date until February 2010. The extra year didn’t matter. First Church, LLC could not pay.

At the heart of the matter, the 12 units of The Sanctuary were not selling. While one or two units were at times pending sale, according to court documents, all 12 units are currently still available.

The complaint sought a judgement against the developers for the $9.159 million still owed on the loan, payment of Charter’s legal fees and the appointment of a receiver to take control of the development and find a way to create enough value from it to pay back some of the debts owed. According to court documents, a jury trial was scheduled for January 2012 but a receiver appears to have already been assigned. Resource Transition Consultants of Edmonds, Washington already has the Sanctuary listed on its project page.

The landmark First Church of Christ Scientist was gutted and sub-divided by Lavin and Sacotte into 12 luxury townhomes, no two featuring the same floor plan. Units span from three to five levels and retain many of the building’s original features, most noticeably its stained glass windows, ornate columns, and dome. The developers sought to reuse as much of the original church as possible; church pews and wooden support columns, for instance, were converted into stairs.

The units feature a combination of historic materials and modern finishes. Kitchens include marble and stainless steel countertops and appliances by Bertazzoni, Liebherr, and Asko. Eight of the twelve units feature terraces, several with views of downtown and, on that rare clear day, Mount Rainier. You can read more about the project in a write-up on the amazing project we posted this spring while the drama around the missed February repayment date was growing — unbeknown to us — behind closed doors.

At this time, we don’t know what is next for Lavin, a Capitol Hill resident himself, and Sacotte. We have an e-mail out and hope to learn more about their situation and their role in Sanctuary going forward. UPDATE: Lavin has declined to comment on the situation at this time.

In the meantime, Resource Transition Consultants are familiar with the Capitol Hill real estate market. Last December, they were behind the auction of the condo units in the Summit Tower project in an effort to quickly move property that was only partly successful. Is there an auction in the future for The Sanctuary? It will be interesting to see what the market rate is for improbably ambitious development is these days.

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15 thoughts on “Financial situation less than heavenly for Capitol Hill townhouse project The Sanctuary

  1. Did Seattle really need another luxury condo building?

    Ideally, someone/group/gov/arts org should have bought this and turned it into a non-profit performing arts space for the many fringe theater companies on the Hill who are getting priced out of their spaces due to gentrification.

    The time is coming when there won’t be anything on the Hill except high end housing and high end restaurants and services for the people who can afford the housing.

    How boring.

  2. There were active discussions at the time about turning it into a performing arts space for youth, but that never got off the ground. Not clear if there is a real economic need for more performing arts spaces anyway. It would have sort of replicated Town Hall, which is barely a mile away, and has the parking that an auditorium of that size needs (OK, a deal with Group Health would have been an option for parking).

    Agree it would be nice to have performance space for non-profits, but I don’t know where you’d find the $$ for that. All the arts are hurting already.

  3. These units are really, really beautiful. The problem with them (at least when I toured) is that they were setup as zero lot line townhouses. There was no formal HOA structure in place to manage the many common elements of the building, like the elevator, garage, (not to mention the giant stained glass dome!) that are part of the building. Without a formal HOA that can collect dues and maintain the common elements, buying into this building seemed like a folly. When the dome cracks, or the elevator breaks, are you really going to just go around with a hat and try to get owners to contribute to a massively expensive repair job?

  4. This is a sad project. I got to walk through the model unit at an open house and yeah, there are some nice finishes, appliances, etc, but given the noble attempt to retain the windows (stained glass or other-wise) the place is like a cave. It’s cool, and on the day I visited the lighting was OK given that it was bright outside. In Seattle, however…. There is a huge common area which seems cool and screams “condo”, except that these aren’t condos:

    There is the zero lot line problem as someone mentions, which given the age of the structure is an issue… You could bind ownership to maintenance but I would never feel comfortable with this myself because there are so many things that could go wrong. It would be a (little) less of an issue with a traditional townhome structure like the “rowhomes” developers have been putting up, though personally I would avoid that anyway.

    For this project, zero lot line units are INSANE. Completely insane. You can’t tell me that a giant shared dome, shared grounds, elevator, common area, etc won’t break down and then who pays?

    At this point you have to seriously wonder if ultimately the building gets demolished. Why would anyone pay even $275/s.f. for these things, which I bet is way under what the receiver will set as a minimum for any of these units.

    It’s a sad outcome for a landmark building.

  5. I’ve seen “occupied” signs on a few of the units, I thought at least a couple were sold and currently had people living in them. Our real estate agent said that the building was not selling well, I had no idea it hadn’t sold at all. Yikes!

  6. This is a complex redevelopment that does not offer much natural light to the units, irrespective of the finishes most units have 5 landings which is not conducive to a luxury lifestyle.

    I assume that if separate floors were planned with open space units the development would have been more successfull, this is providing more windows could be provided to oversee the Park & bay views

  7. The sanctuary is such a beautiful building….it’s a shame that the building didn’t get converted into a more public-use building. I imagine that as high-end condos, it will languish on the market for quite a while. When I toured inside, I was really shocked at the lack of clear windows to access views and light. As a heritage status building, development could _not_ replace the stained glass with clear residential windows. This is not conducive to residential use, and the developer’s folly was not to recognize that any residential development would ultimately fail. I would feel like I was living in a high-end mausoleum. The other concern was the shared atrium space which provides the units with a light well, yes, but also acts as an echo chamber, amplifying your neighbor’s music and tv to the other units. The lack of a HOA is a huge problem given the fact that this is a heritage building….when something needs maintenance or breaks, heritage status requires specific, often expensive repairs. For the price they were asking, you could buy a really nice in-city standalone house.

  8. Taking out a $9M loan to renovate 12 condos doesn’t seem like the brightest idea.

    How cool of a restaurant, bar, playhouse, cafe, gallery, etc. could this have been?

    And yeah, the layout (stacking small living spaces) and lack of light seem ill-conceived.

  9. This should have been turned into a park and a lecture/small concert hall.

    Now there’s going to be another luxury ‘townhome’ building on the hill that no one is going to buy, and the developers are going to cry that the city needs to give them more subsidies for ‘density.’ Meanwhile, downtown, one of these monstrosities that took three years to build and never had higher than 20% occupancy rates has been condemned. We really need to inject some sanity into the housing/rental market around here.

  10. Very sad . . . the community wanted it as a performance space, for which it was beautifully suited, & adjacent the new park. But previous owner wanted too much money, so “developers” bought it & made it one of the ugliest & stupidest developements I have ever seen . . . victim of their own greed. People want light and convenience more than living in a granit icon

  11. Your facts are off. The downtown tower being demolished is the McGuire, which was actually affordable apartments, not luxury condos. And it was built by a trade union, not a developer.

  12. That is what I would do… Buy the whole building and turn it to a rock venue with vip access and private areas.

    oh to dream…

  13. These two have built in Seattle and been sued in Seattle and cheated their buyers without remorse. Anyone who would ever choose to buy something from them is a fool.