https://newsmakingnews.com

NOTES FROM THE WATERFRONT
Pinnacle and Triad at the government trough....
Nice work if you can get it!

Who can you trace Pinnacle Realty and Triad Development back to?

I know your Waterfront reporter has been working on all these boys for years, but I just got interested in it last night. Who are these guys on the West Coast that are going great guns developing and managing multi-family properties, and how did they get there? Starting with some clues from the Waterfront articles on John Goodman, Pinnacle and Triad, here's what turned up. Notice how you have to start with the idea of some land that someone owned, or, in the case of a superfund site, some land that someone had potential liability for. Then in a manner the boys are notorious for, that piece of land is spun off into numerous entities which can feed off the government trough. It's a beautiful system--if one has connections, of course.


Pinnacle Realty accelerates buying
Joe Nabbefeld Staff Writer, August 7, 1998 
http://seattle.bcentral.com/seattle/stories/1998/08/10/story5.html

Seattle-based Pinnacle Realty Management Co., which has grown into a huge manager of apartments across the United States, is now moving rapidly toward doing the same in commercial property management.

The privately held firm on Aug. 1 completed its fourth purchase of a commercial management company and brokerage, this one in San Diego. The deal added 3 million square feet to Pinnacle's commercial management portfolio, bringing it to 16.5 million square feet.

Pinnacle is negotiating a fifth purchase, this one in the San Francisco Bay area. That would raise its commercial management total another 2.5 million square feet to 19 million, most of it suburban office projects, said Pinnacle president Stan Harrelson.

That doesn't yet approach the portfolio of the biggest commercial property managers. Vancouver, B.C.-based Colliers Real Estate Services managed 360 million square feet nationally as of May. At that time, Dallas-
based Trammell Crow Co. had a 296 million-square-foot portfolio. Los Angeles-based CB Richard Ellis and New York-based Cushman & Wakefield each managed about 200 million square feet.

But Pinnacle's apartment management record shows it knows how to get big. It grew from 3,500 units in 1985, when founder and chairman John Goodman hired Harrelson as president, to 86,000 units now. About 21,000 of those apartments are in Washington and Oregon.

Only about 750,000 square feet of Pinnacle's commercial management portfolio is in the Seattle area.

In the most recent purchase, Pinnacle acquired the commercial management and brokerage operations of Pacific Southwest Realty Services in San Diego, but didn't buy the company's mortgage banking operations.

Pinnacle has a three-person office in San Diego that will now grow to 18. 

Harrelson declined to reveal the acquisition price.

Harrelson and Goodman each own about 25 percent of Pinnacle. Phoenix Home Life Insurance Co. of Hartford, Conn., owns the other 50 percent, a position it took in 1994 to provide capital for Pinnacle's entry into commercial management.

Then named GFS International, Pinnacle bought Houston-based Sovereign National Management that year. Sovereign managed 11,000 apartments as well as 3 million square feet of commercial, mostly suburban office buildings in Florida and Southern California.

Pinnacle bought Property Concepts in Atlanta in 1995 to add 1.5 million square feet and ZKI in Maryland in 1996 to add 3 million more square feet of commercial space.

Pinnacle's management portfolio also includes properties in a few other countries.

Pinnacle has targeted another big growth opportunity, too. It has formed Gateway Development Co. in Annapolis, Md., to bid on buying former U.S. military housing from the federal government. Harrelson said the government has about 300,000 units to sell.

Note: "Affordable housing" is being sold, tenants are strong-armed and evicted, then rents are raised so more affordable housing needed. Sounds like a plan from on high.

Reclaiming control Property management team confronts vandals, drug users in problem-property clean up.
George Erb Staff Writer, June 8, 2001 print edition
http://seattle.bcentral.com/seattle/stories/2001/06/11/focus1.htm

On a recent sunny day, Ruby Pickett and four neighbors sat outside the front door of their building in the Vintage Park Apartments in Burien. It was a simple, neighborly moment that would have been unthinkable only a year ago.

Tenants routinely drank and smoked marijuana in the yards, residents say. Gang members scrawled graffiti on the walls. Vagrants lived in the laundry rooms. Fights were commonplace. Longtime residents didn't feel safe in their own homes. "You couldn't sit out on the porch," Pickett recalled.

Then, last fall, a partnership bought the troubled complex from a Seattle company and hired a new management team that resolved to turn the apartments around. Eight months later, the complex is a better place than it used to be, residents and police say, although much work remains to be done.

The unfolding story about the fall and rise of Vintage Park illustrates the vulnerability of multifamily developments to social and physical decay, and how hard it is to restore order. Vintage Park's plight also underscores the role of owners and property managers in keeping blight at bay.

Burien police started to see signs of trouble in the 543-unit apartment complex, then called Seahurst Village, in 1999.

Increasingly, dispatchers were sending police and firefighters into the complex to break up fights and tend to the injured. More tenants began using and selling drugs, police and residents say. Before long, gangs took up residence in the 1950s-era complex.

Burien police and firefighters soon realized that they were spending more and more of their time responding to disturbances and injuries in Seahurst Village. By early 2000, dispatchers were sending officers into the complex on Ambaum Boulevard Southwest about 10 percent of the time, dispatch statistics show.

Life in Seahurst Village was getting increasingly chaotic. Vagrants started living in the basement laundry rooms and storage lockers, residents and property managers say. Freeloaders began moving in with other tenants, making Seahurst Village their home without paying the rent.

Other tenants started moving out, and word began to spread that Seahurst Village was a blighted apartment complex. The occupancy rate sank to 87 percent by the fall of 2000.

At Burien City Hall, officials were getting increasingly concerned about Seahurst Village. The suburban city was devoting more of its public-safety resources to a single apartment complex that threatened the stability of the surrounding neighborhood.

At one point, city officials even considered whether to close the troubled complex. Officials finally rejected that course of action because they didn't want to displace hundreds of families, many of whom were law abiding.

Then, last October, Mararisk, the Seattle-based partnership that owned Seahurst Village, sold the apartment complex for $21.7 million to Virtu Seahurst Associates LLC, real estate records show.

The managing partner of Virtu Seahurst is Virtu Investments LLC, a company based in Scottsdale, Ariz., that specializes in buying and turning around distressed apartment complexes. The company now owns about 4,000 units in Washington, Nevada, Texas and Oklahoma.

"We'll go in and clean it up and make it a better place to live," said Scott McWhorter, who owns Virtu Investments with his partner, Michael Green. The company typically holds onto its properties for four or five years.

Virtu immediately renamed the complex Vintage Park, replaced the existing property managers and brought in Pinnacle Realty Management Co., a Seattle-based real-estate management company with experience turning around troubled properties.

Pinnacle employee Leta Kiesz had leased several upscale apartment complexes in Bothell, Kirkland and Bellevue when her boss, half-jokingly, asked if she would be interested in turning around a troubled Burien complex for a client.

Kiesz thought for a moment. When she replied, she was dead serious.

"I said, 'You know what? I will take that on,' " she recalled. "I wanted to try something different."

Kiesz went right to work. She replaced most of Vintage Park's dozen employees. Then her staff kicked the vagrants out of the laundry rooms and storage lockers, securing the areas.

Pinnacle raised the rents so the apartment complex would generate more revenue and attract different kinds of tenants. At the beginning of the year, the company increased the monthly rent on a one-bedroom apartment 40 percent to $605. Rent for a two-bedroom apartment climbed 11 percent to $675.

But the new owners also spent an additional $2,500 a month on maintenance, starting with 260 deferred maintenance orders that the previous owners left behind.

Pinnacle increased security dramatically. Kiesz doubled private security patrols to 16 hours a day and varied the patrol times. She bolstered her private security force by hiring off-duty police officers to patrol the complex for another 40 to 50 hours a month.

Vintage Park's monthly security budget, about $4,500 a month under the previous owners, on occasion climbed as high as $10,000 a month. The city of Burien chipped in by asking its own officers to patrol Vintage Park on a regular basis.

Pinnacle was especially aggressive with lawbreakers. Vintage Park did background checks on prospective tenants, and told those with felony convictions to look elsewhere.

Existing tenants who ran afoul of the law or failed to pay their rent were called into the office for a frank discussion with Kiesz. She told them that criminal behavior and delinquent tenants were no longer tolerated in Vintage Park, and they had 20 days to find another place to live.

At first, Kiesz warned between 15 and 20 tenants a month. Almost all of them moved. The company started eviction proceedings against the rest. Kiesz even instituted color-coded parking permits for the complex, so security patrols could tell which vehicles belonged to residents, and which belonged to visitors - including evicted tenants who had returned.

"It was a lot of work," Kiesz said of all the changes. "I didn't have any life for the first four months."

Burien police soon found that they were spending less time in the complex. Dispatchers sent officers into Vintage Park on 203 calls during the first three months of this year, down 38 percent from the same period in 2000, dispatch statistics show.

Occupancy rates have rebounded to 96 percent. Revenue from the complex has increased by $60,000 a month since October, mostly because Pinnacle went after delinquent tenants and, to a lesser extent, because the company raised the rent.

"They made, in eight months, some pretty dramatic turnarounds," said Sgt. Henry McLauchlan of the city of Burien's police services. But more work needs to be done. "We're trying to undo something that has taken a couple of years to get into place," he said.

Still, the changes are apparent - and welcomed - by many longtime residents, including Abby Abbott, 87, who has lived in the complex since 1970. At one point, she moved into another building because she was uncomfortable with her neighbors.

"I was terrified the whole time this was going on," she recalled. But, on this sunny day, she was sitting on the front porch with her neighbors. "This place is livable now."
Reach George Erb at 206-447-8505 ext. 116 or

Note: They're just  a couple of good old boys.

John Goodman: Pinnacle's colorful character
Joe Nabbefeld Staff Writer, From the August 21, 1998 print edition
http://seattle.bcentral.com/seattle/stories/1998/08/24/focus5.html

John Goodman managed the apartment building well enough that the owner was able to sell it for a nice fat profit. So the owner gratefully sent him a cold bottle of champagne.

Goodman fired it straight into the wastebasket.

"This is never going to happen again," he muttered.

Profits from the budding businessman's labor hereinafter would go to him.

And they have.

The average student from Ballard who begrudgingly obliged his parents by getting a two-year associate's degree now not only owns a yacht but a yacht-making company.

He travels on business to Asia a lot.

He heads a huge and still-growing international apartment management company, and -- lesson learned -- personally owns interests in at least 29 of the apartment complexes it manages.

He co-owns, and is redeveloping, Pier 70 on downtown Seattle's waterfront, the historic downtown Colman Building, and bunches of other similar properties.

He has helped start a variety of telecommunications and Internet companies. A carpet company, too, since all those apartments buy a lot of carpets.

He not only commissions paintings of famous ships that sank to display on his office walls, but commissions art works to give as gifts.

He's only 45 years old with a kind of swashbuckling Beach Boys look that leads one to expect to find him in a lot of places other than the chairman's seat.

And he still comes across as a happy-go-lucky, gag-playing "character," as the artist he commissions describes him.

He'll easily pour the next pitcher of beer at Mariners games and, when not playing hard in his softball league, likes to tip a few at the smoky Owl and Thistle in the basement of his Colman Building.

Glenn Meyer, his accountant-turned-partner in a start-up company to bring high-speed Internet access to apartments and office buildings, says Goodman retains a knack for breaking up serious meetings with jocular comments.

Stan Harrelson, his partner in the big apartment management company, Pioneer Square-based Pinnacle Realty Management, said, "He likes to basically throw outrageous comments in at times."
...

Goodman hired Harrelson off the softball field in 1985 to run his growing 5-year-old apartment management company, then called Goodman Management Group, now Pinnacle.

Goodman said that followed one of the business rules he stringently adheres to as a key to succeeding: Hire the best people. Harrelson is the one who turned it into a big company, up from managing 3,500 apartments in 1985 to about 86,000 now in 42 states, Puerto Rico and Canada.

"Size still doesn't mean anything to me," Goodman said. But "Stan really does want to be the biggest."

Along with hiring bright people, the approach includes giving them ownership. Harrelson and Goodman each own 25 percent of Pinnacle. Phoenix Home Life Insurance of Hartford, Conn., owns the other 50 percent, a position it assumed with a 1994 capital infusion to fund Pinnacle's first purchase of a commercial real estate company.
...
Goodman first hired Fred Grimm as his real estate lawyer in the early 1980s. When Grimm wanted to switch to developing in 1984, Goodman teamed up with him as Triad Development, the company that now owns Pier 70, the Jefferson Apartments in West Seattle, Kent Valley industrial projects and other property...

Note:  The story below is written by the President of Pinnacle Realty Management. Why is he giving away his secrets of success?

Affordable housing is well worth the investment
Ward Mclain, December 10, 1999 print edition

Last year, the U.S. Department of Housing and Urban Development released a report announcing that right now -- in the middle of one of the greatest periods of U.S. economic expansion -- nearly 6 million working families still need financial assistance to cover the monthly rent.

Traditionally, meeting that need has largely been the responsibility of federal, state and local government. However, multifamily property owners, managers and developers should take on a share of the chores. After all, affordable housing is a vital building block for continued Puget Sound-area economic expansion.

There's a strong business case to be made for getting involved as well. The Low Income Housing Tax Credit, or LIHTC, -- a near dollar-for-dollar credit awarded to firms that bring low-income housing to market -- can more than offset the cost of properties developed in the right locations.

Tax credits, which used to be sold to corporations or institutional investors for 50 cents on the dollar, are now going for as high as 85 cents on the dollar.

LIHTC (also known as Section 42 housing) is one of those rare win-win propositions that more real estate firms should tap into. It's good for business, but more importantly, it's good for our communities. 
...

LIHTC defined

Each year, Washington state receives $1.25 in credits for each of its roughly 5.6 million residents -- about $7 million in credits. The state's Housing Finance Commission then accepts development proposals, most of which come from nonprofit agencies teamed with for-profit developers. WHFC judges each proposal and awards tax credits based on a strict scoring system.

Compared to the development of market-rate properties, WHFC proposals require a lot of upfront work. All the effort eventually pays off, though. Developers with tax credits in hand have significant equity, so quality projects can have an easier time garnering outside financing than traditional projects.
...
WARD McLAIN is Northwest region president for Pinnacle Realty Management Co., a manager and broker of multifamily and commercial properties across the Puget Sound area and throughout the country. Pinnacle manages more than 9,000 units of LIHTC housing in Washington and Oregon.

Digital data powers ApartmentComps 
October 20, 2000 print edition

The Seattle firm's online database exceeds 1 million rental units ...For $28.95 a month, brokers, investors or sellers can subscribe to Sanchez' e-commerce service, which promises to provide real estate professionals with "the most accurate market data on multi-family housing."
...
The firm recently inked an agreement with Pinnacle Realty Management, which will use the services of ApartmentComps to improve the workflow processes of its brokers. Pinnacle manages $4 billion worth of apartments across the country, and Pinnacle brokers have closed transactions in excess of $250 million so far this year, Sanchez said.

It also signed a deal with RentNet.com, which will provide pictures and floor plans for most of the 1.5 million units -- 6,000 properties -- ApartmentComps has online.

Jim Belfiore, national research services director for Phoenix, Ariz.-based Hendricks & Partners -- the largest multifamily brokerage in the country -- doesn't like to think about the intensive work he did before ApartmentComps.com came along.
....

Note: Goodman's Triad Development is into environmental cleanup. Who's he cleaning up after? The boys? 

Clean-up, development paired at Gasworks
February 11, 20001 http://seattle.bcentral.com/seattle/stories/2000/02/14/newscolumn1.html

The Gasworks Park area along the north shore of Lake Union in Seattle will go upscale in the next couple of years.

Two condo projects and a wide, park-like stairway called Wallingford Steps are taking shape. They will replace a blackberry-covered hillside immediately north of Gasworks.

Triad Development says it will start construction this spring on 103 luxury condos at 1700 N. Northlake Way, immediately west of what will be Wallingford Steps. Zarett Properties is shooting to start building another 40 condos the following spring immediately east of the steps.

The two developers, along with the city of Seattle and the Wallingford community, would combine to build the steps, which the community envisions as a smaller, possibly grassier version of the Harbor Steps park in downtown Seattle.

The city also plans to dig up Gasworks Park to remove polluted soil, starting after the annual July 4 fireworks celebration and finishing before the next July 4 event.

Triad recently finished a high-speed, six-month soil cleanup of its 1.3-acre condo site. The state Department of Ecology described it as "one of the most rapid cleanups" in the department's history.

With Equipoise Corp. as its environmental consultant, Triad spent $1.3 million to remove soil tainted with paint thinners, solvents and creosote left by American Tar Co., which produced roofing products and wood preservatives there for decades. Removing the tainted dirt took six months,
said Triad executive vice president Ross Woods. Triad shipped the soil to a disposal site in Arlington, Ore.

"We lose a hazardous waste site and gain the public steps, which the community has talked about for years," said Wallingford Community Council president Ward MacKenzie.

Triad bought the site last October.

The site is a hillside that drops about four stories to North Northlake Way. Triad will build a narrow stairway and two handicapped lifts up the hillside on the west edge of Wallingford Steps as part of its condo project. Zarett plans to build a similar stairway up the east side.

Triad also looking downtown When Triad principal John Goodman revealed in early December that he bought a downtown Seattle site on which Triad would develop a 13-story office building called Colman Tower, he said he also was close to buying three other office sites. Goodman wouldn't identify the sites other than to say they were in or around downtown.

Triad's Woods shed more light on the sites this past week by saying all three are tainted with pollution. He said working with Equipoise in Wallingford has made Triad comfortable with redeveloping polluted sites, which are known as brownfields because they require environmental cleanup before they can be redeveloped.

"The American Tar Co. site was Triad's first major brownfield cleanup, and not an easy one at that," according to a Triad press release. "Thanks to its management of the decontamination project and help it received from Equipoise, Triad now has three more hazardous clean-up sites on its agenda."

Woods said all three of those are office sites. Triad is "very close" to completing deals for two of those sites, Woods said.

Note: So Triad started its cleanup business at Spokane's American Tar. Where does that lead? Oh my goodness, not to Burlington Northern Railroad? 

HAMILTON STREET BRIDGE SITE:
http://www.ecy.wa.gov/programs/tcp/sites/hamilton/ham-main.htm
(Spokane Manufactured Gas Plant & American Tar Company Sites)... 

The Order was issued to Avista Corporation and Burlington Northern Santa Fe (BNSF) collectively known as the potentially liable persons (PLPs). ... The Site is located at North 111 Erie Street, Spokane, Washington (Figure 1). It is generally located at the present-day Brown Building Materials salvage and sales operation, situated beneath the Hamilton Street James E. Keefe Bridge along the Spokane River. It includes properties associated with the former Spokane Manufactured Gas Plant, the Burlington Northern and Santa Fe Railway Company (BNSF), and the former Chicago Milwaukee & Saint Paul Railroad (CM&SPR) property, which are now owned by Spokane River Properties and BNSF.

Between approximately 1905 and 1948, manufactured coal gas and carbureted water gas were produced on the Spokane Manufactured Gas Plant property. From 1948 to approximately 1956, a propane-air system was operated from the manufactured gas plant, utilizing the facility for gas mixing, storage, and distribution. The propane–air system was used until natural gas was
available. To reflect the change from coal gas manufacturing to natural gas distribution, the company changed its name to Spokane Natural Gas Company in 1956.

In 1958, Washington Water Power Company (WWP), now Avista Corporation, merged with the Spokane Natural Gas Company. The gas plant facilities were demolished in 1959. WWP stored and dispensed natural gas from the Site until 1962 or 1963. Mr. Richard Brown leased the Spokane Manufactured Gas Plant property from WWP starting in 1963 and purchased it in 1978. In 1982, the property was deeded to Spokane River Properties, of which Mr. Brown is the
general partner.

During the operation of the manufactured gas plant, coal tar, a by-product of coal-gas production, was transferred via pipeline to a coal-tar processing and distribution facility at an adjacent property. The adjacent property was leased from the Northern Pacific Railroad, now BNSF. C. G.
Betts Company operated this facility until the early 1930s when the operations were taken over by the American Tar Company. The American Tar Company operated the facility until 1967, reportedly shipping tar from Seattle after the Spokane Manufactured Gas Plant was shut down. Mr. Brown began leasing the American Tar Company property from BNSF in 1968 and continues to lease the property today.

The existing riverfront property at the Site, property west of the Spokane Manufactured Gas Plant property and north of the BNSF land, was formerly owned by CM&SPR. Mr. Brown purchased this property in 1981, and the title is now held by Spokane River Properties.

Note: Information about remedial studies can be seen at above url. To find out how the Burlington Railroad ties in to the Bush network, go to https://newsmakingnews.com/lmvoterfraudpart2.htm and https://newsmakingnews.com/archive7,24,00,7,29,00.htm
 


 

NOTES FROM THE WATERFRONT ARCHIVES
News and views about Napa County, California. Click.