Lehman Brothers boss is a partner in Block 46 redevelopment project

By RICHARD HANNERS / Whitefish Pilot

An investor in a block-sized downtown redevelopment project in Whitefish has fallen victim to the Wall Street financial meltdown.

But the Silicon Valley entrepreneur who heads up the project says he's not overly concerned about how his partner's financial problems might affect the project.

Richard Fuld Jr. is one of three principals in Great Northern Ventures, the group behind the Block 46 development project across Second Street from Whitefish Middle School.

Fuld was also chairman and CEO of Lehman Brothers, the giant Wall Street financial firm that went bankrupt several weeks ago.

According to a New York Times article published in October 2007, Lehman Brothers was "a major player in the leveraged-buyout spree and capitalizing on a soup-to-nuts mortgage business that it has built over the last decade," and "in 2006, it was the No. 1 underwriter of securities backed by subprime mortgages."

Those kinds of risky investments caught up to Lehman Brothers, and the company joined the ranks of Bear Stearns, Fannie Mae, Freddie Mac, AIG and Washington Mutual as the subprime mortgage crisis spread havoc through Wall Street.

Mark Kvamme, a part-time Whitefish resident for the past decade, is another principal in Great Northern Ventures. He and Fuld are also partners in The Homestead At Whitefish, a 1,400-acre luxury home project off Farm To Market Road, north of Whitefish. When built out, there will be 40-45 twenty-acre lots and more than 300 acres of open space and common areas, including Little Bootjack Lake.

Kvamme made his fortune as a partner in Bay Area-based Sequoia Capital, which financed Google, Yahoo and more recently YouTube. Fuld's problems on Wall Street "are not an issue," he told the Pilot last week, He also said Block 46 was "put on hold" last summer, long before the financial crisis reached a head on Wall Street.

"We wanted to see what the economy would do and also what Whitefish would do with its Downtown Master Plan," he said.

As its name implies, Block 46 will encompass an entire city block. As presented to the public in April last year, the project calls for 10,000 square feet of commercial space along Spokane Avenue, twelve to sixteen 1,000-square-foot "condotels," 40 to 44 larger condominiums, and 12 to 16 permanent residences along Kalispell Avenue.

The project also called for four penthouse units on the third floor, set back from Spokane Avenue to provide space for decks and gardens. Paul Johannsen, the third principal in Great Northern Ventures, said at the time that the developers might seek a variance so they can exceed the 45-foot height restriction by perhaps three feet.

Building height in downtown Whitefish has become a contentious issue, but as it got batted back and forth between Whitefish's Architectural Review Committee, city-county planning board and city council, the focus has been on Central Avenue, not the rest of downtown Whitefish.

"People need to sit down and talk about it," Kvamme said. "There's two schools of thought. On the one hand, people want to prevent urban sprawl and maintain downtown vitality, while others want to control height. But land downtown has become too expensive, and the math no longer works."

Meanwhile, sales at The Homestead At Whitefish have been slow. Last summer's Brush Creek Fire brought smoke and a huge federal fire camp to the area, but the soft real estate market is likely the real culprit.

"We've sold seven of our sixteen Phase 1 lots in just a little over two years, so we feel pretty good about that, given general market conditions," Johannsen said.