PORT TOWNSEND — Columbia State Bank has been given the green light to foreclose on the Clam Cannery building.

U.S. Bankruptcy Judge Marc Barreca signed an order Wednesday that gives the bank authority to conduct a foreclosure sale of the property Aug. 26.

Kevin Harris, the owner of the renovated building at 111 Quincy St., which is now an upscale waterfront hotel, is optimistic he can find investors before the scheduled sale so the hotel will continue to operate.

However, Harris was unable to meet a July 13 deadline to provide “a firm commitment by an investor to make a cash investment in the property” as stipulated in an earlier order by Barreca.

“We’ve got quite a bit of funding lined up, but we’re a little short,” Harris said Thursday.

“We’ll continue to press forward. It’s not over until it’s over.”

Columbia State Bank planned to conduct a trustees’ sale of the property in December 2010, but Harris filed for bankruptcy, halting the bank’s efforts.

The matter has been in bankruptcy court since then.

An attorney familiar with bankruptcy proceedings said Harris’ only option now may be to sell the building outright, but he would have to do so before the Aug. 26 date.

In a separate matter, Harris has sued Columbia State Bank for breach of contract, claiming Columbia Bank changed the rules midstream on its loan to Harris.

A four-day trial is set to begin Feb. 21 before the same bankruptcy judge.

In that lawsuit, Harris maintains that American Marine Bank, which was taken over by Columbia Bank when federal regulators closed it down in 2008, had unjustly halted Harris’ efforts to sell portions of the Clam Cannery as condominiums and had insisted on having a say in business matters of the Harris’ company, Quincy Street at the Dock LLC.

Harris seeks damages to be determined at trial against Columbia Bank.

The foreclosure sale will have no bearing on that proceeding, however, because Barreca’s order clearly states that the bank has the “unconditional” right to exercise its foreclosure.

Harris said he isn’t taking reservations for the Clam Cannery past the Aug. 26 date.

“The bottom line is I have to move forward until I can’t any more,” Harris said.

The uncertain circumstances surrounding the bankruptcy have already negatively impacted Clam Cannery bookings.

Chelsea Patten of Walla Walla said she planned to hold her wedding in October at the Clam Cannery but decided to change to a venue in California due to the uncertain future of the business.

“My fiance and I actually decided a few weeks ago to not plan our wedding at the Cannery,” Patten said.

“We just couldn’t wait any longer to book a date, and we still hadn’t received word about the bankruptcy status.”

Patten said she loves the Clam Cannery building and hopes for the best for Harris’ future as well as the future of the hotel.

“I sincerely hope whoever purchases it from the bank has an interest in the building’s integrity and character as well,” she said.

“It would be so unfortunate to see such a beautiful building not put to good use.”

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Philip L. Watness is a freelance writer and photographer living in Port Townsend. He can be reached at whatnews@olypen.com.