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Thread: Fractional ownership and downtown redevelopment

  1. #1
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    Fractional ownership and downtown redevelopment

    Good Afternoon

    I am the Town Planner for Eagle, CO. The town is working on a project to revitalize its Central Business District, which includes a major streetscape improvement project, zoning changes to foster infill and redevelopment. Looking to the future and assuming that redevelopment, infill and reuse is occuring in the downtown. Part of that includes a desire by current property owners to condominiumize their buildings. In the long term do you think this will hinder future redevelopment, say 25 years from now? Do we need to consider a policy regarding fractionalized ownership? Is their such a policy for local govt's and has it been sucessful? The concern is that we could large numbers of owners and consolidation or buy-out of individual owners in the would be a cumbersome process, thus being a disincentive to redevelopment down the road.

  2. #2
    Cyburbian donk's avatar
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    I would propose that while a condo might "fractionalize" ownership, it does not really effect future redevelopment too much, especially depending on the future "value" of a building. If the members of the corporation (ie the unit holders) as a groip can realize a substatial return on their investment then they may decide as a group to disolve the corporation.
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  3. #3

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    I am not sure there has been enough experience with condominium development to know if/how it will re-develop. My impression is that condos turn over frequently, especially in resort areas, and the odds of getting all the owners together to make a big change strike me as slim to impossible. I see buildings deteriorating, but it is speculation on my part.

    I know the developers all want to condominiumize because they don't have to manage the property, so you will face resistance to a policy that limits it. BUT, I would think seriously about the mix you are creating.

  4. #4
    Cyburbian Cardinal's avatar
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    My comments are based on the assumption that you are talking about commercial buildings. I have had experience with splitting the ownership of these buildings and it has generalyy been positive. The question you need to answer is whether the buildings which exist there, or are proposed to be constructed, are matched to the vision of what the town wants there in the future. If that is the case, you should have no problem.

    I have found that there is a benefit to ownership for a business, whether in a small town without much going for it, or a city with ridiculous real estate costs. By investing in a building, the business is buffered from rising rent costs which can drive out local shops. Are you familiar with Penny Lane Coffeehouse in Boulder? That's pretty much the story of why it is no longer there. In other places I have seen the building become the only real asset of a business, as nobody wants to carry on the business, and selling the building becomes the owner's retirement plan.

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