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Real Estate Developers May Get Incentive to Build New GlassHouse, SPIRE Style Buildings with the Homeownership Opportunity Act SB 14-220

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UPDATED:  LOOKS LIKE THIS BILL WAS KILLED

May 6th, 2014:  DENVER POST “Procedural move kills last of three Colorado construction-defects bills”  

SB 220, which sought to push more condo construction defect cases into arbitration, was killed in a procedural move after the Senate Judiciary Committee didn’t convene Monday night.

Read more: Procedural move kills last of three Colorado construction-defects bills – The Denver Post http://www.denverpost.com/business/ci_25707252/procedural-move-kills-last-three-colorado-construction-defects#ixzz31iIPdtRv
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Where is the next Glass House or SPIRE?

It’s a pretty common question. With everyone talking about how Denver real estate is BOOMING and everyone throwing around terms like “low days on market”, “sellers market” and “home availability index”; and with buyers getting into bidding wars over the most coveted Denver Urban listings, everyone wonders why no one is building a new high rise. Don’t get me wrong, there is a LOT of great new development going on. LoHi, Jefferson Park, LoDo and all our great Denver Urban neighborhoods are seeing some great new modern projects getting designed, sold and built (usually in that order).

However all of these projects seem to be single family homes, duplex projects, triplex projects, row homes, or mid rise buildings of 4 floors or less. There have been no grand announcements about a new Denver high rise residential tower the likes of the amazingly popular Glass House, SPIRE or Riverfront Tower. These towers are so amazingly hot that resale listings are often snatched up the very day they come on the market. This is especially true of the Glass House which is the gem of Riverfront Park and sits between the hot LoHi neighborhood and the new transit center of Union Station. Side note, if you don’t know why this location is so amazing read the story “A long road led to Denver Union Station’s rebirth” including the quote…

“a transformation that started with the 2007 opening of the 23-story Glass House residential buildings in Riverfront Park, just west of downtown”

So if these buildings are so very very very popular why hasn’t anyone built a new one with all the buyer demand we keep talking about? One big reason may be how the laws are currently written. Apparently the reason real estate developers aren’t racing to build a new Glass House or Spire is because they have too much construction liability. That is a worry for many, including urban planners and fans of high density that want to see more vertical condominium projects for the Denver skyline to continue the growth and development of our city.

Last week Senator Ulibarri’s Homeownership Opportunity Act (SB 14-220) was introduced in an effort to find some common ground that protects condominium homeowners while also creating an environment that encourages large condominium project development. One of the big issues in the new bill covers the issue of arbitration or mediation. Most governing documents that developers write create a structure where the HOA or homeowners must settle their dispute via mediation or arbitration. However, in other states and even here in Colorado this has been challenged as homeowner associations attempt to go to litigation. Simply put, they want to be able to sue the Developer even if the governing documents call for mediation/arbitration to resolve conflicts.

However the developers want new homeowners to be held to the original governing documents they signed. This element could be a protection for the developer, but don’t worry… the new law has something in place to protect the HOA too. One of the biggest concerns that might discourage a developer is the possibility that just one or two homeowners might initiate a lawsuit even if the majority of residents feel everything about their purchase was great, or that the issue is being addressed. To manage this instance and attempt to create a compromise the law appears to allow for the HOA Board of Directors to still initiate a lawsuit BUT with a process that makes it an action by the entire building. That may allow for some measure of validating the concerns and issues.

Of course this brings in the whole aspect of WHO exactly is on this board of directors. Are they biased in some way, or are they in a position where they have a relationship with the developer that might create a situation where they aren’t acting in the best interest of the residents. This is a big issue folks, and it is probably great for future home buyers that it is being debated out in the open.

Cities need different types of development and many urban planners feel that high density buildings offer the best foundation for city growth. If you read the article we mentioned above you can see how valuable the entire Riverfront Park and Glass House development has been for the wonderful advancement and transit oriented development that is now taking place in the Union Station Neighborhood and Northwest Denver.

Read the Proposed SENATE BILL 14-220 Here or call us to learn more about buying and owning a high rise condominium in Denver.

In the meantime, unfortunately for buyers, is that many great parcels that could have been utilized for a new Glass House style building are being developed as apartments. Rents hare high and for many these apartment buildings offer the best use of the land. That means an even more competitive environment to find a great high rise condo home. This is why our team stays on top of new listing and market opportunities to help our clients get the best information to help them find their dream home.

Even if Senate Bill 14-220 passes and creates an environment for developers to enter back with a new high rise offering it could be YEARS before something of that scale is designed, approved, and built to be occupied. That is a lot of time to watch what the market can do with prices and continue to pay rent.

Hopefully, this new bill or one based on it can find a way to make everyone happy. The goals of the new Homeownership Opportunity Act Senate Bill 14-220 seem to be to working to:

  • Create an environment where Real Estate Developers are encouraged to bring us great new high rise condominium residential towers.
  • Allow for new homeowners to feel safe and confident that any issues, should they arise will be addressed
  • Ensure that the HOA boards, Arbitrators, and Mediators are all unbiased and acting in the proper interest

What will the passing of this SENATE BILL 14-220 mean for Buyers?

It could mean a lot of things, but the goal would be more options.  What I mean by that is the possibility that all those Real Estate Developers who have been waiting to start a new high rise Denver residential condominium building will get off the bench and start throwing in their proposals to the city and breaking ground.  No, it doesn’t mean that we will have a brand new residential tower for homebuyers to move into tomorrow, but it could mean there might be one started that could be available in down the road.  In which case we return to the world or looking over floor plans, identifying which units are the best value, have the best view, and the best amenities.  It means reading condo documents very closely and understanding what future development will be happening wherever the new building is located.  What are the materials in construction, what are the HOA fees, and hundreds of other questions to ask.  Our team has worked on so many high rise buildings because we love them.  But buying off a drawing and a model means making sure you know and understand all the details being presented.

But this is all hypothetical, and as mentioned above it requires a LOT of time.  We can speculate forever on what the length of time will be for a final bill to get approved, but that is only the start.  Then if a Developer decides to come forward they need to go through all their steps to get the project approved and ultimately built.   Based upon past projects such as SPIRE and Glass House you might want to assume a couple years.  So… would that mean the next person to move into a new high rise might not happen until 2016? 2017?  2018?

If you are looking for a new Denver condominium or home your best bet might be today.  You can walk it, touch it, and move in.  That doesn’t mean you can’t get in on a future new condo opportunity down the road.  It all depends on what your own goals are for home ownership and your reasons for doing so.  For some, it is the peace of mind that you aren’t putting dollars into rent.  For others it is knowing they can have something to own in the neighborhood they love.  Contact us to discuss your goals, ideal time frame, and property criteria.  Keep in mind this is mostly affecting new high rise condominium towers, not smaller projects or mid rise buildings.

Homeownership Opportunity Act SB 14-220 seems to be more focused on Glass House or SPIRE style amenity rich building.  However, these are often the most desired buildings because their density helps to build a community that can support all those attractive lifestyle amenities like swimming pools, fitness centers, media rooms and more.

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I’m a writer on this team along with being a huge fan of Urban Planning, Architecture , Sustainable Living and transit oriented development.. but not a lawyer or real estate broker so any legal experts who want to weigh in are welcome to comment and share their thoughts.  What I’d love to do is hear a variety of thoughts, hopes, and pet peeves about this issue from condominium residents, prospective homebuyers, and industry experts. We will keep following this story so make sure to subscribe to our blog and follow us on Facebook and Google+.

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