DENVER | Main Development Thread #6

[rds70]

There is now a construction website for the Country Club Towers project:

http://www.1101ebayaud.com/

According to the schedule, there should be 2 tower cranes installed in July.

[EngiNerd]

Oh no denverinfill!

[seventwenty]

Kennnnnn!!!!!! Fixit!

[TakeFive]

Originally Posted by seventwenty

Kennnnnn!!!!!! Fixit!

It's worked for me today.
But I got that last night and today when I tried to use the search function. Working at the moment though.

[DenverPoke]

Well, so much for any new condo developments:

http://www.denverpost.com/news/ci_279683...-bill-sent-colorado-house-kill-committee

[bcp]

wow...that is weak.

[TakeFive]

Originally Posted by DenverPoke

Well, so much for any new condo developments:

http://www.denverpost.com/news/ci_279683...-bill-sent-colorado-house-kill-committee

Yep, it is sad.

Yesterday's DBJ had an article by Ed Sealover referencing Rep. Max Tyler's, a Lakewood Democrat, bill offerings also mentioned in the DP.

In my cynical opinion I'd say a couple of things:
1st, Max Tyler's bills are for the purpose of making it look like the Dems are trying hard. They're fantasy fixes.
2nd, sometimes both parties find themselves "obligated" to certain interests. Dems will want/need to raise a lot of money over the next 12+ months.

Next year is the Big Presidential election cycle and both sides will find themselves in the delicate position of needing to pay homage to certain groups.

Not sure if Denver City Council would have the votes to pass a city ordinance or not, considering the Mayors support for SB177. Probably not.

[Stonemans_rowJ]

Originally Posted by DenverPoke

Well, so much for any new condo developments:

http://www.denverpost.com/news/ci_279683...-bill-sent-colorado-house-kill-committee

This is an interview with Randy Nichols from the DBJ:

DBJ: What about the construction defect law? Is that stopping you from building any condos right now?

Nichols: No, not really. It affects the overall budget, but you can insure yourself around the construction defect liability. It just costs a lot of money. It cost us $3 million in insure Spire. ... The biggest problem in building condominiums right now is you can’t get the financing. A large scale project like Spire would be impossible. The only way to do it is as apartments and convert to condos later. That’s what a lot of guys are doing.

[DenverPoke]

Originally Posted by Stonemans_rowJ

This is an interview with Randy Nichols from the DBJ:

DBJ: What about the construction defect law? Is that stopping you from building any condos right now?

Nichols: No, not really. It affects the overall budget, but you can insure yourself around the construction defect liability. It just costs a lot of money. It cost us $3 million in insure Spire. ... The biggest problem in building condominiums right now is you can’t get the financing. A large scale project like Spire would be impossible. The only way to do it is as apartments and convert to condos later. That’s what a lot of guys are doing.

Ya I read that a few weeks ago, or whenever it was in the DBJ, and found his comment very interesting. I do wonder how other cities are building condo towers if "you can't get the financing" and a large scale project is "impossible".

Not that a ton are being built elsewhere, but there are certainly some.

[wong21fr]

Originally Posted by Stonemans_rowJ

This is an interview with Randy Nichols from the DBJ:

DBJ: What about the construction defect law? Is that stopping you from building any condos right now?

Nichols: No, not really. It affects the overall budget, but you can insure yourself around the construction defect liability. It just costs a lot of money. It cost us $3 million in insure Spire. ... The biggest problem in building condominiums right now is you can’t get the financing. A large scale project like Spire would be impossible. The only way to do it is as apartments and convert to condos later. That’s what a lot of guys are doing.

That's an answer that just raises a lot of questions: Does the liability coverage ruin the economics on smaller condo projects? How does a policy scale up or down depending on the size of the project? Is the lack of financing due to a lack of projects for comparison or do financial institutions just consider multi-family for-sale too risky? Why can other regions support condo construction and Colorado cannot? The current situation doesn't seem to support the answer.

I think that the defect liability issue is a major contributor to the lack of condo construction in Colorado and the Dems should be punished for killing the sole effective piece of legislation that would address the issue. Losing the legislature for a session or two should bring the party back to reality (since losing Adams County apparently wasn't enough of a wake-up call). Maybe they'll start advocating for the general populace again instead of sucking off the members of the tort profession.

[mhays]

I've been saying about the same thing for years.

The condos getting built right now in mid-sized cities have two characteristics:

1. Condo prices are high enough to make someone take the leap. Denver's aren't high enough. Extra insurance is a barrier but condo value fluctuations are often multiples of that in a single year.

2. The developer or a partner bring a ton of equity. Much like an oversized down payment, it makes everything much easier. If local condo values are high enough, this type of local, national, or international players will step up.

3. Those two factors mean they don't have to presell condos, and can build for example at 2015 prices while selling at 2016 or 2017 prices.

That said, the law is making housing more expensive and sounds like clear overkill, in addition to being unfair. The market will simply not build until condo values are high enough to justify the added cost, whatever that cost is.

[TakeFive]

Originally Posted by DenverPoke

Ya I read that a few weeks ago, or whenever it was in the DBJ, and found his comment very interesting. I do wonder how other cities are building condo towers if "you can't get the financing" and a large scale project is "impossible".

Not that a ton are being built elsewhere, but there are certainly some.

When Nichols started putting Spire together the market was much better. But I believe it started to stall a bit before he put a bow on it. IIRC, he was able to get financing from a Colorado Indian Tribe to save the deal. As long ago as that was I wonder what the insurance premium would be today?

Nichols point is rationale and technically one just makes the risk a part of the cost analysis. But not being able to get financing may be because lenders aren't much interested in joining in that risk. There's hardly a shortage of deals needing financing.

I'd like to know one other state that has passed a lawyer's jobs bill at the expense of condo developers? As a practical matter it's why bother? There's no shortage of (other) development opportunities and the law will eventually be changed. In fact the metro is becoming bifurcated with the ability to to build in Lakewood, Lonetree and Littleton passing their own defects laws.

While Trevor Hines has proposed condos at Sloan's Lake perhaps he was counting on the law changing before he started construction and who knows how long before he's approved on that project.

Rockies win in the bottom of the 9th. Woot Woot.

[corey]

These comments from the Democratic Representatives about their alternative proposals to encourage condominium construction are all about assisting low income people. What they seem to miss is the need to build thousands of condos for middle class people. The focus needs to be on providing housing options for people who want to live in Denver and don't want a single family detached house. The developers are now only building condos for the upper income.

[TakeFive]

Originally Posted by wong21fr

I think that the defect liability issue is a major contributor to the lack of condo construction in Colorado and the Dems should be punished for killing the sole effective piece of legislation that would address the issue. Losing the legislature for a session or two should bring the party back to reality (since losing Adams County apparently wasn't enough of a wake-up call). Maybe they'll start advocating for the general populace again instead of sucking off the members of the tort profession.

Yup, that's what is so hard to understand. It's like the Dems in the power chairs would rather double down instead of taking the issue off the table. With any issue one can always come up with a good sounding argument or two but theirs are not passing the smell test at this point. Who knows with the average voter though.

But with the increasing number of cities passing their own laws they are now becoming responsible for fostering an uneven playing field. How's that going to go over with voters?

[Brainpathology]

Originally Posted by TakeFive

Yup, that's what is so hard to understand. It's like the Dems in the power chairs would rather double down instead of taking the issue off the table. With any issue one can always come up with a good sounding argument or two but theirs are not passing the smell test at this point. Who knows with the average voter though.

But with the increasing number of cities passing their own laws they are now becoming responsible for fostering an uneven playing field. How's that going to go over with voters?

I would imagine the lack of condo construction in Denver ranks in voter's minds right below finding affordable dog food for widowed labradoodle dogs who lost their partners in avalanche accidents. We can complain all we want about them not fixing this problem. But extrapolating that to the dems losing the legislature because of it (in a voting population who can't even decide if climate change exists) is beyond silly.

There may be other things they are doing that will tank them. But if I was running it would be as simple as "the democrats in Denver decided to turn the leadership over to Boulder.. is that who we really want running the agenda for the state?" You'll get WAYYYYYY farther appealing to stigma and prejudice with the voters than actual (and on the grand scheme of things not THAT important) issues like condo construction reform.

[bunt_q]

It doesn't have to a very sophisticated argument for it to stick with voters. Which party is "good" or "bad" on any given issue is about as much as most people know, or need to know. It just has to stick that Dems are opposed to new affordable housing. Already I know folks - not very politically sophisticated folks - who will tell you that, even if they're not exactly sure how or why since it seems sort of counterintuitive. In this case, though, it's true, and that'll help it stick. If you care about affordability, you vote for Republicans - that issue's in their column now.

[Brainpathology]

Originally Posted by bunt_q

It doesn't have to a very sophisticated argument for it to stick with voters. Which party is "good" or "bad" on any given issue is about as much as most people know, or need to know. It just has to stick that Dems are opposed to new affordable housing. Already I know folks - not very politically sophisticated folks - who will tell you that, even if they're not exactly sure how or why since it seems sort of counterintuitive. In this case, though, it's true, and that'll help it stick. If you care about affordability, you vote for Republicans - that issue's in their column now.

I know plenty of people saying the same thing.. but I like this stuff.. so a lot of my friends do too. There's a huge selection bias in my friends and what they pay attention to.

[EngiNerd]

This is a very disappointing outcome....

Quote from the article:

One of Tyler's proposed bills would redirect $25 million annually from the state's Unclaimed Property Fund to pay for affordable rental-housing vouchers. Another would encourage the construction of lower-priced housing through the expanded use of tax credits by developers.

A third bill would allow condo builders to voluntarily hire a state-approved inspector to rate the quality of their work, which Tyler said has been used to lower insurance rates in other states.

So what they are basically saying is instead of fixing a regulation that could allow the private market to correct itself in a widespread manner, they would rather appropriate taxpayer funds to try and help a small very narrow band of homeowners. $25 million will buy housing credits for what, 1,000 people max, a pipe dream that $25m/yr is going to make any realistic dent.

And this:

"This is a big complex problem, and it's being dealt with by saying, 'Well, if we only fix this one little thing, everything will be fine.' But that's not reality," Tyler said. "The way to deal with construction defects is to stop defective construction."

This is just not living in reality...yes sometimes there is negligent construction related faults such as at the Beauvillon, but many of these are situations where they could be resolved through the warranties between contractor and HOA, but aren't given the chance to, or there are disagreements between how the contractor wants to fix it (targeted repairs) vs. how the HOA's want them fixed (kitchen sink approach). Doesn't help that there are high powered law firms that chase these projects and convince the HOA's that all of their buildings/units have issues, because they are very very lucrative.

Essentially what happens is say you have a suburban type condo development with multiple buildings, and one building has an issue. Instead of just fixing that one building, many times these lawsuits require fixing every building, regardless if there are actual issues present in each building, because they can't disprove that there aren't issues in the other buildings that could one day be an issue. This turns let's say a $100k repair into a multi-million dollar repair.

In the end, its people building these things, and people sometimes make mistakes...but they should be given the opportunity to fix their mistakes instead of suing them to force them to repair things in a manner that might not really be necessary.

Originally Posted by Stonemans_rowJ

This is an interview with Randy Nichols from the DBJ:

DBJ: What about the construction defect law? Is that stopping you from building any condos right now?

Nichols: No, not really. It affects the overall budget, but you can insure yourself around the construction defect liability. It just costs a lot of money. It cost us $3 million in insure Spire. ... The biggest problem in building condominiums right now is you can’t get the financing. A large scale project like Spire would be impossible. The only way to do it is as apartments and convert to condos later. That’s what a lot of guys are doing.

Indirectly, couldn't it be that the financiers aren't lending because of the risk involved due to the construction defects issue?

[wong21fr]

Originally Posted by bunt_q

It doesn't have to a very sophisticated argument for it to stick with voters. Which party is "good" or "bad" on any given issue is about as much as most people know, or need to know. It just has to stick that Dems are opposed to new affordable housing. Already I know folks - not very politically sophisticated folks - who will tell you that, even if they're not exactly sure how or why since it seems sort of counterintuitive. In this case, though, it's true, and that'll help it stick. If you care about affordability, you vote for Republicans - that issue's in their column now.

Very true and I'll certainly be logging some protest votes in the next election since I'm in Denver and my vote is futile.

But getting the City Council to changes things.... that might be doable asides from District 1 and the NIMBY's who are probably going to assume power up there.

[enjo13]

Originally Posted by wong21fr

Very true and I'll certainly be logging some protest votes in the next election since I'm in Denver and my vote is futile.

But getting the City Council to changes things.... that might be doable asides from District 1 and the NIMBY's who are probably going to assume power up there.

Affordable housing is the single most important issue in Denver today. They've managed to turn this lifelong democrat into a Republican, at least for the next state representative election cycle. I think it's possible that Denver could be in play for a socially liberal GOP candidate.