Hancock, Espinoza differ on REI sale, appraisal

Highlights:

  • Mayor Hancock says a new appraisal for REI site not needed.
  • Councilman Espinoza says 2-year-old appraisal undervalues city-owned land.
  • REI has option to buy land for its appraised value of $500,000.
A site plan showing the REI flagship store in Confluence Park. The City Council votes on whether to sell a parking lot on the site to REI for $500,000. Mayor Hancock supports the sale at that price. Councilman Espinoza believes the 2-year-old appraisal undervalues the parking garage site..

A site plan showing the REI flagship store in Confluence Park. The City Council votes on whether to sell a parking lot on the site to REI for $500,000. Mayor Hancock supports the sale at that price. Councilman Espinoza believes the 2-year-old appraisal undervalues the parking garage site..

Denver Mayor Michael B. Hancock supports selling city-owned property to REI for $500,000, putting him at odds with a city councilman who has described it as a “sweetheart” deal.

The Denver City Council is scheduled to vote on the sale tonight.

Hancock, in a brief interview with Denver Real Estate Watch last week, noted that the sale of about an acre of land next to Recreational Equipment Inc.’s flagship store along the South Platte River has been in the works a long time.

Hancock, after addressing several hundred people attending an Urban Land Institute Colorado forum at the Westin Denver International Airport, said the option for REI to buy the land for the appraised value predates when he first took office.

REI has had an option to buy the property since it build the 190-space, underground parking lot about 15 years ago.

REI currently leases the garage from the city for $12,600 per year.

“It took us three years to get here,” Hancock said.

“It’s not REI’s fault that it was delayed. It’s our fault,” according to Hancock.

A city appraisal for the property valued the land at $500,000 in 2013. Given how much land has skyrocketed in that area near LoHi and LoDo that Councilman Rafael Espinoza has argued that a new appraisal should be conducted, to better reflect the value of the land. The land is in Espinoza’s District 1. Espinoza has called the $500,000 sale price a sweetheart deal. REI would pay less than $12 per square foot for the garage that it built, a fraction of the price of other recent land sales in the area.

Hancock said he does not support a new appraisal.

“It’s not necessary,” Hancock said.

Last week, Skye Stuart, the Legislative Director for the Mayor’s Office, sent Espinoza and the other council members a package that had so many documents that he delivered in a binder;  it was so voluminous that it was impractical to send it by email.

The documents, he wrote to council members, would provide a “clear picture of the encumbrances on this land and relevant contractual obligations, answer questions, and correct any misunderstandings of the agreement.”

Mayor Hancock spoke at the new Westin Hotel at the Denver International Airport before speaking to Denver Real Estate Watch about the proposed REI land sale.

Mayor Hancock spoke at the new Westin Hotel at the Denver International Airport before speaking to Denver Real Estate Watch about the proposed REI land sale.

Council members also received a “confidential memo” from the City Attorney’s office.

Espinoza said the City Attorney’s letter implies that an updated appraisal is precluded because a deadline has been missed. Espinoza requested more information on that point.

The Denver County Assessor had valued the 42,400-square-foot parking garage property as having an “actual value” of $4.24 million.

However, it was over-valued because REI did not inform the city of encumbrances on the property, according to Stuart’s letter to the council.

“Additional context” has now been provided to the assessor, he noted. The assessor now values the actual value at $820,000 and its assessed valuation at $237,500.

REI has agreed to deed restrictions that would prevent building on the site, which is zoned for up to a 5-story building.

Espinoza said in a response to Stuart that he still has “strong reservations” about the appraisal, which in its analysis used a $50 a month for each of the 190 spaces to calculate its value.

Espinoza also said the documents appear to reference another appraisal that does a “better job of documenting the impact of the easements.”

Espinoza requested a copy of that appraisal.

Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. DenverRealEstateWatch.com is sponsored by 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.

 

 

 

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for GlobeSt.com, covering commercial real estate for the Internet publication.

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