Wednesday, June 21, 2006

Economics, aesthetics are a part of TDRs

Express Staff Writer

A group of Ketchum real estate agents have been sitting on a gold mine.

Dick Fenton, managing partner in Leadville Ltd., said the purchase of their office building was prompted by the desire for stability.

"We bought it many years ago so we would be able to control our own destiny," Fenton said.

The purchase in the early 1980s included the McCann Daech Fenton Realtors building at 271 Leadville Ave. in Ketchum, as well as the adjacent Vintage Restaurant building and a vacant lot.

The buildings are small enough that they would fall under the city's transfer of development rights ordinance, currently being revised. The ordinance allows owners of small buildings to sell off their right to develop upwards via additional stories.

Property owners in other parts of town could buy those rights to increase the density of their projects. The idea is to preserve heritage buildings in their current state in the face of escalating demand for high-end condos.

"The idea is intriguing," Fenton said. "We're not unlike some other commercial property owners. We're trying to figure out what to do with our own property."

If they put up for sale the development rights on Vintage, the question is whether anyone would buy them.

"That little building isn't 800 square feet," Fenton said. "So you've got close to 7,000 square feet of (potential TDR). What's someone willing to pay for that?"

The other question mark is whether anyone has a lot to accommodate that additional square footage, he said.

"You may have to, as a practical matter, break (the TDR) in to two pieces," he said. "If you had two 5,500-square-foot lots, that would work. Three would work, but there aren't a lot of three-lot parcels around."

A dollar value would have to take into consideration not only the value of space being sold, but future possibilities for it, Fenton said.

"Our motivation is not just to realize the value of the land right now, but its development opportunities," he said. "We're a real estate company. We've done small-scale development so we're probably not as adverse to that. We love our building but it's not providing much of a return on the value of the land. From a strict economic basis, it's underdeveloped."

Leadville Ltd. has thought about moving the buildings to make way for a more profitable structure.

"Whether you could move Vintage or not I'm not sure," Fenton said of the 1920s-era building. "That takes some of the character away."

They've debated developing their property, but their day-to-day business always took them away from that project.

"It's such a large undertaking," Fenton said. "The path of least resistance is to put the plans away and go back to selling real estate."

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