Getting It Under Control: Acquiring Property for Redevelopment (Part 2)

<p>In the previous post of this two-part series, we discussed how a purchase agreement with an extended due diligence period could be used to obtain site control of properties with redevelopment potential. We also discussed the specific negotiable terms of assignability, due diligence, earnest money, and exclusivity. Local governments should be mindful of these terms during any real estate negations, and the local government attorney should be involved throughout the process. For further discussion, see Tyler Mulligan’s blog post, Follow Procedures Prior to Acquiring Property for Redevelopment.</p> <p>Two alternative scenarios from the fictional Town of Ponder Mountain provide insight into a local government’s use of purchase agreements as a site control strategy. Eager to catalyze their town’s downtown development, Ponder Mountain officials wished to see a boutique hotel that would cater to tourists that visited the area to ski in the winter, hike in the spring and summer, and drive along the Blue Ridge Parkway in the fall. The Town of Ponder Mountain did not own any property downtown and therefore officials looked to gain site control of privately owned property.</p> <p>Scenario One: Environmental Due Diligence and Mitigated Risk</p> <p>Ponder Mountain engaged the Development Finance Initiative (DFI), a team of development experts at the School of Government dedicated to advising local governments, to lead the Town through a pre-development process and attract a private developer. Following an opportunity analysis period, DFI’s process led to the identification of a site that would work well for the potential hotel development. The Ponder Mountain Council was thrilled by the prospect and [...]</p>