The three rules of smart real estate investment never change. The guiding trilogy is immutable: location, location and location. In other words, attributes relating primarily to location – access, visibility, proximity to population plus prominence in a connected network and flexible entitlements – translate to increased land value.
In today’s metropolitan economy, there is no better, sure-thing piece of valuable real estate than a big parcel of land, zoned for intense, mixed-use development located next to a transit station.
Many of Colorado’s oldest and biggest fortunes were created by smart real estate investment. As early as 1868, Territorial Gov. John Evans joined Walter Cheesman and David Moffat in buying every other section of land adjacent to the Union Pacific rail spur to Cheyenne. Fortunes have been made from land holdings adjacent to major publicly financed infrastructure.
First it was the railroads, then parks and lakes and mountain views, then major highway intersections, and then airports. Now, it’s a $4.7 billion comprehensive, multimodal transportation system added to the successful southwest transit line and the soon-to-open Southeast Corridor of the T-REX highway and transit expansion. In the first half of the 21st century, transit-advantaged real estate has become metro Denver’s hottest investment.
Just like any other smart investment, making money on a big parcel of perfectly located real estate requires more than dumb luck. Patient money, thoughtful planning, deep pockets and visionary ownership play a big role. After all, it’s not like playing the slots in Vegas – you don’t just get lucky.
It was no surprise, then, when an old Denver family, the Bansbachs, spent some money planning their 50-acre site on the west side of Interstate 25 and Belleview Avenue – the exact spot where the Regional Transportation District envisioned a major transit station. No doubt they wanted to ensure their zoning and entitlements would provide maximum flexibility for development – present and future – and that their master plan allowed for the density and intensity of development that a major transit hub would support.
Smart, sophisticated people with plenty of real estate experience typically hire a land planner, an attorney and a political lobbyist to ensure a good outcome. They might be particularly motivated to do this if they feared political uncertainty due to an impending major turnover in the legislative body with the power to rezone and regulate their property. In fact, the acreage that was owned by the family for decades had been a golf course – not a bad interim use for a future real estate play.
So the family, wise in the ways of real estate, did just that. They spent $174,000 for land planning, legal advice and lobbying to benefit their large, transit-advantaged site. They were successful in obtaining the entitlements they wanted: high intensity, transit friendly, mixed-use zoning.
Of course, by adding tens of millions of dollars to the value of their holdings, their real estate taxes went from $51,000 to $214,000 a year. On the other hand, the light-rail line will be open next year and the immediate opportunity to develop the southern portion of their property into high-density, high-priced condominiums and apartments appears to be now.
Given this history and apparent enthusiasm for redevelopment, it’s hard to understand why the Bansbachs unleashed their hired guns to lobby the Denver City Council to let them add agricultural use to their already valuable, transit-advantaged property, located adjacent to a light-rail station that opens next year. That’s right. The lawyers and lobbyist are trying to persuade the City Council that corn or wheat or alfalfa is a good use for the land. Could it be because their annual real estate taxes would shrink to $4,200?
Confused? There’s more:
The Bansbachs’ lawyers, in an ongoing condemnation lawsuit with RTD over land needed for the light-right station, are also trying to persuade the courts that high-intensity zoning and a transit station don’t add value. Instead, they insist, the zoning, the transit station and the light rail actually harms the value of their holdings.
That’s right. They want taxpayers – via the Regional Transportation District – to compensate them for the costs of planning, lobbying and lawyering for the increased value of their land.
Here’s another predictable rule of real estate investing: Pigs get fat; hogs get slaughtered.
Susan Barnes-Gelt (bs13@qwest.net) served eight years on the Denver City Council and was an aide to former Denver Mayor Federico Peña. Her column appears on alternate Thursdays.
