Reply to Chevy Chase Community Center Redevelopment

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]This does not bode well for downtown. Wonder how tightening credit may impact the CC project?

https://www.bizjournals.com/washington/news/2023/12/07/dc-madison-highland-office-conversion-treasury.html
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Not as much.  Because DC is retaining the land and entering into a 99-year ground lease with the developer, the developer will not have to pay the land acquisition costs for the Civic Core.  This provides more project flexibility.[/quote]

How is that better?  DC takes on the main risk + doesn't get any property tax revenue.[/quote]

DC gets lease payments equivalent or greater than tax revenue.  It is locked in and a safer revenue stream for the city.  It is a normal and common practice.[/quote]

I'm sorry but 99 year ground leases are not normal in the US.  Isn't that the sports stadium model?  [/quote]

"In a long-term ground-lease structure, a private party or governmental entity owns a development site, leases the land to a developer and receives rent over the term of the lease. [b]This structure has become a very common element in the US real estate market[/b]......For landowners, a ground-lease structure creates plenty of benefits. A successful development project by the ground tenant creates a long-term secure passive income stream. Long-term ownership is retained. Control over development can be exercised, a critical issue for public land owners. Ownership of the improvements vests in the landowner at the end of the lease term.

Public-entity landowners have become more appreciative of a ground-lease structure as an alternative to sale. In addition to realising the economic benefits of a public/private partnership, public landowners can try to achieve social goals in a proprietary capacity that can go beyond what they may do in their governmental capacity. These can include imposition of architectural and design requirements, affordable housing requirements in rental housing developments, local and disadvantaged worker hiring obligations, prevailing wage requirements, and other public benefits, such as public parking, day-care facilities, community rooms, and bicycle storage and repair operations. The ground-lease structure can allow the governmental entity to impose these costs on the developer in exchange for the developer’s paying less rent, thus avoiding the scrutiny and challenges that might arise if the costs appeared in an actual governmental budget." 
https://www.lexology.com/library/detail.aspx?g=4a590ad1-647d-46ad-8a70-0505a31fa0a9
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