Prepared to seize the property, Breckenridge buys downtown building for more than $6M
Breckenridge has forced the sale of a downtown building after coming to terms with an owner who would have preferred to keep the property.
Ed Bello said he really didn’t want to sell the Professional Building in downtown Breckenridge, but he understands the town’s reasons for pursing the sale, remains complimentary of the way local officials handled it and believes that he got a fair price.
Breckenridge recently bought the building, which is next door to Breckenridge Town Hall, for $6.3 million after town council expressed its intent in February to buy the property or seize it through eminent domain.
“If this thing had to happen, I have no complaints with how they handled it,” Bello said about town staff and the real estate agent who represented the town’s interests in the transaction. “I wish I didn’t have to sell it, but I understand what’s going on — they needed it — and they handled (the negotiations) very professionally and very well.”
The purchase strings together a handful of town-owned properties that line the Blue River and form an “L” shape around the South Gondola Lot. That’s where Breckenridge plans to build a large parking garage after nailing down a long-term lease with Vail Resorts, the owner of Breckenridge Ski Resort and the South Gondola Lot.
On Wednesday, town manager Rick Holman detailed the town’s reasons for buying the Professional Building, the least of which, he said, was anyone’s desire to get Breckenridge into the commercial real estate business.
“Typically, as a town, we wouldn’t look to be in the commercial real estate business, but it was a very strategic purchase for us,” Holman said, explaining that town staff really wanted control of the land on which the building sits, along with some of the easements tied to the property.
Holman said Breckenridge is looking to create “a nice space” around the new parking garage on the South Gondola Lot with a heated walkway between Town Hall and the Professional Building leading to a plaza on the southeast corner of the new parking area.
Most basically, he said, the land on which the Professional Building sits “fits into the designs.” The town manager added that preliminary designs for the new parking structure lot could come before Breckenridge Town Council as early as Tuesday.
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Property records show Bello purchased the downtown building for more than $3.17 million in 2016. Afterward, he renovated the property, and it was fully leased out when the town began pursuing the purchase.
Holman promised the town will honor all existing leases and has no plans to kick anyone out. He added that many of the businesses occupying the building, which includes US Bank, offer valuable services to residents and guests.
With an extensive background in commercial real estate, Jack Wolfe of LIV Sotheby’s International Realty represented the town on the sale. He said the agreed upon price was based on the market value of the property, including potential rental income, and this was “a market-rate purchase for the town.”
Another key component of the sale, Wolfe and Bello both said, was a 1033 exchange, which allows an owner who’s required to relinquish his or her property, either through a forced conversion or the threat of condemnation, to defer capital gains taxes by purchasing another property, not unlike the more commonly used 1031 exchanges.
“One of my concerns, frankly, was what am I going to do?” Bello asked about being forced into a sale. “I could sell this now and then I have to pay a bunch of taxes, or I get 45 days to go find another property to replace it?”
Bello wasn’t comfortable with either option, he said, and when Wolfe came up with doing a 1033 exchange, “it definitely made a difference.”
While a 1033 exchange isn’t much different from a 1031 exchange, a 1033 typically involves a government entity and allows the seller considerably more time to buy another piece of real estate by jumping the deadline to close on the replacement property from 180 days to as long as three years.
Bello said the extended period will give him time to identify a replacement property and perhaps even weather soaring real estate prices.
“I’d say this has been one of the best transactions I’ve been involved with in Breckenridge,” Wolfe said about the result, adding that Bello was a true real estate professional in the negotiations. “I just felt like both parties were very straightforward and both parties got a fair deal out of it.”
As for Bello, he’s already looking to buy another property in the area, he said.
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