Potential homebuyers weren’t biting on the opportunity to purchase a home in a soon-to-be-built northwest Bend housing development. Many were uninterested in leasing the land from the property owner, Central Oregon Community College, just to buy the home on top.
In response, COCC and developer William Smith Properties — collaborators on this housing development and planned developments near COCC’s campus — decided to allow future buyers to purchase the land, as well as the home.
“If you’re in business, if you can’t sell anything, you’d better figure out how to get it sold,” said Joe Krenowicz, member of the COCC board of directors, which made the change on Wednesday.
The future housing development, dubbed the Outcrop subdivision, will be located right next to NorthWest Crossing, at the southwest corner of the Mt. Washington Drive/Shevlin Park Road roundabout. Construction on the 16-home development will begin soon, and all the homes could be purchased by the summer, Krenowicz said.
The ground lease for the homes would have generated about $173,000 per year, plus inflation, for COCC and William Smith Properties to split, William Smith Properties’ director of leasing and development Peter McCaffrey told The Bulletin last fall.
Now, COCC will earn more money up front from selling the homes and land al together: an estimated $5.3 million by 2024, the college estimates.
McCaffrey, in an email to The Bulletin on Monday, said he expects COCC to earn more revenue after this change. Krenowicz believes this is a lateral move, and the college won’t earn any more money — it’ll just make it easier to sell the homes and land.
The original plan of leasing the land would’ve resulted in smaller down payments for potential homeowners, McCaffrey wrote. But those potential buyers shied away from the ground leases for multiple reasons, including inflationary increases to the lease and being able to purchase the land more easily due to current low interest rates.
“The relative advantage of the smaller down payment for a ground leased property has not been compelling enough to prospective buyers,” McCaffrey wrote.
COCC is considering a similar tactic with the other parts of the development around the college, Krenowicz said. For now, COCC and William Smith Properties plan to build a 180-unit apartment complex on the southeast corner of the Shevlin Park/Mt.Washington roundabout, along with possible commercial space.
Bill Smith of William Smith Properties is an investor in The Bulletin.