The developer of a new condominium tower in Los Angeles gave local homeowner groups an equity interest in a future residential project in exchange for project approval.
"Developers often work out monetary settlements with associations to address the concerns of local homeowners. And in exchange for fixed payouts, the groups agree not to oppose a development."
Yet new twist in this practice is the case of New York-based Related Companies, which is developing a new condominium tower on the former site of a St. Regis Hotel in Century City, an area of West Los Angeles near Beverly Hills. The developer struck a deal with nearby homeowner groups, promising them an equity interest in another of the company's developments on the drawing board, given the neighbors a percentage of the income from the other condo project.
"Real estate industry professionals say that revenue generated by the nearby Century Woods Estates development – which has yet to move beyond the conceptual stage – would likely be quite a bit larger than a simple monetary settlement. It is unclear, however, how much money that would be.
'It is a gamble, but I would hope it would be in the many millions,' said Mike Eveloff, president of the Tract 7260 Association and a member of the coalition of homeowner associations that worked out the deal."