It is commonly used, as in this case, by a real-estate principal with deep pockets and limited purchase options who ears being held up for an extortionate price if his or her true identity should become known. ) Your undisclosed principal is the Conrad Milton Hotel group, a publicly held company that owns and operates eighty-three luxury hotels worldwide. For these reason, Conrad Milton wants you to keep their identity secret. You are attempting a brilliant coup. Because of its landmark status, demolition of the Ballard Houses is impossible.
Moreover, the garden area is too small for it to be partitioned into a viable separate building lot, given Asthma’s property margin rules. (Such rules commonly call for a minimum tieback of some number of feet between the property edge and the beginning of any structure. ) The difficulty of access to any such garden site almost surely forecloses the possibility of getting a waiver of these restrictions (such a waiver is called a variance), even if the garden land were rezoned as commercial (commercial property usually has a smaller setback requirement).
Hence, you are gambling that Downtown Realty has written off the possibility of developing the Ballard property for commercial use and that it is selling what it believes to be the (much less valuable) right to develop only luxury residential housing. Review Copy Do Not Reproduce The property is capable of another use, however. Your architects have drawn rough plans for the construction of a Milton Hotel on the site. The hotel would use the elegant Houses for its lobby and public rooms.
A great crystal tower would be built in the garden connecting to the rear of the Houses. Because there would be no need to margin off a separate plot, this site for the tower would be Of ideal dimensions, wide enough to permit eighty rooms per floor. Half of the rooms in the tower would be premium “bay view” rooms. The hotel would retain the Houses’ prestigious Bay Drive address and excellent access to the financial district. Even assuming the site can be acquired, however, making this celebrated landmark into a Milton Hotel will not be easy.
The Landmark Commission would have to approve the tower This case was created by Ron Kara and revised by Mix Tan, David Gold, Andrew Clarion, Paul Cramer, Douglas Stone, and Bruce Patton for the Harvard Negotiation Project. Copies are available at reasonable cost from the Clearinghouse for the Program on Negotiation at Harvard Law School (website: www. Pond. Org; telephone: 800-258-4406 or 617-495-1684). This case may not be reproduced, revised, or translated in whole or in part by any means without the written permission of the director of Curriculum Development, Program on Negotiation, 513 Pound Hall, Harvard Law School, Cambridge MA 021 38.
Please help to preserve the usefulness of this case by keeping it confidential. Copyright 0 1983, 1985, 1986, 1988, 1991, 1995, 2002 by the President and Fellows of Harvard College. All rights reserved. (Revised 4/19/02. ) THE BALLARD HOUSES -? Confidential Instructions for the Buyers Representative construction, and the Zoning Board would have to rezone the site from residential to high-rise commercial. These changes are not inconceivable, but hey will depend heavily on politics. Nonetheless, you and your clients are optimistic about securing these administrative changes.
You feel that your hotel proposal is more politically acceptable than the luxury residential development that Downtown is reportedly considering. You intend to fan the considerable anger that has been expressed about plans to restrict use of the Houses to the rich and powerful. Although Milton Hotels are certainly not populist palaces, a new Milton would be a sorely needed addition to currently tight convention and hotel capacity in Gotcha. Moreover, the lobby and bars loud at least be open to the public, unlike the contemplated private residences.
Overall, the bottom line is that your proposal will succeed if it offers the mayor and her machine the only politically and economically viable alternative to luxury developments. You can see no reason why it wouldn’t: you have a good idea of the possible competing bids Downtown may have received. The Milton real-estate department believes that the Ballard complex could be developed in several ways: 1 . Residential housing development, namely brownstones or duplexes. Million’s real-estate department and construction consultants estimate that such a condo conversion would ultimately generate revenues to the developer of roughly $76 million.
Likewise, they estimate it would cost between $28 million and $34 million to build condos (not counting the cost Of purchasing the property from Downtown). Subtracting costs from revenues, leaves a net revenue to a potential developer for turning the Ballard Houses into luxury condos of $42 million to $48 million. From this projected net revenue you can figure out what a reasonable developer might be willing to pay Downtown for the Houses. This should give you a good idea of the kind of bids for the Houses that Downtown has in and now-?and which Absentia will have to beat.