Borelli Investment Company - 50 years of Commerical Property Experience - Buying and Selling Land

HIGHLIGHTS

New home development is denied final approval ten days before close of escrow
Major obstacle is waiting for Federal funding to improve Highway 4 in Antioch
KB Home's business model discourages the purchase of unentitled land
Borelli Investment Company arranged for an investor to assume KB Home's purchase contract, with a 24-month buy-back option
With funding earmarked for Highway 4 included in the approved 2005 transportation bill, the development has now received a green light

Many times, a complicated land sale travels a bumpy road on its way to closing. When a particular sale hits a big pothole, a real estate broker with considerable depth of experience in land can be an especially valuable partner in the process.

In eastern Contra Costa County, new home communities are being built to meet the demands of a growing Bay Area workforce. KB Home — one of the country's premier new home builders, which emphasizes entry-level and first-time, trade-up homes — purchased a $7 million option on property in Antioch, with the intent of building 110 new homes.

Working with Borelli Investment Company, KB Home patiently followed the entitlement process nearly to completion. Shortly before the scheduled close, a caution flag was raised because the funds needed for improvements to Highway 4 in Antioch were stalled in the transportation bill before Congress. After considering the issue, the Antioch city council voted 3 to 2 against final approval of the project until the Highway 4 concerns were addressed.

So, with ten days to go until the close of escrow, KB Home was facing a red light. The company's business model strongly discourages it from closing on a property that isn't fully entitled. That clearly wasn't going to be resolved within a week and a half.

But working closely with its land broker, Borelli Investment Company, KB Home devised a solution. The company assigned its purchase contract — with a 24-month buy-back option — to an investor that Borelli Investment Company brought into the deal. Based on the financial arrangements, the investor was willing to assume the risk of the Highway 4 improvements continuing to be delayed.

The escrow closed on schedule, and KB Home went back to the drawing board, reducing the planned number of homes on the property from 110 to 82 — to lessen the traffic impact in the area.

In the summer of 2005, Congress passed the long-awaited transportation bill, which contains funding earmarked for Highway 4 improvements. Local grassroots groups have also lobbied hard to remove obstacles to the desired construction.

With the road ahead new clear, KB Home exercised its purchase option with the short-term investor group. The development is now ready to proceed on KB Home's Almondridge, Antioch.

So even when all the signs said stop, Borelli Investment Company's creativity and teamwork led to an alternate route that is helping KB Home reach its destination.