City To Collect on Developer's Rebate Incentive

The owner of the Belamor development will pay the City of Millbrae $5,000 for every condominium sold from Aug. 20 to Nov. 30.

Belamor will use the city as a marketing channel to advertise a new rebate program for new buyers. The developer will pay Millbrae $20,000 during escrow of a unit, and after closing, the city will distribute $15,000 to the new buyer and retain $5,000 for itself.

“[The owner] has been told that a governmental agency of any kind, whose name appears with the sale, greatly enhances buyers’ interest,” said George Corey, an attorney representing the owner of Belamor, L.F. George Properties.

Belamor already offers buyers a free new Mercedez-Benz or a 1-carat diamond. But, in this difficult real estate market, it needs as many offers as possible, Corey said.

Council members Friday voted 4-1, with Mayor Dan Quigg dissenting, to enter into a contract with L.F. George Properties.

“It seems to me that the developer already has a good incentive,” Quigg said. “And I don’t see why we, as a public entity, should be involved in this.”

Typically, a city will manage a rebate program for first-time or low-income home buyers, but this deal has no qualification restrictions.

Quigg was reluctant because the city may be legally responsible for any claims from  buyers. 

“The risks outweigh the benefits,” he said.

Although City Attorney Joan Cassman will ensure in the contract with L.F. George Properties that Millbrae shall not be liable for any legal claims from buyers, Quigg said the company could dissolve and thus nullify the agreement.

“There should be a good reason for the city to involve itself with helping a developer sell its units as such a program is an anomaly,” Cassman said in a report.

The good reason, all other council members rationalized, is that the program not only would bring the city much needed revenue, but also more taxpayers to Millbrae.

“These are extremely difficult times and we need to think creatively,” said council woman Gina Papan.

L.F. George Properties will reimburse Millbrae for employees’ time spent on the program. And, the city must approve all marketing material before distribution.

There are about 60 vacant units in the Belamor development, according to the owner, so the city could stand to receive $300,000 if all units are sold by November.

Additionally, the city could take advantage of the full $20,000 rebate if it buys below market rate units to fulfill the state’s affordable housing mandate. However, at this time, there are no such plans.