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"Land Banking" - buying up land and property with public housing funds became a key strategy promoted at the meeting. (Admittedly, before the Burlingame money pit was uncovered.) Several "deposits" in the City's "Land Bank" have caught the public's ire, as they were not only controversial when they occurred, but have now become high-profile money losers, and further call into question City Officials' fiscal management. While playing fast and loose with the public's money, Mayor Ireland and City Manager Steve Barwick surely rue the days that they signed off on the purchase(s) of these non-performing assets:
THE "COP HOUSE" - 802 W. MAIN STREET
On August 15, 2007, the City purchased a rundown single-family house at the corner of 8th and Main, just along the west side of the S-Curves. This 1400 square foot, 2-bedroom, 1-bath addition to our Land Bank cost the taxpayers $3.69 million in RETT funds. The City's intent was to tear the house down in order to develop a 9100 square foot 10-unit affordable housing complex, with a mix of 1, 2 and 3-bedroom units (18 bedrooms in all) on the 9000 square foot site. The City planned to spend a total of $7.5 million for building 10 units, and subsidize the units for about $490,000 EACH. Estimated taxpayer subsidy was to total $4.9 million.
So just where is this affordable housing dream today? The dream remains just that -- a dream. And for the decision makers, it's presumably a bad dream. The $3.7 million 802 W. Main Street brings in $1500 per month in rental income. (The Red Ant affectionately refers to 802 W. Main as "the cop house" because finally, many months after taking possession, the City rented this Land Bank gem (troubled asset?) to a City of Aspen Policeman after investing just over $7000 in improvements to the property. The "cop" no longer lives there, rather, a long-time APCHA-approved working local currently calls "the cop house" home.)
The Housing Fund is currently out of money and in debt. While the City gets $1500 per month on a $3.7 million house, with no development in the foreseeable future, one wonders how many employees we might have helped with their near-term housing needs with a just fraction of these funds.
BMC WEST
In December 2007 the city closed on a 4.6-acre lumberyard just east of the Aspen Airport Business Center for $18.25 million. In its zeal to acquire the property, for a future affordable housing development, the City did not take the time to get an appraisal for fear that another buyer would move in quickly, although this was quite improbable considering the very restrictive zoning there. Yes, it's true - the City did not get an appraisal on an $18.25 million purchase, despite protests from some citizens at the time! But rest assured, taxpayers, the City maintains that this was a "reasonable" price - after all, the BMC West land is perhaps the largest POTENTIALLY developable parcel that remains in the upper Roaring Fork Valley, and adjoined some undeveloped City property.
In the summer of 2008, City Manager Steve Barwick finally engaged an appraiser to conduct a valuation on the parcel, but when a yet-to-be-publically-disclosed draft was delivered, the City asked the appraiser to "revise the scope." Another appraisal is reportedly in the works that includes an adjacent 3-acre parcel of City-owned land. The new appraisal will also address zoning restrictions on the BMC West land. (Zoning restrictions on OUR $18.25 million property that was purchased with great haste and no appraisal?? Could this mean that the BMC prize in our Land Bank portfolio might, as critics warned before the deal was closed, have zoning restrictions obviating its intended affordable housing development use??) Good grief!
Since October 2008, The Red Ant, through the Colorado Open Records Act, has repeatedly requested the BMC appraisal. Nothing has been provided other than Barwick's assurance that the new appraisal will be ready in "early 2009." We have additionally requested the City's agreement with the appraiser, all correspondence that includes the reason for the delay in submitting/receiving the report, and all correspondence that discusses the valuation of the property in advance of the report, but received no replies. In short, we expect a potential "distressed sale" of the BMC property, with the losses to be funded by yes, you guessed it -- the taxpayers. Call us cynics, but we don't expect to see that happen until after the upcoming election cycle.
Once again, the millions in lost value could have been used for subsidizing a lot of employees' rental expenses, helping them afford quality housing in the area. Remind us -- isn't that the idea of workforce housing?
JORDIE GERBERG'S HOUSE - 312 W. HYMAN AVE
When the sale of local Jordie Gerberg's house collapsed in 2006 because the contracted buyer discovered the house was quite questionably on "the list" for historic preservation, the City stepped in and bought the property from Gerberg for $3.5 million with dedicated housing funds from the RETT. The City's intent was to historically designate this mutant Chalet/Rancher and further develop the parcel to create four (4) deed-restricted affordable housing units on the property. (Think of the public subsidies on those four units!! Ouch! Nearly $1 million a piece!)  The Red Ant's favorite quote on this Land Banking deal comes from City Manager, Steve Barwick, "We're in the process of redefining what subsidies look like." In the end, the affordable housing development didn't happen, Gerberg currently rents his house back from the City for $3000/mo., and the City is contemplating both a controversial land-swap with a neighbor and a sell-back to Gerberg (at a loss) in order to unload the property. (For the complete story, look for, "One Deal Over the Cuckoo's Nest-Aspen Style," coming soon on www.TheRedAnt.com.)
NO NEW WORKFORCE HOUSING, ONLY MILLIONS OF TROUBLED ASSETS
After these questionable transactions and the financial fiasco of Burlingame Phase I there is little doubt that the City of Aspen's "Land Bank" will need a "bailout." Current leadership has bankrupted the formerly robust RETT-supplied Housing Fund and amassed a portfolio of non-performing real estate assets with money specifically designated for affordable housing. Never believing that the bubble would burst, Ireland and Barwick to this day continue their zeal for spending. Just look at the 2009 budget! Never mind, in the current economic environment there are surely many struggling local employees who could have been directly benefitting from these unrecoverable, squandered funds spent on premium priced land.
Despite Mayor Mick's reputation as the Valley's ardent affordable housing crusader, 20 months into his leadership, the government has executed virtually no new near-term housing facilities or subsidy programs, but instead recklessly used precious housing funds for unwise land speculation, rather than realistic programs which could have addressed immediate employee/employer needs. Were these the leadership decisions of a true housing advocate or those of a zealot, blinded by power and the City's wealth, with no concern for his fiscal stewardship responsibilities?
Please share your comments below.
Reminder--New Law
ALL homes in Aspen and Pitkin County must have CO detectors by March 2. See the new regulations at
http://theredant.squarespace.com/storage/Ptk_monoxide_cardFinal.pdf
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February 13
Reader Comments (21)
RESPONSE TO ABOVE MCBRIDE COLUMN,
Ireland and Ed Foran
submitted by Ed Foran
Posted by Mick Ireland on Facebook:
2) Why John McBride is wrong about the BMC purchase
John McBride's letter to the Aspen Daily News is well written but factually awry for the following reasons:
First, he claims the property is not zoned for affordable housing, it's intended use and this means it is less valuable. However, it is adjacent to the city and could be annexed and re4zone at the city's discretion. This makes the appraisal different from private sector evaluation because the city has zoning authority and private purchasers do not.
Second, he claims that the city owned property is restricted to open space uses because there is a sign on it. However, the deed restriction does not apply to the flat land below the slope, about 2.5 acres.
Third, the set back from the highway is not 200 feet, it is 100 feet and that setback does not apply to the city owned property at the base of the hill. The 100 foot setback for the BMC property can be varies as John knows well.
Fourth, the covenants on the land can be removed by purchase or condemnation. The condemnation tool John suggests for the property as a whole is available for minor restrictions such as the covenants.
As a result of the purchase, the city has 7 acres of develop able property for which it paid $18 million. The value of that property that it now has at the time of purchase was $25 million. This is a good purchase since there are no other available 7 acre properties on transit lines available within the Urban Growth Boundary.
Ed Foran’s response on Facebook:
3) A hypothetical appraisal is worthless
What about the "hypothetical appraisal?" Not only is this not a legitimate appraisal, but it was presented to the public as a market value appraisal, which was misleading at best.
Secondly, why is the City not using an appraiser with an MAI designation? While Dave Ritter is qualified to do appraisals for certain types of properties, he is not an MAI and does not have the experience or qualifications to value a property of this magnitude.
As you know, the MAI designation requires an appraiser to go through a rigorous education and approval process before receiving this designation.
Aspen has one of the industry's finest MAI's in Randy Gold at the Aspen Appraisal Group. Randy has lived here for over 30 years and has an intimate knowledge of our unique real estate market in addition to holding an MAI designation, the highest designation you can receive as an appraiser.
Randy is considered the foremost appraisal expert in Aspen and respected by property owners, developers and lenders alike for his objectivity and attention to detail. Why was he not used? Was the City concerned that he would value the property at less than the purchase price, thus causing embarrassment for City officials?
It seems to me that The City of Aspen has a fiduciary duty to the taxpayers of this community to make every real estate acquisition subject to an MAI appraisal that ensures that the buyer is paying fair market value. This is a normal condition of any real estate contract. Mr. Ritter's "hypothetical appraisal" is worthless. A bank would not even consider it as a document to verify whether or not can be financed.