ANT BITE -- The BMC HypoAppraisal
March 20 The long awaited BMC "appraisal"—sort of---has been released by the City. Initially, upon reading the newspapers last week,Aspenites were comforted by the assurance that the value was only $1.45 million less than the $16.8 million paid in December, 2007. But upon further examination of the appraisal, and discussions with real estate professionals, the City is once again being challenged with the outrageous spin they put on the so called, “appraisal.” (Reminds us of the bogus press releases issued after the Burlingame audits.)
Turns out the “appraisal” was a very nonstandard valuation based on “Extraordinary Assumptions” and “Hypothetical conditions”---not what a reasonable buyer would pay!! And one any bank would laugh you out of the room for presenting.
John McBride, one of the most respected developers and businessmen in the valley, who knows this property like the back of his hand, called the public’s attention to the bogus appraisal in a guest column this week. (His columnis both linked and printed in full below.) And from there, the rocks are being uncovered.
We are not ready to write the Ant article on the issue yet, but given the attention it is getting and the blog entries we have received, we want to make as much information publicly available as possible.
Here’s a link to the Aspen Times article:
http://www.aspentimes.com/article/20090313/NEWS/903139970&parentprofile=search
And the City’s Press Release:
http://www.aspenpitkin.com/apps/news/news_item_detail.cfm?NewsItemID=1042
John McBride’s Column “Fantasy Economics” : (also reprinted in the comments below)
http://www.aspendailynews.com/section/columnist/133284
Mick Ireland’s Rebuttal to McBride:
http://www.aspendailynews.com/section/letter-editor/133319
A copy of the “appraisal”: (large file takes VERY LONG TIME to open):
http://www.aspenvotes.org/storage/HypoAppraisal.pdf
Fair Warning At the Time of Purchase:
http://www.aspentimes.com/article/20071129/NEWS/71128041&parentprofile=search
City Documents at Time of Council approval. (Explanation of $450,000+ per unit subisdy!)
http://www.aspenpitkin.com/pdfs/depts/38/cc.res.097-07.pdf
See the comments below posted initially under issue #28 of The Red Ant “Land Banking Needs a Bailout.” We stand by our conclusions!
Stay tuned.We know that there is much more to learn. The Ant has been asking for a copy of the appaisal every few weeks since late summer, and the City always had some excuse as to why it was not complete. But the long awaitedreport was even more creative than we could have imagined!
Feel free to leave a comment below.
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Reader Comments (15)
I know the Appraiser that the city is using for the BMC parcel that the city paid 18M for. The city didn't like the first low appraisal so--they combined it with the three acres that we own next to it to try and hide the low appraisal. The appraiser was given a bunch of improbable suggestions as to the parcel's possible uses and he still couldn't make the numbers work. If a real estate broker trys to influence an appraiser's opinion This is corruption by the city manager.
February 28 | Real Estate Professional
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Ed Foran's comment:
The City of Aspen and Mick Ireland need to respond to this letter to the editor from John McBride. If anyone stands to benefit from the BMC West sale, it's John McBride, as the largest property owner at the AABC. Yet, as John logically states below, the property is worth less than half than what the city paid for it.
"Last week, the appraisal for the BMC parcel that the city of Aspen bought in 2007 was reported at $16.8 million. I was surprised. Although the appraisal was lower than the $18.25 million the city paid, it still is way too high. I continue to believe that the real market value is somewhere around $6.5 million.
Prior to the city’s purchase, the highest price paid for land in the Airport Business Center was $30 a square foot. At that rate, the value of the lumberyard, based on comparables, would have been $5.34 million. Further, under the income approach, if the city nets $600,000 a year from the lumberyard, at an 8 percent cap rate, would yield a value of $7.5 million. $6.5 million is in the middle between the comparable value and the cap rate value. It seems to me a fair market value that an appraiser could defensibly assign.
Confused by The Aspen Times and Daily News articles on Friday of last week, I contacted the appraiser hired by the city to conduct the recent BMC appraisal. Dave Ritter, who is a friend of mine, clarified the large discrepancy.
Dave explained to me that he was not asked by the city to do a fair market value appraisal of the BMC parcel. Rather, he was asked to do a “hypothetical appraisal,” imagining a very large housing project was already built on the land — thereby paying no attention to existing constraints. A fair market appraisal and a “hypothetical appraisal” are apples to oranges. Ignoring the constraints overlaid on a piece of property is the essence of a hypothetical appraisal. It is relevant that the public know the BMC parcel contains such limits as county zoning, height and parking requirements, ABC covenants, and the 200-foot greenbelt setback from the highway right of way. This setback, by itself, would almost preclude the development of the city’s adjacent open space parcel. (The city’s statements seem to indicate that this open space parcel is not under easement, contrary to the sign posted on it!)
I asked a longtime banker of mine if he had ever heard of a hypothetical appraisal. He said he had, but that it is not considered a real (defensible, credentialed, well-founded, genuine, factual, bona fide) appraisal. He added, “A hypothetical appraisal is really just a developer dream and as such has no merit or value, especially for a loan.”
Still somewhat shocked, I looked up “hypothetical appraisal” under the American Society of Appraisers. Their definition:
“A Hypothetical Appraisal is an appraisal based on assumed conditions which are contrary to fact or which are improbable of realization or consummation … It is improper and unethical to issue a hypothetical appraisal report unless 1) the value is clearly labeled as hypothetical; 2) the legitimate purpose for which the appraisal was made is stated; 3) the conditions which were assumed contrary to fact are set forth … a hypothetical appraisal … which is so much above the market that it is practically impossible for it to be realized, would not serve any legitimate purpose and its issuance might well lead to the defrauding of some unwary investor.
Wow!
Does the public understand that the city’s justification for overpayment of $1.45 million is based on an imaginary appraisal, which by definition is “contrary to fact?” If you were selling a home, would you list the house for what it could be if it were remodeled? Or for what it is worth today?
Obviously the city is trying to justify the high price they paid. But more than that, they seem to be indicating that they believe they can violate a long history of established principals and guidelines that for years have defined the character of the ABC.
Had the city performed a proper fair market value appraisal prior to purchase of the land, they could have saved tax payers $10 million to $12 million.
Alternately, if the city had been unable to negotiate a deal with BMC, they could have condemned the property. Condemnation demands a fair market value appraisal. The fire district did this at North 40, when they bought their land for $27 a square foot — the fair market value. "
March 18 | Ed Foran (eforan@masonmorse.com)
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Normally I am not one to share my personal concern with our local government decisions but I just can’t let this one pass. I find it reprehensible and unconscionable that our current council cannot admit that a terrible mistake was made in purchasing the BMC property at the price that was paid. What I find even more disconcerting is that it appears they are trying to “hide” this fact from the public.
Please let your elected officials know of your concern on this issue and/or at a minimum, ask them to be more honest and forthcoming with information. Next time I am selling a property, I’ll see if a buyer will take a “hypothetical” appraisal!!!
March 18 | Broker and Citizen
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Great comments by "Broker." Another fact that I think may have been ignored is that the City’s purchase was for affordable housing. Shortly before the City bought the BMC parcel, Mick voted in opposition (no) on Centurion’s application to build the Lodge at 1A (prior to the coop). Mick said in his statement for denial, was that one of his major reasons do deny the approval was the fact that much of the affordable housing was “beyond the roundabout.” That did not seem to be an issue though for use by the City for their affordable housing.
March 18 | Bob
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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.
March 18 | Ed Foran
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How can Mick possibly defend this silliness?
Of course the market value is what a willing buyer would pay to take the considerable risk of zoning and building to his needs.
That value is FAR lower than the “appraisal” value based on all sorts of pie-in-the-sky assumptions that could never be realized by a private buyer.
I believe that what Mick is trying to tell us is that the City paid the seller a value that assumed that a private buyer could have instantly had the property rezoned for their intended use, and have the same ability as the City to condemn property, etc.
Clearly the City overpaid, and they are trying to do anything other than admit it.
This is not unlike the “negotiated” audit reports on Burlingame. The facts have been changed to generate an absurd conclusion.
March 18 | Marilyn
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After reading Mick's response to McBride's op-ed all I can say is please Mr. Mayor stop with all of your misleading statements and except responsibility for all the mistakes made in your mediocre rule. Enough all ready Mick. The public is finally catching up with your dishonest megalomaniac ways. Leave elected office and get a real job . My one piece of advice. If you are as rude to co-workers at a real job as you've been as mayor I hope you enjoy the same dissatisfaction and disrespect you've shown .
March 19 | jsam
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Above comments copied from Issue #28 (Land Banking Needs a Bail Out)
If this is as bad as it looks, the Mayor should be censured, and shamed into not running for re-election.
The city manager should be fired immediately for fostering this deceit.
The other side of the story, from today's Aspen Daily News. Beginning to sound like the "truth" is in the hands of the best negotiator !!
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BMC West property appraisal is correct
Iam writing to respond to John M c B r i d e ’ s m i s l e a d i n g comments regarding the city’s purchase and subsequent appraisal of the BMC West property. The appraisal for the BMC parcel, which the city of Aspen bought in 2007 for $18.25 million, valued the property at $16.8 million. Additionally the adjoining 2.5-acre Burlingame parcel was valued at $8.9 million, making the combined property worth $25.7 million. The city-owned Burlingame parcel would have been very difficult to develop for housing without the purchase of BMC West due to access and other issues. Aspen City Council and the Pitkin Board of County Commissioners agreed that this is a great site for high-density affordable housing. McBride clearly hopes for a much lower density development scenario, but his hope does not make our development plans illegitimate, or the appraisal based upon those plans. McBride’s primary grievance is that the city should have valued the property at its current zoning and use (a lumberyard), rather than using a hypothetical approach imagining that a large housing project would be built on the land. In reality, the BMC West property was purchased explicitly for the development of high-density affordable housing, and that is why the appraisal was based on this important scenario. Appraisals that assume changed conditions are perfectly appropriate — especially when the decisions to change the current development guidelines are entirely within the hands of the purchasing government. Aspen City Council or the Pitkin Board of County Commissioners will eventually rezone the property to allow for this development scenario, so unlike with a private developer, there is no question about government being able to rezone a parcel which they own. McBride also asserts that there is a 200-foot greenbelt setback from the highway at the BMC West site, which is incorrect. There is a setback of 100 feet for the parcel, and our adjacent Burlingame parcel has no such setback requirement.
While the acreage next to BMC is currently dedicated open space as he suggests, the city has the right to remove that conservation easement as specifically stated in the Bar/X pre-annexation agreement.
McBride also claims that the Aspen Airport Business Center covenants are significant constraints to development on these two parcels, but McBride himself suggests that the city could have purchased the BMC property through condemnation rather than negotiation. It should be obvious then that the application of AABC covenants are also subject to condemnation and are not absolutely rigid restrictions on redevelopment.
However, even though the city of Aspen purchased the BMC West parcel for highdensity affordable housing, no actual development plans have been created, and few discussions have taken place with the neighbors, the Colorado Department of Transportation, Pitkin County, possible housing partners or the community as a whole. We have simply purchased the parcel and in doing so, created a 7.24 acre parcel that is available for providing critically needed affordable housing for this community’s future.
Argue about price if you like, but this was an unparalleled opportunity that created a huge increase in value for our adjacent Burlingame parcel. Where else are you going to find 7.24 acres of land easily developable for affordable housing within the urban growth boundary, easily accessible by public transportation with utilities, and in a place where construction of new housing wouldn’t affect the neighborhood greatly?
The BMC West site will be a critical part of this community’s affordable housing program for many years after the politics of the moment have been forgotten. McBride’s notion that the value of this parcel is only $6.5 million is the real hypothetical fantasy in this situation, not our appraisal or purchase of this vitally important site.
Scott Miller is capital asset director for the city of Aspen.
GUEST COMMENTARY BY SCOTT MILLER
In both Scott’s and Mick’s reply they keep reminding us that the City paid WAY more than FAIR MARKET VALUE for the property at the time of the purchase, --which is John McBride’s point. Most would agree that :
-it could be a good place for more affordable housing (if our fund balance ever recovers from the damaging blows dealt by this Council.)
-And that the government has the power to make the property more valuable in ways that it would not likely do for other buyers.
-And that it may SOMEDAY be very valuable as such a property, if developed according to the hypothetical assumptions.
.
However, the debate is whether the City paid far more than a willing 3rd party buyer would pay for the same property. It sounds to me that everyone----the appraiser, McBride, Mick and Scott are all in agreement that yes, in fact, the City paid far more than the property was worth in December, 2007.
My house in Missouri Heights is worth about a billion dollars, based upon the hypothetical assessment that it's sitting atop a diamond mine.
I have been a substantial commercial and residential real estate investor and developer in several states for over 35 years. I have hired, read, and analyzed numerous serious MAI appraisals through the years.
After reading both sides of this issue, it is unbelievable and indefensible that the City could possibly have paid that much more than that property was worth. And there is no doubt whatsoever that the BMC property was worth a fraction of what was paid. I don't understand why the citizens are not talking impeachment here. If this were the US or Colorado government, there would already be a congressional investigation of this mayor and City manager going on with the facts available.
Something is terribly wrong here. I would suggest that someone needs to follow the money here. Was this purchase just blatant stupidity or is there real malfeasance going on here? It's either one or the other. Or at the price paid for that land, possibly both.
I will have more to say on my website and in the newspapers soon, but end of day, the number one question in my mind is, why did the City bid any more than $250,000 over next firm bid? Even if you take the City’s appraisal (which I have some questions about) at face value, it a guide for a maximum bid, NOT the minimum starting number.
The Art of the Bad Deal
In support of John McBride’s claims as to the “real” value of the BMC parcel, I would like to weigh in.
My credentials include being a partner in a mortgage business in New York in the late eighties. During my experience we made a number of land loans – none without a minimum of two market value certified appraisals. Now, the circumstances were a bit different as we were acting as a private bank, but not foolish enough to think we would put a dime into a deal without knowing the “real” value, and factoring in the “downside” of the property.
The argument made by Mayor Mick in his response to John McBride, was that this was different as no bank was required, the city was going to spend its own money. Except it was OUR money - the taxpayers.
Another incomprehensible argument was the land had more value to the city than to an ordinary purchaser – thus we should pay more than fair market value. A basic concept in real estate is to “buy low - sell high”, and if the city could take advantage of the land for whatever reasons, all the better for us.
Those that assert another legitimate buyer was in the wings that would over-pay for the property based on the possibility of re-zoning are delusional.
The claim that because the city was the buyer the asking price was going to be higher, demonstrates a lack of common sense business experience. When a high profile buyer is interested in property one strategy used is to send in a “dummy” buyer – someone in with the specific purpose of establishing the best price and terms of the deal.
If you factor in that the person hired to advise the City in this deal, and prepared the market value “analysis” was getting a Brokers fee, the only conclusion possible is that the “dummy” in this deal was the city.
The City also claimed this purchase would free up some acres land-locked, making this a smart deal. Not so smart, as the city could have asked for an easement, or if refused, condemned the property for market value.
The fact Mayor Mick is defending this deal shows him to be naive and lacking real experience when it comes to business.
Negotiation is a skill. Having a law degree doesn’t make you a good negotiator; it makes you a person with a law degree.
It is obvious the city needs to hire someone who knows how to negotiate, someone who is working for the city only.
In tough economic times, we need to be SMART about our money, not live in a “hypothetical” world.
Andrew Kole
FACEBOOK EXCHANGE BETWEEN ED FORAN AND MICK IRELAND ON BMC:
Michael Ireland at 7:54pm March 19
Ed:
I respectfully disagree. The property should be appraised based on its worth, not under the assumption that the zoning cannot be changed since, in this case, the city has the power to do so.
I have been in litigation over the MAI issue and have not seen that MAI certification is the sine non qua of appraisal veracity.
The fact remains, we have 7 acres of land that we control the zoning on and there are no such equivalent parcels available for $18 million at the time we made the purchase or even today.
As for Randy Gold, I would have loved to have him do it but he was, at the time, probably booked and unavailable. To impute motivations about the city i choosing dave Ritter is unfair and not supported in fact. It's not like you to imply nefearious motives in a situation where you and most professionals understand both Dave Ritter's competence and the difficulty of getting randy .
Thanks
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Ed Foran 8:07 p.m March 19
Mick,
I respectfully disagree. I have served on 2 Eminent Domain juries and they use only MAI appraisers and market value appraisals. And, this is not just about using an MAI, its about a market value appraisal vs. hypothetical appraisal. A hypothetical appraisal would never stand up in a court of law as a legitimate appraisal. BTW, is the City requesting a hypothetical appraisal or a market value appraisal for the Aspen Youth Center site? We should be consistent, don't you think?
I'm sure the Art Museum would like to know as well.
Seriously, I'd like to know which it will be.
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Ed Foran 8:37 March 19
Mick,
If you would have loved to have Randy Gold, why didn't you ask him? You say, he was, "probably booked and unavailable." Do you know that for a fact? Did anyone ask him? "Probably" implies an assumption, not a confirmation of Randy's availability.
I don't want to continue to flog this thing but I'd love to sit down with you and John McBride and clear the air. I know you are out of town at the moment, but perhaps we can all get together when you get back.
Let me know.
Thanks,
Ed
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Michael Ireland at 5:26pm March 21
Yes, ed I do know how hard it was at that time to get Randy to do an appraisal because I have employed him or tried to employ him on behalf of private sector clients.
You are assuming his answer would be different. There is no foundation for that assertion.
Tnaks Mick
Mick didn't seem to want to address Ed's question about whether the City will be selling the Youth Center property to the Art Museum based on a Fair Market Value or a "Hypothetical" appraisal.
And we voters are supposed to trust the city officials to negotiate an appropriate deal with the Art Museum.
The appraisal was ordered in September, 2008, almost six months before it was delivered.
I began asking for this appraisal in early October, and was told several times over the fall and winter that it would be “two more weeks.”
The mere delay during a time where appraisers were not busy is perhaps cause for suspicion.
The fact that a “first draft” was delivered and kept from the public, does not give more comfort.
The timing also undercuts Mick’s arguments that an MAI certified appraiser could not be engaged due to the needed timing of the report.
-So, why did the City order this appraisal?
-Why didn’t the City order a market value appraisal?
-What use is this hypothetical appraisal?
-Why should the City have paid a hypothetical appraisal value, and ignored the market value?
-Why doesn’t the City just admit that they paid millions over the market value, and explain why they couldn’t get the property for market value, although there was a willing seller?
FROM 3.23 09 LETTERS TO EDITOR---ASPEN TIMES:
When government plays developer
Editor:
Aspen City Asset Director Scott Miller’s defensive commentary regarding the BMC purchase price unintentionally reveals what happens when government plays developer.
Remember the Burlingame pork barrel:
— Misled the voters by millions of dollars about the cost;
— Allowed the buyers to determine expansion — not the taxpayers who funded for it;
— Subsidized the units to the tune of more than $300,000 each (sure glad my tax dollars allows McDonald’s and the other multinational corporations in Aspen to underpay their help);
No private developer who wanted to stay in business could afford to screw up as consistently as did the city at Burlingame.
Likewise, no private developer in his right mind would hire an appraiser to determine the fair cost of a piece of land by disclosing all the future upzoning potential it would approve, which had the effect of tripling the appraisal price. It’s like saying to the seller, “I would rather pay $18 million for your lumberyard rather than $6 million or $12 million.” Dumb!
Government as developer has no incentive to make a profit and the resulting cost overruns and screw-ups will continue until the taxpayer says “enough.” When the time comes, vote the city out of the development business.
Bert Cassady
Aspen
So, I filed a Colorado Open Records Act request to get a copy of the broker's "market analysis" of $18.25 million value that was done for the City prior to their purchase. I learn of this analysis in the Aspen Times article of 11/29/07 on BMC.
"The city’s broker did a market analysis, which indicated $18.25 million was a fair price, Henderson said." (from the Times article.)
Well, turns out that the city can't find any such analysis. They believe it was an "oral report."
No appraisal and no written documentation to analyze the value of an $18.25 million piece of property.
And our voters believe that we should have confidence in our current leadership?
More of the "other side of the story." I've been wondering where Dwayne Romero was on this issue. He's the developer and the person on Council most knowledgeable of these kinds of issues. Appears Dwayne was involved in the analysis, as I would expect him to be. What does the Rant think of that since she blames everything on Mick and Jack as if the other Council members don't count.
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From today's Aspen Times:
Greg Hunter - Guest Opinion
I participated in the BMC purchase that has become the latest topic of city criticism, and I don’t think all of the facts about this purchase have been quoted accurately. The BMC purchase by the city was executed with full transparency and was well reviewed by many sets of eyes. This shall be my only public comment.
In September 2007, the city of Aspen had a housing summit, attended by the Pitkin County commissioners, City Council, the housing board and a wide variety of public and private sector leaders.
They were asked a number of questions about Aspen’s future, and an overwhelming majority of those citizens told the city that Aspen was in an employee housing crisis and was mandated that banking land now for future employee housing should be a top priority. The way that the city’s land code is written requires that the employee housing be built within Aspen’s urban growth boundary. That geographic requirement obviously has a large influence on price.
Long before I was hired to help the city find suitable land for future housing, the citizens of Aspen had agreed to subsidize the costs of employee housing, to help make it affordable to the employees working here. That decision was already in place.
The city and I were approached by the owners of BMC, and the city was told that the owners were going to put this piece of land on the market at an asking price of about $20 million and had already received other unsolicited “interest” at that price. It has been assumed by some that the city responded prematurely to that statement and made a naive offer. That is just not accurate. Before any offer was even considered, the property was carefully reviewed by city staff on its merits for future employee housing needs, and by an analysis done with City Councilman Dwayne Romero from a developer’s point of view.
Dwayne and I conducted an objective review of the property’s potential value should it be placed on the open market to a developer. Among other things, we estimated the property’s potential value according to a “residual land value analysis.” This analysis included a review of the property’s current zoning, and just as importantly, what the property’s use could be if the zoning were changed. This is commonly done via a planned unit development application, and would be a common analysis for a potential developer. After that analysis, we determined that should the property be developed to its highest and best use, the value of the land could actually exceed $20 million.
Even if you evaluate the BMC property strictly as an investor, with the current rent it generates being more than $600,000 annually, at a 5 percent CAP rate, the value of the property is more than $12 million with no development planned at all.
The BMC owners were unaware that the city owned an adjacent 2.5 acres of land acquired during the Burlingame purchase that would now gain easy access and become developable because of this purchase. This fact was an important ingredient in the decision by City Council to proceed.
The next step was a review by city staff. This property can easily be annexed into the city limits. Its zoning and covenants can be legally changed to allow for affordable housing. And according to the city’s staff analysis, the subsidy for employee housing was well below other employee housing projects.
With the housing market at a continual torrid pace in 2007, and the city being told by its citizens to bank suitable property to house its employees within the city, land-banking the BMC property passed the review of its value from both an experienced developer’s point of view as well as the city’s staff.
We can all look at today’s economy and see that there were other well-laid plans in 2005-2008 that today are either partially built or have been abandoned. Look around: There are several “Big Boy” projects up and down this valley that didn’t quite go as planned. It is pretty easy to criticize their decisions today also. Many very smart development people were forecasting a bright future for Aspen at that time.
It is important to remember the performance of the market at that time. The city could have required an appraisal be completed before the purchase was made. It was discussed, but all parties involved determined that this was an unusual set or circumstances where there really were no comparable sales for an appraiser to use. So rather than risk an opportunity for the city to purchase a very large and a favorable parcel that accessed another 2.5 acres of land already owned by the city, in a location that had very little negative impact on any neighboring property and to be within the urban growth boundary, and after review of all value analysis, the unanimous consent of the City Council authorized the purchase of this property.
It is not for me to publicly discuss the negotiation process. The City Council authorized Steve Barwick and me to open negotiations, and were also authorized to purchase this property. Through a process of offers and counteroffers, the final price was settled within the guidelines given.
It is easy to be a Monday morning quarterback. I have absolutely no political agenda, but I find the elected officials involved to be people trying to do their best for what they have been elected or hired to do, regardless of their political affiliation.
If we were shopping in today’s market conditions, the value would have been much different (as many current sellers are discovering). But if the economy had remained on the path that was a clear pattern of more than 20-plus years of historical continued growth, we wouldn’t be discussing this purchase at all.
Greg Hunter is the real estate broker for the city of Aspen.
Hello !! Is anybody home ????