ANT BITE -- The BMC HypoAppraisal

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.

Comments

[XYZ]

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