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City of Aspen Takes $2M Hit by Delaying Land Purchase 1yr Ago, ADN
The Castle Creek parcel the city of Aspen recently announced it
will buy for $5.4 million to build affordable housing was offered to
the city less than a year ago for $2 million less.
Local broker Gwen Dickinson confirmed that she approached the city
about buying the property when she held the listing on it last summer.
At the time, the one-acre parcel across the road from Aspen Valley
Hospital was on the market for $3.4 million.
Dickinson said the city was initially receptive to her offer, but she did not hear back from them after a while.
Assistant City Manager Bentley Henderson, who is involved in the
city's efforts to acquire property for affordable housing, said the
city was interested in the property when it was pitched to them. But,
in general, when the city is interested in buying property, it takes
longer for it to act than a typical private buyer, Henderson said.
Sometimes, as the city is going about its review and due diligence
process, another buyer comes in and purchases the property. By Curtis Wackerle, May 28, 2008 Aspen Daily News
The Castle Creek parcel the city of Aspen recently announced it
will buy for $5.4 million to build affordable housing was offered to
the city less than a year ago for $2 million less.
Local broker Gwen Dickinson confirmed that she approached the city
about buying the property when she held the listing on it last summer.
At the time, the one-acre parcel across the road from Aspen Valley
Hospital was on the market for $3.4 million.
Dickinson said the city was initially receptive to her offer, but she did not hear back from them after a while.
Assistant City Manager Bentley Henderson, who is involved in the
city's efforts to acquire property for affordable housing, said the
city was interested in the property when it was pitched to them. But,
in general, when the city is interested in buying property, it takes
longer for it to act than a typical private buyer, Henderson said.
Sometimes, as the city is going about its review and due diligence
process, another buyer comes in and purchases the property.
"We have certain constraints we have to go through which is probably what happened with this," Henderson said.
Henderson added that the city did not reconsider the property until
"a few weeks ago" when a real estate broker the city works with brought
forward the idea. The city is not disclosing the mystery broker's
identity.
WF Castle Creek LLC, a partnership of mostly East Coast investors,
closed on the property in October for $3.4 million. Local fly-fishing
expert and part-time broker Michael Shook and another local man Shook
declined to identify also have a small stake.
The property was granted approval in early 2006 for the
construction of two single-family homes plus an affordable-housing
unit. When the partnership bought the property in October, their plans
were to develop the three structures, Shook said.
"We didn't buy it with the intention of selling it to the city," he
said, adding that he was not aware that the city had been approached
about purchasing the property last summer.
"They probably should have bought it at that time," Shook said.
During the LLC's ownership, a house on the site was demolished, but no other improvements to the site were made, Shook said.
At some point, the group changed their tune and decided to sell the
property to the city. Shook noted that the group could have reaped a
much greater return on their investment if they had stuck with the
plans for the single-family homes.
"We would all rather see affordable housing there than two trophy homes," Shook said.
The city is paying a fair price for the property, he opined.
Aspen Mayor Helen Klanderud said the city began pursuing land
purchases for affordable housing in early 2006, when an ad appeared in
local newspapers soliciting sellers to approach the city.
In December 2006, the city announced it had a home at 312 W. Hyman
under contract for affordable housing. Prior to the sale, the city was
attempting to designate the home as historic against the wishes of its
owner.
When the Castle Creek purchase was approved at the last City
Council meeting, the city also announced it was under contract to
purchase another property in the $4 million range. The council has also
signaled that it's ready to move on more housing, approving an
ordinance that gives the city the authority to reimburse itself for up
to $30 million worth of real estate purchases.
"One of the reasons for moving forward more aggressively now is
that clearly land and property are not getting less expensive,"
Klanderud said.
Development consultant Mitch Haas guided the Castle Creek parcel
through the approval process for the single-family homes. He said he
was surprised to see the city's plans for 15 affordable-housing units
on the site, considering the criticism his clients took for the mass
that the single-family homes would create on the site.
He said he believes the city is paying more for the site than
anyone else would. However, the city's development plans for the site
are also likely more than what any private developer could get approved
for that parcel
"I applaud the city's effort to buy property and bank land for
affordable housing," Haas said. "It's just unfortunate that an extra $2
million of taxpayer money was spent when it didn't need to be."
