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December 3, 2012
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Aspen officials say downtown hotels still a possibility

ASPEN - Last week's announcement that a developer was withdrawing its application to build a 76-room lodge on South Aspen Street doesn't spell doom for the likelihood of a downtown hotel project, city officials said Friday.

ASV Aspen Street Owners LLC, represented by David Parker, of Bald Mountain Development, had sought City Council permission for a project involving three buildings in the vicinity of South Aspen and Juan streets. One building was designed as an 84,000-square-foot, 76-room hotel. Two other buildings were to contain 35 free-market condominiums. Also, space within the separate buildings was earmarked for employee housing.

One of the council's listed goals for the 2012-13 cycle is to work with the private sector to increase the number of hotel rooms - officials call them "hot beds" - in the downtown area. The Aspen Area Community Plan also stresses the need for more lodging in the city, given recent studies that point to a declining hot-bed base within the resort community.

The South Aspen Street location the developer was targeting, near the base of Aspen Mountain and Lift 1A, is seen by city officials and others as perhaps the only remaining prime location in Aspen for a hotel development of any magnitude.

But near the end of the council's Nov. 26 meeting, Parker said the project wouldn't work from a financial standpoint because potential hotel operators have expressed the need for a tall building of five stories or higher. Some council members appeared willing to go to three stories, above the recently adopted 28-foot height limit that effectively limits new projects to two stories. Anything beyond three stories is viewed as a tough political sell to the community, officials have said.

Community Development Director Chris Bendon said although the South Aspen Street location was a perfect spot for a lodge, a new hotel project can be achieved in other ways.

"There's no question that the prospect of building a brand-new lodge is more of a challenge than it has been in the past," Bendon said. "Developing a lodge in the immediate downtown has always been a difficult prospect because the lots are just not that large."

He said the city's goal is still reachable. Several other, older lodges and condominium complexes in the area are probably due for upgrades, and such properties can be enhanced and expanded for a net gain to the shrinking bed base.

But in terms of available properties in the heart of the city that would be able to accommodate a substantial lodge project, there's nothing currently available aside from the South Aspen Street property.

"We don't have another 2 1/2-acre parcel," Bendon said. "It's kind of hard to hide that."

Councilman Adam Frisch said the developer's decision to pull the application represents a "reality check" for all of the involved parties.

"I think (Parker) told the unfortunate truth that a hotel anyone's going to want to bring here would need to be bigger than the community at this moment is going to want," Frisch said.

He said he agrees that the type of hotel that would-be operators currently envision as feasible would be too big for the community.

"I just don't think it would fly regardless of what council is sitting up there because the community would get involved and it would turn into a big fight," Frisch said.

He pointed out that while the addition of hot beds is a great concern to the city and the business community, there's an even more pressing need - snow. The lack of early-season snow to adequately cover Aspen Skiing Co.'s four mountains renders the lodge issue moot for now.

"A lot more snow is probably better than a new hotel in the short term," he said.

Frisch said the city can afford to wait until market conditions are more amenable for a lodge project. Even if mitigation requirements related to parking, affordable housing, drainage and the like were waived by the city, a developer would still have a difficult time bringing a new hotel project to fruition because of the community's concern about building heights, he said.

"I think we just have to wait and see what happens down the road," he said. "If we don't get any more hot beds in the next five years, it's not the end of the world."

ASV Aspen Street Owners LLC already has approval, obtained in 2003 by the previous property owner, to build 17 affordable-housing units and 14 townhouses on the property. Earlier this year, the developer submitted plans for a project centered around 14 free-market townhouses and 10 affordable-housing units on the site, along with eight off-site affordable-housing units in the Aspen Business Center area.

As that application was winding through the city's approval process, council members asked Parker whether the idea of a lodge could be resurrected, which led to new negotiations for a hotel component. In his brief comments about the withdrawal of the plan involving lodging, the developer did not say whether his company would definitely pursue the original townhouse development that already has received city approval.

"The value of the land that (ASV Aspen Street Owners LLC) bought is priced on the ability to do a big free-market townhome development," Bendon said. "That land is probably worth a lot more than a lot of other lodge properties in town because of that underlying right. So that became a financial hurdle to making a lodge project make sense. The project would have to make that much more money to overcome that."

Bendon said he believes Parker and his development community knew about the financial challenges all along but were hoping against the odds that a hotel operator would evaluate the project and attempt to make it work.

"When you're skiing down the mountain toward Lift 1A and you look at this property, you always say, 'There ought to be a lodge there,'" Bendon said. "I think he was hoping that his pro forma would work out better and he would find an operator satisfied with operating a 76-unit lodge.

"Everyone was scrounging around in the hat looking for the rabbit. And at the end of the day, there wasn't a rabbit - there was just a plain old dumb hat."

asalvail@aspentimes.com


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The Aspen Times Updated Dec 3, 2012 06:10AM Published Dec 3, 2012 12:31AM Copyright 2012 The Aspen Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.