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March 12, 2014
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Willits owner: Investors can’t face risk

The owner of Willits Town Center doesn’t want to provide a financial guarantee that it will build an affordable-housing project because it would put its investors “at risk,” an executive told the Basalt Town Council on Tuesday night.

Evan Welsh, a senior associate with Mariner Real Estate Management, said the company won’t construct a 113-room hotel in the Willits commercial core if the town government requires it to put up $2.3 million as security for affordable housing.

“We can’t put our investors at risk,” Welsh said at the council meeting.

Instead, Mariner wants to construct the hotel with an understanding that no other building in Willits Town Center would be approved until a 50-unit affordable-housing complex is constructed. The requirement to build the project after the hotel would be a condition of approval for the hotel, said Tim Belinski, Mariner’s local representative.

“It’s the next building. It’s just that simple,” Belinski said.

Jody Edwards, the local attorney for Mariner, said the town has the ability to control what gets built next by declaring that no certificates of occupancy will be issued for any building except affordable housing.

“That’s pretty substantial leverage,” he said.

The town’s public finance consultant urged the council to require greater security. Bruce Kimmel, of Ehlers Inc., advised the council to think in terms of mitigating that the risk to the public. In this case, the risk is the 50 affordable residences might not get constructed if Mariner sells the project, the economy takes a downturn or competition makes the affordable-housing project less attractive.

Nothing would prevent Mariner or another owner, if the project were ever sold, from asking for an amendment to approvals to remove the requirement that the affordable housing gets built next.

The commitment by Mariner to build the housing next is an “insufficient guarantee that it will satisfy its current obligation in a timely fashion,” Kimmel said.

Mariner has reached a point in the Willits Town Center development where it must provide 19 units of affordable housing. As development advances, it will trigger the need for additional housing. A total of 56 units would be required at build-out. The housing is required by approvals granted in 2001.

“To think of this as a donation to the community” is inaccurate, Kimmel said.

Mariner isn’t seeking a waiver from the housing units. Officials said if the town allows it to delay construction of the housing temporarily until after the hotel, it will accelerate its mitigation and build 50 units in one shot.

To guarantee that occurs, Kimmel advised the Town Council to make Mariner provide a $2.3 million letter of credit or escrow account. It would be refunded to Mariner if the company starts the housing project by the time the hotel is completed. If not, the town could tap the funds for affordable housing.

Welsh and Belinski stressed thaat hotel construction wouldn’t start under those conditions.

“It’s not a chump-change kind of thing,” Belinski said.

The standoff spurred varying reactions from the six council members attending the meeting.

Councilman Rick Stevens said the hotel would provide a huge financial boost for Willits and the entire town of Basalt, both during construction and when it is operating.

“We lose sight of that when we talk about the profits the developers made,” Stevens said.

He didn’t take a clear stand on requiring a financial guarantee for the affordable housing.

“I just want to find a way not to delay a hotel,” Stevens said.

Councilwoman Karen Teague said it isn’t a good idea for the town government, developer or community to craft an agreement that potentially would freeze future development at Willis. The goal is to keep the project moving, she said, and affordable housing should be part of that progress.

Teague said she wasn’t satisfied with Mariner’s explanation for why it cannot provide a financial guarantee for the project. She also said she has “no doubt” that Mariner or a future owner would come to the council for another waiver if the housing isn’t guaranteed at this stage.

Councilman Glenn Rappaport said he doesn’t support requiring Mariner to make a financial guarantee for the affordable housing. He said his No. 1 priority is economic vitality. “I support the hotel wholeheartedly,” he said.

Rappaport said the town makes the “same mistake over and over again” by telling developers that want to invest in the community that they must provide affordable housing. That housing, he claimed, just ends up getting built for people working in Aspen.

Councilman Mark Kittle said Snowmass Village is facing an issue with commitments being fulfilled at the Base Village development. He indicated that he wants to avoid similar problems in Basalt.

“I think it’s important that we have something to rely on,” he said.

Mayor Jacque Whitsitt said she feels the affordable housing is as equally vital to the community as the hotel. She said she favors some type of security that it will be built next.

Councilman Rob Leavitt suggested a way to avert the standoff between Kimmel and Mariner. He suggested the council grant the first of two approvals necessary for the hotel — with the understanding that town staff and Mariner come to some agreement for security on the affordable housing before the issue comes back to the council on March 25. The council approved the first reading of an ordinance granting approval to the hotel by a 6-0 vote.

scondon@aspentimes.com

“It’s not a chump change kind of thing.”
Tim Belinski
Willits Town Center


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The Aspen Times Updated Mar 12, 2014 10:10PM Published Mar 14, 2014 11:47AM Copyright 2014 The Aspen Times. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.