Developer is facing scrutiny | AspenTimes.com

Developer is facing scrutiny

Carolyn SackariasonThe Aspen TimesAspen CO, Colorado

ASPEN A federal investigation into the developer who is proposing to build a condominium and affordable housing complex in Aspens east end neighborhood might find it difficult to get approval by the city government.Tom Petters, CEO and chairman of Petters Group Worldwide, is the subject of an investigation by the FBI, the U.S. attorneys office, the IRS criminal investigative division and the U.S. Postal Inspection Service.His Minnetonka, Minn.-based headquarters was raided by federal agents on Wednesday. Electronic and written materials were carted away from the offices and loaded into SUVs.The investigation centers on Petters Company Inc., a finance company, and it does not include any of the other companies in the Petters portfolio, including Petters Real Estate Group, which controls Aspen Walk LLC, a subsidiary that owns 404 Park Ave. in Aspen.Petters Company Inc. has no ties to the real estate company, said Petters Worldwide spokeswoman Andrea Miller.Even so, the investigation has cast doubt among some Aspen officials as to whether the local government should be involved with an entity under federal investigation, or if it will affect the financial success of the public-private partnership.I dont think we will grant an approval under these circumstances, said Aspen Mayor Mick Ireland, adding that a delay in the project may be appropriate until the investigation is complete.Petters Real Estate Group is a partner with the Aspen/Pitkin County Housing Authority (APCHA) in whats being called Aspen Walk, a proposal that calls for 24 affordable housing units and 14 free-market condos on two parcels 404 Park Ave. and 414 Park Circle.Stan Clauson, who is the local planner of the project, said changes have been made to the building to address the Aspen City Councils concerns that the project is too big. The council is scheduled to vote on the conceptual plan Monday.I hope its not a distraction because I think Aspen Walk is a good project, Clauson said, adding he doesnt know much about the LLC but said company representatives have been a pleasure to work with. I dont know anything but they pay their bills.At the projects last review in August, there was some concern among elected officials whether the financing of the project was solid, given the unstable economy. Tom Klassen, managing partner for Petters Real Estate Group, assured the council then that the companys financial backings were secure, as long as the project wasnt unnecessarily delayed in the approval process.Petters website says that Petters Capital Inc. the firm under investigation is a finance subsidiary established to support the global activities and funding requirements of the parent company and its affiliates.The real estate portion of the website describes the Aspen Walk project as situated on .75 acre parcel of land located on the rapidly re-developing eastside of the city of Aspen. Petters Real Estate Group expects to break ground in summer 2008 on this 40-unit, $55 million condominium project just a few blocks from the world renowned commercial core of Aspen, Colorado. Delivery is scheduled for fall of 2009.City attorney John Worcester said he doesnt see the investigation as a hindrance to the review of the Aspen Walk project because its still in the early stages of the land-use approval process.If [the council] approves anything, its conceptual, he said, adding theres plenty of time for review and the facts to come out of the investigation. I havent heard of a reason to postpone it at this point.Tom McCabe, executive director of APCHA, said he spoke on Thursday with Klassen and Tom Hay, vice president of Petters Real Estate Group, who assured him the investigation wont affect the public-private project.Were of course concerned and it took me by surprise, McCabe said. But our deal should be affected in no way.Klassen and Hay will be on hand Monday during the public review of Aspen Walk to answer any questions, which council members likely will have for them.This is something I would ask about, said City Councilman Steve Skadron, adding of concern to him is the companys ability to complete the project and ensuring the local employees who live in the current buildings are housed in the new development.I want to make sure they get what they are promised, Skadron said.Petters Real Estate Group focuses on hospitality and resort areas, as well as vacation residential and commercial projects. The company plans to develop a $200 million project at the base of Keystone Mountain that includes a four-star, 105 key, condo hotel, and 217 condominiums and townhomes.The companys outside counsel, John Lundquist from Fredrikson & Byron, said Thursday charges have not been filed against anyone. This event was part of an ongoing investigation, which could take months to complete, he told the Minneapolis Star Tribune. Agents Wednesday also searched Petters Wayzata home. The 51-year-old chief executive was away during the searches.The search warrant materials remain under seal in U.S. District Court.Petters, who founded Petters Worldwide, is the majority owner of Sun Country Airlines and has holdings in Polaroid and numerous other businesses.csack@aspentimes.com

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