Aspen advances $10M purchase of Centennial deed restrictions
The city is moving forward with its pursuit to buy the deed restrictions on 148 apartments at Centennial for $10 million.
Aspen City Council on Tuesday voted that the municipal government should enter into a purchase agreement with the owner of the complex, Centennial Aspen II Limited Partnership.
The agreement gives both sides of the deal the opportunity to walk away without cause during the 30-day diligence period.
That gives city officials time to research the complicated approvals associated with the property and its deed restrictions, City Attorney Jim True told council.
How much the owner can charge for rent expires at the end of the 21st year after the death of the last member of the Pitkin Board of County Commissioners who approved the development, which is 72-year-old Old Snowmass resident Michael Kinsley.
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The city’s interest in buying those deed restrictions in perpetuity was prompted by the owner shopping the property to prospective buyers, officials said.
Sam Brown, general partner of the limited partnership, said Monday that his partners are motivated to sell so they can focus on other real estate opportunities in Aspen.
They hired a commercial broker, which marketed the property and received numerous offers, with the deed restrictions in place and without them in what could be 40-plus years from now.
Once the deed restrictions are removed, the owner of the property could develop it into free-market housing with far fewer affordable housing units.
Several years ago, Brown offered the city the chance to buy the property for $60 million, and recently reduced that to $50 million, but the municipal government declined.
“We had a number of offers, many of which that were over what I offered to the city,” Brown said, adding that as the developer of the affordable housing apartments almost four decades ago, he believes they should remain in local control. “I think it’s the right thing to do for the city to buy this.”
Brown added that he does have a back-up offer on the table from a company that specializes in owning and managing affordable housing for more than the deal with the city.
City officials have said it’s difficult to put a value on a deed restriction now or into the future.
Councilman Ward Hauenstein asked rhetorically in Tuesday’s meeting how much it would cost to replace 148 affordable housing units.
“A value is whatever someone is willing to pay for it,” he said.
Mick Ireland, Aspen resident and former mayor and county commissioner, advised council to not buy the deed restrictions for the inflated price of $10 million without a valuation or an appraisal being done.
He also noted that in the city’s negotiations with the limited partnership, the price keeps going down.
“You are making progress, why stop? Ireland said.
Councilwoman Rachel Richards said she supported the purchase agreement because it allows a month for the city to fully research the deal and what it means in protecting a significant portion of the affordable housing stock.
“This is a problem that has been looming out there,” she said of the impending expiration of the deed restrictions, adding that Kinsley wrote a letter to the editor in support of the city’s purchase. “It’s important to do our due diligence.”
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After 14 years, a lengthy lawsuit by area residents and nearly $4 million in construction costs, a half-mile trail to two school campuses in the Castle Creek Valley was finally completed this week.