Aspen Power Plant lease — $52,500 a year
The city government on Friday unveiled a lease agreement that the Aspen Power Plant group is seeking for the civic building at 590 N. Mill St., which includes an initial term of 10 years and the cost of $15 per square foot for the first floor.
Other conditions include having the city pay as much as $1.35 million for improvements that would include a new air-conditioning system, adequate water and sewer service and possible repair or replacement of the building’s roof, windows and other elements.
Administering a noise-monitoring program before the lease is signed also is proposed, along with the elimination of hard alcohol from the ground-level restaurant — except during special events — and the allowance of 28 special events a year, provided they don’t conflict with performances at the nearby Theatre Aspen.
Total cost per year would be $52,500 for the 3,500-square-foot ground level. The Power Plant group is asking to pay $10 a year for the 3,000-square-foot second floor because it would provide what they call a community service with the cut-rate office space. The lease would take effect Oct. 1 and expire Sept. 30, 2026, with the option to renew for another five years. The lease’s total term would not exceed 25 years.
“The (Aspen Power Plant) organizers believe these restrictions and policies will allow the project to move forward and for a lease to be finalized and executed,” wrote the group’s lawyer, Chris Bryan, in a letter to City Attorney Jim True on Wednesday.
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Aspen City Council is scheduled to negotiate the lease in public with members of the Aspen Power Plant on Tuesday. At least two closed-door meetings have been held among city staff, elected officials and Power Plant officials leading up to next week’s talks.
In March 2015, the City Council blessed the group’s proposal for a project that includes the upstairs space for 65 desks and/or offices for entrepreneurs and business types, with the downstairs space occupied by the Aspen 82 television station, a business called 82 Events and a restaurant called The Watershed.
The process of getting a lease done, however, has dragged along, in part because the Pitkin County Library has used the riverside building as its temporary space while it remodels and expands its permanent home, which it plans to open later this month.
A group of residents in the adjacent Oklahoma Flats subdivision also have come out against the Power Plant, particularly out of concerns that alcohol will be served on site. The neighbors and Power Plant organizers met recently in May to hash out their differences, with one point of contention being the organization’s nonprofit status.
The Aspen Power Plant, which would be the landlord for the four tenants, is registered as a nonprofit with the Colorado Secretary of State, but it hasn’t achieved tax-exempt status through the IRS. That is part of the plan moving forward, according to the lease and Bryan’s letter.
The letter says “to avoid any disputes concerning compliance with zoning regulations, the (Aspen Power Plant) nevertheless has begun the process of applying for a favorable determination letter from the IRS to satisfy the ‘nonprofit organization’ definition set forth in … the city of Aspen Land Use Code. This obviates the need to rezone the property or for City Council to accept any staff recommendation for a (planned development) overlay regarding nonconforming uses of the property.”
True has said the property, which the city determined was zoned public after previously maintaining it was residential, possibly would have to be run by a tax-exempt nonprofit. If not, the property would require a zoning change or overlay.
The Power Plant team — comprised of David Cook and Spencer McKnight, co-owners of Aspen 82; Gordon Bronson, who is overseeing the office project; and Duncan Clauss, the owner of Aspen Brewing Co. who would operate the restaurant — have argued that the project will provide a community service.
Public-zone districts allow for public and nonprofit uses so long as they provide a community service. The office space, which would be offered below market value, fills that niche, they have contended.
The lease agreement states that if Aspen Power Plant doesn’t obtain tax-exempt status, either the city or the leaseholder could terminate the agreement.
True, in a memo to the City Council, wrote “this proposal contemplates a complete restructure of the leasing entity with a provision that the lease is subject to the receipt of a determination letter from the IRS granting the applicant … tax-exempt status. These and all other issues related to the lease will be discussed at the work session.”
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