Base Village condo deals axed; prices go up
Intrawest and the owners of the Aspen Skiing Co. terminated “reservation agreements” with prospective buyers of 85 condominiums at Base Village earlier this month and then increased sales prices by 15 percent.
The prospective buyers of the 85 units had first shot at entering new binding sales contracts ” if they were willing to pay prices up to $300,000 more than they initially were told, according to Scott Calliham, director of sales for the project.
Some local real estate industry insiders said the maneuver by Intrawest and its Skico-related partner, Intrawest Brush Creek Land Co., raised eyebrows.
“This is totally unheard-of in the industry,” said one real estate broker, who asked not to be named for fear of retribution for criticizing the partnership publicly. The source contended that sales agreements are terminated when a developer doesn’t go ahead
with a project ” not simply because construction prices have increased.
The reservation agreements were signed with prospective buyers in April 2005 and earnest money was collected. At that time, it was anticipated that binding contracts would be prepared within 60 to 90 days, Calliham said.
But Intrawest and the Skico had trouble obtaining a vital permit from the U.S. Army Corps of Engineers to begin development of the sprawling village at Snowmass Ski Area’s base. Therefore, they couldn’t offer contracts to the parties that had reservation agreements on the first phase of condos.
The federal agency finally issued the permit earlier this month ” one year after the signing of reservation agreements on the condos for prices ranging from about $650,000 to $2 million.
Intrawest decided condo prices had to go up. The 15 percent increase translates into an additional $97,500 to $300,000 on the price of the condos. The partnership alerted the prospective buyers of the increase in a letter dated April 7; Jim Crown, managing partner of the Skico, co-signed it as a director of the Intrawest Brush Creek Land Co.
The letter said overall prices for the village have gone up 15 to 20 percent, with some segments of construction expected to double. Therefore, the condo prices had to be increased.
“We sincerely regret the impact this has on our buyers,” the letter said. “We deliberated this decision many times over before concluding that this was the best course of action.
“Cutting quality from the project, re-launching all of Phase 1 to new buyers, or cancelling [sic] the project altogether simply would not be good business decisions or fair to those of you who have been so patient and loyal to this project.”
Calliham admitted there was “certainly a risk” of alienating buyers by raising the prices. “We have seen virtually no fallout, though,” he said, meaning the prospective buyers are expected to go through with the deals at higher prices.
Crown and Intrawest officials summoned real estate brokers to Snowmass Village in early April, collected them in small groups and told them of the change in price, according to a source familiar with the arrangement.
The prospective buyers were also notified directly by letter. Contracts with binding sales prices were scheduled to arrive with buyers starting this week. In most cases, the prospective buyers have two weeks to sign the contracts, Calliham said.
B.J. Adams, the owner of a Snowmass Village real estate business that brokered several purchase agreements of the Base Village condos, said every buyer her office is helping is going through with the deal.
“There’s no question we were dismayed when this announcement was made,” Adams said.
But she said real estate agents in her office understood the reasons much better after the presentation by Intrawest. That helped them explain the 15 percent price increase to their clients.
“Obviously they aren’t jumping up and down,” she said, but they have accepted it and plan to proceed. Condominiums in Snowmass Village have appreciated 20 to 30 percent over the last year.
She said there is no question in her mind that the Base Village partners had the right to terminate the reservation agreements. The agreements clearly stated that either party could cancel the deal.
However, another Aspen source connected to the real estate development business, but with no direct knowledge of the Base Village events, said he wouldn’t be surprised to see a lawsuit challenging the termination of the reservation agreements.
Construction has started on Base Village. In addition to the condos, the first phase will include about 30,000 square feet of restaurants and retail space; a 25,000-square-foot children’s center; and a 16,000-square-foot multiuse conference center.
The condos should be completed by the 2007-08 ski season, according to Crown’s letter.
Scott Condon’s e-mail address is firstname.lastname@example.org
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