Business deal sours between Basalt, town’s big developer
July 1, 2002
It looked like a match made in heaven. Instead a business deal between Basalt’s biggest developer and the town government has gone to hell.
Two development firms controlled by Michael Lipkin, Clay Crossland and Paul Adams have filed a lawsuit against the Basalt Town Council alleging that the government reneged on terms of three agreements made in the 1990s.
The developers contend that they provided land for the benefit of two significant public works projects only to have the town fail to live up to its side of the bargains.
“They basically screwed us,” said Herb Klein, the attorney for the developers.
Town attorney Jody Edwards doesn’t agree. He wouldn’t discuss the substance of the disagreement, but he denied that the town has acted improperly.
The lawsuit was filed by the developers in Eagle County District Court. It hasn’t been officially served on the town government or the council members so it isn’t being processed by the court system yet. Klein said he is engaged in talks with Edwards to see if litigation can be avoided.
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The roots of the dispute go back to 1996, when Adam’s and Crossland’s Basalt Trade Associates agreed to provide the town government with the land it needed to extend Midland Avenue out toward Highway 82.
Instead of collecting money from the town, the developers claim they secured a promise that a development application for land along that new road would be processed “expeditiously.”
The development firm and town also teamed in an effort to convince the U.S. Postal Service to build a new Basalt facility along the Midland extension. Crossland and Adams had negotiated to sell the post office property on the south side of Highway 82. Town officials lobbied for a different site, on the north side of Highway 82, that was also owned by Crossland and Adams.
The developers agreed to make the land desired by the town available for sale to the post office. The facility was later built at that site.
In return, the developers thought they received a promise from the town to “expedite processing of its development plans and the annexation, planning and zoning of the 11-acre parcel” on the south side of Highway 82.
In other words, the developers provided land for the extended Midland Avenue and for the post office. In return, they wanted speedy review of two development applications – one at a site adjacent to the post office and one across the highway.
The developers reviewed the first of three approvals necessary for a hotel or townhouses and 27,265 square feet of office and retail space next to the post office. The town planning commission granted a second approval, as well. Then the review stopped cold, according to Klein.
“They didn’t do anything with this application for several years,” said Klein. “They put it on the back burner.”
Meanwhile, the town adopted tough new codes requiring developers to provide affordable housing and to comply with new flood-plain/flood-way standards.
The town staff said those new standards will apply to the Midland Addition project. The developers contend they should not.
Klein said the town is holding the project’s approval “hostage” over the affordable housing issue.
A town planner’s memo to the council claimed the developers agreed with affordable housing requirements during negotiations in 1998. The memo doesn’t make it clear how much housing the town staff wants required.
A memo from Lipkin, who became a partner in the project with Crossland and Adams, said the hotel operator agreed to provide two units for employees. The hotel and commercial project is expected to generate 112 employees.
Lipkin also proposed the developers provide $41,500 for seed money to buy money for affordable housing, and that sales taxes generated by the project could be used to buy land.
Lipkin also said Basalt officials should “apply pressure on Aspen and Pitkin County to build the promised 500 units of affordable housing within the Aspen metro area.”
The lawsuit seeks to block the town from applying its new affordable housing requirements and flood-plain rules, which could limit development. It also seeks speedy reviews of the projects and monetary damages from the loss of the ability to sell or rent property.
The lawsuit was filed this month. The town’s review of the Midland Addition project was coincidental, said Edwards.
“We started processing this before we heard of [the lawsuit],” he said.
Klein said it is too soon to tell if the resumed review is reason for optimism for his clients. The lawsuit won’t be pressed immediately in an effort to reach an understanding with Edwards, he said.