Intrawest bows out of Base Village
August 15, 2006
Intrawest Corp. is working on a deal to bow out of the Base Village project in Snowmass just a few months after construction started on the controversial project.Intrawest and the Aspen Skiing Co., which have been partners in Base Village for four years, announced Tuesday they signed a letter of intent for exclusive sales negotiations with Patrick Smith, the principal investor in a company called WestPac Investments LLC. They hope to have a binding purchase agreement in 60 days, according to Skico managing partner Jim Crown.If the deal is completed, Smith would take over ownership and development of the residential and commercial components of the million-square-foot project. The Skico would retain ownership of skier services in the new village at the base of Fanny Hill, and it would manage a hotel and other residential property. Intrawest would depart the picture.Crown said the potential change in ownership won’t change the village.”While this is a very different path than we thought we were going to be on 12 to 24 months ago, to be honest the finish line looks the same,” Crown said. “The Base Village that was approved by [the Snowmass Village Town Council], supported in [a town election], embarked upon by Intrawest and Aspen Skiing Co. is still the Base Village we’re going to have in 2011.”
Crown said it was always understood that Intrawest, which was the managing partner in the ownership team, was going to sell its interest in Base Village. “It was just going to be much more gradual,” he said.Smith said he investigated the purchase of some of the Base Village commercial space, but decided to make an offer for the entire commercial and residential component.Intrawest is a publicly held company that announced Friday it agreed to a buyout by Fortress Investments Group LLC. That pending sale had nothing to do with Intrawest’s willingness to negotiate a sale of Base Village, according to Michael O’Connor, vice president of development for Intrawest. The timing of the two pending deals is “coincidental,” he said.The potential for speedy turnover at Base Village surprised more people than just Crown. Jeff Tippett, a former mayor and retired businessman in Snowmass Village, said he has lots of questions about the potential owner, but welcomes the departure of Intrawest. “Most of us thought they’d be out of here in 10 to 20 years,” Tippett said.
Tippett was the leader of a group that opposed the Base Village proposal from Intrawest and the Skico. They claimed it was too massive and dense. While Tippett welcomed the possible ownership change, it does little to change what he sees as the plan’s defects.”It’s still going to be a project that’s too big and too tall,” he said.If he was still mayor, he said, he would want to know more about projects Smith’s firms have developed and their financial stability.Those issues are on the current mayor’s mind, as well. Mayor Doug Mercatoris attended a press conference that Smith, Crown and O’Connor held, and said that the community also must do some “due diligence” that precedes a real estate deal. He urged Smith to meet with the council to discuss more of his company’s goals and accomplishments.Snowmass Village Councilman Bill Boineau also attended the meeting and echoed similar concerns as Mercatoris afterward. “There are a lot of questions in my mind about what the future looks like,” he said.He noted that Smith also has ownership interests in the Snowmass Center and Snowmass Village mall. He said those properties have traditionally hosted businesses that cater to different segments of the resort community. He said he wants to know more about the vision Smith has on the interrelationship between three commercial centers. Boineau said it wouldn’t benefit Snowmass Village to have tenants at all three places paying “Aspen prices.”
Boineau asked during the press conference if the Skico’s willingness to sell its interest in Base Village had any broader business implications. Crown stressed the ownership remains committed to running the company.”We are not going anywhere,” he said. “We are not changing what we do. Our commitment to Aspen and Snowmass is as resolute as it’s ever been.”As proof, he said the $50 million in on-mountain improvements at Snowmass Ski Area will continue, regardless of whether Base Village sells.In reality, Crown said, the potential sale of Base Village “takes some risk off the Aspen Skiing Company’s shoulders, some financial risk.”The Skico can reinvest in the businesses it knows best, he said, and leave the development solely in the hands of a professional real estate developer.There was no announcement of terms of business arrangements between the Skico and WestPac.Crown warned that the proposed sale isn’t a done deal. He said the due diligence will be “long and complicated.” In theory, the Crowns will explore if Smith and his group have the ability to complete the village just as Smith will have to investigate more fully if the deal makes sense for him.Crown said he would prefer not to have discussed the potential deal until after a contract was in hand.”That would indicate we have a deal that has a high assurance of going forward. We don’t have that,” he said. “We’re working in good faith and have high expectations of getting there.”The press conference was held, he continued, because so many people are aware of and working on the potential deal that chances were great that rumors would “slip around.”Scott Condon’s e-mail address is email@example.com.