City of Aspen slaps Hunt projects with three red tags in one day

A city-issued stop-work order placed Friday on the construction site of the future RH Guesthouse at the Historic Crystal Palace was lifted hours later after developer Mark Hunt paid off the outstanding balance, people associated with the project said.

Yet stop-work orders on two other Hunt-led projects, also red-tagged Friday, remained in effect at the end of business hours, according to a city engineer.

The outstanding debt to the city amounted to more than $170,000 for encroachment fees, which developers are required to pay when their projects take up parking spaces, sidewalks and other public places.

Reached Friday, Hunt said in an email the issues had been resolved.

“There aren’t any. Mistake by the city. All clean,” he said when asked about the red tags.

According to the city, different forces were at play and business with Hunt over the red tags remains unfinished.

Tim Rohe, of the city’s engineering department, who issued the three citations late in the morning, said multiple attempts to collect the fees from Hunt and his company M Development were futile. The end of Thursday was the deadline for payment and it wasn’t met, he said.

By Friday, however, the city had gotten the attention of Hunt and M Development. While paying two bills hours after being red tagged (later to cancel one of those payments), Hunt has another one outstanding for $61,000 that’s due in encroachment fees for his affordable-housing project at the corner of West Hallam and Eighth streets. That location also is where Poppies Bistro Cafe was open from 1981 through the late 2000s.

Hunt will meet with the city Wednesday to negotiate the balance owed at the old Poppies site, Rohe said. The amount is being contested because the site is intended for worker housing and Hunt believes the balance should be lower, Rohe said.

While the stop-work order was lifted at RH Guesthouse at the Historic Crystal Palace, construction activity there has been completely halted since July 1.

Hunt officials have said it is because minor revisions to the project’s interior need to be reviewed and approved by the city. Hunt also said work will resume shortly. Representatives for the project’s general contractor declined comment on the hotel project’s status.

Elsewhere in Hunt’s development orbit, construction is under a city-ordered halt at 434 E. Cooper Ave., site of the former Bidwell Building, which was demolished in December. Hunt owes $69,000 in overdue encroachment fees and the site had other unresolved issues with the city as of Friday, Rohe said. Hunt’s team had cut a check covering the amount owed to the city after being red-tagged Friday, but later in the day, put a stop payment on the check, Rohe said in a text message Friday night. That project calls for a two-story building that would house the RH Gallery and other retail spaces.

A posted notice at the site said, “Stop all construction-related work until you have an approved stormwater management plan. Due to a lack of fugitive dust control, absolutely no parking on site.”

The notice gives the project until July 30 “to avoid further enforcement action.”

The site also has been devoid of construction activity of late, Rohe said.

“They have not worked on that site the last 30 days and turned it into a parking lot,” he said, noting the area could get contaminated without a stormwater management plan in place.

Project supervisor Bryan Scott of G.F. Woods Construction, the general contractor on the Bidwell project, said they will remedy the situation early next week.

“The money got paid and they’re asking for us to tighten up the space, and we’re going to do that immediately starting first thing Monday morning,” he said, previous to the stop-payment being placed.

The RH Gallery and RH Guesthouse are part of a so-called Aspen Ecosystem that the home furnishings company — formerly known as Restoration Hardware — has teamed with Hunt on.

In January, RH announced a partnership with Hunt to create an arts, lodging, residential and retail development touted as an “Aspen Ecosystem.” RH also announced its $105 million investment into the project that includes the 20-room luxury boutique hotel where the Crystal Palace was.

Hunt played down a statement in a recent Form 10-Q filing by RH, which is publicly traded and based in Corte Madera, California. The June 10-dated filing with the Securities and Exchange Commission noted the managing member of three limited liability companies owes nearly $14 million to RH. Hunt is the managing member of those three LLCs.

“As of May 1, 2021, $13.8 million of promissory notes receivable are outstanding with the managing member, which are included in prepaid expense and other current assets on the condensed consolidated balance sheets,” said the filing, which was based on RH’s quarterly financials through May. ”These promissory notes are expected to be settled in cash and not converted into additional equity investment in the Aspen LLCs.”

In other words, the filing suggests that Hunt is behind on a $13.8 million loan to RH, and that RH is not interested in having more equity in the buildings that it will be occupying and in which Hunt’s LLCs have majority ownership.

Hunt, in an email Thursday, said the outstanding debt “has nothing to do with the delay” on the construction at the old Crystal Palace location. “It’s simply an accounting method based on timing of equity.”

An email about the statement concerning the promissory notes, which was sent to RH’s media inquiry department, was not answered Friday.

rcarroll@aspentimes.com