New St. Regis Aspen owners ask for transfer tax exemptions
October 23, 2018
The city's Wheeler Opera House and affordable-housing coffers typically reap financial benefits when a piece of real estate sells within Aspen limits, but that might not be the case with the recent sell-off of nearly 20 percent of a major downtown hotel.
The new owners of 18.9 percent of the St. Regis Aspen resort hotel are seeking a $269,000 waiver from the city by asking it to exempt them from paying the Real Estate Transfer Tax.
The two-pronged RETT requires buyers, upon closing, to pay a 0.5 percent tax to the city that supports the historic Wheeler venue and its operations, as well as a 1 percent tax that funds the city's housing program.
Earlier this month, the owners of the 179-room luxury hotel announced that 18.9 percent of the hotel had been bought for $18 million in digital tokens sold by the newly formed Aspen Digital Inc., a tokenized real estate offering. Aspen Digital's $1 tokens were sold to accredited investors who had to purchase at least 10,000 tokens.
Aspen City Councilman Bert Myrin drew attention to the matter at Monday's council meeting.
"To me, it's very insulting that a business that relies on our workforce and that relies on our community assets, like the Wheeler, is even asking for an exemption on selling a fifth of their real estate," he said.
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Mayor Steve Skadron said the council would follow up on Myrin's call to investigate the issue.
For now, however, the city's attorney and finance offices are reviewing the exemption application, which Aspen Digital Inc. submitted Oct. 1.
"We are going to evaluate it like any other request for exemption," Assistant City Attorney Andrea Bryan said Tuesday.
If the request is denied, Aspen Digital could appeal the matter to the City Council, Bryan said.
The exemption application, which The Aspen Times obtained Tuesday after a public-records request it submitted Friday to the city, states that Aspen Digital is precluded from paying the RETT based on language in the city's municipal code.
The application specifically cites that the RETT is not applicable when less than 50 percent of a property changes ownership.
Myrin, in a follow-up interview, said while that is the case, Aspen Digital has a "moral obligation" to pay the RETT tax since it also benefits from it through housing for its employees and subsidized tickets to Wheeler shows.
Myrin has been watching the St. Regis deal unfold since as far back as February. That's when he attended a gathering of potential investors at the lodge's Chefs Club restaurant, which was hosted by New York-based Elevated Returns, the manager of 315 East Dean Associates, then owners of the entire hotel.
There, Stephane De Baets, president of Elevated Returns, made a pitch for raising $33.5 million for an initial public offering of part of the hotel through a single-asset real estate investment trust.
After retreating on that strategy, De Baets focused on selling a chunk of the hotel through the coins sold by Aspen Digital.
For that to happen, a complex series of transactions ensued, resulting in the creation of Delaware-based Aspen Owner LLC taking full ownership of the St. Regis for $10 in a quit claim deed transaction recorded June 27 in the Pitkin County Clerk and Recorder's Office.
That deal also stipulated that 315 East Dean would own 81.1 percent of Aspen Owner, and Aspen Digital would own the rest.
Also on June 27, documents were filed in the Pitkin County Clerk and Recorder's Office showing that Aspen Owner had borrowed $99 million against the St. Regis from JPMorgan Chase Bank.
Public records list De Baets as either the president or CEO of 315 East Dean Associates, Aspen Digital and Aspen Owner.
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