Lodge at Aspen Mountain gets another lease on life
November 18, 2009
ASPEN – The Aspen City Council on Tuesday granted a developer a two-year extension for vested rights to build townhomes on South Aspen Street as a back-up plan if its proposed hotel is denied or withdrawn.
John Sarpa, representing Aspen Land Fund II, LLC, needed the extension as a key term in renegotiating a $22 million loan with Alpine Bank. The vested rights were set to expire in Jan. 28, 2011, and now they will end Jan. 28, 2013.
The bank required at least a three-year extension to build 17 townhomes and 14 affordable housing units, which were approved by a previous council in 2003; the rights were extended at least twice since then.
But after it was clear that a majority of the council might not support three years, the council meeting was put on a five-minute break so Sarpa could meet privately with his bankers and partners, who were on hand at the special session.
“They can’t say yes, no or maybe on the fly, but 24 months is better than nothing,” Sarpa told the council after the quick huddle.
Sarpa explained to the council that the loan was made based on the value of the townhome approvals in place and are needed as further collateral.
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“We are here because our financial situation,” Sarpa said. “In the bank’s assessment to get appropriate breathing room they want three years.”
Aspen Land Fund II filed for Chapter 11 bankruptcy in September after it learned that Alpine Bank had entered into a contract with an unknown third party to sell its loan on the project even though the firm had been in negotiations to extend the terms of the note.
The bankruptcy filing allows the company to reorganize its finances and prevents Alpine Bank from foreclosing on the property. In the meantime, Sarpa and his partners are raising new capital in an effort to continue planning and building the hotel, known as the Lodge at Aspen Mountain.
“The objective of our lenders is the lodging component,” Sarpa told the council, adding if the lodge is approved it would take up to two years to get further approvals like subdivision and development agreements, and building permits. He added that it would be even longer if the lodge goes to a public vote.
Mayor Mick Ireland was apprehensive to grant an extension because he said he doesn’t know the details of the financing, isn’t an expert in banking and doesn’t want townhomes at the base of Aspen Mountain.
“I don’t want to be in the position that carries this on forever,” he said. “The point is to not make options for developers.”
Sarpa pleaded with the council, saying that good work is being done in designing a hotel that’s palatable for the community, and if the bank note isn’t renegotiated, it’s all over.
“We’re asking for help,” he said. “We’re here with our bankers. It’s an odd situation for all of us.”
In the end, the council voted 4-0 to approve the extension. Councilman Derek Johnson recused himself because he lives within 300 feet of the proposed development.
Councilman Dwayne Romero said he doesn’t want years of work by community members who are helping design a hotel be lost because of timing and the tightening of the credit market.
“I think it would be unfortunate that it would come to an abrupt halt over static and noise,” he said. “We should show the community some level of assurance and safe-keeping of the process.”
Sarpa said the company will reorganize its finances as it moves forward with a citizen-based task force called the Lodge at Aspen COWOP (convenience and welfare of the public) for an approval to build a hotel.
The land-use proposal has been through several iterations and has been in the city’s review process for six years. A previous hotel plan was rejected by the council in 2007.
Then last year, it was part of a master plan that included a development proposal across the street known as the Lift One Lodge.
The master plan was recommended by a previous COWOP but was ultimately withdrawn because of a lack of support by the council. As a result, the COWOP task force was disbanded.
In January, the council voted to send a revised proposal to Aspen voters. The May ballot measure was eventually pulled, and developers are working on a scaled-down version.
The current COWOP group is focusing on the hotel’s scale and mass – issues that didn’t get fully fleshed out last year. The building’s size was the main reason the council wanted to send the proposal to voters.
Even though Sarpa’s group could have built the townhomes, it has chosen to continue with the grander plan despite the financial challenges and the long, drawn-out process.
It will likely be sometime in 2010 before the council will review yet another hotel proposal. If it’s approved, it could be up to two years before construction would commence, and even then, the project might not have its financing secured.
Chris Bendon, the city’s community development director, didn’t support Sarpa’s request for a five-year extension and questioned the need for it.
“Certain scenarios may cause the applicant to cease pursuit of the lodge application,” Bendon wrote to council.
He suggested two alternatives that enables the Lodge at Aspen Mountain to proceed, and the council chose the second one. But instead of the suggested six-month buffer commensurate with the lodge development, the council opted for a longer period.