Planning for Aspen hotel continues despite financial turmoil
September 30, 2009
ASPEN – A citizen group charged with designing a hotel at the base of Aspen Mountain will continue its work even though the development company that owns the property filed for bankruptcy last week.
John Sarpa, representing Aspen Land Fund II, told members of the Lodge at Aspen COWOP (convenience and welfare of the public) task force Wednesday that the partnership is renegotiating its $22 million loan with Alpine Bank for the property it owns on South Aspen Street.
That news comes only a few days after the development company learned Alpine Bank had entered into a contract with an unknown third party to sell its loan on the project even though Aspen Land Fund II had been in negotiations to extend the terms of the note.
As a result, Aspen Land Fund II was forced to file for bankruptcy protection in an attempt to prevent the loan from being acquired.
“We didn’t want to be dictated to by the bank or a third party or anyone else,” Sarpa explained to the group. “It’s a complex time financially and economically.” People are aggressively acquiring loans at low prices, he said.
The third party, the identity of which remains a mystery, intends to eliminate Aspen Land Fund II and build 17 townhomes – a development plan for the property approved years ago by a previous City Council.
Recommended Stories For You
Sarpa told COWOP members as much as he could about Aspen Land Fund’s financial status, and what it means for the group and its review of the 160,000-square-foot hotel proposal known as the Lodge at Aspen Mountain.
The Chapter 11 bankruptcy filing allows Aspen Land Fund II 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.
Even though the company is bankrupt, money is available for the planning effort, Sarpa said.
“Nobody’s not getting paid,” he said. “You have to be a viable business to continue on and people are making sure we are.”
Sarpa said it will be at least five or six months before the bankruptcy is sorted out and during that time, Aspen Land Fund II will continue to own the property.
Sarpa said he hopes the task force completes its work by the end of October, so whatever land-use project is recommended to the Aspen City Council for approval can move forward in the months following.
The COWOP still has to address transportation and traffic issues, the hotel’s scale and mass, its architectural character and its energy consumption. The group has been meeting for eight weeks.
Aspen Community Development Director Chris Bendon said a more realistic timeline for the majority of the group to sign off on the project and make a recommendation to the council is mid-November.
Sarpa said, while time is of the essence to get an agreed-upon land-use plan to the council, it will be a long time before a hotel is built. When it is, he said, hopefully the economy will be in better shape and tourism will have bounced back.
“If and when this hotel is built, it will be … four or five years at least into the future,” he said.
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, and last January, the council voted to send a revised proposal to Aspen voters. The May ballot measure was eventually pulled and developers have brought back a scaled-down version.
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’s now up to the community to make the final decision, Sarpa said.
“Imagine six years into this and have this event (the takeover of the loan and bankruptcy) take place,” he said. “We’re still committed to this … we could have done a lot of things but we’re still willing to take the risk.”
The COWOP next week will review conceptual drawings by Poss Architecture and Planning unveiling the latest look of the hotel, based on the group’s feedback.
“For the first time, we’ll see what we’ve all been working on,” Sarpa said, adding there still a lot of issues to sort out. “We’ll make sure the project is still viable no matter what the costs are.”
Aspen Land Fund II owns property on the west side of South Aspen Street, where the old Mine Dump Apartments once stood. The property is valued at $30 million, according to court documents filed in U.S. Bankruptcy Court in Denver. The company’s other asset is a CD valued at $1.5 million. Both assets were used as collateral for the Alpine Bank loan. The company has $34.6 million in debt.