Should they stay or should they go?
September 25, 2007
ASPEN ” By this time next year, it won’t be business as usual at the Mill Street Commercial Center as many tenants will close up shop because of increased rents from the building’s owners.
The owners of Replay Sports, Alps Video, Aspen Tile and other locally serving businesses say they can’t afford the increase in rent by North Mill Street LLC, a group of investors led by local attorney Andy Hecht, which bought the 20,000-square-foot building in June for $1.5 million.
The tenants received notices in August that their rents would increase as much as 30 percent, forcing them to either commit to new leases through 2010 or let them expire in October 2008.
The rent increase and the uncertainty was too much for Tim Fortier, owner of Aspen Tile, a business he has operated in the same location since 1984.
Fortier said his basic rent was going to increase by 5 percent annually, instead of the 3.5 percent increase that normally had kicked in each year. But the biggest change in the lease was the addition of paying the Common Area Maintenance fee, or CAM, which includes taxes, utilities and insurance for the building.
Fortier, who occupies the most space of all of the tenants, at 4,850 square feet, said his rent would have increased from $13,337 per month to $14,004 over the first year.
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Add the monthly CAM fees of $4,243, and Fortier’s looking at an increase of more than 30 percent ” or more than $50,000 annually ” over his current lease.
Fortier decided to move down the street to Obermeyer Place, where he bought three spaces for $1.7 million, and will now have control over his destiny. The Mill Street landlords have not communicated with Fortier on their plans for the building, and as a business owner, that’s too big of an unknown.
“My mortgage payment will be the same as what I pay in rent now,” he said. “The reality for me was that I was going to have to pay $40,000 to $50,000 more in rent, and at the end of three years the chances of being torn down are pretty good.”
For Steve Stevens, who owns Alps Video, he hoped for a temporary location in a trailer when the building is ultimately knocked down and rebuilt. He thought he might be able to move back in. But that’s not possible now with the rent going up $750 per month.
“I’m not signing the new lease,” he said, adding that he is unsure where he will relocate. Stevens has operated the video store for 15 years and before that had run an upholstery shop since 1980.
Brad Jasicki, owner of Replay Sports, was facing an increase, as well. He won’t be signing a new lease for his 1,000 square feet of space where he sells used sports equipment.
“I can’t feasibly make it work,” he said, adding that he hopes the landlords have a change of heart and allow him to stay at the current rent. Otherwise, Jasicki doesn’t have a clue where he can continue to operate in an affordable location. “I don’t think there’s another option in town … I’ll move to a town that cares.”
Ryan Chadwick, owner of Green Dry Cleaning and Laundry, is still weighing his options. He is unsure whether he will sign the new lease, which is due by the end of the month from Katie Reed Management LLC, which manages the property.
Chadwick has owned the business for the past year and a half, but the laundromat has been there since construction of the building. Chadwick has 2,000 square feet of space and is facing a 30 percent jump in rent.
“The rent increase was a surprise to all of us,” he said. “My hope is that we can stay for at least five years.”
Chadwick believes the laundromat is a crucial service for many Aspenites, particularly those who live in apartments on the east side of town and don’t have washer-dryers. If he has to move, Chadwick said he’s not optimistic he can find another affordable place to set up shop.
“I would have to tell people in Hunter Creek and Centennial they would have to go to El Jebel to do their laundry,” he said. “But I don’t want to raise prices to ridiculous levels, either, to pay the rent.”
Other tenants have no option but to sign the lease and wait it out because there are no more affordable places in Aspen to set up shop.
“My first reaction was joy because I get another three years,” said Chris McLaughlin, owner of Aspen Repair. He said he’ll sign a new lease and pay 22 percent more rent on his 733-square-foot repair shop. When October 2010 comes around, he’ll decide whether to relocate or shut down.
“If they had their way, they’d tear it down tomorrow,” McLaughlin said.
Walter Voight, owner of Walter’s Carpet, is facing a slight increase, but he’ll pay it because there is no where else to go.
“I don’t want to move,” he said, adding that he’s nearing retirement anyway. “I’ll hang in there and then see what happens in three years.”
Back Door Catering will stay put as well.
“We don’t have any choice,” a representative said, asking to remain anonymous. “We’re going to pay a third more, but there’s nowhere else to go.”
Mike Wampler, owner of the Aspen Velo bike shop, has said in the past that he will sign a new lease because he has a family to feed and doesn’t think there will be another place in Aspen that will be any more affordable.
“We knew we had a good deal before, but this is supposed to be affordable rent,” he told The Aspen Times last month. “With the new rent increases it’s not going to be affordable. But there’s not much I can do. I don’t have much of a choice. I have two kids to feed.”
Representatives from Katie Reed Management didn’t return phone calls seeking comment about the new lease or what the plans are for the building.
Fortier the silence is deafening.
“Our future was too sketchy for me,” he said. “They obviously have a plan and that plan doesn’t include me. There’s no hard feelings, it’s obviously time to move on. I wish everybody the best of luck.”
Many suspect the new owners eventually plan to tear down Mill Street Commercial Center, located across from the post office, and model it after Obermeyer Place, a Service, Commercial and Industrial-zoned development on Bleeker Street. However, there have been no applications with the city.
The SCI district was created decades ago to keep locally serving businesses in town by keeping the rents affordable. As the City Council struggles to preserve that zone, it can’t do much to protect local entrepreneurs when buildings are bought.
“We don’t have any way to protect them,” said Mayor Mick Ireland. “If the property owner wants to raise the rent, we can’t do anything. … It’s unfortunate they are able to increase the rents in a way that hurts some valuable locally-serving businesses.”
It’s unknown what Hecht and his partners have planned for the building, but it’s likely to include a residential component that could involve fractional-ownership condominiums. The building owners would have to ask for a zoning change to allow a residential-commercial mix.
But Ireland said if he’s still in office when a land use application is filed, he will do all he can to protect locally serving businesses there.
“There would have to be a lot of things done before I upzone that property,” he said. “We want to create more SCI space and we are looking for more. I don’t know what they are going to apply for but in other instances, people look for residential or fractionals to make the purchase financially sound.”
Other observers in City Hall foresee the property owners redeveloping the complex into a three-story building with residential on the top floor, possibly offices on the second floor and shops on the street level. An underground parking garage and affordable housing could be part of the application as well.
Those are the components that make up Obermeyer Place, and it might just be the right model, said City Councilman Dwayne Romero, a developer who helped build the complex.
“Obermeyer is a great case study,” Romero said, adding that he is 110 percent behind preserving the SCI zone and protecting locally serving businesses throughout town. “That site has great potential for additional housing. The infill opportunities are enormous.”
Romero added that it’s not uncommon for landlords to charge tenants CAM fees and levy triple net leases to offset the costs of operating the building, including insurance, taxes and maintenance.
“It’s just that the timing is unfortunate,” he said.
Hecht, who with other investors have recently bought up other coveted establishments in town including the Red Onion building, remains silent on what he and his partners intend to do with any of their investments.
Their refusal to convey their plans to the community and their increasing portfolio of property has some citizens believing they have reached a new level of greed.
“They want to own everything. … Being millionaires isn’t good enough,” said longtime Aspenite Bayless Williams, who frequents the businesses on Mill Street. “They want to be billionaires. If this was the 1890s, these guys would be tarred and feathered and run out of town.”