Skico not ready to back out of Burlingame – yet |

Skico not ready to back out of Burlingame – yet

John Colson

The city of Aspen is being formally courted as a potential partnerin the proposed $9 million Burlingame seasonal housing project.But the Music Associates of Aspen’s original partner, the AspenSkiing Co., has not backed away from the project, claimed spokesmanDave Bellack. It has simply told the MAA to try to find anotherpartner.”We are still involved,” Bellack said. But he explained that theSkico’s likely involvement if the MAA and the city become partnerswould be to buy some of the beds for wintertime ski area workers,if that were an option.The MAA, faced with the loss of housing for 178 music studentswhen the Grand Aspen Hotel is demolished next fall, has been workingon the project since 1997.The Skico joined in the project as a way to provide wintertimehousing for ski area workers. Observers have surmised that negotiationswith the MAA have not yielded a partnership agreement that wasattractive enough to keep the Skico at the table.The plan, to date, has been to rent the apartment-style unitsto music students in the summer, and to a mixture of Skico, RoaringFork Transit Agency and general workers in the winter.MAA President Robert Harth sent a letter to the city, dated Feb.17, that outlines a proposal to form a nonprofit organizationto build and manage the 200-bed project. According to documents provided by consultant Jim Curtis, theproposed nonprofit organization would be controlled by a boardof directors appointed by the City Council and include one representativefrom the MAA.Curtis said Tuesday that he will formally present the proposalto the Aspen/Pitkin County Housing Authority on March 3, and tothe City Council at a later date.The dealAccording to the letter from Harth to the city, the anticipateddevelopment cost of the Burlingame seasonal housing project isnearly $9.3 million, which could be funded by tax-exempt bondsissued by the city. The city also can borrow money at a lowerinterest rate than a private corporation can.According to the figures presented by the MAA, the potential revenuesfrom rents of the 200-bed project would only pay for less than$7.2 million in bonds. The remaining $2.1 million would have tobe covered by additional subsidies – $708,000 from the MAA and$1.4 million from the city, including the $615,000 sale priceof the land.To recoup some or all of its subsidy, Harth’s letter suggests,the city could lease up to 87 beds to nonprofit or governmentalentities, or sell them to area employers, at a cost of up to $7,090per bed.The subsidy breakdown, Curtis said, is based on the use of theproject. The MAA would use the units for one-third of the year,while the city (or any leasee) would use it for two-thirds ofthe year. The subsidy split reflects this ratio.The combined subsidy, according to the proposal, would be raisedin a separate bond issue. The two bond issuances would be paidoff at different times, the $7.2 million in the first 30 yearsof the project’s life. The second bond issuance, known as the “Series B bonds,” wouldbe purchased by the city and the MAA in what Assistant City ManagerSteve Barwick called “an internal financing scheme.” These wouldbe paid off only after completion of the 30-year payment scheduleon the first bonds, “Series A.”The reason for the back-to-back payment schedules, Barwick said,is to extend the length of time the MAA would be guaranteed useof the project. Barwick said federal law prohibits the city fromguaranteeing the MAA’s tenancy in the project any longer thanthe repayment schedule. He explained that the MAA was “concernedthat after 30 years, if the political climate changed, they mightnot have access to the project anymore.”Although the MAA proposal suggests the B bonds be paid off overas much as 45 years, Barwick said that may not be legally possible.Harth’s letter suggests that research be done to outline the optionsfor paying off the B bonds, before the City Council considersthe proposal.Also contained in the letter is a schedule of development-relatedcosts, including fees amounting to $122,000 for Curtis’ consultingcompany and $201,000 for Harry Teague Architects, designer ofthe project.Curtis said those figures represent payment for all work doneby the two firms, starting on July 1, 1998 and continuing throughJune 1, 1999.

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