Paul Andersen: Fair Game
October 5, 2009
Last week, I wrote about trouble in paradise between mountain bikers and wilderness. Now there’s trouble in paradise according to a recent front page of The Aspen Times reporting bankruptcy and foreclosure.
The top story was about the historic Hotel Jerome, a luxury hotel run by RockResorts, a wholly owned subsidiary of Vail Resorts. The hotel is facing foreclosure and auction to recoup $36 million in unpaid funds. Financial players in the back story on this debt-plagued property include the usual suspects: Lehman Brothers and Morgan Stanley.
The collapse of prosperity for the Hotel Jerome reflects the same for Aspen. When a key property like the Jerome is set for auction, there’s something seriously wrong. It’s the economic equivalent of the recent seismic shock on the Samoan Islands that sent a tsunami rippling across the sea. Aspen is feeling shock waves, and the water is rising.
That same issue of the Times reported that developers for the Lodge at Aspen – who have spent six years in the labyrinthine approval process at a cost of tens of millions of dollars – have declared the protection of bankruptcy on a debt of $34 million. Goldman Sachs floats into peripheral view on this implosion, but a far more local presence, Alpine Bank, is owed $22 million.
While a dozen creditors are left hanging, the developers have issued assurances for a recovery. Despite such glad tidings, you have to wonder about the developers’ viability when they have dramatically downgraded their financial credibility so publicly.
And so another seismic tremor ripples through Aspen, warning that guarantees of continued prosperity are overstated. From a historic perspective, it feels like the crash of 1893, when the mines shut down because of a dramatic downturn in the price of silver.
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In today’s crash, creditors and contractors have gotten the shaft. Most of the large development projects in the valley are shut down, harking to the silence of the mines from over a century ago. Willits, Snowmass Base Village, Stage Three – all are shuttered.
Add the city of Aspen’s recent staff cuts, plus staff cuts to any number of local businesses, and you’ve got an across-the-board shrinkage of the Aspen economy, the ripples of which are touching an ever-expanding segment of the local population.
Municipal budgets throughout the Roaring Fork Valley are simultaneously constricting as a result of reduced sales taxes, and there’s no telling when this trend will end, or how. Hopes for a nick-of-time recovery are just that, hopes, because there’s gonna be a whole lotta shakin’ goin’ on before the upheavals on Wall Street reach equilibrium.
The cautionary tale is that the luxury home, condo, hotel and vacation markets are teetering over an abyss reminiscent of the old sink hole at Glory Hole Park. That hole, which occurred from the collapse of rotten, underlying mine works, is metaphor for the collapse emanating from a dubious financial foundation.
This reality check offers a sobering opportunity to re-evaluate the valley’s economy and accommodate a more reasonable and sustainable economic model that doesn’t rely on big outside money, huge work forces, and grandiose schemes that threaten to make everybody rich.
Last week, Aspen was identified as having the highest cost of living in Western Colorado, due mainly to the tropospheric price of housing. Aspen, which has been dubbed “the Athens of the West,” has become more like Mount Olympus, where only gods can live. And it seems there aren’t enough gods to go around anymore.
What’s needed in Aspen today is entrepreneurial innovation and visionary ideas before the next Quiet Years epoch stills the pulse of the town altogether. Locally grown food, local energy efficiency and production, rebranding our resorts to offer more affordable vacations, and a retreat from the unconscionable waste from material gluttony and absurdly opulent development scenarios may be places to start.
When the old system flounders, as the luxury industry is doing now, it’s time to try something else. What Aspen needs is a dose of that good old American quality of pioneering vision. That’s what built the Hotel Jerome in the first place and why it’s still standing, even if it’s standing on the auction block.