City of Aspen under contract to buy downtown building for $23 million

A redeveloped building at 517 E. Hopkins Ave., where it's proposed that City of Aspen offices be located on the second floor and basement, and retail on the street level.
Courtesy rendering

The city of Aspen is under contract for $23 million to buy a building near City Hall from developer Mark Hunt.

The city is eyeing 517 E. Hopkins Ave. for new municipal office space, officials said Monday in a statement. Under the proposed deal, Hunt would design and construct a new building and provide 21,400 square feet in the basement, and first and second floors.

The building would need to be condominimized so Hunt can maintain ownership of three retail spaces on the street level and the city would own the rest.

“It would be close to a turnkey” project, Hunt said Monday. “They are 90 percent of the building.”

Aspen City Manager Steve Barwick said the city would work with Hunt’s design team to meet the government’s specifications on the interior. Hunt would pay $100 per square foot for interior work; the city would pay for anything that is higher than that price.

The Hopkins Avenue location could provide an alternative to the controversial office building that Aspen City Council approved in April 2017. The 37,500-square-foot building would be located between Rio Grande Place and Galena Plaza, and is estimated to cost $22.6 million.

But the city has been fighting a legal battle for the past year with Aspen residents Steven Goldenberg and Marcia Goshorn, along with Snowmass Canyon resident Toni Kronberg, who sued the government when it passed Ordinance 4, approving the building.

A judge has ruled in the plaintiffs’ favor on more than one issue in two lawsuits. The court still has to deliver a ruling on whether the plaintiffs have a right to gather signatures from city voters to let the public decide the building’s fate.

Kronberg said Monday her group will drop the lawsuits if council agrees to walk away from the Rio Grande plan.

“Until that contract is signed, sealed and delivered, both lawsuits are moving forward,” she said. “And they have to rescind Ordinance 4.”

Kronberg has said in the past that her group would appeal to the higher court if they were to lose, thus delaying the project for what could be another year or two.

Meanwhile, city officials are concerned about escalating construction costs while the lawsuits drag on.

“We have to consider all of our options and we have to be fiscally responsible and respect community values,” Mayor Steve Skadron said.

There already are approvals for a commercial building at 517 E. Hopkins Ave. Hunt said he originally planned to have more commercial and retail space in the building, along with affordable housing, but said this deal would be better for the city in the end.

“It’s certainly not the highest and best use for me but I wanted to be part of the solution, and I would love to see (the city) downtown,” Hunt said, adding he could deliver a new building in about a year.

The deal is contingent on City Council approval July 2 and a 45-day due diligence period.

Skadron said while the Rio Grande office building is not off the table, the Hopkins site is attractive because it takes the onus of development off the city and is across the street from City Hall on Galena Street.

“I love the location and I would love a concentrated campus,” he said, adding that the city looked at the Hopkins building and the one next door a decade ago but the owners weren’t willing to sell at the time.

Just until a couple of years ago, the city’s building and engineering departments rented the basement space in the building.

Barwick said City Council asked him to look for other sites for municipal office space beyond what is planned in the Rio Grande location.

“They asked me to provide another option and that is what I have done,” he said when asked why the Hopkins building is attractive to the city.

In the statement announcing the deal, the city said that, “The purchase is an effort to accommodate the need for additional office space, while avoiding new building development and construction.”

The city spent almost a half-million dollars in rent and homeowner association dues last year to house four departments that have outgrown City Hall.

Hunt bought the Hopkins building, the former location of the Aspen Daily News, for $10 million in 2014.

He proposed the conceptual idea for municipal office space to city officials a couple of months ago and has been in negotiations ever since.

The Armory building that now serves as City Hall will remain the hub of Aspen’s government and is scheduled to undergo a renovation after 2020, according to city officials. The city also will continue using offices in the Old Power House and the Rio Grande building.

During its July 2 meeting, council will discuss funding measures for the purchase of the Hopkins building, which may include a combination of cash and either a lease purchase or an interfund loan.

The contract to purchase the building does not mean that the city is retiring all other options for future office space, but rather expands opportunities, city officials said.

Barwick said he’s not sure what would go in the Rio Grande building if the Hopkins plan goes forward, but putting the Aspen Chamber Resort Association back in there is one option.

“We’ll worry about that later,” he said. “All of it is up in the air.”

ACRA moved to the Old Power House by the Roaring Fork River off Mill Street earlier this year in anticipation of the city office building being constructed.

The city can end the contract with Hunt with no financial ramifications up until the end of the 45-day due diligence period.

If the deal closes, the city will pay impact fees associated with the redevelopment and will be responsible for all affordable housing mitigation requirements.

The city has provided $2.5 million in earnest money that is fully refundable if the contract is severed during the due diligence period.

Skadron said he is excited to work with Hunt, who represents several LLCs that own a dozen or so buildings in town. The only one that’s been redeveloped so far is what’s known as the “Aspen One” building at the corner of Galena Street and Hopkins Avenue. It is the site of the former Gap retail store.

Skadron said Hunt could have made that two stories but he chose not to.

“I appreciate Mark’s concern for local character and he would make a good partner,” he said. “It’s exciting and we’ll see what we can bring to the community.”