When the city of Aspen conducted an after-the-fact budget reconciliation for $475,000 worth of public improvements it was owed in a deal regarding Obermeyer Place, it gave the developers credit for additional work they did that was not part of the original agreement.
The city in 2004 struck an agreement with the now dissolved Obermeyer Redevelopment Co., allowing the developer that was building the Obermeyer Place project to use two city-owned parcels during the 26-month construction process on the $40 million mixed-use project. Instead of rent, which was calculated to be worth $475,000 for the term, the developer agreed instead to work off the debt by making public improvements focused on redeveloping the city’s recycling drop-off center, located across Rio Grande Place from the new condos and commercial spaces. The land-lease deal included a list of 13 items the developers could choose to be responsible for, to meet the payback. Those included removing a city-owned industrial snowmelt machine that was on the site and doing other site work, building new sidewalks on Rio Grande Place between the Eagles Club and the recycle center, and funding the engineering and design fees for the new recycle center.
A city-convened committee of Obermeyer developers, neighbors and interested residents came up with a design, including stone and glass covers over the recycle bins that carried a total price tag of $750,000. Having apparently already spent some of the land-lease obligation dollars on design fees, city officials said in the summer of 2006 that Obermeyer would put $375,000 toward the recycle center. However, the recycle center design was challenged via a citizen referendum, from a group that found the plans too extravagant, and the drop-off center was voted down in the November 2006 election.
A significant amount of Obermeyer’s payment — $102,026 — went toward recycle center architecture and design fees. Those fees were racked up by the city-convened committee — known as a COWOP, an acronym meaning “for the convenience and welfare of the public” — which went through multiple design iterations, ultimately settling on the $750,000 concept that voters rejected.
In 2010, as the city was preparing to spend $175,000 on more scaled-back improvements to the recycle center, the Aspen Daily News reported that no one in the city or with the developers could account for how exactly Obermeyer had met its obligations related to the lease agreement. Nevertheless, officials assured the public that Obermeyer had contributed $475,000 worth of improvements, and said they would perform some forensic accounting to document that the work had been done. Records turned over to the Daily News on June 28, which were finalized last year, show that $475,000 was spent. However, the city gave Obermeyer credit for a portion of those dollars for work that was not singled out under the original land-lease agreement — work that the developers did over and above their obligations related to the rest of the project.
Most of the records turned over to the city from Obermeyer, which dug through its own records with general contractor R.A. Nelson and numerous subcontractors, were “very clear,” Assistant City Manager Randy Ready said. The initial records were turned over in late 2010, but the city still could not come up with a complete accounting of the $475,000. The “clear” records represented 13 items on a 16-item reconciliation list produced by the city (see information box below).
“The last three items are what really took us time,” Ready said.
Those three items were $43,879 for paving work on Rio Grande Place and Spring Street, storm sewer engineering and design for $4,500, and $3,903 for trail connection improvements in excess of the $124,464 the developers were required to spend as part of other obligations on the project.
The biggest item on that list — the additional paving on the section of street around the Obermeyer development — wound up being credited to the land-lease obligations because the developers did more paving than they were required to do, Ready said. Government officials said that Obermeyer paved about 24 percent more street than required, so the city, in the 2010 reconciliation process, applied that percentage of the total paving cost to the land-lease obligations.
Ready said that even though the additional paving work was not part of the scope of the original land lease, the developers should be credited for it because they went “above and beyond” their obligations, which were to pave the street only directly in front of the development. Instead, they paved from the intersection of Spring Street and Main Street to the entrance of the Rio Grande parking garage.
“They were very civic minded,” Ready said.
When asked if he thought that part of the reconciliation amounted to “creative accounting,” Ready said, “There was nothing creative about it.” The developers were simply given credit for extra work that benefited the public, he said.
The nearly $4,000 in credit given for trail improvement work — also not a project contemplated in the land-lease agreement — was because the developers, as part of their “parks improvement fee” of $124,464 on the project, agreed to build an extension of the Hunter Street Trail, which connects Obermeyer Place to Main Street. They ended up spending more than their parks improvement fee requirement on building the trail, and were therefore given credit toward the land-lease obligations, Ready said.
A $124,355 line item for site work includes removal of the snowmelter, grading and landscaping on the site.
The city has gone through three heads of the asset management department since the work began, further complicating efforts to understand what happened with the land lease, Ready said. It was difficult to locate and sift through records that were four to eight years old, Ready said.
Ready said he was not directly involved in the Obermeyer work at the time it was going on, and could not comment on why records of the land-lease obligations were not being kept in detail at the time.
While the reconciliation work was difficult and time consuming, Ready said it “needed to be done.”
Architecture and landscape design
Indirect costs (safety and insurance items)
General contractor fee
COWOP meeting expenses
In-kind work performed by contractor
Hunter Street Trail extension (in excess of $124,464)
Storm sewer engineering and design