After six years of failed attempts to develop the housing project known as Aspen Walk, a local company is under contract to purchase a portion of it.
Aspen-based Bald Mountain Development, which had been working to build a new hotel at the base of Ajax on South Aspen Street, is the company behind 404 Park Avenue LLC and currently is under contract with the Bank of America to purchase 404 Park Ave. The company entered into the contract in December and representatives said they hope to close by March, according to Jody Edwards, a local attorney representing 404 Park Avenue LLC.
The Aspen Walk housing project includes the Park Avenue parcel and the adjacent Aspen/Pitkin County Housing Authority (APCHA) owned property at 414 Park Circle.
The Park Avenue property was previously owned by PFG Aspen Walk, a group of Minnesota developers, who proposed in 2008 to replace the existing buildings on two parcels with 14 affordable housing units and 12 free-market condos.
In order to get the free-market project approved, PFG Aspen Walk entered into a joint-development agreement with APCHA that obligated the Park Avenue property owners to redevelop the adjacent Park Circle building and pay APCHA $750,000.
PFG Aspen Walk went into foreclosure proceedings in November 2011 after two of the initial investors, including Minneapolis businessman Tom Petters, were convicted in a Ponzi scheme that defrauded investors of more than $3 billion. Since then, the Park Avenue property has gone into receivership under the Bank of America.
Edwards went before the APCHA board on Wednesday asking that the joint-development agreement be removed.
He said his clients are not interested in redeveloping the APCHA-owned property, but they want to remodel the 14 units in the Park Avenue building and convert them to affordable housing apartments to earn credits, which would mitigate for other development projects, Edwards said.
In November, Bald Mountain Development decided the lodging concept on South Aspen Street was financially not feasible. The property owners will likely revert back to a townhomes and affordable housing project in the spot, which City Council approved in 2003. The owners had previously sought to amend the townhomes proposal by moving more of the required affordable housing off-site to the Airport Business Center, but City Council had asked them to consider a hotel there instead. If the currently free-market apartments on Park Avenue are converted to affordable units, the building could theoretically provide mitigation for the townhome project.
The original purpose of the joint-development agreement was to guarantee affordable housing on the site, and that will be done with the Park Avenue remodel, Edwards said. When the agreement was made, no one expected that the PFG Aspen Walk owners would go bankrupt or to prison, Edwards added.
APCHA attorney Tom Smith said the agreement should probably be removed because the property will be difficult to sell with the obligation attached to it.
Housing board members agreed that it makes sense to remove the obligation to redevelop Park Circle, but they declined to remove the joint-development agreement until after they discussed the move with Smith in executive session.
There could be unintended consequences that should be considered before action is taken, said housing board member Ron Erickson. Once the agreement is removed, the new property owners wouldn’t have any obligation to the housing authority other than normal mitigation requirements, and they could decide not to convert all of the apartments to affordable units, Erickson said.
Despite generally supporting the idea, Erickson expressed frustration at the fact that Edwards was pushing the board to make a decision on Wednesday night.
“Frankly, I don’t think I have enough information,” Erickson said. “The fact that you want to end an agreement that we’ve had for six years makes me very uncomfortable ... I think this is too serious.”
The board decided to go into executive session on the topic after Wednesday’s meeting. The board plans to take action on the issue in its next meeting on Feb. 20.