Aspen’s mayor accused a council member of doing the city a “disservice” by publicly sharing his negotiating posture and valuation analysis on the Mountain House lodge, which elected officials went into a private session to discuss Monday night.
The 26-room bed and breakfast, which serves as entry-level lodging in the Aspen market with rooms in the ballpark of $200 a night, is up for a foreclosure auction on March 27. A private buyer would likely convert the property into a high-end residential use, which Mayor Mick Ireland and others have said is a trend threatening the town’s tourism infrastructure.
Ireland in the last month has requested that city staff gather information about the property’s value and potential strategies for acquisition. The city should consider buying the note on the land and transferring the property to an operator who would be required to keep it as a lodge, Ireland has suggested.
An executive session, which is closed to the public, was held at the end of Monday’s meeting to discuss those matters. Negotiations related to property acquisition is one of the reasons Colorado law allows for government bodies to exclude the public.
But at the beginning of the meeting, Councilman Adam Frisch protested the use of an executive session, saying he didn’t think there was anything that needed to be discussed privately.
It takes him “about 10 seconds,” he said, to figure out the property’s value both as a lodge and as residential real estate.
“Everyone in the world who is in hospitality” knows a simple calculation taking the number of rooms multiplied by the average nightly rate and then adding three zeros, which gives you the operation’s value, roughly, he said. That would mean the Mountain House is worth around $5.2 million, as a lodge, Frisch said.
With new high-end downtown condos trading at $2,500 a square foot, the property could be worth double or more as residential. Frisch’s conclusion was that the city can’t afford to play ball at those numbers and thus there is no point in having the closed meeting.
Ireland, speaking after Frisch, said it was “craziness” for his colleague to speak about the property in the manner he did.
“Why would you ever do that? Have you ever purchased anything?” Ireland said, calling Frisch’s statements a “disservice.” “ ... I haven’t played much poker but I do remember playing my cards so the other side couldn’t see them.”
He added that, as an attorney, he “would be out of his law license in a week” if he had disclosed his bargaining position and opinion of valuation so publicly.
The council was right to get more information before deciding whether there is anything that can be done, Ireland said.
“The fact that you are confident in your ability to estimate something because of your background” does not mean that council cannot get the confidential opinion of staff, he said.
Ireland added that there may be information disclosed in the executive session related to strategies to keep the property from converting to condos, as well as valuation calculations that are more sophisticated.
“There is other information that I don’t want to share with the public,” he said, adding that the issue is not as simple as it may seem.
Frisch replied that he didn’t think he was “giving away any strategy” and that it was patently obvious that the property as condos is worth double what it is as an economy lodge.
“There’s a multimillion-dollar difference there,” he said.
He later said he doesn’t want to pay “anything” for the property and that the city shouldn’t get involved.
Ireland compared doing nothing about the Mountain House to Nero fiddling while Rome burned. The resort community cannot thrive if the minimum price for lodging is $700 a night, he said. (The average nightly rate in Aspen in January was $455, up from $409 in 2011, according to central reservations agency, Stay Aspen Snowmass.)
“The market is not going to rescue this lodge,” he said.
The council is scheduled next week to discuss possible incentives for preserving small lodges at a Monday work session.
Frisch agreed with Ireland that there is an issue at hand with Aspen becoming more and more high end, since “fewer people are paying the same amount of bills.” Many of his friends in the restaurant business, for example, have complained to him that the pool of Aspen tourists seems to be dominated more and more by fewer numbers of bigger fish, Frisch said.
Aspen City Council voted at the end of the public portion of the meeting to go into executive session to discuss matters related to property negotiations, as well as three matters involving litigation or potential litigation. Those cases include the two lawsuits involving the public’s ability to inspect voted ballots, and the Burlingame homeowners association’s lawsuit over defective siding at the city development.