The city council gave direction to move forward with a $10 million purchase agreement meant to ensure 148 units of affordable rental stock remain deed restricted in perpetuity. The current deed restriction on the Centennial housing complex’s rental units has a sunset date.
Over the next 30 days, the city and the apartments’ owner — Centennial Aspen II Limited Partnership, which is led by Sam Brown — will negotiate and formalize a new deed restriction which would kick in once that date is met.
“There is no convenient time to make this investment,” Chris Everson, the city’s affordable housing project manager, said after the meeting.
Spurring the conversation now is Brown’s assertion that he has an interested buyer who would take over management of the property, likely through the sunset of the deed restriction. City staff would like that sale to come with the agreement that the rentals would remain in the city’s affordable housing stock instead of going free market.
Everson estimates that it would cost $85 million for the city to build 148 new units instead of putting $10 million behind a newly negotiated deed restriction.
“Also,” he wrote in his memo to council, “As time moves forward the value of the expiration of the current deed restrictions to the owner of the facilities will tend to increase, which will likely cause the cost of extending the deed restrictions in perpetuity to increase over time.”
Everson said the city began negotiations with Brown at $6 million but they were told that wasn’t enough to outweigh the asking price they could get if the deed restriction sunset remains.
Mick Ireland, former Aspen mayor and Pitkin County commissioner, spoke during the discussion, urging council not to OK the $10 million deal.
“No consideration has been given to alternative solutions to this problem,” Ireland said.
He said that the city could save money and instead pursue indefinite affordable housing at Centennial by rezoning the property to only allow for deed restricted residential. Or, in the case that a buyer would want to tear down the current complex to build high-end condos, he said the council could pass an affordable housing replacement ordinance, which would require anything torn down to be replaced into the subsidized housing stock.
He said the 30-day clock to hammer out negotiations was too accelerated for the city to do due diligence in seeking out other solutions.
“You have a long time to deal with this problem,” Ireland said. “You can deal with the next buyer and buy an extension of the deed restriction from the other buyer.”
Dara Coder, who works with Centennial, told the council that the buyer, who was not named, has other deed-restricted properties that it manages, and would be comfortable accepting the rent restrictions in perpetuity.
“It would be something that I think would be great for the city,” Coder said.
Brown was instrumental in the creation of Centennial. The street names in the neighborhood are named after him and his family. Coder said he has entered into the agreement with the city in a balancing act between maintaining the community asset and his business venture.
“It is Mr. Brown’s desire that the units do stay with the city and employee housing in perpetuity,” she said, but “he does have a possibility to his partners. It’s not something that he can just blanket give to the city.”
Ireland countered that the deal was all business, however. And he said without knowing what the offers are to Brown for those willing to buy with the restrictions in perpetuity and those willing to buy with the expiration, the city is not able to evaluate if they are receiving a good deal.
“We are being offered something that the seller comes out at least even and probably ahead of what would be obtained by simple selling the property,” he said.
But Coder said the valuation of Centennial isn’t a number pulled out of thin air.
“In a way, we do have valuation because we have potential buyers,” she said. “(We’ve talked) about the price with restrictions and the price without restrictions. So we’ve done homework on our end.”
The council noted the importance of the rental stock, which currently houses 280 working Aspenites. Councilmember Ann Mullins called the agreement complicated, but necessary.
“I think there’s a lot more discussion, a lot more investigation involved,” Mullins said.
She and the rest of the council showed their confidence that those complications can be worked out within a month, however, and passed the resolution unanimously.
Centennial’s 148 rental units are among the 500 in the local housing stock that have sunset provisions.
Ireland expressed concern that the buyout deal will set a precedent for the other housing complexes to also request funding from the city as their deed restrictions set to expire.
Everson said that each subdivision is different and the city will address those negotiations if they arise, but none equal the magnitude of beds that the Centennial rentals represent.
“There is great value in continuing those deed restrictions in perpetuity,” Everson said.