Having seen one financial collapse of the Base Village in Snowmass, the town’s financial advisory board (FAB) is understandably cautious about Building 6, which will be deeded to the town on Nov. 1 as part of developer mitigation.
On Wednesday, the FAB posed some hard questions to Town Manager Clint Kinney about the building’s potential liabilities and whether the option of selling it had been fully explored.
By meeting’s end, the board appeared satisfied that Kinney and the town council’s plan for the building, which will be retained and leased back to the Base Village developer. It was originally designed as a discovery center to house the ice age finds unearthed from Ziegler Reservoir in 2010 and 2011.
“It’s not costing the town a lot of money to have a very valuable asset,” said the newly elected FAB chairman, Greg Smith.
Kinney noted that, “One of the biggest goals of the term sheet was to reduce the risk to the town.”
Building 6 is being retrofitted for four primary uses: a restaurant, discovery center for the ice age finds, a 100-seat flex space for lectures and small gatherings and a game room. A subsidiary of the Base Village partnership, consisting of East West Partners, Aspen Skiing Co. and KSL Capital, will be in charge of programming and operating all of the Building 6 uses except the discovery center, which is the town’s responsibility.
Asked what was the development group’s overriding interest in taking on this operation, Kinney explained, “They want to make sure the core is being done well. This helps them achieve that.”
The only revenue source in Building 6 is the 100-seat restaurant.
“The restaurant supports the entire building,” said FAB member David Rachofsky.
Profits from Building 6 will be shared 50-50 between the Base Village partnership and the town. FAB member Harry Andrews asked if the town had the right to audit the books, to which Kinney said yes.
An operator of the restaurant has yet to be named and the developer is still open to considering new concepts, according to Andy Gunion of East West. The development group’s offer involves investing $2 million to $2.5 million to build out the restaurant, flex space and game lounge. The discovery center build out is the town’s responsibility, though it’s hoped that a nonprofit group will help out.
Terms of the agreement also call for no common area maintenance fees charged for 14 years on the buildings. Those will be shouldered by future buyers of Base Village property who will likely have to pay a special assessment, according to Kinney.
All told, the town’s contribution to Building 6 is $767,000. Of that, $700,000 was received from the developer in 2016 as part of the approval, and which will be put back into the building. The other $67,000 is in permit fees which cover the cost of inspections.
The developer will be offered a five-year lease with a five-year renewal.
“I don’t think our risk starts until year 10,” Kinney said.
The FAB members, who lived through the economic downturn in Snowmass Village, wanted to make sure there was a plan B for Building 6.
The town “has been through doomsday once,” said member Gary Hartman. His colleague Andrews suggested, “To avoid Greg’s doomsday, you sell (Building 6) in the good times.”
“I think it could be sold,” agreed Rachofsky. “I think we can sell it now.”
Former Base Village owner Related Cos. had offered a prior town council the choice of Building 6 or $4.5 million in cash and other incentives. Kinney suggested it could be worth well more than that upon completion and with the tenant improvements.
Andrews referenced the hot real estate market – “We call this the Trump effect,” he said – and suggested now might be an opportune time to sell.
“There is nothing in this that precludes selling the building,” Kinney said. “This keeps all the options open.”
Retrofitted for new purpose
Phil Sirianni, the outgoing FAB chair, said he thought it odd that the building was designed for one purpose and now being retrofitted for new concepts.
“I’m a little taken aback by taking a building and now trying to massage something in it,” he said.
The discovery center, once the centerpiece of the Harry Teague Architects-designed building, will now use only about a quarter of the structure’s space.
Kinney said the nonprofit group, Snowmass Discovery, which is a 501-c3, met recently about the prospect of fundraising for this new facility. Previously the group had decried the lack of a permanent home to tell the story of the thousands of bones and plant material found in Ziegler Reservoir, and its impact on fundraising.
“The worse-case scenario is we recreate what’s on the mall,” Kinney said of the small museum now located in Snowmass’ other commercial center. With rent and other support, the cost of the current museum is $100,000 a year, money that will be applied to the Building 6 facility.
Kinney said the mall discovery center sees about 30,000 visitors per year.