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April 23, 2012
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What will fuel mid-valley projects?

EAGLE COUNTY - Rick Hermes thinks there's an opportunity for development in Wolcott. Other developers aren't so sure.

Hermes is the lead partner in a group that wants to develop roughly 350 acres in Wolcott for housing and some commercial space. Hermes' group received its "sketch plan" approval from Eagle County earlier this year, and he said Monday that his group plans to continue the approval process to its conclusion, with an eye toward groundbreaking next year.

"Now is the time to start planning for the future," Hermes said. Given that labor costs are down and there's a lot of work to do at the site - including moving U.S. Highway 6 closer to Interstate 70 - starting that part of the project now makes sense, he said.

That puts the Wolcott project in a different category than other big projects in the middle of the valley.

Patrick Chirichillo's "Vines at Vail" project at Wolcott received its final approvals from Eagle County in late 2007. Chirichillo has been waiting for the economy to turn around ever since.

A note on the project's sign indicates that the entire property is for sale. Chirichillo said he's kind of changed his mind about selling - although he still would, if a good offer came along. For now, he continues to wait.

"There's been an uptick in the real estate market in the last month or two," Chirichillo said. "And we're hoping the market keeps moving that way."

While Chirichillo is holding on to his project at Wolcott, two projects in Edwards have changed hands since the declines in the national and local real estate markets.

The West End project in Edwards was seen as a way to put at least a small dent in the valley's shortage of for-sale housing when it was approved in the latter part of 2007. Since then, the project went into foreclosure and was purchased by WHI Real Estate Partners of Chicago.

Earlier this year, Jim Orth, a managing principal in WHI, said he and his partners believe in the Vail Valley, but would take their time in evaluating the West End parcel.

A similar fate has hit Eagle River Meadows, although in this case, the original lender on the project has taken over.

Former project representative Lance Badger is now just a consultant for the owners. But Badger lives in the valley, and has been involved in several local projects.

Badger said it's probably going to take some time before market conditions are ripe for a re-start.

The biggest problems with new construction in the valley are the loss of jobs and flood of home foreclosures over the past few years, combined with the continued high cost of new construction.

"Labor has dropped, a little," Badger said. "But the rest of the cost of building new hasn't come down."

That puts the cost of the existing building inventory well below the cost of building anything new.

Badger believes the answer to rebuilding the job base will be in something besides second homes. Simple demographics show that the pool of potential buyers isn't growing, he said.

But Hermes and his group believe in the Vail Valley market.

"The market is moving, and we expect a slow walk out (of the slump)," he said. "If we're going to be relevant, we need to keep working."

Business Editor Scott N. Miller can be reached at 970-748-2930 or smiller@vaildaily.com.


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The VailDaily Updated Jun 22, 2012 11:36AM Published Apr 23, 2012 08:11PM Copyright 2012 The VailDaily. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.