Deal revises deed restrictions for Gypsum project
EAGLE, Colorado – Eagle County may not end up with the deed restrictions it paid for under a new Stratton Flats deal.
A Denver company has a contract to buy the struggling project, and that could change the way the county’s deed restrictions work.
The county commissioners sank $4.5 million into the floundering project in January 2008. The tax money is supposed to buy deed restrictions on 113 of Stratton Flats’ 339 units, say the county commissioners who spent the money.
That means taxpayers paid more than $40,000 for each of the county’s Stratton Flats deed restrictions.
But the nature of those deed restrictions will change under a deal with a new developer and price caps will be removed, say partners in the Stratton Flats deal.
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Also up in the air is whether the county’s taxpayers will be paid the 6 percent interest on their money they were promised as part of the original deal.
County Attorney Bryan Treu says the deal is negotiated, and they’re waiting for banking regulators to approve it.
“There will be a presentation in a couple weeks, and we’ll answer questions at that time,” Treu said.
The county has been trying to restructure the deal for more than a year.
Banking regulators are in the mix because Colorado Business Bank, CoBiz, sank more than three times the money into Stratton Flats that Eagle County did, a bank spokesman said Tuesday. The bank has between $12 million and $18 million in Stratton Flats.
“You could say $12 million is in the neighborhood,” said Sue Hermann, spokesperson for Colorado Business Bank.
The bank will stay with Stratton Flats, Hermann said.
“We are integrally involved and intend to remain so until it comes to a successful completion,” Hermann said.
Critics say county taxpayers’ $4.5 million was squandered on Stratton Flats and is lost.
But county officials say it’s no more lost than it ever was. For the county to recover any of its $4.5 million, Stratton Flats units have to sell, said Alex Potente, Eagle County’s housing director.
But Gypsum is the county’s slowest real estate market, and Stratton Flats is located near the end of the Eagle County airport’s runway.
Of the 338 home foreclosures this year in Eagle County, 93 are in Gypsum.
One Stratton Flats house has sold in the last year, a $379,494 government-to-government deal. The Eagle River Water and Sanitation District negotiated a deed restricted purchase for one of its staff members. That deal closed Sept. 21, 2009.
On the Stratton Flats website Tuesday, three bedroom homes were listed for $325,000 on the open market.
“The money is gone, but the affordable housing remains part of our community,” said County Commissioner Sara Fisher.
Fisher, along with Peter Runyon and former county commissioner Arn Menconi, voted unanimously to get Eagle County involved in Stratton Flats.
“We’re fortunate that we were able to forge a partnership with the owners and the bank to keep it as an affordable housing project,” Fisher said.
Fisher said when she was running four years ago, affordable housing was the highest priority.
“All the Vail projects had been approved and were getting under way,” Fisher said. “It was full speed ahead. Some thought we’d never stop growing. They banked on it.”
Not all deed restrictions are created equal.
Stratton Flats is a three-way deal between the town of Gypsum, Eagle County and the developer.
Gypsum waived its tap fees, real estate transfer taxes and other up-front costs, in exchange for deed restrictions on 113 units. Gypsum has no money tied up in Stratton Flats.
Eagle County’s deed restrictions limit a home’s value to increases of not more than 3 percent per year.
Gypsum requires that the homes be sold to locals, and have no price caps.
Under the new deal, the county’s price caps will be removed, say Gypsum officials.
“Their deed restrictions will change under the new deal,” said Lana Gallegos with the town of Gypsum.
The other 113 Stratton Flats units are being sold on the open market.
Stratton Flats has always struggled. The project was submitted to Gypsum at the same time as the Tower Center, a proposed shopping center in Gypsum that has never gotten off the ground.
Stratton Flats was floundering when the county commissioners poured in $4.5 million to keep it afloat.
In January 2008 the commissioners at the time – Menconi, Runyon and Fisher – spent the $4.5 million from a facilities fund.
The three did not officially appropriate the money until February 2008.
The three commissioners did not form the county’s housing authority until March 2008, two months after the money was spent.