Economy pushes back Eagle County’s Lake Creek deal
Eagle County, CO Colorado
EAGLE COUNTY, Colorado ” The sale of the Lake Creek Village apartments in Edwards could be pushed back three months because of the poor economy, county officials said.
Commissioners approved a “letter of intent” to sell the county-owned affordable rentals in Edwards in October. The agreement, which is nonbinding, said the county intended to exclusively negotiate the deal with Corum Real Estate Group.
County officials said they are still negotiating with Corum, but both parties agreed that with the country in an economic recession and the financial markets in flux, it made sense to wait.
“The current economic climate does present some challenges, but we are cautiously optimistic that we will be able to effect a deal that is a benefit to county,” said Alex Potente, the county’s housing and development managing director. “We’re going to wait until we can find a window that’s more favorable from a financial perspective.”
The $53 million deal would keep the 270 apartments affordable and rent-capped forever. The county plans to put some of the money from the deal toward other affordable housing opportunities, including partnering with private developers and buying land.
The county looked at closing the deal before the end of the year, but decided to delay the process 90 days, said County Attorney Bryan Treu.
“The market has impacted the deal,” said Treu. “Now isn’t a good time to close on a deal like this.”
Corum’s Executive Vice President James Fitzpatrick said it made sense for the company to wait to try and get a better interest rate before finalizing the deal.
“There is so much uncertainty today and so many moving parts in this transaction that we all agreed that it was both in the county and Corum’s best interest to complete all our documents and wait to see where the capital markets are,” Fitzpatrick said.
The poor economy will likely have little effect on the Lake Creek sale price, officials said.
The apartments were appraised at $59,474,360 in June 2006. It’s the most recent appraisal the county has for the apartments. And despite the county being in a recession, it’s unlikely that number has dropped much, said County Assessor Mark Chapin.
“In the past year or so, even with the economic slide, real estate hasn’t been significantly impacted,” Chapin said. “It’s not inflating, but it’s not going down.”
The county planned to net about $30 million from the sale after paying off outstanding bond debt.
Treu said the sale price is the same it was in October.
“It’s $53 million,” he said.
Don Cohen, executive director of the Economic Council of Eagle County, said the value of rental products in the county is still relatively high.
“There’s an assumption that everything has gone down in value, but if it did, it wouldn’t be by much,” Cohen said. “Any apartment complex in Eagle County will still achieve a premium price.”
Even if the county did net less than it anticipated from the Lake Creek sale, it would be reinvesting the money at a good time, Cohen said.
“If the county saw a few less million, it still, to me, constitutes a good deal,” Cohen said. “Anything they invest in will be cheaper to build.”
The county hopes to finalize the Lake Creek deal sometime in the first quarter of 2009 ” which will be good for both the county and Corum, Potente said.
“It will save the county money and the buyer money,” he said.
Commissioner Sara Fisher agreed it makes sense to wait on the deal.
“There’s value in taking this little pause on both sides so that we don’t end up spending unnecessary dollars,” said Commissioner Sara Fisher.
Jon Stavney, who will take over for Commissioner Arn Menconi in January, is in favor of the deal.
“It seems like we get to have our cake and eat it, too, by selling (Lake Creek),” Stavney said. “I really do think it’s an exciting opportunity to free up some money that can be dedicated to our workforce housing challenges.”
Stavney said he doubts the price will drop much at all.
“We are really short of rental stock in the valley,” he said “You look at contracts like this over a 10- to 20-year period.”
Staff Writer Chris Outcalt can be reached at 970-748-2931 or firstname.lastname@example.org.