Luxury condos pass critical Aspen inspection
ASPEN, Colorado ” An Aspen luxury condominium project received a conditional certificate of occupancy, or CO, Sunday just before a deadline that could have led to legal trouble with buyers.
The city of Aspen building department issued approval for occupancy of 26 fractional ownership units at the Residences at The Little Nell, according to Mike Metheny, managing building inspector for the department. The developers must meet numerous conditions before the fractional units can be used, including clearing the main entrance and other public ingress and egress points of construction materials, Metheny said.
The Residences at The Little Nell are located at the base of Aspen Mountain, where the Tippler nightclub and Tipple Inn were located, just west of the lower terminal of the Silver Queen Gondola. The condo project will be one of the most opulent in Aspen or Snowmass Village. It will be managed and operated by The Little Nell hotel, the Aspen’s Skiing Co.’s five-star, five-diamond property.
The building from the outside doesn’t have the appearance of being completed. Landscaping crews planted trees during last weekend’s snowstorm, and patches of exterior trim were missing. Port-a-potties lined the area around the main entrance.
But inside, the interiors of the condos are finished and furnished, said Brooke Peterson, a representative of the company that is the managing member of Residences at Little Nell Development LLC. “They are all completely occupiable,” Peterson said.
The conditional certificate of occupancy applies to the condos, not to the 5,000-square-foot restaurant or 5,000 square feet of retail space or eight luxury hotel rooms in the building. Those areas aren’t completed yet.
The issuance of a certificate of occupancy on a holiday weekend isn’t unusual at this time of year, according to Metheny. The building department makes inspectors available for weekend work in November and December because there is a often a rush to get residential and commercial space completed and opened for the holidays, he said. The building department’s website says developers can request inspection times outside of normal business hours ” as long as they are willing to pay an additional fee.
Peterson credited the city building department with being cooperative without showing favoritism.
Big final push
The development firm mounted a construction surge to complete the condos and trigger a string of related events. A substantial amount of work needed to be finished this fall to pass an inspection and obtain the conditional certificate of occupancy.
Once that CO was issued Sunday, the development firm notified buyers it was ready to close their contracts, starting in 30 days.
The timing was essential. The contracts called for the closing of deals by Dec. 31. If that deadline isn’t met, buyers had the right to terminate the contracts and get refunds of their earnest money.
It isn’t cheap to buy into the posh project. Six-week interests in the three-bedroom condos started at $1 million and climbed to $1.9 million. Six-week interests in the four-bedroom condos ended up selling for $3 million. Buyers had to put down more than $200,000 in earnest money for each interest purchased.
The 208 fractional ownership shares were about 97 percent sold out. Only a handful of shares in the three-bedroom units remain, according to R.J. Gallagher, a marketing consultant for the developer.
Construction delays threatened the completion of the project by the deadline. A massive retaining wall needed to be constructed in 2005 to stabilize the lower slopes of Aspen Mountain. That threw the project off schedule. The development firm notified buyers in September that the deadline for closing on sales might not be met. It claimed it had a right under a “casualty” provision of the contract to extend the deadline by 90 days, or to March 31, 2009. The unstable soils and need for a retaining wall constituted a “casualty,” the development firm contended.
Four buyers of seven fractional interests already are challenging the developers’ interpretation of the contracts in court. They claim the casualty notification in September allowed them to nullify their contracts and get their deposits back.
Peterson wouldn’t address the lawsuits, although he said the developer still believes it had the legal right through the contract to extend the closings until the end of March. It strived to meet the Dec. 31 deadline for closings to eliminate any potential issues that would make buyers unhappy, he said.
National meltdown helped project
Ironically, the national economic meltdown that has stalled several developments in the Roaring Fork Valley actually helped the Residences at The Little Nell. Gallagher said the skilled craftsmen needed for work on the luxury project were difficult to find until about 60 to 90 days ago. As workers got laid off of other projects, they learned about the jobs in Aspen.
That extra manpower allowed the construction crews to make up lost time, according to Gallagher.
Peterson said the developers secured their financing before the credit crunch hit. “It’s never been an issue, and we had great cooperation from our lenders,” he said.
Residences at Little Nell Development will give buyers the option of closing their purchases in January, if they prefer to avoid the deals during the holidays. The first owners likely will occupy the Residences in February, Peterson said. Construction on the remaining parts of the building won’t interfere with the guest experiences, he said.
The Residences could be the last fractional ownership project built in a long time.
One source intimately knowledgeable with the Aspen-area development industry said financing for those types of projects was the first to disappear, for both developers and buyers of fractional interests. Some people buy fractional units with the idea of flipping them at an appreciated price. Some of those buyers might not be able to secure financing anymore, the source said, and the developer might have trouble selling units if buyers default.