Vail Daily letter: There’s more to the Stratton Flats story
August 6, 2010
On July 23 the Vail Daily published an article stating that the county’s affordable housing project Stratton Flats was to change hands. The article also indicated that the county commissioners had invested $4.5 million of taxpayer money into the project, which Scott Miller reported was used by the developer to “lower the price of 100 units and put appreciation limits on the units.”
Mr. Runyon stated: “We were an investor. We got deed-restricted housing for our investment. And we’re still going to have a third of these units restricted to resident-occupied housing.” This statement is much different from what the commissioners represented to the public when they made this investment.
My recollection is that the county’s $4.5 million investment was to be protected by a second deed of trust as well as other rights in the development should the developer fail.
This is confirmed by a letter by the commissioners that was published on Aug. 14, 2008, under the Daily’s headline, “Commissioners: County protected in Stratton Flats deal.”
On Aug. 30, the Daily published a letter signed by Commissioners Fisher, Menconi and Runyon acknowledging that in order for the developer to obtain financing the county gave up its second deed of trust securing its debt, now an investment, of $4.5 million. The commissioners tried to justify their shift from creditor to investor by comparing Stratton Flats with the ideally located Miller Ranch project in which the county had a minimal investment. The original purchase price for all 110 acres of the 5th filing/ Miller Ranch was $2 million, less about $700,000 received from the existing contract for the water plant. The fact that Miller Ranch was developed in an ideal market was not a consideration in the eyes of the commissioners.
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Again, the county touted the minimal risk noting that only sales of two Stratton Flats units per month would satisfy the bank loan and in the worst case the county could refinance the project.
On Sept. 14, 2008, the Daily published an article by Melanie Wong that discussed the risks and included comments from the county’s director of housing, Alex Potente, who was the commissioners’ lead on the transaction.
Mr. Potente explained how minimal the risk was for the project and indicated the county could just take over the project if it failed. Again, he county would recover its investment of $4.5 million of taxpayer dollars.
On the other hand Tom Stone pointed out in the article that front-end money is “really risky,” the original owner Meritage could not find an equity partner and none of the valley banks would provide financing — that is, until the county showed up.
I could go on and cite several articles the Daily published over the following months charting the alleged success of the project and the various persons and entities who were thrilled with the opportunity to purchase housing in Stratton Flats. Even the new commissioner, Jon Stavney, “applauded” this housing investment in his election campaign.
After April of 2009, little was reported on the project until Sept. 7, 2009, when an article appeared justifying the lack of sales as “hibernation.” In this article, Mr. Potente said that “the town is involved in talks with banks about restructuring the project’s debt.” Apparently there was more to the story than Mr. Potente was willing to admit. This is a fair indication in April of 2009 the project was failing to meet the lender’s expectations and the $4.5 million of taxpayer dollars may not be recovered. There was no follow up by the Daily.
Finally, after a vacuum of news about Stratton Flats for months, the Daily on July 23, 2010, published an article indicating that a new developer could be involved. The recovery of the $4.5 million was not mentioned and instead the article talked about using the funds invested by the county to reduce the sales price of 100 units.
In researching the articles published by the Daily, I never saw anything about forfeiting $4.5 million of taxpayer dollars for price reductions. Nor have I seen any update or a new letter from the commissioners indicating the status of their investment of $4.5 million of taxpayer dollars.
If it is true that $4.5 million of taxpayer funds have been lost, the commissioners should own up to the fact that the Stratton Flats is a big problem and stop spinning a story about all that was important was getting some price restricted housing. The Stratton Flats undertaking has the appearance of a colossal failure at an enormous cost.
Usually, objective reporting investigates and gets the real facts and is something more than a spin vehicle for politicians. Please dig deeper and tell us in step by step detail what happen to our $4.5 million. Find out the real reasons this project failed and please don’t tell us it was just the economy as Stratton Flats looked to be a failure even in the best of times.
Tell us who is accountable for the loss of $4.5 million of taxpayer money. Please don’t limit the story just because of the Daily’s editorial on July 25, 2008, endorsing the commissioners’ investment in Stratton Flats in the face of an acknowledged recession.
Everyone makes mistakes. Credibility is found in admitting mistakes and not repeating the same mistake. And speaking of repeating mistakes, after the disappointments with Stratton Flats, why would the commissioners go forward with the sale of Lake Creek Village in order fund another other development scheme?
Shouldn’t the commissioners re-examine their role and expertise in financing or directly investing in real estate projects? While affordable housing for workers is a laudable goal, risking again, and perhaps losing, millions of taxpayer dollars is not an acceptable result.
Editor’s note: Powers’ letter was submitted prior to the story “Stratton Flats deal revises deed restrictions” published Wednesday, Aug. 4, which addressed some of his concerns.