Vail lowers price on employee housing deal
Vail, CO Colorado
VAIL – The town of Vail agreed Tuesday to lower the amount of Vail Resorts’ $22 million employee housing letter of credit to roughly $12.5 million.
Vail Resorts has applied for its building permit for the North Day Lot employee housing project, which fulfills its employee housing requirement for its Arrabelle project that opened in late 2007. There’s been some contention between Vail Resorts and the town over the delay in fulfilling the housing requirement, which some Vail council members agreed has been partially the town’s fault.
The town helped the “feet be dragged,” Councilwoman Susie Tjossem said. She said that from her understanding, the town slowed things down by trying to get Vail Resorts to be a partner on Timber Ridge – something that never panned out.
Councilwoman Kim Newbury said Vail Resorts may have delayed construction of the employee housing requirement, but “I don’t think it was entirely their fault.”
“We should partner with them and make sure it gets done,” Newbury said.
The original letter of credit amount was based on the average of the previous year’s real estate square footage prices in the town of Vail, said Community Development Director George Ruther.
The number is adjusted from year to year, bringing it to its current $22 million.
The town originally used that formula because Vail Resorts didn’t have a detailed project in which the town could base the amount of the letter of credit. The town would normally charge a developer 125 percent of construction costs of a project in a letter of credit amount, but in this case used the formula for the town’s pay-in-lieu policy, which uses the real estate square footage average.
There have been a number of milestones along the way with the employee housing application that Vail Resorts has met, based on the updated timeline of the project, lowering the risk that the company would back out of the project and leave the town to cash its letter of credit, Ruther said.
“Because they have fulfilled a majority of the obligations, the risk has gone down,” Ruther said. “The amount the town agreed to (Tuesday) is still 125 percent of the actual cost, so we effectively have enough money to go out and build the project (if we need to).”
Vail Resorts spokeswoman Kristin Kenney Williams said the company requested the town lower the amount in the letter of credit because Vail Resorts wanted to keep the amount in line with the actual cost of construction.
“To have a letter of credit that is so grossly out of line with the costs of construction, sure, it can tie up (the company’s) credit,” Williams said.
Williams said construction on the North Day Lot employee housing will begin before May 1. She said this is the most exciting employee housing project for Vail because it’s right in town.
“We’re excited to get our employees in there,” Williams said.
Some strains in the relationship between Vail Resorts and the town as a result of the Arrabelle employee housing requirement were still obvious Tuesday. Councilwoman Margaret Rogers said she was opposing the reduction for the letter of credit because a building permit still doesn’t guarantee that Vail Resorts will build the project. She also said the 125 percent amount of roughly $12.5 million might not be enough.
“It’s been more than two years since the Arrabelle was approved and yet we still haven’t seen any employee housing due on that project,” Rogers said. “Everything costs more than you think it’s going to cost. I’d rather have the ($22 million) in the bank.”
Councilman Kevin Foley agreed that the town should hold onto the $22 million and give Vail Resorts the difference once the project is finished. The vote was 4-3, with Foley, Rogers and Mayor Dick Cleveland dissenting.
“The community wanted this housing a long time ago,” Foley said.
The reduction won’t go into effect until the town issues the North Day Lot building permit, which Ruther said it’s ready to do soon.
Community Editor Lauren Glendenning can be reached at 970-748-2983 or firstname.lastname@example.org.
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