Vail reaches $1 million settlement with Altus Vail over deed-restriction violations

The town of Vail and the owner of Altus Vail have reached a $1 million settlement over the deed restriction violations claimed in the town’s May 2023 filing in district court.

On May 26, 2023, Vail filed a complaint in the Eagle County District Court which claimed the Altus owner “failed to sell or lease the Property as agreed upon with the Town” and is “denying qualified residents of Eagle County a place to reside, in violation of its agreements with the Town.”

According to George Ruther, the town’s director of housing, once the complaint was filed the two parties “agreed to act proactively and seek a mediated solution outside of an order by the court” knowing that the court would likely require mediation first anyway.

“It was this process that led to a better understanding of the issues and opportunities, and that led the town and Altus to reach a settlement agreement,” Ruther said.

Inside the deed restrictions

The Altus Vail condominium project was completed in 2021, bringing 30 units on the market. Denver-based real estate investment firm Brue Baukol Capital Partners partnered with part-time Vail resident and Colorado developer Pete Carlson on the project. Per the terms of the development agreement, 15 units were to be set aside as employee housing units, using the town’s typical deed-restriction terms.

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Since the complaint was filed, Altus sold two of the homes to qualified buyers, making the property owner responsible for 13 of the 15 deed restrictions on the property.

Segments of these deed-restriction terms were included in the town’s May court filing. Specifically, it said that the units must be occupied by “at least one qualified resident” continuously. This resident is defined as a “person who works an average of 30 hours or more per week at a business in Eagle County” or earns at least 75% of their income from an Eagle County business.

It also establishes that the “qualified resident” may rent a room or rooms in the unit to individuals so long as that “qualified resident” occupies it as their principal place of residence. These leases must be more than 30 days, but cannot exceed six months. A six-month lease to a “qualified resident may be renewed without limitation,” it adds.

In a press release announcing the settlement, Chad Brue, the founder and managing partner of Brue Baukol, expressed that this six-month term was one of the hurdles and discussions in recent settlement talks.

“The six-month lease is a hurdle in leasing to full-time, year-round professionals as there is no assurance that they could extend their six-month lease,” Brue said in the release. “We hope to collectively resolve this issue with the (town of Vail). All along, we have maintained that we need ways for residents to be owners of deed-restricted housing.”

In an email to the Vail Daily, Ruther wrote that there were no changes made to the deed restrictions during the settlement negotiations. However, he added that “the town and Altus do anticipate collaborating on possible amendments to the lease term provisions, but verbally agreed to do so at a later date.”

In its complaint, the town alleged that by March 31, 2023, the violations of the deed restrictions resulted in damages to the town of “approximately $5,858,775.” It added that this figure only increases as the deed-restriction breaches continue.

According to the filing, this number is based on a 2019 report commissioned by the Vail Local Housing Authority, which reported that the annual value of a deed restriction to the town is $312,467.

Coming into compliance

The town of Vail’s court filing alleged that the Altus units were non-compliant for various reasons. The filing alleged that all 15 “failed to provide annual verification by February 1, 2022, or February 1, 2023, with evidence to establish that Unit was occupied by a Qualified Household during the applicable calendar year.”

The town also claims that many of the units were vacant for either the whole calendar year in 2022 or a portion of that year. It also claims that two of the units were occupied by non-qualified residents for some portion of 2022.

In the release, Brue acknowledges that prior to February 2023, the units were not fully in compliance with the recorded deed restrictions.

“While unintentional in non-compliance, we were faced with a management storm of COVID-related shutdowns while simultaneously and vigilantly trying to both staff and onboard on-site property managers,” he said.

Currently, Ruther said that Altus has come into compliance on all 13 of its for-rent employee housing units, adding that they are all “occupied by a qualified resident as required by the terms of the deed restriction.”

“The town’s Housing Department and Altus’ property management company met frequently to ensure that individuals contemplating signing a lease were indeed qualified,” Ruther added. “I am confident in Altus and its property manager and that the town’s expectations are understood and the issue is resolved going forward.”

In addition to bringing its 13 employee housing units into compliance, Altus Vail will make a $1 million payment to the town’s housing fund per the settlement. Ruther said that there were no other substantive conditions of the settlement agreement.

Money in this housing fund goes toward the town’s 2017 goal of acquiring 1,000 new deed restrictions by 2027. According to the town, it is 70% of the way toward achieving this goal.

In the release, Ruther said that the town was “pleased with the outcome, which enables us to continue to work toward our goal for EHUs in the town and Eagle County.”

With a settlement reached, the district court case has been dismissed.

Going forward, Brue Baukol and Carlson are “likely” to sell the 13 deed-restricted units to locals, according to the release.

“Homeownership in Vail is precious and rare,” Brue said. “High-end deed restrictions have proven successful in resort communities throughout the country. Our goal is to make them equally successful in Vail Village.”

With any sales of these units, the deed restrictions will transfer with the property.

According to the MLS, five units are currently up for sale ranging from $675,000 for a studio to $1,595,000 for a 2 bedroom. The Altus owner indicated that once these units sell, the remaining units will be listed.