Vail Valley Voices: Asking too much for ranch easement
Vail, CO, Colorado
I am for preserving open space. While I was a county commissioner, there were four major conservation deals I voted for.
Two were hotly contested, but none received as much concern as the proposed Colorado River Ranch conservation easement in terms of pricing.
Why? Because pre-recession, we all thought real estate values would always go up. That was before we learned about how money manipulation like financial derivatives and predatory lending had created a false liquidity, which pushed real estate values up faster than what would have been realized in a normal market.
Before a decision is made in spending taxpayer dollars on this open space acquisition, there are three key issues that deserve a full and fair hearing: price, urgency and future precedent.
1) Price. Tom Edwards, chairman of the Eagle County Open Space Advisory Committee, and Ron Wolfe, a member and former chair of the committee, have both advised that the county funding share should be no more than $4 million.
I think it should be lower. The Eagle Valley Land Trust requested $5.7 million of open space funds from the commissioners.
The history is interesting. This ranch has changed hands three times in the last 11 years: $5.7 million in 1998; $5.0 million in 2004 (yes, it dropped in price); $9.6 million in 2007; $13.5 million in 2009 (appraisal estimate).
In light of a housing market where sales have fallen off a cliff, many Realtors haven’t seen a paycheck in over six months, estimates of 15-25 percent devaluations are being made, major commercial construction projects teeter on insolvency, and local bankers tell me that raw land has lost more value than developed land, it’s hard to accept a formulaic appraisal that supports a now-failed trend of appreciation.
Even the appraiser acknowledges that the market is “flat.” A statement that at best is optimistic.
This is not a working legacy ranch that has been in the family for generations like some other past conservation deals that were supported by open space dollars. This is a parcel of land that has been flipped and driven by investment hopes. Just because the current owners bought it at the top of the market doesn’t mean that we, as taxpayers, should reward them with a premium payday.
The county is being asked to pay top dollar for a likely depreciating property in an environment where everyone’s home value or 401K has dropped in value by 20 percent to 40 percent in the last year.
I believe the county should invest no more than $3 million in open space funds. Here’s how I see it:
The property was purchased almost at the peak of an overpriced market. In 2008 the value was $10 million. In today’s market I would discount that price by 20 percent to $8 million. If we used the easement calculation of 60 percent for the proposed deal, then 60 percent of $8 million, less the contributions by the owner and partnering dollars, would be bring the county’s contribution closer to $3 million. I believe this is what most taxpayers would find compatible to their real estate values and feel comfortable approving.
2) Urgency. What’s the rush? Many of the past open space purchases took months to evaluate by the board. The Bair Ranch had multiple hearings, two visits to the ranch and months of discussion leading to a 2-1 vote. With the present real estate market dropping drastically in the last few months, why not be patient and see what other opportunities could be created for open space? Open space purchases are like buses, if you miss one, another one will come along.
3) Precedent. Overpaying for this parcel sets a bad precedent for the future. Looking back, in better financial times, I think we let emotions sometimes get ahead of our bank accounts and caused the price of easement acquisitions to inflate.
Just like families taking a hard look at their budget at the kitchen table, our commissioners need to push for the best possible value and send a message to future landholders and sellers that all deals are going to be looked at a lot more carefully and with a strong dose of skepticism. Don’t look to Eagle County for a bailout for land deals gone bad.
As currently proposed, this deal will halve the funds in the open space account down to $5 million.
With good deals on land almost certain to appear, I’d much rather go shopping with a $7 million checkbook than a $5 million one.
And finally, let’s be honest here, where’s “Plan B?”
Is development on this parcel imminent? Hardly.
Brightwater has closed, The Gates sits empty at the entry to Beaver Creek, and no new spec home building permits have been requested.
So let’s be careful about guarding our open space checkbook and investing wisely and strategically.
Arn Menconi served as a county commissioner from 2000 to 2008.