With no deal, Avon negotiations continue
September 26, 2012
AVON, Colorado – Nerves started fraying at about 10 p.m. in the Avon Town Council chambers Tuesday. When midnight struck, patience was in short supply. At the end of a marathon meeting that began at about 3 p.m. – and included roughly three hours of public haggling over one section of a settlement proposal that runs into hundreds of pages – Avon Town Council members finally said “enough” in efforts to forge an out-of-court deal with the developers of the Village at Avon. Then they signed up for another meeting Oct. 9. That meeting may be the last chance to get a settlement agreement completed.The town and the developers have been in court since 2009. The town is suing the developers for revenue promised by the development’s 1998 land-use approvals. The developers are suing the town, alleging town officials are blocking any new construction at the project.After failing in previous attempts to settle the cases, the town and developers last year announced they’d agreed to the outline of a settlement. The parties have spent the last year trying to determine just what the details will look like, including significant revisions to the original land use approvals.Those changes have to be treated as essentially a new land-use application by the town: The developer brings a proposal to the town. Town officials can recommend changes, but can’t impose them. After negotiating details, the Town Council can either approve or deny the application.
Town officials say the changes proposed by the developers have gone far beyond what was envisioned in the settlement framework. Starting in July, council members insisted that the developers bring only what’s in the settlement framework for consideration. That apparently hadn’t happened as of Tuesday, as council members said the latest version of the application was still missing key documents.”We’re supposed to have these things,” council member Buz Reynolds said. “We’ve had months; the documentation should be there… We should have been done by now.”And, council members said, they simply aren’t able to even vote on the application in its current form, much less approve it.That approval is crucial to finishing the settlement, and time has about run out to get the deal done. The parties are working under a deadline that’s both self-imposed and overseen by District Judge Tom Moorhead and attorneys for international bank BNP Paribas.The bank is involved because it holds the letter of credit being used to pay the development’s revenue bonds, which were used to pay for roads, utilities and other improvements at the site. If the bank withholds payment, the bonds will go into default, and the complex financial elements of the deal fall apart. And if the settlement isn’t completed, the parties’ lawsuit resumes. Moorhead has penciled in time for a trial starting in January.
The bank has until Oct. 12 to notify the bond trustee whether or not it will continue making payments. That notification won’t happen unless a deal is in place.Brandee Caswell, the attorney representing BNP Paribas, Tuesday told the council that she didn’t think granting a third extension on the letter of credit would make a difference in getting the deal done.”Without some kind of business case to back up an extension, I’m not sure why it would be approved,” Caswell said.Caswell also told the council and audience that there are serious consequences if a deal doesn’t get done. If the lawsuit resumes, the town could lose, and then would face the prospect of a “multi-million-dollar judgment,” Caswell said. That’s what happened in Mammoth, Calif., where a developer won a judgment against the town. The town has had to declare bankruptcy, Caswell said, and is now looking at some combination of tax increases and service cutbacks to pay the judgment.Before Caswell spoke, though, several residents – mostly neighbors of the property – urged the council to deny the land use application altogether.Former Mayor Ron Wolfe urged the council to take a different direction.”The current (application) isn’t approvable,” Wolfe said. “But the right decision isn’t denial.” Wolfe urged the town and developer to go back to nothing more than the language of the original settlement framework.Council members said that’s what they want to see, too – but need to see a complete application and accompanying documents.Council member Chris Evans said he’s willing to vote on a stripped-down proposal, but said he still needs to see documents he’s been asking for for weeks, including a list of the developer’s draws on the letter of credit.Other council members said they’d also be willing to vote on a clean, stripped-down application. But council member Amy Phillips said she’ll have a hard time voting for anything beyond exactly what the original settlement framework contained.”When I voted for the term sheet, I swallowed every single concession I was ever going to swallow,” Phillips said. “This can’t go on – it has to end,” council member Kristi Ferraro said. “There’s been ample opportunity to get this done … we’ve got to fish or cut bait, and soon.”Business Editor Scott N. Miller can be reached at 970-748-2930 or firstname.lastname@example.org.