A $10 million deal has fallen through between the developer of the Centennial housing complex and the city of Aspen that had the municipal government buying the deed restrictions on 143 apartments in perpetuity, effectively limiting rent prices.
“Everybody worked in good faith but we just couldn’t get it done,” Sam Brown, general partner in Centennial Aspen II Limited Partnership, the owner of the complex, said on Monday. “It’s a damn shame.”
Negotiations stalled out in late December when a new buyer of the complex, who is set to close in the next 45 days, could not agree to the city’s terms regarding a stipulation in the ownership agreement.
Brown’s group, which developed Centennial in the 1980s, has the ability as landlord to regulate the rent on the complex’s overall square footage, which allows for some tenants to pay more or less based on ownership’s needs.
That flexibility is being passed onto the buyer, and Aspen City Council had concerns about the potential abuse of power by an unknown entity, according to Chris Everson, the city’s affordable housing manager.
Brown said the deadline was approaching for his deal with the buyer and it was a point they were unwilling to budge on.
“From the buyer’s perspective they looked at what the city wanted and they said, ‘What you are asking jeopardizes our ability to finance the deal,’” Brown said. “We just couldn’t find that sweet spot.”
After a Dec. 19 meeting between city staff and Brown, Everson said the government was waiting for a counterproposal.
Instead, Brown sent a notice of termination on the purchase contract.
“I feel like we dropped the ball because we left the ball in his court,” Everson said Monday. “I do feel like it was a lost opportunity.”
But at the same time, City Council’s concerns were addressed, he added.
“I felt we were being reasonable by looking at the how the rents were managed,” Everson said.
If the sale of the property goes through, the buyer will take on Centennial’s conditions for approval from the mid-1980s, which call for a lifting of the deed restriction on the units.
How much the owner can charge for rent expires at the end of the 21st year after the death of the last member of the Pitkin Board of County Commissioners who approved the development, which is 72-year-old Old Snowmass resident Michael Kinsley.
Brown, who was championing the city buying the deed restrictions, said he’s “crushed” that he wasn’t able to make it happen.
He said while the real estate deal is more lucrative to him with Centennial rentals eventually going to the free market, he would have rather seen the city be in control of the rents.
“It was not an economic issue but a matter of public policy,” Brown said.
Several years ago, Brown offered the city the chance to buy the property for $60 million, and recently reduced that to $50 million, but the municipal government declined.
“We are under contract for more than what we offered the city,” he said.
Brown added that the buyer is interested in working with the city on the deed restriction in the future.
Brown declined to reveal the identity of the buyer but has said in the past that it is a company that specializes in owning and managing affordable housing.
The city’s interest in buying Centennial’s deed restriction in perpetuity was prompted by Brown’s group shopping the property to prospective buyers.
City Council members have said that $10 million is a small price to pay when assuming market forces will continue to drive up costs.