ISSUE #258: Oops, We're About to Do It Again (9/10/23)
January 5 "You never make the same mistake twice.The second time you make it, it is no longer a mistake.
It is a choice."
-- Lauren Conrad
No surprise, but today's installment is about The Lumberyard, again. This Tuesday's city council meeting could potentially bless the development entitlements for this ill-conceived project, "horizontal construction" will begin, and we're off to the races.
Central to the issue is that NO PROJECT BUDGET NOR FINANCING PLANS HAVE BEEN PUBLICLY PRESENTED NOR EVALUATED. My guess is they do not exist.
It's far too soon to approve ANYTHING without this information!
Today's column in The Aspen Times reminds us of the Burlingame fiasco of 2006-2008 that we are uniquely set to repeat at The Lumberyard. Read it HERE.
Councilman Bill Guth cannot do it alone. He has continually asked for financial information, models, sourcing plans and other responsible disclosures. City staff continues to obfuscate and his fellow councilmen appear not to care.
Earlier this year, I asked you to write to city council to express your opinions on The Lumberyard financials (specifically the lack thereof). Nearly 100 comments were received and this effort slowed the process with promises of a dedicated council work session on the topic. That never happened. (It couldn't - there is nothing to share.)
I am asking (imploring?) you to do it again, especially if you agree with me. Please click HERE and voice your displeasure about the lack of transparency, the irresponsible governance, the ignorance and the arrogance of approving development entitlements (or anything!) without a full and public disclosure of the project's budget and financials. Write "September 12" on the subject line and CC or BCC me, if you'd like!
A special note to my friends in the development business:
Please write to council HERE and explain how a real Public-Private Partnership works, and how this should absolutely be explored before moving ahead with the existing plans. It's clear that no one at the city understands how a PPP could benefit the community AND significantly reduce the risk.
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It’s Groundhog Day! As city staff works to cajole three councilmembers to approve development entitlements to The Lumberyard subsidized housing project on Tuesday evening despite no stated means of paying for it, we’re about to re-enact an outrageous scandal that played out over 15 years ago at Burlingame.
First, a little history. In 2006, a reporter asked the city’s then-finance director to make public the financials for the then-planned Burlingame housing project. Said finance director, theretofore kept in the dark about said financials, pressed the then-asset manager to produce the numbers, which he reluctantly did - on the back of a McDonald’s napkin.
Those numbers, later featured in a city brochure for a crucial ballot measure, were found to grossly understate both the Burlingame project cost as well as its public subsidy, ultimately revealing that no comprehensive project budget had ever existed. (The stated $14.7 million subsidy turned out to be well in excess of $85 million.) Needless to say, public trust was decimated and has yet to recover.
As a result of this scandal, the city empaneled a Citizens Budget Task Force (CBTF), which, over the course of 10 months in 2008, was granted unprecedented access to the city’s financial data and information. The CBTF made numerous recommendations, many specifically for improving the city’s housing development process. The resulting resolution passed unanimously, but most recommendations were never implemented.
Today the city is back, pushing to memorialize development plans, this time for The Lumberyard. What we do know is that 277 units comprised of 467 bedrooms and parking for 435 cars are planned for the 11-acre site, for which the city spent $30 million on the land and another $5 million on design. The project, at Aspen’s entrance across from the airport, looks more like a prison than a housing development, but I digress.
What we don’t know are any financial details, just that cost estimates range from $500 million to $750 million; that’s $1.8 million to $2.7 million per unit. The public has not been presented with any information on how the city intends to finance and pay for this, the largest municipal project in Aspen’s history.
Numerous requests for vaguely-referenced “financial models” have been denied. Councilman Bill Guth routinely presses staff for this crucial information but the others on council do not. City manager Sara Ott is apparently so confident she has the “yes” votes to proceed there is again no comprehensive project budget to share publicly.
Reflecting on the CBTF, which reported on “the city’s lack of financial, budgetary and project management policies and procedures to properly manage large, multi-year capital projects,” today we find ourselves ignoring perhaps the committee’s most applicable recommendation:
"Only seek to borrow funds for major capital projects through bond issues or other debt instruments once a detailed project plan is in place and has been communicated to the public. Such a detailed plan should include estimates of all cost components with documented underlying assumptions for all variables influencing cost.” In other words, be transparent about all the financing details!
The city intends to use public funds to hire a developer to build out its $5 million design. That’s not a public-private partnership (PPP). A real PPP brings a public entity like the city together with a private sector developer who has broad access to capital and is well-versed in construction, leasing, market realities, and has a track record of performance and long term asset management; everything the city lacks. Simply put, a PPP for The Lumberyard could deliver the same number of units more cost effectively and more expeditiously, while off-loading the community’s financial risk onto the development partner. Why aren’t we even considering a PPP?
If we entitle The Lumberyard now, horizonal construction (roads, infrastructure) will commence. Such construction will preclude a PPP, since a development partner would specifically design and fund a project according to a financial proforma that delivers both the units and a return on its investment, likely not what our wannabe-architects on city council have designed at $1.8+ million per unit.
It is utterly laughable that city staff posits that entitlements are necessary today. They’re not. The city is both applicant and approver; judge and jury. This is nothing but a trap. These entitlements will effectively eliminate PPP opportunities and “force” the city to self-finance, placing all financial risk and responsibility on our community, and keep it on the hook for the operations and maintenance of The Lumberyard into perpetuity. Isn’t APCHA’s track record alone enough to illustrate what an horribly irresponsible decision this is?
Notably, councilman Ward Hauenstein was on the housing committee of the CBTF. He wrote these very recommendations, yet apparently he and others on city staff have conveniently forgotten them. The work of 24 dedicated citizens to improve the housing development process after an embarrassing scandal should not be ignored. History has a knack for repeating itself.
We are facing exactly the same issues and the same obfuscation we did in 2006-2008. The approved CBTF recommendations should have been proactively implemented 15 years ago. Instead, it’s Groundhog Day, just with another zero at the end of every number.
Write to publiccomment@ aspen.gov TODAY and implore city council to be transparent about The Lumberyard financials before approving anything. Contact TheRedAntEM@comcast.net