The Crested Butte News Serving the Gunnison Valley since 1999
Mid-April conclusion expected for situation
By Mark Reaman
In its quest to gain control of an affordable housing unit that went into foreclosure in the Poverty Gulch project, the Crested Butte Town Council last week held an emergency meeting.
The board gave the okay to the town attorney and town staff on March 23 to negotiate with another lien holder on the property and make a deal to essentially purchase their lien and redemption rights for no more than $12,000.
The town had already paid the Poverty Gulch Homeowners Association $9,235 for the rights to its lien on the property. That was the amount in past dues owed by the unit’s owner, Jim Harlan.
That action put the town in line to redeem the certificate of purchase that was bought at a Gunnison County trustee’s auction by local Realtor Mindy Sturm earlier this month for $93,000. A resolution is being prepared for the April 3 Town Council meeting to approve “the payment of $93,000 and such other amounts necessary to redeem the certificate of purchase issued to Mindy Sturm.”
According to Gunnison County deputy treasurer and public trustee Teresa Brown, per Colorado Revised Statutes, a junior lienor has the right to acquire the property if they have a valid lien and have filed a timely Notice of Intent to Redeem along with the other required documentation. The town of Crested Butte, as the assignee of the HOA lien, did file the required Intent to Redeem along with the appropriate documentation.
Brown explained that the town of Crested Butte would have the first right of redemption. The Certificate of Purchase holder (Sturm) submitted her Statement of Redemption outlining the costs associated with her purchase of the certificate by Monday, March 27. The statement included the amount paid at sale, interest and allowable fees and costs and was close to $97,000. Sturm included attorney fees incurred as a result of a failed negotiation with the town.
The town has until noon on Tuesday, April 4 to exercise its right to redeem and if the town does so, the trustee, Brown, will issue a certificate of redemption to the town. The Town Council will consider an emergency ordinance on Monday, April 3 authorizing the redemption costs for the unit to not exceed $125,000.
“The redemption payment will be given to the Certificate of Purchase holder (Sturm),” Brown said. “The Certificate of Purchase holder is not able to stop the process of redemption. They must accept the payment. The next junior lien holder will then have an additional five business days to redeem. Once all redemption periods have ended I will issue the Confirmation Deed to either the last redeeming party or if no redemption has been made, to the holder of the Certificate of Purchase.”
Sturm has issues with process
Sturm was not pleased with the process with the town in this particular case. Despite a comment from town attorney John Belkin asserting that Sturm rejected a deal with the town, Sturm states, “I did not reject any offer. I met with Dara McDonald, Michael Yerman and John Belkin and was open to further dialogue but they were not prompt in responding to my questions. When they did respond, they were vague and the information supplied to me (both oral and written) was misrepresentative of the situation. They were not giving me the full picture so I could make a decision.
“On Monday of last week, the town manager called and said their offer was off the table and they were proceeding with their redemption rights,” Sturm continued. “I filed a Statement of Redemption this week, that included attorney fees and other costs related to the sale. Because the town was giving me the run around, I had to retain counsel to give me an opinion on my position as well as the town’s. To me, this whole thing would have been a lot easier and the town could have had that property for a lot less if they had exercised the option to purchase, or succeeded at the foreclosure sale. Why neither of those avenues were accomplished is a mystery to me. The town authorized the purchase of the unit for $104,000. Considering that I live and work in this town, I am frustrated by the lack of professionalism in this situation.”
“Throughout the foreclosure process, the town explored all of our options to retain the unit,” said MacDonald. “Unfortunately, due to the tight timeframes, the town and Mindy were not able to come to terms amenable to both parties.”
Council expressed some concern at the emergency meeting with possible litigation over the Poverty Gulch unit foreclosure, but Belkin said there was always a chance for litigation in almost any situation.
Future issues at stake?
At last week’s emergency meeting the council asked staff if the rest of the town’s deed-restricted affordable housing stock was protected in foreclosure situations or if the town would have to follow similar procedures as this in the future.
“I imagine there are a number of units that could be subject to stuff like this,” said town attorney John Belkin. “Other municipalities are dealing with similar issues so it depends on the documents that have been filed with a particular property.”
Crested Butte town manager Dara MacDonald said she and town planner Michael Yerman have talked about conducting an inventory of the town’s affordable housing resources. “It is a concern that we want to get ahead of,” MacDonald told the council.
“There are 203 separate deed restrictions in town, without including the Anthracite Place project,” said Yerman. “Over the decades, things have been recorded differently and deed restrictions vary from property to property. We definitely need to get ahead of this, so we want to look at this. We want to keep taking steps forward and not take steps backward.”
