Mt. CB pays $750,000 to secure Homestead settlement

Inspection to determine what is salvageable (if anything)

[  By Kendra Walker  ]

After being at a standstill for more than a year and delayed two years longer than its originally anticipated completion, the Homestead affordable housing development is poised to come back into the hands of the town of Mt. Crested Butte with a settlement agreement that will secure town the rights necessary to complete construction of the project.  

On December 20, the town council approved a General Mutual Release and Settlement Agreement related to the issues between the town and developer Lance Windel of Homestead Housing LLC. Under the terms of the agreement, the town has agreed to pay Homestead Housing $750,000 for all the Homestead property rights and will acquire all rights to the Homestead property on a closing date of April 30, 2023. The settlement agreement requires that Homestead Housing LLC transfers all its rights, including ownership, rights to construct and sell affordable housing units of the Homestead property. Homestead Housing must convey to town the property free and clear of all liens, encumbrances, taxes, HOA fees and resolve the buyers’ contracts to the town’s satisfaction. According to newly appointed town manager Carlos Velado, the town council will take the necessary steps to complete construction and sell the units after the closing date of April 30. 

Background

In November 2018, the town of Mt. Crested Butte, Prospect Development Company, Inc. and Homestead Housing, LLC entered a construction contract to buy, sell and develop deed restricted housing in the Prospect Homestead Subdivision. The town and Prospect transferred the property to Homestead Housing to build 22 deed-restricted affordable housing units on lots 7 through 28. Neither the town nor Prospect retained any ownership or development rights related to the Homestead property while development was underway. 

However, Homestead Housing failed to fulfill its contractual requirement to construct and sell the units by December 31, 2020 and negotiated some time extensions to build the units. In the fall of 2021, Windel went into default of his contracts with the Homestead unit owners, and the construction zone has sat vacant and incomplete ever since.  

Since December 2021, the town has shared that it has been diligently working with lawyers to resolve the matter. Windel previously shared with the News that he made a verbal offer to the town last December to try and resolve the issues but did not receive a substantial response to the offer until May 2022. He then made a formal offer in June, and the town arranged for a mediation meeting on November 18, which resulted in the recent settlement agreement. 

The agreement

Under the terms of the agreement, the town will acquire all rights to the Homestead property including those necessary to complete construction of the development. According to the town, the $750,000 amount it will pay Windel in the agreement reflects the value of the project, including tap fee credits, permit fees, deposits, site work and existing approved architectural and engineering plans. “The settlement sum also includes a value judgement in which the town decided rather than taking additional risk and spending additional time and money on litigation, they would rather attain ownership of the property more quickly to help move the project forward,” shared town staff.

Velado confirmed that as per the agreement, all construction materials have been removed from the Homestead site. Additionally, the agreement gives the town the ability to inspect the property in its current state. “The town intends to further analyze the properties to the greatest extent possible as allowed by weather conditions immediately,” said Velado. “The town intends to inspect and assess to the current improvements on the property to determine what is salvageable (if anything). The town will assess the condition of the existing improvements to determine what next steps need to be taken. Next steps could be partial demolition. We won’t know the estimated costs until after the assessment,” he said. “The town will work to further assess the property and work with design professionals to update the drawings to make sure design is as close as possible to being ‘shovel ready’ by the closing date.”

The agreement also states that Homestead Housing will resolve the buyers’ contracts by March 31, 2023. “To be fair to the prospective buyers, the town agrees to acknowledge and reserve the prospective buyers’ winning lottery position in the affordable housing lottery and to extend to the prospective buyers the opportunity to enter a new buyer’s contract with the town in the affordable housing units the town seeks to construct and sell using the Homestead property,” said Velado. “The town’s offer to the prospective buyers remains contingent upon the prospective buyers’ continued eligibility, other than income limitations under the applicable area median income (AMI) standards, and the town will honor the prospective buyers’ established financial eligibility as initially determined when first being placed under contract.”

Windel shared with the News last week, “I am disappointed the project did not work out for my company, but I am glad to have reached a resolution with the town that will allow another builder to move forward with the construction of the needed housing at Prospect Homestead.”

According to Velado, multiple contractors have already reached out to the town regarding completion of the project. Velado said the town will prepare a Request for Proposals (RFP) to complete the development when the time is ready, but the provisions of the settlement agreement must first be met. “The conditions of the settlement agreement must be met for the properties to close on the April 30 closing date,” he said. “The town’s top priority is to complete construction as soon as possible but with many things still remaining for the settlement agreement to be satisfied, it’s difficult to put a timeline on when that might be.”

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