Breckenridge terminates agreement with Mercy Housing on Valley Brook project
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BRECKENRIDGE – The Town of Breckenridge this week terminated an agreement with developer Mercy Housing on the 42-unit Valley Brook affordable housing development after nearly two years.
“The economy – and the economics of the situation itself – was probably the biggest reason,” Councilman Eric Mamula said Wednesday, adding that it will save the town money to develop it in “smaller chunks” rather than “one shot.”
The development agreement for the estimated $12 million project, financed in part by the town and government grants, began in June 2008.
Mercy Housing Colorado president Jennifer Erixon said her company is gathering invoices so it can be reimbursed for costs to date.
“Ultimately, the council decided it needed to take an approach that didn’t involve a third-party developer, and we respect that,” she said.
The project hit choppy waters last fall when general contractor BASE Building Solutions pulled out, postponing the likely move-in date for residents from summer 2010 to spring 2011.
The town council was scheduled during Tuesday’s work session to discuss final approval of plans for the development, but the item was removed.
Town spokeswoman Kim DiLallo said negotiations regarding the agreement were added to a scheduled executive session Tuesday.
Councilman Dave Rossi said that while the meeting behind closed doors may be legally justified, he would have preferred it to have been in public.
“I wish we had not taken it into executive session,” he said. “I think that was not really necessary.”
The agreement that had been included as a supplement to the town council packet involved changes that would have added extra risk to the town’s involvement.
Mercy Housing was concerned with changes to the housing market since the project began in late 2007 and early 2008. The developer planned not to commence construction on any building not “100 percent pre-sold,” according to the packet’s supplement.
Mercy also requested a full subsidy – including a $725,000 developer fee and overhead of $150,000 – be paid at the time of closing.
The proposal set timelines by which units must be sold. For example, it would have allowed Mercy to terminate the agreement to construct Phase 2 if there were any unsold units left by March 1, 2011.
Town council and staff have expressed optimism regarding the future of the project, which is still slated to break ground in April.
“In the long run it’s a very positive move,” Mamula said of the town taking on the project’s development. “The town’s learned a lot in the last couple years. I think in the end, it will take longer to get the project completed, but it will just be a better situation overall.”
“I think the savings to taxpayers is going to be big. It’s going to be noticeable,” he said.
The town will save money without having to pay a developer, and Mamula said he’d like to see the project kept “100 percent local.”
Mercy Housing is based out of Denver.
The town sent out a press release Wednesday afternoon stating that by taking on the project in smaller pieces, it will “provide more flexibility in regard to construction schedules and market demand.”
The town owns the land and is expected to meet with local contractors in the coming weeks to discuss their participation in the project.
It also has received bids for the project’s infrastructure to begin “as soon as the weather permits,” according to the press release.
Buyers are to be contacted regarding the schedule for units to be available.
Robert Allen can be contacted at (970) 668-4628 or firstname.lastname@example.org.
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