Submitted by Pam Bennett, Dirk dePagter and Nick Farkouh
On December 20, 2023, the Town and County issued a press release announcing two offers made to purchase all 105 acres of the Diamond Ridge property. The press release was subsequently published in the Telluride Daily Planet. Since the Town and County decided to announce this news publicly, the parties associated with the offers wish to set the record straight by informing the community of what occurred up to this point in more detail.
The first offer was submitted by longtime resident Pam Bennett (daughter of Albert Aldasoro) on October 20, 2023, in the amount of $6,300,000. However, the offer expired on November 2, 2023, as no response by either the County or Town was provided before the acceptance deadline. BENNETT OFFER
The second offer was submitted by longtime resident Dirk dePagter and Nick Farkouh on December 5, 2023, in the amount of $6,150,000. DEPAGTER/FARKOUH OFFER
Both offers were “cash” offers with no contingencies and proposed thirty day closing timetables. Both offers contemplated a consortium of concerned local community members as final buyers, with an intent to either maintain the current Forestry/Agricultural (F/Ag) zoning of the property or to consider placement into a protected conservation easement. Both offers were kept confidential by the offering parties in order not to prejudice a possible sale.
The most recent offer by Mr. dePagter and Mr. Farkouh was rejected by the Town and County by a cordial phone call from the Town on December 20, 2023. However, within minutes of that dialogue, the Town and County issued the above-mentioned press release with a very different and negative tone.
The Town and County press release states that all future possible sales would “be offered publicly in a competitive bid process to ensure transparency, fair competition, and comprehensive consideration in line with local government fiduciary duties.” In response, Ms. Bennett states “Considering the history of the Diamond Ridge purchase, it is great that Town and County officials now understand their need to conduct real estate transactions in a transparent manner, and their fiduciary duty to the citizens of this region”.
Details not provided in the Town and County press release are provided below to support Ms. Bennett’s statement, but it is important to note that careful thought was put into the first offer by Ms. Bennett and the most recent offer by Mr. dePagter and Mr. Farkouh. Both offers had a desire to:
- Provide an offer to the County and Town that was much closer to the amount the County and Town paid than any third party would contemplate;
- Enable a replenishing of the wrongfully depleted respective General Funds;
- Allow for decisive actions on the part of both governmental entities, and most importantly;
- Provide funds that could immediately be applied to housing solutions.
HISTORY OF DIAMOND RIDGE PURCHASE BY TOWN AND COUNTY
Prior to the Town and County purchasing the Diamond Ridge property in 2022, the three lots comprising Diamond Ridge were on the market for collective asking price of $5,050,000 – an asking price that had received no offers. DR LISTINGS Many real estate professionals placed the 2022 value of the three lots between $3,500,000 and $4,500,000. DR CMA This is primarily based on the legal limitations of one house per 35 acres, the physical attributes of the property itself, and the proximity to the airport. Those realities limited the interest of buyers.
However, without any public discussions, and certainly without any public awareness, on January 15, 2022, the Town and County entered into a contract to purchase Diamond Ridge for $7,210,000. TOWN/COUNTY PSA
The public became aware of this purchase in March of 2022 when the Town and County selectively notified a handful of citizens of their contract, and of a rezoning application the Town and County had filed with the County. Town and County officials conveyed that the rezone application was to be heard by the County Planning Commission on April 21, 2022, and by the Board of County Commissioners (BOCC) on May 18, 2022.
Word of this news spread quite quickly through the community, and in addition to the concern for the rezone application itself, many people pointed out to the Town and County that they had contracted the property for a wildly overpriced amount. Through the ensuing rezone process, these comments were made countless times by citizens – many with credentials and expertise in the real estate market – both in spoken and written form. Comments included the fact that the Diamond Ridge lots had been on the market with no buyers for twenty years at asking prices closer to $5,000,000 – well below the $7,210,000 Town and County contracted price.
On January 15, 2022 – the same day the Town and County went under contract with Jack Vickers to purchase the Diamond Ridge property, the Town and County applied for a DOLA grant fund to subsidize their intended land purchase DOLA APPLICATION , and were notified of an award of $5,000,000 on April 14, 2022. DOLA AWARD LETTER The Town and County essentially “banked” on the DOLA funding of $5,000,000 to arrive in relatively short order, so in their minds, the actual “cost” to the Town and County would be $2,210,000.
THE TOWN AND COUNTY GAMBLED WITH PUBLIC FUNDS ON A BET THEY WERE NOT ALLOWED TO MAKE
Despite the Town and County’s belief that DOLA funds would arrive in relatively short order, DOLA was not obligated to actually pay the $5,000,000 grant until after the Town and County met contractual grant requirements. One of the key requirements of the DOLA grant was that the property be zoned appropriately for the use intended by the Town and County.
On May 18, 2022, and as planned, the BOCC approved a rezone of the Diamond Ridge property from F/Ag to Community Housing (CH) per the DOLA requirement. However, on December 21, 2022, due to illegal spot zoning and abuses of discretion by BOCC, the Colorado District Court overturned this rezone, and Diamond Ridge reverted back to its original F/Ag zoning. COURT ORDER
In order to come up with the $5,000,000 anticipated to be backfilled by DOLA grant funds, the Town borrowed $2,500,000 from the Telluride Housing Authority (THA), which is an independent public entity, and promised to pay the THA back by December 31, 2022. The Town cancelled this promissory note on December 30, 2022. TOWN PROMISSORY NOTE Irrespective of note cancelling, this agreement obligated the General Fund of Telluride in an unsecured gamble that DOLA would come through in the desired timetable.
The County acted a bit differently. Since they could not borrow funds from the THA, the County issued a check in the amount of $2,500,000 from the County General Fund to THA. The County then entered into a promissory note to repay THA, which was really a disguised loan to THA conditioned on the unsecured repayment by DOLA. COUNTY PROMISSORY NOTE The County gambled with public money, expecting that they could replenish the General Fund in short order without public awareness.
As a result of the various unsecured loans and payments made by the Town and County, a problem was created by and for both governmental entities, but more importantly for the taxpayers of the region. General Funds are highly regulated as to the allowed use of funds. They are limited to paying the regular expenses of the County or Town, and not for capital improvements or land acquisition. The use of general funds to guarantee an unsecured gamble that DOLA would pay back the money is not one of those enumerated proper uses of the General Fund. The Town and County made a bet that DOLA funds would backfill the General Fund expenditures. However the gamble went due to a fundamentally flawed plan by the Town and County – flaws highlighted by the Court’s overturning of the Diamond Ridge rezone because of illegal spot zoning and abuses of discretion.
Shortly following the Court ruling which interrupted the intended scheme, to avoid a violation of Colorado’s Taxpayers Bill of Rights (TABOR), the Town of Telluride paid $2,500,000 out of the Town’s General Funds to THA under their loan agreement. The County had already paid their $2,500,000 out of their General Fund – funds it could not simply get back. The gamble had gone horribly wrong.
TOWN COUNTY DECIDE NOT TO APPEAL AND THE EAST END MASTER PLAN
With a Court case working against them, the Town and County found themselves at a crossroads as 2022 turned to 2023. Two Town and County statements are provided to demonstrate the direction they decided to take.
On December 22, 2022, just one day after the Court ruling, the following appeared in a draft press release created by the Town and County – a statement that was not included in the final version issued to the public. PRESS RELEASE DRAFTS
“According to County Manager Mike Bordogna, San Miguel County will consider next steps including a potential amendment to the County Comprehensive Development Plan to account for high density community housing”
On January 3, 2023, a similar statement was made by the Town in a KOTO interview. Town Manager, Scott Robson stated:
“We got some direction out of the District Court on some modifications in the process that would need to occur for Diamond Ridge to move forward”
Rather than appeal the Court ruling they lost regarding Diamond Ridge rezoning, the Town and County instead made a decision to use the already-in-progress master plan process as an easier and faster way to circumnavigate the Court ruling. Ultimately, the Town and County were willing to use a master plan to achieve the end goal, even if that approach had regional consequences.
THE MARKET VALUE OF DIAMOND RIDGE
In light of the mess created by the County and Town gambling with public money, offers to purchase Diamond Ridge were tendered by Ms. Bennett, Mr. dePagter, Mr. Farkouh and all associated concerned citizens with a broader purpose in mind. In the cover e-mail to their offer, Mr. dePagter and Mr. Farkouh state “…in spite of the less-than-ideal history that has been created recently, our offer comes with a genuine intent to put the past behind us and to begin working in tandem with you all as leaders of our region”. EMAIL LETTER. The offers to purchase Diamond Ridge were intended to provide an off-ramp for the County and Town from the mess they had created for themselves.
Knowing the County and Town overpaid dramatically for this land, but also with awareness for the General Fund expenditures by both governmental entities, an inherent challenge existed for a fair and reasonable offer amount for the property. In addition to the known $7,210,000 price tag the Town and County paid for the property, an appraisal for the property (required by DOLA) valued the Diamond Ridge property at only $6,900,000. DR APPRAISAL This lower-than-paid appraised amount was determined even though the appraiser knew the $7,210,000 amount of the Town/County contract. Furthermore, the appraisal was based on superior Deep Creek Mesa properties as “comps”, which ultimately inflated the appraised amount for Diamond Ridge.
As an additional point related to valuation, but also to developability of the property for Community Housing, the Geotechnical report (also required by DOLA) prepared after the Town and County closed on the property, uncovered a new glaring problem for property. DR GEOTECH Diamond Ridge is predominantly Mancos Shale, a subsoil condition that is very unstable and prone to substantial movement over time. In addition to substantial foundation and slab cost implications, Mancos Shale is known by developers, engineers, and contractors to be a significant, and sometimes fatal, impediment to development.
In yet another point related to valuation, developability and fiscal responsibility (and in addition to concerns by the community for the feasibility and cost of providing water service to the Diamond Ridge property), the Town and County have misled various stakeholders when outlining their plan to provide municipal water to the property.
The Town claimed in a presentation to Newmont (the water rights holder to the Town’s water supply) that each home in Diamond Ridge would use 95.6 gallons per unit per day. NEWMONT. However, when the Telluride School District (TSD) came before the Town regarding a potential TSD housing project in Lawson Hill, the Town had a very different number used for a per unit basis. The Town then claimed that 235 gallons per unit per day was the correct figure. WATER – TOWN-TSD
To put this in perspective, the annual usage of approximately 8.3 million gallons presented by the Town for the Diamond Ridge development (240 units) should actually be in excess of 20.5 million gallons per year, an understatement of 12.2 million gallons, or nearly 2.5 times the incorrectly stated amount.
This community is overflowing with talent, expertise, experience and passion that can fuel solutions not even contemplated at the present time. This talent needs to be harnessed, not fought, by our local governments. Offers to purchase Diamond Ridge represent an opportunity to move on from the Diamond Ridge debacle, but more importantly, will allow us to collectively solve housing issues well into the future and begin the healing process in our currently polarized community.
For additional information on the Diamond Ridge property, the following links are provided
