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TC Minutes 07-20-1982• MINUTES OF THE SPECIAL MEETING OF THE AVON TOWN COUNCIL HELD JULY 20, 1982 - 7:30 P.M. The special meeting of the Town Councilmembers of the Town of Avon, Colorado was held in the Municipal Building in the Council Chambers. The meeting was called to order by Mayor Nottingham at 7:40 p.m. A roll call was taken with Larry Kumpost, Sheila Davis, Greg Gage, A.J. Wells, Al Connell, John Blish present. Also present were the Town Attorney John Dunn, Town Manager Dick Blodgett, Town Planner Dick Kvach, Attorney Dennis Cole, attorney for the time-share developer as well as members of the press and public. The purpose of the special meeting was to discuss the time-sharing at the Christie Lodge. The Mayor stated that Mr. Cole had provided the Council with additional information. Dennis Cole approached the Council. He stated the purpose of the special meeting was to request permission to time-share units in the Christie Lodge. Mr. Cole summarized the transaction and to give the Council a total picture. Currently there are 280 Condominium Accommodation units in the Christie Lodge. Of these 280, approximately 80 units have already been sold by U.S. Home and are owned by individual owners other than U.S. Home Corp. U.S. Home owns approximately 203 units. Of these 203 units, it would be anticipated that a contract would be closed between U. S. Home Corp. and Shearson American Express, subject to time-sharing approval, 150 units would be trans- ferred to a partnership composed of a subsidiary of U.S. Home Corp. and Shearson American Express. The purpose of that partnership is simply to hold those 150 units and to pass the tax benefits of owning those as well as the rental income on to limited partners who will invest in that partnership through Shearson American Express. He stated that they anticipate that the transfer tax to be paid to the Town of Avon as a result of that transaction to be approximately $160,000.00. Mr. Cole stated that even though this would be a transfer which might partially be exempted, the intention of U. S. Home would be, they would pay the total transfer tax. He stated that if time-sharing would be approved, they anticipate that this contract would close approxi- mately 30-60 days and that the transfer tax would be paid at that time. The second item of transaction would involve a transfer from U.S. Home Corp. to the time-share developer of the remaining approximate 50 condo units. He stated he was itemizing the transfer tax to be paid to the Town of Avon, at a total of $65,000.00. At that point all of the accommodation units in the Christie Lodge have been transferred, either to the Shearson partnership or the time-share developer. The third item. The time-share developer would have the option to acquire units out of that pool of 150 as units are needed for inventory for time-sharing purposes. He stated in fact that they would be double taxed. Of the 150 units, double in the sense that they would be taxed when they were transferred to the Shearson partnership; they would be taxed again as the options excerised to take them out of the partnership and they go to the time-share developer. He stated that he had indicated the minimum amount of transfer tax at $160,000.00. He stated that the first $160,000.00 would be a fairly immediate payment - within 30-60 days, the $65,000.00 would be fairly immediate as the deal was struck and contracts finalized by the time-share developer. The second $160,000.00 plus, would come out as units were transferred from the pool to the time-share developer. Fourth item. It is the intention of the time-share developer and U.S. Home that these units would be time-shared, there is a total of 200 units and they are assuming 50 weeks of available for sale as time-share units, at an average price of $6,000 per unit, it was their feeling that that was a conservative price, if you multiply 200 x 50 weeks x $6,000 per unit, the gross sales would be $60,000,000.00 and a 1% transfer tax should • 0 be $600,000.00. So a total transfer tax payment to the Town of Avon would be a total of $985,000.00 minimum based on these assumptions. Item 5 and 6. Mr. Cole stated that if the Christie Lodge were to be built over again, specifically for time-sharing, it would be very desirable to include amenities. Since as a practical matter, it is not possible to put significant new amenities into that facility without disrupting the parking, they felt that it would be appropriate for U.S. Home and the time-share developer to provide the amenities described in the Sub- division Agreement, and in addition, to recognize that time-share users would pro- bably make use of recreational amenities and transportation services, that the Town of Avon may supply. For that reason it was their opinion that they ought to share in the cost of those amenities as provided by the town. Under paragraph 5 then, they are suggesting that the time-share developer pay a one time fee of 1/4 of 1% of the sale price on the sale of all time-share units. That would be in addition to the 1% transfer tax. What this would represent would be a payment going into a fund for the construction, maintenance and servicing of recreational and/or transportation amenities. In addition, if time-share users do make use of the recreational services in the Town of Avon and also the transportation provided by the Town, they should share in that cost and they proposing that a recreational amenity fee be paid by each time-share owner. They suggested that if each time-share user or owner paid $5.00 per week, for each week that he owns x 200 condo units x 50 weeks, there would be $50,000 per year coming into the fund. Mr. Cole then turned to the Subdivision Agreement. He stated that basically what they were requesting was an approval on time-sharing which technically would require approval of a Subdivision Agreement, the Special Use for time-sharing and the amended plat. He stated that they had prepared a proposed Resolution which does that, but the important document now was the Subdivision Agreement. He stated he would like to summarize some of the items in the Agreement. On page 2, paragraph one, he stated that it was describing what was meant by the time-sharing subdivision. That they were talking about a deeded time-sharing program. Each time-share owner would receive a deed to his interest in that unit, and that deed would then trigger a transfer tax payable to the town. He stated that it was their specific request that the approval extend to all unsold units as described in Exhibit E and that in addition, the approval could extend to any other units in the Christie Lodge provided, the current owner join in the Subdivision Agreement and sign the Agreement. Paragraph 2. - marketing of time-share units. He stated that all units would be sold in conformance with the Rules and Regulations of the Colorado Real Estate Commission. All sales persons would either be employees of U. S. Home or the time-share developer or licensed Real Estate Brokers. All initial time-share sales made within the Town of Avon and shall be conducted through a licensed Real Estate Broker, licensed by the Colorado Real Estate Commission. Paragraph 3 - deals with the amenities. Mr. Cole stated that he had made some changes and presented the Council with a copy of the proposed changes in this paragraph. He stated that probably there are more amenities offered then many of us realize. Paragraph 6 - In addition to current services, a reservation excursion service would be provided at the Lodge. In the following he stated he had listed the functions and services that were currently operating at the Lodge or that they anticipate would be available shortly. Then the paragraph describes the restaurant facility. That space would be C-19 and would be a full time restaurant service which would be open from 6:00 a.m. to 1:00 a.m each and every day. It is a 3700 sq, ft. space and would be in operation January 1, 1983. Then there were additional things that were prepared to include in the facility. In the last paragraph he stated he covers the provision concerning the amenity fees. He stated that within the next 60 days after the document was executed, that a deter- mination of what the fee should be, should be agreed upon by the Town. The maintenance and management requirements were discussed. -2- • • Paragraph.6 - Mr. Cole stated that a disclosure must be made to all subsequent pur- chasers of units in the Christie Lodge whether they buy a whole unit or a time-share unit, that the project has been approved for time-sharing and that time-sharing sales are taking place. Paragraph 8 - It was agreed to hold the Town of Avon harmless. It was noted that there would be a change, "any and all cost", this should specifically indicate that this does include all attorney fees. Paragraph 9 - He stated they are setting forth the specific representations that have to be made in writing pursuant to the requirements of the Town Ordinance. These disclosures would be signed prior to that purchaser signing any contract. At that point Mr. Cole requested that the Subdivision Agreement be up for discussion. In the proposed change in paragraph 3, it was suggested to clarify the wording of the "closing the sale of each.time-share unit", insert "week". On page 1, exhibit A, the second "Monthly total for time-share units" should be changed to read "Weekly total for time-share units". On page 4 insert "and guests". Councilman Blish stated that he was currently satisfied with.the agreement as it exists. Councilman Connell also agreed. Councilman Wells asked Mr. Cole to explain why the 1/4 of 1% one time fee. Mr. Cole stated the reason was that if they have to wait 60 days to determine what the fee would be, they could not continue negotiating to do a deal with the time-share developer. He stated that they have to know what their costs are if they are to proceed. He stated that they have to pin point the one time fee to be paid by the developer and then leave open the determination of the other fee. There was discussion on the amenities. Mr. Wells stated that he was not in favor of the Town having the responsibility to make the determination for the fee for the amenities. He stated he would like to see them cut the transfer tax in half, give the exemption on half and transfer half of that transfer tax to what is being paid into the recreation. A lengthy discussion followed. There was discussion on the marketing of the units. Mr. Wells stated that there should be some kind of limitation on just how many units would be brought on line at anyone time - 75% of ten units being sold before anymore units would be brought on line. He stated that if they would sell all units from December through April and then the developer does not sell May through November, he stated the project could go down hill from there. He stated that why not make sure that they are going to sell 75% of all the weeks in a year before they bring on other units. Councilman Wells asked if they would be willing to transfer $80,000 of the transfer tax to the recreational fee and would be willing to pay that up front, that they were paying 1/2 of the transfer tax and the remaining $150,000.00 would still stand? Mr. Cole stated that they would be willing to do so. Mr. Wells then asked if they would be willing to agree to the limitation of the number of units to be placed on the market. Mr. Cole stated that the time-share developer would have restriction on the number of units he could sell out of any given unit, but did agree to go along with that commitment. There then was discussion on the number of units to be placed in the unit pool. There was discussion on the expense to the developer if a percentage of the units were not sold. -3- • • Mr. Cole stated that the majority of buyers that bought units., bought them for in- vestment purposes. Mr. Cole then clarified the units once again. 280 units total in the Christie Lodge, 203 units are owned by U.S. Home, 77 units are owned by approximately 60 owners, owners of 6 units requested that they buy back units. Councilman Wells asked Mr. Cole if they would be willing to agree to 50 or 60 units in the pool at one time. Mr. Cole so agreed. Mr. Wells stated if they could add the wording that "a pool of 50 units at any one time would be offered for sale and no more units would be offered until there were 75% sold, before they have the right to bring on a new unit, he would be satisfied. The transfer of half the transfer tax as a recreation fee up front, he also would be satisfied, but had concern on the $5.00 main- tenance fee. There was then discussion on this item. There was discussion on the Condominium Declarations. At that point there was a recess called. The meet ingre convened at 9:05 p.m. The definition of "accommodation unit" was discussed. Paragraph 8 regarding the hold harmless wording was discussed, Page 10, paragraph J was discussed regarding a third party developer. It was agreed to change the wording to read,"notwithstanding such assumption, of U, S. Home shall remain bound by all affirmative obligations of this Agreement". On page 10, a typographical error, change "amont" to "amount". It was requested that the Town receive an opinion letter from U. S, Home Counsel stating that Mr. James Bennett does have the power and authority to sign the Sub- division Agreement on behalf of U. S. Home. The amended plat was discussed and reviewed. On page 3 of the Agreement insert"closed", third line of the paragraph. Mr. Blodgett suggested that on page 3 change the wording to read, "continue to be provided". It was suggested that in the Agreement they make reference to the plat in regards to units. Page 4 paragraph C, change "recreational amenities" to P additional services" John Blish moved to leave the transfer tax projection as they appear on the memorandum to the Councilmembers from Dennis Cole dated July 19, 1982 which has six numbered items and also the motion would include this as presented in the final vote. The motion was seconded with a provision that a waiver be placed in the document in the Agreement waiving the exempt of 1/2 of the exemption. It was agreed to include this wording in the motion. Discussion followed. There was concern of adopting the $5.00 per week which was previous agreed not to do. After discussion Councilman Blish withdrew his motion. A.J. Wells moved approval that the Subdividers Agreement he amended to stipulate that the transfer tax on the transfer of the units to a partnership between U. S. Home and Shearson American Express would be $160,000.00. and that U, S. Home waives their right to claim their exemption to any or all of that and that $80,000,00 of the amount be specified to be expended for recreational amenities by the Town of Avon as it sees fit. -4- The motion was seconded by Al Connell. After some discussion A.J. Wells moved to amend his motion to change the $160,000.00to the wording, "the transfer tax generated by that transfer". The amended motion was seconded by Sheila Davis. Those Councilmembers voting aye on the change by amendment were: Larry Kumpost, Sheila Davis, Greg Gage, A.J. Wells, Al Connell, John Blish. There were no nay votes. The motion was unanimously carried. John Blish moved approval that the Subdivision Agreement be amended to include a provision that restricts the developer from selling out of more than 50 units at a time and a unit shall be defined as any designated space at the Christie Lodge out of which less than 51% of the time, meaning weeks, has been sold and the definition of a unit for this provision shall not include any space at the Christie Lodge acquired from any of the present owners other than U. S. Home, so that they could conceivably have as many as 127 units. The motion was seconded by Al Connell. The discussion was open. Councilwoman Davis was agreeable to the 75% instead of the 50%. After discussion a hand vote was taken with Greg Gage, Al Connell, John Blish voting nay to the 75% and Larry Kumpost, Sheila Davis and A. J. Wells voting aye for the 75%. With a tie vote the Mayor voted aye for the 75%. The motion was defeated. At that point A. J. Wells moved approval that the Subdividers Agreement provide a stipulation that they have no more then 60 pool units at any one time to sell from and that they are not allowed to add anymore units to that pool until they have sold 75% (37 weeks ) of each unit. The motion was seconded by Larry Kumpost. Those Councilmembers voting aye were: Larry Kumpost, Sheila Davis, Greg Gage, A.J. Wells, Al Connell, John Blish. There were no nay votes. The motion was unanimously carried. Mr. Cole stated that there were three things that have to be approved, the concept of the use, the amendment of the plat, and the Subdivision Agreement as amended and to be represented for verification at the next regular meeting. John Blish moved approval to adopt and pass Resolution No. #82-11, Series of 1982 as presented with the amendments that have been made, the spelling of the word 'rescission and dropping the word "residential" where it appears and also include the proposed amendments to the plat and the revised Subdivision Agreement subject to the two motions that just passed, 60 units and the 37 weeks and other changes that were agreed to. The motion was seconded by Larry Kumpost. Those Councilmembers voting aye were: Larry Kumpost, Sheila Davis, Greg Gage, A.J.Wells, Al Connell, John Blish. There were no nay votes. The motion was unanimously carried. There being no further business John Blish moved to adjourn. Greg Gage seconded the motion. The meeting was adjourned by Mayor Nottingham at 11:05 p. m. The Council then went into Executive Session. espec fully S itted., Patricia J. Doyl Town C1 rk -5-