Mountain Village Leads Season's Construction Charge

Castles in the Sky?

By Peter Kenworthy
The Telluride Watch
Published:4/14/06

The county’s slow, Telluride’s so-so, and the Mountain Village is go-go-go. That, more or less, is how the 2006 construction season appears to be stacking up based on interviews with local building officials, developers and builders. But, things could change. Particularly with larger projects, timing is rarely definitive. A tweak here by the developer, a pre-sale requirement there by the banker, here a HARC fillip, there a P&Z caveat, and groundbreaking can swiftly move from spring to summer to next year. And, conversely, a project can become suddenly infused with urgency and purpose and move from the drawing board to a hole in the ground far faster than anyone had supposed.

“The crystal ball’s kind of cloudy,” confessed San Miguel County Building Official Gary Hodges.

Telluride Building Official Daniel “Sam” Samuelson had a similar response when asked to predict this season’s construction activity.

“It’s hard to read the future,” he said.

Both officials, however, braved a guess that new construction may not be up from years past.

“It never really goes downhill, but we’re at a plateau,” said Samuelson. “Building is reactive to being able to sell it,” he added, and pointed to a large inventory of for-sale properties in town as well as rising interest rate expectations as dampers on new permits.

With the exception of 2001 and the aftermath of 9/11, Hodges said a drop in construction valuation last year in the county was the first he had witnessed in the previous ten years. He sees no particular signs of resurgence this year.

“We’re slow,” he summed up succinctly.

The same cannot be said for Mountain Village. While some of the proposed large developments that have been in the news of late are still in the early stages of the approval process, with actual construction not expected before next year, others are either underway or set to get there.

The town’s director of community development, John Adler, ticked off a long list of projects in the latter two categories.

They include a second phase of developer John Abrams’s See Forever project, comprising 15 luxury condos and six townhomes on Lot 129 across from the proposed St. Regis Hotel; the St. Regis itself, a $200 million condo-hotel project; the Lumiere, an 18-unit boutique condo-hotel that has already started foundation work; Belvedere, Phase 2, comprising 28 condos and two lodge units; Lot 31 near the core that will be built as seven condos and two employee units; not to mention a slew of single family residential construction projects outside of the Mountain Village Center.

“There’s a lot of single family construction going on,” said Adler.

By comparison, based on early estimates, Samuelson’s list is heavy on maybes and shy on definites. The new Between The Covers project is a good case in point. Involving the demolition of the Silver Trestle Building and the adjoining Fino condominiums and resurrecting in their place a new three-story mixed use building, it is one whose commencement date Samuelson cannot accurately pinpoint.

“I thought they’d have all their plans approved by now and be ready to start tearing down,” he offered. Instead, things are, literally, still up in the air.

The Crescendo project, a large proposed condo development above the Cascades on the south side of the San Miguel River, is another example. Based on challenges that the developers may have in getting all their approval t’s crossed and i’s dotted, Samuelson said he has no idea whether the project will break ground this spring or summer. The same holds true for another project by the same developer, a 10-unit development of lower-priced condos. And new projects on either side of Clark’s Market, one designed as condos and one a large mixed-use development, have uncertain start dates.

“The cubbies are full right now,” Samuelson said, indicating shelves full of rolled-up architectural plans. “Our process being as rigorous as it is, though, if they’re not in now for a bigger project, they’re not building this year.”

Projects he is reasonably sure of include the new skateboard park in Town Park, a half million dollars of streetscape work on east Colorado Avenue and the second half of the 30-unit Owl Meadows project in Bachman Village.

Lot 48A, the town’s next affordable housing project and currently the vehicle impound site, is expected to start construction in the fall.

At the eastern end of the canyon, Chris Chaffin of the Idarado Legacy project said infrastructure development there will be substantially reduced from last year.

“The lion’s share of construction was completed last year,” he said, a year in which his development company was involved in extensive trucking through town.

“We committed to not exceed six trucks per hour last year,” Chaffin said. “We’ll be well below that this year with maybe three or four days of three to four trucks per hour. It will be a totally different scope of traffic.”

One critical factor that may hold up some projects is cost. Longtime local builder Josh Kent said the construction boom that currently spreads over much of the Western Slope has made labor, in particular, hard to come by and expensive. With gas prices high and markets like Montrose starting to pay higher wages, said it is no longer attractive for many laborers to make the long commute to Telluride.

Developer John Abrams said that simple supply and demand economics keep labor costs high here.

“We don’t have labor so we’re importing,” he said.

It’s not just labor, though, according to Abrams. He sees all costs, from energy to steel and concrete and lumber, being significantly higher than last year. He said costs for the second phase of his See Forever project, anticipated to begin construction June 1, will be 20 percent higher than the first phase that started less than two years ago.

“I think the whole market has got to brace itself for significant increases in construction costs,” said Abrams. In turn, he said, buyers have to “embrace the reality of market price increases.”

Abrams, a successful residential and commercial developer here for the past ten years, questions some of the planned large projects in Mountain Village.

“I don’t know what the right adjective is, maybe ‘befuddlement,’” he said. “The marketplace hasn’t realized the values that make it worthwhile for developers. The reality is these projects are going to have to be at $1,500 per square foot to make it work.” He said this compares to a maximum pf $1,100 or $1,200 per foot that high-end buyers seem prepared to pay.

Apart from what he calls a “disconnect” between buyers’ expectations and developers’ realities, Abrams says there are other major challenges facing developers of large projects here.

“The infrastructure to support the service levels that are expected is not there,” he said, referring primarily to inadequate affordable housing and transportation systems. And he said that there is not sufficient “velocity of sales” to absorb all the planned development.

“We’re not an Aspen or Vail,” he said and conjectured that some developers were “focused on getting their entitlements, not looking at the future.”

“Being on the front line, I almost wish I could talk to these people and tell them to do their math,” Abrams said.