The Telluride Watch
Published 5/2/08
by Gus Jarvis

Hot-bed proponents will get a shot in the arm if a proposed 189-room hotel successfully runs the gauntlet of the approvals process in Mountain Village and is built next year, as the developer hopes.

Representatives for the developer, MV Colorado Development Partners LLC, presented conceptual plans for the project in an eight-hour special Mountain Village Town Council meeting on April 26. The proposed hotel would be built on five separate lots on Mountain Village Boulevard, just past Country Club Drive and on the north edge of the Village Center.

Conceptual approval by council is the second step in the five-step approvals process for a Planned Unit Development in Mountain Village and is underway following a unanimous recommendation to council for approval by the Mountain Village Design Review Board. Council did not act on the application on April 26, but continued its review to May 15 in order to allow the applicant to respond to specific concerns.

The developer has executed a letter of intent with Morgans Group LLC to operate the hotel under the Mondrian name. Existing Mondrian hotels are already in place in Los Angeles and Scottsdale, Ariz. Hotel units would be offered for sale to the general public with unit owners given the opportunity to rent their unit through a rental program.

Morgans is proposing the hotel to be in the four-star range, as compared to the Capella Hotel, now under construction and scheduled to open by Christmas, and the Rosewood, which has been approved but has not yet broken ground, which are both anticipated to be five-star hotels.

According to documents given to the Mountain Village Town Council, in order to make sure that the units will be used for short-term rentals, 126 of the 189 units would be lodge efficiency units without kitchens. To add to that, each unit will be initially be furnished by the developer. The developer is also willing to include a guarantee of hotel management as a condition of approval; however, the document stated, such a restriction must not subject the property to Security Exchange Commission investment regulations.

No penthouses will be included in the development and all of the units will be designed for short-term use.

Amenities planned for the project include Telluride’s first 24-hour room service, full service restaurant, lobby bar, and housekeeping.

As in any PUD process, the developer is asking for a number of zoning variances in exchange for providing community benefits. At the special town council meeting, three different variances were requested for the project, one of which is to allow the building footprints for lots 109 and 110 to expand by more than 25 percent. The developer is also asking for variances to allow an increase in maximum height and maximum average height.

In exchange, the project would include the following community benefits:

– Creation of short-term bed base;

– Construction of a roundabout;

- Construction of 35 covered parking spaces which will be given to the town and replacement of 13 surface parking spaces;

- Revenue sharing of a master parking management program;

– Plaza improvements and public restrooms;

– Improved trash facility or cash in lieu of constructing one;

– Development of four-deed restricted employee apartments and six dorm units beyond what is required.

As part of the approvals process, the town will weigh the value of the proposed benefits against the magnitude of the variances requested. It is in the course of that kind of negotiation that the consideration of a large project can become controversial.

The Mountain Village Town Council on April 26 launched the negotiation by directing the applicant work on the mass and scale and gave some direction to the developer on their public benefit offers, and continuing the review to a meeting on May 15.

“I thought the commentary we got from council and homeowners was a great dialogue,” said Mollye Wolahan, who represents the developer, in an interview on Friday. “They asked for some redesign on the west side of the project and they are looking to adding more detail to what we can offer the town in the way of public benefits.We have proposed ten more units of affordable housing, which is a mixture of six dorms and five employee housing. They would like us to provide housing for 30 percent of our employees,” she added.

It is estimated that it will take close to 100 employees to operate the proposed hotel.

For Councilmember Dan Garner, the project is significant and must be done right.

“This is a challenging project,” Garner said. “It is challenging because it is something we all, I think, agree is needed not just in Mountain Village but the entire region. It has a lot of elements that bring to bear some public policy issues that we will need to wrestle with.”

Garner identified the proposed encroachment on town open space as a likely point of further negotiation.

“This is the first project in my knowledge that has come before us asking for the use of open space,” he said. “My big concern is that building on some of the active open space would hinder views of existing neighbors. I think it is a public policy problem to allow building on what an owner thought was open space. We have asked them to pull back a bit so the view corridors aren’t hindered.

“I am also looking for more information on the average maximum height and maximum height,” Garner said.

Councilmember Jonathan Greenspan is also weighing the merits of the project.

“Overall, I think the project has great potential,” he said. “We didn’t ask for hot beds, they presented them to us in that way and I don’t think we are going to say no to something like that as long as it is done correctly. What I really liked about it was it will draw people to a whole new section of the Village Core, which will give the commercial sector a better chance to succeed.

“Is it worth the mass and scale? We still have a long way to go to see in full light on how massive or not-massive it will be,” he said.

Greenspan went on to say that council will have to weigh the importance of the small piece of open space.

“Part of that open space could become a plaza too,” Greenspan said. “Then all of a sudden it becomes usable. We will have to address the open space question.”

The Telluride Ski and Golf Co., which has made its presence known at other large development approval process to get as many hot beds out of a project as possible, sees this project as a benefit to the resort community.

“I think it is the perfect project in the perfect location,” Telski CEO Dave Riley said in an interview. “It is desperately needed in the core of Mountain Village. Its mass and scale are compatible with the surrounding buildings and we are very pleased that the developer has brought this project to the community.”

The hotel development will not be encroach on any Telski owned open space but Riley said the town’s open space, which the developer wishes to use, could make a good private/public partnership.

“The developer is asking for one third of an acre of open space owned by the town,” Riley said. “I view this as a public/private partnership. In return for one-third of an acre, what will the town get in return? Possibly annuity of substantial sales taxes, property taxes, real estate transfer assessments as units are flipped and resold and the property itself will have a critical mass.”

Riley added that if this hotel is approved and built it would not solve all the region’s bedbase problems but it “will be a substantial help.”

The developer claims that the short-term bed base will contribute significantly to town revenues through a variety of sales and use taxes, while creating new revenues to the region annually.

“I think we gave them a list of things of what we are asking them to do,” Garner said. “How long and at what point do hotbeds create a public benefit? They are asking for a lot and we in turn have asked them a lot to come back to us with.”