Bank failure leaves Carbondale townhouse project in limbo
CARBONDALE, Colorado – The recent closing of Denver-based United Western Bank by federal regulators puts another wrinkle in the already troubled Mountain Sage Townhomes project on Main Street in Carbondale.However, developer David Mork said he views the Federal Deposit Insurance Corp.’s Jan. 21 takeover of the bank as a positive thing. The bank’s funds were moved to First Citizens Bank & Trust of Raleigh, N.C.”I think this will bring a much more stable situation in the long run,” Mork said during a Carbondale Board of Trustees meeting on Tuesday. “I don’t consider it a bad thing at all, and I’m looking forward to a brighter future with a stronger bank.”But the only income stream for Mork and Ken Williams, his business partner in Colorado Main Development LLC, is now controlled by the North Carolina bank. That means the developers cannot pay any money owed to the town, at least temporarily.The town still holds from the developers a $398,000 letter of credit, which is intended to pay for public improvements and park dedication fees associated with the Mountain Sage project.Only 14 of the 26 townhouse units approved in the project have been completed, and the developers are not ready to break ground on the remaining units until the first phase is sold out. The second phase is also to include the required affordable housing units that were part of the development approvals.In December 2010, Mork and Williams agreed to pay $88,000 on the original $486,000 letter of credit, if the deadline for completing the improvements could be extended until October 2011.Town trustees agreed but also wanted United Western to sign over the deeds on two unsold units in the first phase as collateral on the remaining balance.United Western Bank had indicated before the shutdown that it could not do that, though. So, the developers were back before the town board on Tuesday asking for another 60-day extension on the letter of credit, which is set to expire at the end of the month.The board was unwilling to grant another extension, preferring to have weekly updates from town staff, which is working with the developers to resume payments.”It’s not like this is all that unexpected, and we were forewarned of this possibility,” said Trustee Elizabeth Murphy, in reference to a warning from town attorney Mark Hamilton last fall that United Western was in trouble.Hamilton said at the time that the bank could call the loan for Mountain Sage or possibly be taken over. In either case, the town’s letter of credit might not be secure, he said.”There’s really not much we can do now,” said Carbondale Mayor Stacey Bernot, who was opposed to extending a letter of credit to the developers in the first place.”I know these two [Mork and Williams] have been active participants in the community for a while, but to have the town on the hook for these funds that are now in question is inexcusable,” she said. “It’s an unfortunate lesson for these developers and this board.”Trustee John Foulkrod took exception to the mayor’s assessment, however.”I don’t think we mismanaged funds, we were just trying to act in good faith to help these guys out,” he said, adding he believes the town’s development exactions are the email@example.com
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Imagine Glenwood and The City of Glenwood Springs is slated to host a virtual town hall at 5:30 p.m. Thursday, March 11.