Carbondale trustees ready to settle Cleveland Place lawsuit |

Carbondale trustees ready to settle Cleveland Place lawsuit

John Colson
Glenwood Springs Post Independent

CARBONDALE — A nearly 2-year-old lawsuit against the town by the developers of the Cleveland Place II housing project might be settled soon, following action by the town’s Board of Trustees on Tuesday.

As a consequence of the settlement, Carbondale appears poised to buy a two-bedroom townhouse in the project for use as employee housing or other lodging needs, according to a summary of the case presented at the trustees’ meeting Tuesday night.

Cleveland Place II, in a densely populated part of town on the west side of Eighth Street, adjacent to the Rio Grande Trail, has been subject to many problems since the approval of its final plat in 2007.

In 2009, the town slapped the development with a notice of default over allegations that the developers had not fulfilled their obligations to build affordable-housing units and that the concrete used in the streets of the project was substandard.

The project’s woes included a 2011 controversy about efforts by Habitat for Humanity to buy undeveloped lots and turn them over to families willing to commit their “sweat equity” to building their own homes and buy them from Habitat.

The neighborhood already was home to several Habitat houses, and some neighbors asked why their section of town should be a “testing ground” for the low-income-housing program.

In 2012, the original developers, Prince Creek Construction Inc. and 211 Eighth LLC, sued the town, alleging civil-rights violations and breach of contract, which ultimately wound up in federal court.

In February, according to Town Attorney Mark Hamilton, a federal judge dismissed the civil-rights claims but sent the breach-of-contract claims back to the local district courts.

Another problem for the project has been the economic slump of the past five years, which resulted in the remaining unbuilt portions of the project going into receivership after Community Banks of Colorado initiated foreclosure proceedings against the remaining lots in the project’s second phase, which 211 Eighth LLC still held.

That property remains under the control of Community Banks and an appointed receiver from Denver named Tim Yeager, who have been negotiating with town staff and contract attorney Heidi Hugdahl, of Denver, “to finally resolve this case,” in the words of a memo Hamilton sent to the trustees.

Under the proposed settlement, the town is to buy a two-bedroom, 21/2-bath townhouse for $265,000 and agrees to release deed restrictions tied up in the default notice.

The owners agree to deed restrict one-half of an existing duplex unit permanently and fix the damaged sections of street up to a cost of $29,507, which is equal to the amount the town has been withholding as a bond to guarantee that everything connected to the development is completed. If the costs of the repairs are greater than that amount, the town will pay half of the overage.

The owners also will have the option, under the agreement, to convert one or two approved triplex units to duplexes within a two-year period and agree to do their best to revive the Cleveland Place Homeowners Association, which Hamilton described as “not functional.”

Town Manager Jay Harrington said on Wednesday that he had not received bills from attorneys who worked on the Cleveland Place case and was not certain how much the court fight cost the town.

In other action, the trustees:

• Agreed to hold a work session on Sept. 17 to work on a proposed recreational marijuana licensing ordinance necessitated by the passage last year of Amendment 64 to the Colorado Constitution. Mayor Stacey Bernot said at the Sept. 10 meeting that the board had hoped to adopt a final ordinance at the Sept. 24 meeting, and the work session was called to try to hammer out the differences among the trustees about the proper provisions for the ordinance.

• Approved a Solar Power Service Agreement with Carbondale Solar LLC, a Denver company, for the installation of photovoltaic systems at the town-owned Roaring Fork Treatment Plant, the Third Street Center and the Town Public Works shop.

• Approved an agreement with Xcel Energy to bury overhead utility lines along Highway 133, at a cost to the town of $339,741, as part of the broader project to expand and improve the highway as it goes through town.

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