Appraiser: Valley Floor worth $50 million

By Douglas McDaniel

If the San Miguel Valley Corporation has its say, every man and woman in Telluride would pay the kind of prices either Ross Perot or Ophrah Winfrey might pay for the Valley Floor.
“I came in at fifty million,” said Larry Stark, a land appraiser for National Valuation Consultants, Inc., on the stand as a witness for the SMVC during the third day of the Valley Floor Valuation Trial in Delta.
That was his opinion price on the “take” portion of the Valley Floor, based on his assessment of what the uber-elite pay for their exclusive mountain meadow and ranch properties.
Such as the $87,038 per acre that Winfrey paid for an 85 acre tract near Telluride in 2004, or the $67,422 per acre Perot paid as part of a $90 million deal for a ranch near Jackson Hole, Wyo.
Assessing the overall value of the 540-acre parcel at anywhere from $40 million to $56 million, Stark laid out an appraisal of the Valley Floor that would likely benefit from the skyrocketing real estate market, as well as its exploitation as a future development Disneyland.
The setting of the trial itself was hardly the Greenpeace Rally one might of inspected, based on San Miguel County District Court Judge Charles R. Greenacre’s “decorum order” no doubt anticipating a showing of town resident support for the condemnation, and, a low, low price.
With the exception of Telluride Town Mayor John Pryor in attendance, the court pews on Wednesday were filled with a scattered collection of men in business suits as they watched the proceedings dominated by charts upon charts of figures, maps and aerial photographs displayed on an overhead projector.
And as the real and imaginary astronomical dollar amounts flew through the courtroom to be considered by the six-member jury of Delta property owners, the sharp-dressed attorneys on both sides of the room did every thing they could to point the final valuation meter up or down.
As Stark took the court for a slide-show tour of the West, where prices for some of the most pristine mountain properties go for anywhere from $16,000 per acre in Steamboat Springs to $23,000 in Aspen, it was the sales for land adjacent to the Valley Floor, development properties at Sunnyside East and West, that cast some of the darkest clouds over the Town’s hope to keep it around $45,000 per acre.
One property on Sunnyside East, which overlooks the Valley Floor from the north, originally sold for $23,741 but two years later was resold at $56,940 per acre, he said. Another recent sale by yet another high-profile buyer, Meg Whitman, CEO of eBay, included a price tag of $114,701 per acre for 157 acres of land near Highway 145 south of Telluride.
“We’ve seen a 100 percent appreciation over a five-year period,” Stark said. “The property owner is due to paid for its highest and best use. If not for this condemnation, this would be put to the highest and best use.”
At the extremes, the property might be worth as much as $96 million, if developed under one scenario, he said. Stark stated the Valley Floor south side has attributes that buyers look for, such as proximity to the Town of Telluride, approximately 3.5 miles of frontage on the San Miguel River, senior water rights, a potential gondola site, wetlands and mountain views. He explained his methodology for analysis, detailing the adjustments he made for such things as the condition of the properties, their location, property rights conveyed, market conditions and especial allowable zoning densities.
Stark then addressed his value conclusions for two possible develop options for the Valley Floor as $40.6 million for Alternative A, $56.8 million for Alternative B. The $50 million estimate wasa “reconciliation” between the two alternatives, he said.
The latter was a point that Telluride attorney Leslie Fields tried to chip away at during Wednesday’s cross-examination, asking whether he gave more weight to the development alternative that would lead to the highest possible value of $50 million.
“You put more weight on the riskier development option,” Fields asked Stark.
“Yes, I did,” he answered.
She also tried to create a sense of uncertainty about how the $50 million price was based on a wide range of hypothetical factors, including a long list of governmental approvals for everything from zoning density to the ability to, again, hypothetically, realign the San Miguel River.
The second day of the Final Valuation Trial for the Valley Floor condemnation began with the SMVC attorney, Darrell Waas, calling longtime local resident Johnnie Stevens as a witness. Stevens testified extensively as to the changes in Telluride in the last 50 years, including everything from the closing of the Idarado mine to the opening of the ski area in the late ’70s.
He was followed as a witness by Peter Jamar, a land planner, who testified to three development alternatives he explored for the south side of the Valley Floor. The first, Alternative A, included 15 units under a one-unit-per 35-acre plan, the second, Alternative B, planned for 77 lots or approximately 1 unit per 7 acres on the south side. The final plan, Alternative C, looked at more than 1,200 people living in 800 units on the south side of the Valley Floor.
The current population of Telluride is estimated to be just over 2,000 full-time residents.
Fields cross examined Jamar on a number of the assumptions necessary for the three development scenarios, including the need for various approvals from San Miguel County, the U.S. Forest Service, a State of Colorado Water Court and the U.S. Army Corps of Engineers.
The Town of Telluride's Final Valuation Trial for the condemnation of the Valley Floor property began Monday, Feb. 5, with two whole teams of lawyers and a jury pool of 150-plus people filing into the Delta County Courthouse.
By Tuesday, both sides, the Town represented by Fields and Jack Sperber, Esq., two partners with the Denver law firm of Faegre & Benson, and the San Miguel Valley Corporation, represented by Waas, Mikaela Rivera, Esq., and Patricia Campbell, Esq., of the Denver law firm of Otten, Johnson, Robinson, Neff and Ragonetti, had made their opening statements.
According to the daily update provided to the town by Telluride Town Attorney Kevin Geiger, most potential jurors already completed a pre-trial jury questionnaire addressing employment and residency issues, or whether any they had any knowledge or strongly held opinions about the case.
"Following a number of preliminary matters," Geiger stated, "potential jurors and counsel for the parties convened in the Courtroom to begin the jury voir dire process, which means 'to see them say' or 'to see them speak.' Eighteen potential members of the jury were 'called' at random from the audience into the jury box.
"The voir dire process involves the Judge asking potential members of the jury specific questions that are designed to reveal, among other things, the background, education and interests of potential jury members.
"The Court excused a number of potential jurors for a variety of reasons, including medical hardship, financial hardship, advanced knowledge of the issues in the case or strongly held beliefs that would interfere with a juror being impartial and fair. By noon, the Court had assembled a full panel of eighteen potential jurors with no additional Court identified cause for challenge."
After Monday's lunch break, the court continued with counsel asking questions of potential jurors, whittling the potential jurors from 18 down to a total of eight "with each side using five peremptory challenges, which are jury dismissals without stating a reason," Geiger stated.
The jury was impaneled by mid-afternoon Feb. 5, taking an oath of jury service for the trial's duration, which is expected to be three weeks. The jury of six regular members and two alternate members consists of six females and two males.
Opening statements were made by Waas for the SMVC, who is pitching to keep the final determined value high, and by Fields for the Town, who is arguing to keep it within the approximately $25 million the Town is intending to pay.
The difference is anywhere from $45,500 per square acre to $87,000 per acre for the 540-acre parcel.