Go figure!
Valley Floor Valuation
Trial Jury Goes Into
Deliberations
By Douglas McDaniel
It comes down to the jury now.
The lawyer versus lawyer, land planner versus land planner, and especially appraiser versus appraiser phase of the Valley Floor War is over, at least for the time being.
With the possibility of an appeal hanging like an overcast cloud bank over the Delta County Courthouse during the entire Final Valuation Trial for the Valley Floor, the six-member jury is in their final deliberations today. Unless they are able to render the mind-numbing flood of calculations, contradictory factors and figures into a Solomon-esque simplicity, their deliberations will likely go on into the weekend.
There is nothing left but the score now. Something with at least six zeroes attached to the back end. Something on a single sheet of paper. A final price. An astonishing figure, either way. Somewhere between $26 million, what the town’s appraiser says, and $56 million (rounded off to $50 million), what the San Miguel Valley Corporation believes it can get for the 570-acre parcel.
On day eight of the trial, the town rested its case.
The week began with the legal team led by Leslie Fields launching into the attack mode, chipping away at what they hoped were to be viewed by the jury as “speculative” planning by Peter Jamar, the SMVC land planner, and pie-in-sky pricing by Larry Stark, the SMVC’s appraiser.
But by Wednesday, Feb. 14, in cross-examination, SMVC attorney Darrell Waas tried to portray the town appraiser’s valuation approach as a mere attempt to play lowball, with oversimplified calculations drawn from a narrow field of comparable sales in the region. Sales, in fact, that have already been eclipsed in the booming Telluride real estate market, according to SMVC.
The town’s appraiser, Richard Chase, was kept hopping Wednesday with questions about such differences of opinion and approaches, and at one point seemed to have difficulty operating his calculator.
Waas scored at least one major victory: Getting a $5 million-plus sale for a property in Sunnyside East, on the mesa to the north of the Valley Floor, entered into the court record.
Throughout the day, Fields had successfully neutralized Waas’s efforts to get Chase to acknowledge the recent sale, getting it stricken off the record when he mentioned the transaction in court. But after Chase made a broad statement characterizing the sales in the Sunnyside developments (his comparable sales figures for Sunnyside involved 811.62 acres for $20.8 million, or, $861,000 per 35-acre lot), San Miguel County District Court Judge Charles Greenacre allowed Chase to answer Waas’s question about the sale.
“Actually, it was $5.8 million,” Chase admitted.
The clash of comparables
Attempting to defeat the criticism by Chase about Stark’s use of comparable prices outside the Telluride region, Waas questioned the town’s appraiser about the international cast of buyers who might be wealthy enough to buy land in Telluride, compared to other destination resorts such as Aspen, Vail, Breckenridge and Jackson Hole.
Asking about the latter, Waas questioned Chase about whether or not Jackson Hole was an appropriate region to draw comparables. In Chase’s previous testimony, he argued it was not, since Jackson Hole was regarded as a world-class mega resort like Aspen, Vail and Breckenridge. But Waas got Chase to admit Jackson Hole has fewer skier visits each year than Telluride, and that Telluride’s junior status among larger resort areas and relative isolation actually made it more attractive for the super rich buyers looking for exclusivity.
Chase answered “yes” to Waas’s statement that the “desirability of location and the fact that it has fewer people than Breckenridge is something people might be looking for.”
Chase admitted that it was acceptable to go outside a sales area for “outside” comparable if adequate sales data was not available, but he felt “very comfortable” that he had enough comparable sales in the Telluride region to value the Valley Floor.
“There’s no problem with going out of your area as long as the fruits of your labor are really comparable,” he said. “I felt strongly that sales that occur in the region set a benchmark.”
Waas then reviewed Chase’s three appraisals for the town beginning with a $15.5 million price in 2000, followed $19.5 million in 2003 and $25.9 million in 2006. But Waas asserted there was a large increase in values between 2000 and 2006, and questioned why Chase did not use any sales in the Telluride region after April of 2001. Chase’s comparable sales are an average of approximately six years old, while Stark’s are approximately two.
“There has been an upturn since 9/11,” Chase admitted.
Chase said no large comparable sales were available after 2001. Instead, he used time adjustment calculation to address the market increase and apply it to the comparable sales.
Room for Wal-Mart?
Shortly after this the Sunnyside East sale of $5.8 million was allowed to be entered in the record, possibly to stick in the jury’s ear like a de facto additional comparable.
Waas then tried to poke holes in Chase’s assertion that any development other than the one-unit per 35 acres option was “speculative.” He said if it wanted to, the entire town of Telluride could be moved into the Valley Floor.
“Isn’t it clear,” Waas asked, “with the future of their (SMVC’s) property, that that’s where this town has to grow?”
“That’s true,” Chase responded.
“Is there room for a hospital?”
“That’s true.”
“A Wal-Mart?” asked Waas.
“I think a Wal-Mart would drive people in Telluride crazy,” Chase responded.
But after going back and forth in this manner, Chase insisted Stark’s appraisals and the SMVC’s land planners were “out on speculative limb by a good measure.”
After Fields rested the town’s case, SMVC brought in rebuttal witnesses, starting with Jim Felt, a water attorney for SMVC since the 1980s.
He said an augmentation plan established in Water Court in 2004 would have to be amended if SMVC were to develop water amenities on the site, but it was a far simpler process than made out by several of the town’s witnesses. All SMVC would have to change is the evaporative component for the ponds on the plan, and that was the only significant hurdle, Felt said.
On day nine, Thursday, Feb. 15, the landowners presented additional rebuttal testimony from Johnnie Stevens, Jamar and Stark, all brought back to assert that the SMVC’s pricing, and planning, were realistic, not “speculative.”
Valley Floor field trip
Of course, everything rests on the point of view of the Delta County-based jury members who are mostly retired landowners, a group predominantly made up of females.
To the possible good fortune of the Town of Telluride on day seven of the trial, Tuesday, Feb. 13, the sun was not shining too brightly on those jurors on an overcast, then snowy afternoon over the Valley Floor.A sunshine-brilliant clear day might have been of little benefit to the town when the six jurors and four alternates were shepherded by Telluride Chief Marshal James Kolar around the 570-acre parcel.The Valley Floor looked beautiful, if not too beautiful, as early afternoon snow flurries made the view of the east end of property from the Gondola cabin look like a spackled grayish blob, those all-important pricey vistas a whitewash of merged mountaintops and sky.The trial started on its seven day with a snocat tour of the property in question, lunch on the second floor of the Shell Station (in the trial, it’s still referred to as the Texaco station), followed by a tour by a Telluride Galloping Goose bus up to Mountain Village, and then, a gondola ride. The jurors, led in a line through the Mountain Village center, were all smiles and seemed to be enjoying themselves as they awaited lift-off from the gondola.Any time mingling with Telluride culture or residents (and of course, the press) was avoided. Though their Galloping Goose led them around the traffic circle at the gateway to town to head up to Mountain Village, they spent little more time in town than enough to get off the Telluride gondola station and back on another bus to continue their tour.
The value of views
On the previous day of the trial in Delta, Monday, Feb. 12, the comparative views on and around the Valley Floor became an aspect of the town’s attack. On the stand, Chase said he focused his comparative sales strictly to the region, as opposed to Stark, who also compared Telluride’s prices to other ski towns such as Aspen and Steamboat Springs.Chase said the issue of views from lots, one of the factors used for determining price, showed that the Valley Floor’s low-lying vistas were less desirable than for such mesa-top plots found on Grayhead, Diamond Ranch and Sunnyside.All three properties are perched on mesas on the northern slopes near the Telluride Regional Airport. “Views are what sell in this market,” Chase said. “Grayhead has superior views to the Valley Floor. The mesa-tops offer multi-dimensional views versus the one-to-two dimensional views of the Valley Floor.”Fields asked Chase about the possible development scenarios as they related to the town, Mountain Village and San Miguel County. Chase told the court the most likely scenario which he based his analysis on was that any development would likely occur under the county’s jurisdiction. “Certain issues suggested Telluride and Mountain Village wouldn’t be able to annex,” he said. Telluride couldn’t annex a developed Valley Floor, he said, because of limitations to its water supply. Mountain Village couldn’t annex, Chase said, because of the obstacles of trying to connect utility systems between two vastly different elevations. In addition, he said, “The Mountain Village never had a Master Plan that incorporated the Valley Floor … so it would be with the county.”The most likely development scenario, which he based his calculations on, was under the one per 35-acre option. “The highest and best use was for 35-acre home sites,” Chase said. “It’s a relatively easy, straightforward process, an expedient process at the county level.”That’s because, as Chris Dunn, the town’s expert land planner testified earlier in the day, the development option required minimal development infrastructure, no affordable housing requirements, no transportation mitigation, no school sites or public parks, and so on.
Which scenario to choose?
This view of the most likely development scenario differed greatly than Stark’s appraisal, which focused on three possibilities. Stark based his value conclusions for the two possible develop options for the Valley Floor as follows: $40.6 million for Alternative A and $56.8 million for Alternative B. Alternative A involves 15 units under a one unit per 35-acre analysis; Alternative B involves 77 lots or approximately 1 unit per 7 acres on the south side.
An Alternative C with a plan of up to 1,200 people on the south side of the Valley Floor with up to 800 units of density was developed by Stark, but it was not used in his final calculation. To arrive at his estimate for the south side of the Valley Floor, Stark indicated that the final figure reconciled the two prices from Alternatives A and B. Regarding the choice to use a calculation that used 40 percent of Alternative A and 60 percent of B to come up with a $50 million price tag, Chase said the approach was highly unusual. “I only heard about stories like that in Las Vegas, to tell you the truth,” Chase said.For Alternative A, Stark reviewed his 10 comparable sales of property. The locations were from the Telluride area, Jackson, Wyo., Aspen and Steamboat Springs. The range of value for these comparables was approximately $20,000 per acre up to $160,000 per acre.For Alternative B, Stark reviewed his four comparable sales of property. The location of the comparables include: the Telluride area, Jackson, Wyoming, Steamboat Springs and Breckenridge. The range of value for these comparable was approximately $87,000 per acre up to $185,000 per acre.But Chase criticized the need to compare the Valley Floor to sales outside the region. He said mega-resorts with twice to three-times more skier days than Telluride, such towns as Vail, Aspen, Breckenridge and Steamboat Springs, shouldn’t be compared to a relatively new resort area. "The Telluride area, if you try to compare to other international resorts, is up and coming, but is in my opinion still in its infancy,” he said. “Telluride hasn’t hit the mega-resort status yet.”
Appraisal versus appraisal
Chase’s first comparable sale, Grayhead/Ruffner Peak, is a 1,368-acre property that sold for more than $19 million, or, $14,368 per acre, in 1997. The second comparable sale, the 432-acre Diamond Ranch, went for $9.3 million, or, $775,000 per 35-acre lot. The third comparable sale, Sunnyside, just north of the Valley Floor, but at a higher elevation, involved 811.62 acres for $20.8 million, or, $861,000 per 35-acre lot.Chase’s bottom line price after his analysis: a total “take” value of $25,983,800 as of Jan. 9, 2006, the so-called “date of value.”Meanwhile, the SMVC’s price stands at $50 million.
How the jury will be able to reconcile the gap is now the greatest question of them all.
Trial Jury Goes Into
Deliberations
By Douglas McDaniel
It comes down to the jury now.
The lawyer versus lawyer, land planner versus land planner, and especially appraiser versus appraiser phase of the Valley Floor War is over, at least for the time being.
With the possibility of an appeal hanging like an overcast cloud bank over the Delta County Courthouse during the entire Final Valuation Trial for the Valley Floor, the six-member jury is in their final deliberations today. Unless they are able to render the mind-numbing flood of calculations, contradictory factors and figures into a Solomon-esque simplicity, their deliberations will likely go on into the weekend.
There is nothing left but the score now. Something with at least six zeroes attached to the back end. Something on a single sheet of paper. A final price. An astonishing figure, either way. Somewhere between $26 million, what the town’s appraiser says, and $56 million (rounded off to $50 million), what the San Miguel Valley Corporation believes it can get for the 570-acre parcel.
On day eight of the trial, the town rested its case.
The week began with the legal team led by Leslie Fields launching into the attack mode, chipping away at what they hoped were to be viewed by the jury as “speculative” planning by Peter Jamar, the SMVC land planner, and pie-in-sky pricing by Larry Stark, the SMVC’s appraiser.
But by Wednesday, Feb. 14, in cross-examination, SMVC attorney Darrell Waas tried to portray the town appraiser’s valuation approach as a mere attempt to play lowball, with oversimplified calculations drawn from a narrow field of comparable sales in the region. Sales, in fact, that have already been eclipsed in the booming Telluride real estate market, according to SMVC.
The town’s appraiser, Richard Chase, was kept hopping Wednesday with questions about such differences of opinion and approaches, and at one point seemed to have difficulty operating his calculator.
Waas scored at least one major victory: Getting a $5 million-plus sale for a property in Sunnyside East, on the mesa to the north of the Valley Floor, entered into the court record.
Throughout the day, Fields had successfully neutralized Waas’s efforts to get Chase to acknowledge the recent sale, getting it stricken off the record when he mentioned the transaction in court. But after Chase made a broad statement characterizing the sales in the Sunnyside developments (his comparable sales figures for Sunnyside involved 811.62 acres for $20.8 million, or, $861,000 per 35-acre lot), San Miguel County District Court Judge Charles Greenacre allowed Chase to answer Waas’s question about the sale.
“Actually, it was $5.8 million,” Chase admitted.
The clash of comparables
Attempting to defeat the criticism by Chase about Stark’s use of comparable prices outside the Telluride region, Waas questioned the town’s appraiser about the international cast of buyers who might be wealthy enough to buy land in Telluride, compared to other destination resorts such as Aspen, Vail, Breckenridge and Jackson Hole.
Asking about the latter, Waas questioned Chase about whether or not Jackson Hole was an appropriate region to draw comparables. In Chase’s previous testimony, he argued it was not, since Jackson Hole was regarded as a world-class mega resort like Aspen, Vail and Breckenridge. But Waas got Chase to admit Jackson Hole has fewer skier visits each year than Telluride, and that Telluride’s junior status among larger resort areas and relative isolation actually made it more attractive for the super rich buyers looking for exclusivity.
Chase answered “yes” to Waas’s statement that the “desirability of location and the fact that it has fewer people than Breckenridge is something people might be looking for.”
Chase admitted that it was acceptable to go outside a sales area for “outside” comparable if adequate sales data was not available, but he felt “very comfortable” that he had enough comparable sales in the Telluride region to value the Valley Floor.
“There’s no problem with going out of your area as long as the fruits of your labor are really comparable,” he said. “I felt strongly that sales that occur in the region set a benchmark.”
Waas then reviewed Chase’s three appraisals for the town beginning with a $15.5 million price in 2000, followed $19.5 million in 2003 and $25.9 million in 2006. But Waas asserted there was a large increase in values between 2000 and 2006, and questioned why Chase did not use any sales in the Telluride region after April of 2001. Chase’s comparable sales are an average of approximately six years old, while Stark’s are approximately two.
“There has been an upturn since 9/11,” Chase admitted.
Chase said no large comparable sales were available after 2001. Instead, he used time adjustment calculation to address the market increase and apply it to the comparable sales.
Room for Wal-Mart?
Shortly after this the Sunnyside East sale of $5.8 million was allowed to be entered in the record, possibly to stick in the jury’s ear like a de facto additional comparable.
Waas then tried to poke holes in Chase’s assertion that any development other than the one-unit per 35 acres option was “speculative.” He said if it wanted to, the entire town of Telluride could be moved into the Valley Floor.
“Isn’t it clear,” Waas asked, “with the future of their (SMVC’s) property, that that’s where this town has to grow?”
“That’s true,” Chase responded.
“Is there room for a hospital?”
“That’s true.”
“A Wal-Mart?” asked Waas.
“I think a Wal-Mart would drive people in Telluride crazy,” Chase responded.
But after going back and forth in this manner, Chase insisted Stark’s appraisals and the SMVC’s land planners were “out on speculative limb by a good measure.”
After Fields rested the town’s case, SMVC brought in rebuttal witnesses, starting with Jim Felt, a water attorney for SMVC since the 1980s.
He said an augmentation plan established in Water Court in 2004 would have to be amended if SMVC were to develop water amenities on the site, but it was a far simpler process than made out by several of the town’s witnesses. All SMVC would have to change is the evaporative component for the ponds on the plan, and that was the only significant hurdle, Felt said.
On day nine, Thursday, Feb. 15, the landowners presented additional rebuttal testimony from Johnnie Stevens, Jamar and Stark, all brought back to assert that the SMVC’s pricing, and planning, were realistic, not “speculative.”
Valley Floor field trip
Of course, everything rests on the point of view of the Delta County-based jury members who are mostly retired landowners, a group predominantly made up of females.
To the possible good fortune of the Town of Telluride on day seven of the trial, Tuesday, Feb. 13, the sun was not shining too brightly on those jurors on an overcast, then snowy afternoon over the Valley Floor.A sunshine-brilliant clear day might have been of little benefit to the town when the six jurors and four alternates were shepherded by Telluride Chief Marshal James Kolar around the 570-acre parcel.The Valley Floor looked beautiful, if not too beautiful, as early afternoon snow flurries made the view of the east end of property from the Gondola cabin look like a spackled grayish blob, those all-important pricey vistas a whitewash of merged mountaintops and sky.The trial started on its seven day with a snocat tour of the property in question, lunch on the second floor of the Shell Station (in the trial, it’s still referred to as the Texaco station), followed by a tour by a Telluride Galloping Goose bus up to Mountain Village, and then, a gondola ride. The jurors, led in a line through the Mountain Village center, were all smiles and seemed to be enjoying themselves as they awaited lift-off from the gondola.Any time mingling with Telluride culture or residents (and of course, the press) was avoided. Though their Galloping Goose led them around the traffic circle at the gateway to town to head up to Mountain Village, they spent little more time in town than enough to get off the Telluride gondola station and back on another bus to continue their tour.
The value of views
On the previous day of the trial in Delta, Monday, Feb. 12, the comparative views on and around the Valley Floor became an aspect of the town’s attack. On the stand, Chase said he focused his comparative sales strictly to the region, as opposed to Stark, who also compared Telluride’s prices to other ski towns such as Aspen and Steamboat Springs.Chase said the issue of views from lots, one of the factors used for determining price, showed that the Valley Floor’s low-lying vistas were less desirable than for such mesa-top plots found on Grayhead, Diamond Ranch and Sunnyside.All three properties are perched on mesas on the northern slopes near the Telluride Regional Airport. “Views are what sell in this market,” Chase said. “Grayhead has superior views to the Valley Floor. The mesa-tops offer multi-dimensional views versus the one-to-two dimensional views of the Valley Floor.”Fields asked Chase about the possible development scenarios as they related to the town, Mountain Village and San Miguel County. Chase told the court the most likely scenario which he based his analysis on was that any development would likely occur under the county’s jurisdiction. “Certain issues suggested Telluride and Mountain Village wouldn’t be able to annex,” he said. Telluride couldn’t annex a developed Valley Floor, he said, because of limitations to its water supply. Mountain Village couldn’t annex, Chase said, because of the obstacles of trying to connect utility systems between two vastly different elevations. In addition, he said, “The Mountain Village never had a Master Plan that incorporated the Valley Floor … so it would be with the county.”The most likely development scenario, which he based his calculations on, was under the one per 35-acre option. “The highest and best use was for 35-acre home sites,” Chase said. “It’s a relatively easy, straightforward process, an expedient process at the county level.”That’s because, as Chris Dunn, the town’s expert land planner testified earlier in the day, the development option required minimal development infrastructure, no affordable housing requirements, no transportation mitigation, no school sites or public parks, and so on.
Which scenario to choose?
This view of the most likely development scenario differed greatly than Stark’s appraisal, which focused on three possibilities. Stark based his value conclusions for the two possible develop options for the Valley Floor as follows: $40.6 million for Alternative A and $56.8 million for Alternative B. Alternative A involves 15 units under a one unit per 35-acre analysis; Alternative B involves 77 lots or approximately 1 unit per 7 acres on the south side.
An Alternative C with a plan of up to 1,200 people on the south side of the Valley Floor with up to 800 units of density was developed by Stark, but it was not used in his final calculation. To arrive at his estimate for the south side of the Valley Floor, Stark indicated that the final figure reconciled the two prices from Alternatives A and B. Regarding the choice to use a calculation that used 40 percent of Alternative A and 60 percent of B to come up with a $50 million price tag, Chase said the approach was highly unusual. “I only heard about stories like that in Las Vegas, to tell you the truth,” Chase said.For Alternative A, Stark reviewed his 10 comparable sales of property. The locations were from the Telluride area, Jackson, Wyo., Aspen and Steamboat Springs. The range of value for these comparables was approximately $20,000 per acre up to $160,000 per acre.For Alternative B, Stark reviewed his four comparable sales of property. The location of the comparables include: the Telluride area, Jackson, Wyoming, Steamboat Springs and Breckenridge. The range of value for these comparable was approximately $87,000 per acre up to $185,000 per acre.But Chase criticized the need to compare the Valley Floor to sales outside the region. He said mega-resorts with twice to three-times more skier days than Telluride, such towns as Vail, Aspen, Breckenridge and Steamboat Springs, shouldn’t be compared to a relatively new resort area. "The Telluride area, if you try to compare to other international resorts, is up and coming, but is in my opinion still in its infancy,” he said. “Telluride hasn’t hit the mega-resort status yet.”
Appraisal versus appraisal
Chase’s first comparable sale, Grayhead/Ruffner Peak, is a 1,368-acre property that sold for more than $19 million, or, $14,368 per acre, in 1997. The second comparable sale, the 432-acre Diamond Ranch, went for $9.3 million, or, $775,000 per 35-acre lot. The third comparable sale, Sunnyside, just north of the Valley Floor, but at a higher elevation, involved 811.62 acres for $20.8 million, or, $861,000 per 35-acre lot.Chase’s bottom line price after his analysis: a total “take” value of $25,983,800 as of Jan. 9, 2006, the so-called “date of value.”Meanwhile, the SMVC’s price stands at $50 million.
How the jury will be able to reconcile the gap is now the greatest question of them all.
Labels: Colorado, Valley Floor War in Telluride
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