HomeMy WebLinkAbout1992-12-01 Town Council MinutesMINUTES
VAIL TOWN COUNCIL MEETING
DECEMBER 1, 1992
7:30 P.M.
A regular meeting of the Vail Town Council was held on Tuesday, December 1, 1992, in the
Council Chambers of the Vail Municipal Building. The meeting was called to order at 7.30
P.M.
MEMBERS PRESENT: Peggy Osterfoss, Mayor
Mery Lapin, Mayor Pro-Tem
Jim Gibson
Jim Shearer
Tom Steinberg
Rob Levine
MEMBERS ABSENT: Bob Buckley
TOWN OFFICIALS PRESENT: Ron Phillips, Town Manager
Larry Eskwith, Town Attorney
Pam Brandmeyer, Assistant to the Town Manager
Martha Raecker, Town Clerk
• The first item on the agenda was Citizen Participation. Joe Staufer spoke against TOV
Ordinance No. 3, Series of 1992, regarding private snow removal on public sidewalks. He felt
such snow removal should be a function of TOV, and felt the ordinance should be repealed.
Larry Eskwith noted most cities throughout Colorado and across the country required
property owners to clear private sidewalks adjacent to public properties.
Ann Waller, representing Eagle County citizens opposed to recently passed Amendment No.
2, expressed that group's support of TOV Council's passage of TOV Resolution No. 10, Series
of 1992, opposing that Amendment. Mayor Osterfoss noted, in addition to TOV, a number
of other organizations in the community, including the Vail Valley Foundation (VVF) and
Vail Associates, Inc. (VA), were also supporting efforts in opposition of Amendment No 2.
Second on the agenda was the appointment of a member to the Local Licensing Authority to
complete Steve Simonett's term. A ballot was taken, and Mery Lapin moved to appoint David
Wilson to the Local Licensing Authority until June, 1993. Tom Steinberg seconded the
motion. A vote was taken and the motion passed unanimously, 6-0.
At this time, Mayor Osterfoss noted this was Vail Town Clerk, Martha Raecker's last evening
• meeting with the Vail Town Council. Mayor Osterfoss thanked Martha for her contributions
to TOV, and wished her well in her new location.
Item No. 3. was the appointment of a member to the Design Review Board (DRB) to complete
Sherry Dorward's term. A ballot was taken, and Mery Lapin moved to appoint Michael
Arnett to the DRB until February, 1993. Tom Steinberg seconded the motion. A vote was
taken and the motion passed unanimously, 6-0.
Item No. 4 was an update and disclosure of information TOV had received from consultants
regarding research on TOV's options related to the Gillett Holdings, Inc. (GHI) and VA
bankruptcies. Mayor Osterfoss stated TOV had, at this time, completed its legal research of
this issue, and emphasized the correlation between the success of the ski company to the
success of the community. She summarized the chronology of events related to the
bankruptcies and actions taken by TOV. (February, 1991: GHI was forced into bankruptcy
by its creditors; June, 1991: GHI declared Chapter 11 bankruptcy; August, 1991: TOV
Council passed Resolution No.16, Series of 1991, authorizing TOV to take all steps necessary
to investigate and evaluate what TOV might need to do to protect its interests; August, 1992,
TOV Council passed Resolution No. 13, Series of 1992, authorizing the hiring of additional
consultants to provide further expert advice to protect TOV's interests, including engaging
legal consultants who would be able to take any necessary action.) She advised Executive
Sessions were utilized by TOV Council because of the need for discussion about negotiation
and legal strategy, but no action was taken, nor would or could have been taken, without
s
public review and discussion. Mayor Osterfoss stated TOV spent $13,000 to monitor the
bankruptcy and $21,265 for legal research in 1991. In 1992, $175,000 was spent on legal
research. She said Council felt the information gathered had value today and was a resource
• of information with long term value for TOV. She noted, although continued monitoring of
this issue was necessary to protect the interests of the community, Council was optimistic
about the Apollo Group ownership, and felt the management now in place at VA would be
successful with the operation of the ski area. She advised VA representatives had told
Council they were committed on a long-term basis to operating the ski area successfully, and
indicated they felt it was necessary and appropriate to work cooperatively with the
community to address matters of mutual concern. Mayor Osterfoss said VA representatives
had stated several times they understood their actions would continue to be observed as the
community evaluated what they did. Before a detailed presentation by Chuck Borgman,
attorney with Kutak Rock, Mayor Osterfoss noted Council member Bob Buckley at no time
participated in any of Councirs discussions of this issue based on the fact he was part of the
executive group working with VA.
Chuck Borgman fully described the nature of Kutak Rock's engagement, and the engagement
of two other law firms by TOV to monitor this issue. He discussed highlights of the legal
efforts taken over the past eighteen months by the law firms, and explained in detail the
chronology of events of this issue beginning with the involuntary bankruptcy proceeding filed
against GHI in February, 1991. He noted Kutak Rock was engaged after the time of the
initial filing of the involuntary bankruptcy proceeding and prior to the time that proceeding
was converted to a voluntary bankruptcy proceeding in approximately May, 1991. He said
• Kutak Rock provided ongoing monitoring of the proceedings, and researched and advised TOV
on issues related to how the bankruptcy could impact TOV, as well as how TOV might have
had to respond. Mr. Borgman advised Kutak Rock was assisted by Marlin Opperman,
recognized eminent domain expert, with the law firm of Opperman & Associates. The two
firms looked at issues Mr. Borgman described as defensive in nature, given the importance
of the industry to the town, concerning what TOV could do, if necessary, to acquire assets or
regulate the operations of the ski area if the bankruptcy proceedings did not go as the debtors
hoped. He said the legal issues research focused in two general areas: (1) whether or not
there was legal basis for TOV to acquire VA assets if it had to, and (2) whether or not TOV
could impose any kind of regulatory procedure on VA operations or require minimum
capitalization or other requirements to assure either ongoing operation or capital
expenditures at a certain level or some level of service. Mr. Borgman noted it was relatively
unprecedented for a municipality to exercise those kinds of powers with respect to this
particular kind of industry, however, lengthy research concluded that, in each case, there was
legal basis for TOV to move forward with either or both actions. Mr. Borgman recounted
technical details about the course of events of the bankruptcies and the potential resulting
danger of interruption of operations of the ski area.
Mr. Borgman advised in May, 1992, Council asked Kutak Rock to recommend co -counsel with
• experience in hostile takeover matters. Kutak Rock recommended the firm of Wilke, Farr
& Gallagher, a prominent Wall street law firm, be engaged. He said there were three
reasons for the engagement of this additional law firm: (1) the stakes were so high and the
area of concern had so little precedent, both TOV and Kutak Rock felt more comfortable with
a second opinion from Wilke, Farr & Gallagher, (2) it was believed if TOV had to act in this
arena it would have been akin to a hostile takeover setting, and (3) it was anticipated if
action had to be taken it would ultimately unfold in New York where many of the involved
parties were, where the financial community was centered, and where Wilke, Farr &
Gallagher was based.
At this time, Mr. Borgman indicated a joint amended plan of reorganization was filed in the
spring of 1992, the final confirmation order was in August, 1992, and having now passed the
final confirmation date, GHI and VA had now emerged from Chapter 11. He reiterated that
a great deal of expensive legal research was done for TOV over the past eighteen months.
In addition to the research, there was strategic planning involving an important legal
component on which time was spent. He believed the bulk of the legal work done had
continuing value for TOV and would be valuable in the future, when any sitting Council
might have to review the situation. The available information might have to be updated, but
was not work that would have to be reproduced in total. His understanding was, as the
bankruptcy proceedings had been concluded, Kutak Rock's engagement would become
dormant at this point. He indicated Kutak Rock had received no direction to move forward,
and felt any Council observation of VA operations would no longer require a legal component
at this time. He gave an overview of the bankruptcy arena, and pointed out the tremendous
power of bankruptcy judges, who could, in fact, affect existing relationships between debtors
and third parties, including the capacity to void existing contracts, as well as the possibility
• of affecting TOV's ability to collect taxes and enforce existing agreements. That, he indicated,
would clearly have had direct impact on the ongoing operation of the ski area. He concluded
his presentation by recalling Mayor Osterfoss had earlier mentioned most of TOV's
communications regarding this issue had been in Executive Session, and added that was
intentional. All of the work product produced had been submitted to Larry Eskwith as Town
Attorney with the protection of attorney -client privilege. He concluded his presentation by
indicating the amount of strategy involved and Council's desire to avoid having its actions
or threat of actions have a negative impact upon VA or upon the successful culmination of
the bankruptcy proceedings were the primary reasons for TOV's internalization of this issue
while research was underway.
Mery Lapin then explained he had personally taken on the job of following GHI's financial
condition, and said he took full political responsibility for encouraging fellow Council
members to monitor and understand the implications of this bankruptcy issue and the
resultant actions taken. He felt that was Council's fiduciary responsibility, and said he
personally saw no other alternative but to suggest TOV follow the course of the bankruptcy
and know the alternative choices of action available to it. He mentioned numerous dealings
TOV had with VA a bankruptcy could affect, including the 4% lift ticket tax (9% of TOV's
budget), the 60-year lease VA had with the Vail Recreation District (VRD) for the lands
around Gold Peak, the zoning greenbelt and open space, and the possibility that Vail and
Beaver Creek could have been separated and sold or liquidated. He noted it was always
Council's intention to bring this issue to the community for a public hearing before any action
was taken. He agreed with Mayor Osterfoss about Council's optimistic view of the future of
VA's new management, but added he was concerned because the new ownership there had
no track record operating a successful ongoing company. However, in the short run, he felt
TOV should be pragmatic and judge the new management by contributions they made to
keeping Vail Number 1, including contributions not only to the quality of the skiing
experience, but contributions toward solutions for problems related to employee housing,
public transportation, parking, and the expansion and repair of Vail's infrastructure. Mery
encouraged Apollo Group to increase their Board of Directors to include meaningful
representation of outside directors representing the interest of the Vail community. Mery
also expressed concern that, although GHI's debt had been reduced for the present owners,
what assurances were there that this trophy asset would not be overpaid for by the next
buyer, or that bankruptcy would not once again become an issue. Mery stated many people
in Vail had everything both financially and emotionally invested here, and felt it was
necessary for the community to stand together to continue to make Vail Number 1.
Mr. Borgman spoke again briefly in response to Bill Wilto's request for clarification of TOV's
options. Mr. Borgman said the choices would have been dictated by what happened in the
. bankruptcy, but summarized the options previously explained.
Andy Daly, President of VA, inquired as to why there had been no investment banking
advisory role advising TOV on its financing strategies. Mr. Borgman stated a number of
investment banking firms had been interviewed during the summer of 1992, but none were
engaged due to the turn of events. Mr. Daly asked if the conclusions of TOV's research would
be public record, and Mayor Osterfoss advised information beyond what was being reported
at this meeting was confidential attorney -client information which would not be publicly
available. Larry Eskwith confirmed the attorney work product would not be public record.
Mr. Daly commented about the process of TOV's research, and added he was relieved by the
conclusion reached. He commended Council for taking the action now being taken. He
believed the element of trust that had been nurtured during the last sixty days could
continue, and had every expectation it would. He stated there was a new vision, as the
community moved forward, that all entities had to work together, and VA was open to
discussion and participation where it made sense from a good business perspective as well
as from the perspective of a good corporate citizen.
Mayor Osterfoss concluded by noting Andy Daly and the rest of the new VA management
group had shown a great deal of interest in working and communicating with TOV, and
clearly, she said it was felt there was more to be gained by working cooperatively with VA.
41 Item No 5. was a Consent Agenda consisting of two items:
(a) Approval of Minutes of November 3, 1992, and November 17, 1992, Evening
Meeting Minutes.
• (b) Ordinance No. 27, Series of 1992, second reading, an ordinance amending
Section 18.57.020 - Employee Housing Units (EHUs) generally, of the
Municipal Code of the Town of Vail, Paragraph 18.57.020(C) and (D) to clarify
restrictions on the leasing and sale of Employee Housing Units, and Paragraph
18.57.020(K), Section 18.57.040(B)5, Section 18.57.040(B)9, Section
18.57.060(B)13, and Section 18.57.060(B)6 to clarify the meaning.
Mayor Osterfoss read the titles in full. Mery Lapin moved to approve Consent Agenda Item
A, but to table Consent Agenda Item B, with a second from Tom Steinberg. Jim Gibson
asked Kristan Pritz to explain the reason for tabling Ordinance No. 27, Series of 1992.
Kristan stated she understood this meeting's agenda was too full to review the second reading
of this ordinance, and that a number of people interested in the ordinance were told it would
be discussed at the December 15, 1992, evening meeting. Jim Gibson inquired if any changes
to the ordinance were anticipated on second reading. Kristan advised no changes were
anticipated, and the changes Council had requested on first reading had been made for
second reading. To clarify the issue, Mayor Osterfoss asked Kristan if the people concerned
with this ordinance were concerned with the way it read on second reading, or whether they
were concerned about any changes that could possibly be made on second reading. Kristan
indicated there were not any concerns about the ordinance as it read now regarding the issue
of lots under 15,000 square feet. She confirmed that interested parties would have no
• objection to the ordinance if it was passed as presented on second reading at this meeting.
A vote was then taken on Merv's motion, and the motion failed, 2-4, Mayor Osterfoss, Jim
Gibson, Jim Shearer, and Rob LeVine opposed. Jim Gibson then moved to approve the
Consent Agenda, with a second from Jim Shearer. Before a vote was taken, Mery Lapin
noted he was concerned Ordinance No. 27, Series of 1992, was allowing and encouraging too
much development on lots smaller than 15,000 square feet, and was also allowing
development on 15,000 square foot lots of two or more units to be separated and sold. He felt
the ordinance would add to an already crowded lot density and increase the impact. Kristan
explained, on lots of less than 15,000 square feet, the current ordinance allowed two units
assuming the second unit was a restricted year round employee housing unit. The proposed
ordinance would not add density on those lots. If both units were permanently deed
restricted as employee housing units they could be sold separately. If not, they would still
fall under existing rules. There was brief additional discussion regarding smaller lots. A
vote was then taken and the motion to pass the Consent Agenda passed, 4-2, Mery Lapin and
Tom Steinberg opposed to Ordinance No. 27, Series of 1992.
Item No 6. was Ordinance No. 31, Series of 1992, first reading, an ordinance accepting
certain improvements constructed and installed in and for Booth Creek Local Improvement
District, determining the total cost thereof, receiving and accepting the assessment roll
• apportioning the cost thereof to be paid by special assessments among affected parcels within
the District, assessing the cost as apportioned therein against each assessable parcel within
the District especially benefitted by the improvements, prescribing the method of paying and
collecting the assessments, describing the lien securing payment thereof, making necessary
findings with respect to the satisfaction of all conditions and requirements relating to the
foregoing, and limiting actions challenging the proceedings. Mayor Osterfoss read the title
in full. Steve Thompson explained this ordinance was for the levying of assessments for work
done on the mitigation ditch at Booth Creek. He said the net assessed amount was $487,187,
which was being divided over 26 different units, approximately $18,737 per unit. The
assessment could be paid in full by January 18, 1993, or in ten equal installments at 9.5%
interest. Larry Eskwith noted there would be a public hearing for input and/or protests on
this ordinance and on the assessments on December 15, 1992. He advised the people to be
assessed had been notified by certified mail of the hearing, and public notice of the meeting
would be published in the newspaper. Mery Lapin moved to approve Ordinance No. 31,
Series of 1992, with a second from Jim Gibson. Before a vote was taken, Pat Dauphinais,
resident of the area targeted for assessment, asked for an explanation of the history of the
mitigation project. Larry Eskwith gave a brief review of the formation of the local
improvement district, and noted the formula for the assessment was established at the time
the district was formed. Ron Phillips also described details of the formation of this district,
noting most of the owners in the Booth Creek area had been involved in the formation
• process. Ron advised the owners had come to TOV asking for assistance with financing of
the needed improvement. There was discussion about the original assessment amount,
4
construction problems the project had encountered, additional monies spent because of
problems related to the construction and cost of litigation as a result of that, and the cost of
interest on bonds covering the project. Ned Gwathmey said the project now worked, but
• asked for an accounting of the project's costs. Steve Thompson indicated a breakdown of the
requested accounting information was available. Jim Gibson then called the question. A vote
was taken and the motion passed unanimously, 6-0.
Item No. 7. was a review of Town of Vail's Third Quarter Financial Report and Proposed
Supplemental Appropriations. Steve Thompson advised TOV's financial condition for 1992
remained in line with what had been projected all year. He noted there were approximately
$2,000,000 worth of projects between the Capital Projects Fund and the Real Estate Transfer
Tax Fund that would need to be rolled forward into 1993. He briefly reviewed the revenue
and expenditures of the General Fund, Capital Projects Lottery Fund, Real Estate Transfer
Tax, Special Parking Assessment Fund, Marketing Fund, and Police Confiscation Fund
budget categories. Mayor Osterfoss inquired about the number of projects being rolled
forward, and there was discussion about possible affects of Amendment No. 1 on those
projects. It was explained funds could be put into a reserve which would be viewed, under
Amendment No. 1, as expenditures in the year the reserve account was established, but Steve
Barwick added this option was dependent on court rulings regarding reserves and other
operations under Amendment No. 1 regulations.
Item No. 8 was Ordinance No. 32, Series of 1992, first reading, an ordinance making
supplemental appropriations from the Town of Vail General Fund, Capital Projects Fund,
. Vail Marketing Fund, The Real Estate Transfer Tax Fund, Police Confiscation Fund,
LionsHead Mall Project Fund, Conservation Trust Fund, LionsHead Mall Debt Service Fund,
Booth Creek Debt Service and Construction Fund, Heavy Equipment Fund, Town of Vail
Debt Service Fund, West Vail Debt Service Fund, and Police Building Construction. Fund of
the 1992 Budget and the Financial Plan for the Town of Vail, Colorado; and authorizing the
expenditures of said appropriations as set forth herein; establishing a reserve fund balance
of $5,740,000; creating an emergency reserve of $550,000; and setting forth details in regard
thereto. Mayor Osterfoss read the title in full. Mery Lapin moved to approve Ordinance No.
32, Series of 1992, on first reading, with a second from Tom Steinberg. Before a vote was
taken, there was discussion about requirements of Amendment No. 1, including use of the
term "emergency reserve," and further discussion regarding pledging of assets for that
reserve. Mayor Osterfoss noted the $550,000 emergency reserve was not usable under any
circumstances short of physical emergencies. It was noted the reserve could be invested long-
term. A vote was taken and the motion passed unanimously, 6-0.
Item No. 9 was Resolution No. 18, Series of 1992, a resolution authorizing employees of the
Town of Vail to purchase, sell, resell, to or from Gill & Associates; and setting forth details
in regard thereto. Mayor Osterfoss read the title in full. Jim Gibson moved to approve
Resolution No. 18, Series of 1992, with a second from Mery Lapin. After brief discussion, a
. vote was taken and the motion passed unanimously, 6-0.
Item No. 10 was Resolution No. 19, Series of 1992, a resolution authorizing employees of the
Town of Vail to purchase, sell, resell, to or from RAF Financial Corporation; and setting forth
details in regard thereto. Mayor Osterfoss read the title in full. Jim Gibson moved to
approve Resolution No. 19, Series of 1992, with a second from Tom Steinberg. A vote was
taken and the motion passed unanimously, 6-0.
Item No. 11 was Resolution No. 20, Series of 1992, a resolution authorizing employees of the
Town of Vail to purchase, sell, resell, to or from Stifel, Nicolaus & Co., Inc.; and setting forth
details in regard thereto. Mayor Osterfoss read the title in full. Jim Gibson moved to
approve Resolution No. 20, Series of 1992, with a second from Tom Steinberg. A vote was
taken and the motion passes unanimously, 6-0.
Item No. 12 was Resolution No. 21, Series of 1992, a resolution authorizing certain Town
employees and officers to sign checks drawing on a health insurance debit account to be
opened by the Town at the FirstBank of Vail, and further authorizing certain employees of
the Town to make deposits in said account. Mayor Osterfoss read the title in full. Shelly
Shanley explained TOV needed to establish this new account to pay out health insurance
claims from TOV's new health insurance carrier, Fortis. Rob Levine moved to approve
• Resolution No. 21, Series of 1992, with a second from Tom Steinberg. After brief discussion,
a vote was taken and the motion passed unanimously, 6-0.
Item No. 13 was review of a request for a sign variance for The Antlers Condominiums, 680
W. Lionshead Place, Lot 3, Block 1, Vail LionsHead 3rd Filing. The applicant was Rob
LeVine/The Antlers Condominiums. Rob Levine stepped down from discussion due to conflict
• of interest. Tim Devlin advised this request was, in fact, for two variances; the first being
for size of signs, and the second being for height of signs. He explained the description of the
request as detailed in the CDD memo to the DRB dated November 4, 1992, including a
proposed change in the lettering style and lighting of the existing 36 square foot legal non-
conforming sign. He indicated TOV Municipal Code stipulated the right to continued use or
operation of any legal non -conforming sign terminated whenever a sign was altered in any
way. Therefore, The Antler's needed a variance even though the size and height of the
proposed sign would remain the same as the existing sign. Tim noted there were precedents
for this type of variance, and staff and the DRB believed there were special circumstances
applying to The Antler's building, particularly its concave physical location. After discussion,
Mery Lapin moved to approve the sign variance as requested with the findings of special
circumstances as called out in the above -referenced memorandum including proof of physical
hardship, that special circumstances were not created by the applicant, and that granting of
the variance would be in general harmony with the purpose of the TOV Sign Code and would
not be materially detrimental to the persons residing or working in the vicinity, to adjacent
property, to the neighborhood, or to the public welfare in general. Jim Gibson seconded the
motion, A vote was taken and the motion passed, 5-0-1, Rob LeVine abstaining.
Item No. 14. was an appeal of a Design Review Board (DRB) decision denying the request for
a color change for the residence located at 1628 Vail Valley Drive, Lot 1, Warren Pulis
• Subdivision. The appellant was Mr. J.P. Molyneaux. Kristan Pritz reviewed the criteria
from the DRB's October 7,1992, vote to deny the color change request as detailed in the CDD
memo to Council dated December 1, 1992. The memo included background on the request,
including the fact that Mr. Molyneaux had not received DRB approval prior to painting his
house red. Mr. Molyneaux acknowledged he had first painted the house without knowledge
that authorization to do so was required, however, after being contacted by staff, he had
agreed to try to obtain DRB approval. After discussion regarding the alternatives and
compromises examined by the DRB and Mr. Molyneaux since August, 1992, Mayor Osterfoss
indicated the DRB's decision to deny the color change had been appropriate as the DRB's
decision was based on the parameters set forth in TOV Municipal Code. Jim Shearer moved
to uphold the DRB's decision to deny Mr. Molyneaux's request for a color change for the
residence at 1628 Vail Valley Drive, Lot 1, Warren Pulis Subdivision, based on the DRB
findings that the request was not in conformance with Sections 18.54.030 (A) and (B) (Design
Approval) and 18.54.050 (Al) and (C3) (Design Guidelines) of TOV Municipal Code as set
forth in the above referenced memo. Jim Gibson seconded the motion. Before a vote was
taken, Rob Levine noted there was no malicious intent on Mr. Molyneaux's part, and directed
the DRB to continue to work with Mr. Molyneaux, who agreed to repaint the residence by the
end of June, 1993. It was stated the time between now and then was a reasonable amount
of time to repaint, and that it was not reasonable, during the winter months, to require the
repaint. A vote was taken and the motion passed, 6-0.
• There being no further business, a motion to adjourn the meeting was made and passed
unanimously. The meeting was adjourned at 10:00 P.M.
Respectfully submitted,
0.
M aret A. Osterfoss, Malyor
ATTEST:
Pamela A. Brandmeyer, Acting Town Clerk
• Minutes taken by Donanne S. Deto
OUNSDE01.92