The city of Aspen and the Aspen-Pitkin County Housing Authority will settle with the Centennial Homeowners Association after a nearly decade-long legal dispute over building defects.
The city will purchase two parcels of undeveloped land from Centennial for $7.5 million, funds the homeowners association will use to complete repairs outlined in a 2010 Building Science Corp. analysis of the condominiums and a 2024 cost of repair opinion from Charles Taylor Engineers, according to the terms of the settlement.
If the city’s $7.5 million payment exceeds repair costs, Centennial must place the surplus in a capital reserve account limited to future common-element work or structural and envelope repairs tied to safety and livability. The money cannot be distributed to individuals or used for upgrades inside private units.
If the payment falls short, Centennial must cover the remaining repair costs.
“Centennial has full discretion on how it shall fund any shortfall to complete repairs so long as the funding mechanism is not intentionally structured to disproportionately defer repayments to future unit owners,” according to the settlement.
Purchase of the two parcels — about 0.9 acres on Teal Court and 1.35 acres on Free Silver Court — will require council approval after a professional appraisal is completed. It will also require approval from the APCHA board.
Aspen City Council unanimously approved the settlement terms Tuesday night. The final purchase contract will be reviewed by council and the APCHA board again once the appraisal and a survey to determine the final acreage of the parcels are complete. It will also require all Centennial homeowners with outdated deed restrictions to execute updated APCHA deed restrictions.
“The purpose of all of our discussions, including the purchase of the land by the city of that 2.25 acres, was to create a win-win for both Centennial and the city of Aspen,” True said during the meeting. “There is still a lot of work to be done for this to be ultimately completed, but this is the first step.”
Under the settlement terms, the city may not develop the land while any of the current owners own and occupy their units, or 40 years from the date of the property acquisition, whichever comes first.
In the interim, the city may begin subdivision and land-use applications for development of the property, and Centennial agreed it will not formally or informally object to any further development proposals put forth by the city. The homeowner’s association will encourage its individual owners not to oppose the city’s development applications under the settlement terms.
The city is purchasing the parcels with the intent to develop new affordable housing in the future, Aspen Special Counsel Jim True told the Aspen Daily News.
Centennial homeowners must adopt the housing authority’s most current deed restriction.
In a 2023 amended lawsuit, Centennial owners requested a judge lift or modify the units’ deed restrictions to allow homeowners to recoup more for certain capital improvements at resale. They argued at the time that even if owners could afford to pay for an estimated $11 million in repairs, it would be difficult for the owners to secure financing to cover the expenditure because the deed restrictions on the employee housing units capped the resale value of their units.
The settlement agreement includes provisions that require the Centennial Homeowners Association to waive claims on behalf of its unit owners, “as well as any claims that could have been asserted arising out of the physical defects of the Centennial HOA units and common areas.”
The settlement comes nearly 10 years after Centennial owners sued the city, APCHA and Pitkin County in December 2015. The lawsuit was an attempt to get the entities to pay for repairs the owners association claimed would cost between $3.5 million and $10 million.
The Centennial Homeowners Association argued that APCHA, the city and the county were liable for damages related to water infiltration issues at the buildings that were constructed in 1985 at the base of Smuggler Mountain.
Owners of the 92 condominium units said at the time that extensive water saturation had “completely rotted” major structural beams and load-bearing studs and walls, leaving them at risk of imminent structural failure. Saturation also led to growth of potentially toxic mold throughout the units, according to the 2015 lawsuit.
The 2010 Building Science Corp. report that Centennial must refer to while addressing repairs found that problems with attics, roofs, exterior walls, balconies, window systems and crawlspaces were caused “primarily by water intrusion at certain locations in the exterior wall assemblies.”
“Some secondary concerns were noted that related to condensation accumulation,” the report continued.
The report made several recommendations to decrease water intrusion, including patching and repairing walls in and adjacent to areas deteriorated by water, and removing and replacing all windows.
The October 2024 Charles Taylor Engineers’ opinion of cost of repair was not immediately available for review.
In a statement to the Aspen Daily News on behalf of the CHOA board, chairman Dios Long said the board is hopeful all parties can agree to the final documents required to approve the purchase.
“The Centennial HOA, the city and APCHA have agreed to a term sheet outlining the settlement of their long-running dispute concerning the deterioration and repair of the Centennial units,” Long said in the statement. “We are hopeful that the parties can now agree to final documents and the buildings will be preserved as affordable housing for another 40 years.”
Council members said during the Tuesday meeting that the settlement was a monumental move after nearly a decade of litigation.
“I cannot stress enough how many executive sessions, how many times people from Centennial came in, how that living area is such a bedrock to our community, and how we did it in a way that I don’t think is a dangerous precedent for future HOAs, who still should be responsible in funding their HOAs and not ending up in situations where they have deteriorating conditions,” Councilman Sam Rose said during the meeting. “So it’s just a big pat on the back to everyone for this. I know it’s not over the finish line completely, but to have gotten to this point, there were times where I was wondering if it was ever going to happen.”
The settlement agreement requires approval from Aspen City Council, which was scheduled to review the agreement during its Tuesday regular meeting. Long signed the agreement on Aug. 25.
