By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
By Michael Roberts
By Melanie Asmar
Item: When the deal was revived three years later, the asking price had risen to $11 million, according to a May 1995 memo from CU's then-assistant vice chancellor (now financial services director) Bill Herbstreit to Chancellor Park. After months of canny negotiation, CU basically agreed to meet the seller's price, which included swapping two parcels that the university owns in an industrial park, valued at $2.5 million, and paying the balance in cash.
Item: Secrecy was essential to the deal from the start. Chancellor Park has defended the furtive nature of the negotiations as necessary "so that no third or fourth parties would come to the table and up the price"--a peculiar assertion, in light of Flatiron's history of difficulties with the city over developing the property. But Herbstreit's memos make it clear that it was Flatiron managing partner Larry Frey, acting on behalf of the owners, who had sought to keep the deal quiet.
"Larry has asked...that we maintain as much confidentiality as possible," he wrote. "Larry is still in the process of considering several development opportunities with the City of Boulder and he needs to keep these discussions going."
Not that CU didn't have its own reasons for secrecy. "Given the absolute certainty that this will be [a] politically charged issue with the City and the neighbors," Herbstreit wrote, Park would have to seek "significant engagement on the part of the Administration and the Regents at a level we have not had to involve them in the past." The acquisition strategy would necessarily involve hush-hush meetings with regents and members of the Colorado Commission on Higher Education, "as well as various influential state legislators," in order to smooth the way for the purchase and "minimize the possibility of the City or the citizens using these political bodies as targets for City/citizen politics."
Citizen politics was a horror CU wanted to avoid, if possible. And Boulder officials might be more willing to cooperate, Herbstreit suggested, if they didn't find out about the deal until it was practically done.
Item: Before an appraisal was done, CU officials already had a pretty good idea that the property's value could be calculated in a way that would make the asking price seem an absolute bargain.
At the urging of regent Peter Dietze, a longtime critic of Boulder's slow-growth policies and an enthusiastic supporter of the Gateway deal, CU hired former university counsel Dick Tharp as a $125-per-hour consultant on the "legalities and political issues" involved in the land deal. Last February Tharp sent Flatiron's attorney a letter setting forth CU's requirements for the purchase, including a request for a new appraisal of the property "that shall indicate an appraised value of a minimum of $16 million." Although the agreed-upon price for the property was still hovering around $11 million, "we would anticipate some type of recognition to the sellers (donors) for agreeing to provide the University this parcel in a bargain sale," Tharp wrote.
The "recognition" finally arrived in the purchase agreement itself, which listed the official price as $16.4 million, so that Flatiron could claim the difference as a $5.4 million "gift" to the university. Tharp has since been named CU-Boulder's interim athletic director.
Item: Subsequent to Tharp's letter, Boulder appraiser Gerald Anderson presented Flatiron with his best estimate of the value of the property: $16,411,000. Although there's no evidence that Anderson was aware of Tharp's letter--indeed, his appraisal contains standard warranties that it was "prepared in an independent and objective manner"--city officials have questioned several key assumptions that were made to arrive at such a figure.
What land is worth comes down to what can be done with it. The Gateway's assessed value as unincorporated county land is slightly more than $4 million. The city recently studied the property as a potential park site and concluded it was worth around $8.5 million--as a park. Anderson, using standard appraisal techniques, concluded that a maximum of 286 acres of the land could be developed and that the highest and best use of the land would be as a mixed-density residential development annexed by Boulder. If the site remained unincorporated county land, a developer would be limited to building eight single-family homes on 35-acre lots; once annexed, though, Anderson figured the site could be worth around $16 million, or more than $50,000 an acre.
Yet that assumes the city would annex the land and allow mixed-density development on all but a few acres, and the Gateway's opponents say that's sheer fantasy. "The city would never annex that land and let it all be developed," says city council member Steve Pomerance.
In fact, Flatiron's recent attempt to build 78 homes on the site suggests quite the opposite--that the city would require that a hefty portion of the land be devoted to open space as the price of annexation. But Anderson's appraisal makes no mention of the recent annexation application, or of the city's stated interest in preserving 220 acres of the property as open space.
Item: CU has claimed that the Gateway has been through two independent appraisals, but the second effort, commissioned by CU, was merely a review of Anderson's summary appraisal. Operating on similar assumptions about annexation and the amount of developable acreage, the review arrived at a remarkably similar valuation of the property.