Craig Nassi changed Denver's Golden Triangle, but not everything is sparkling
On sunny winter days, the Beauvallon shimmers like a palace on Lincoln Street. In the center of the sprawling condo complex, twin domes highlighted by Roman columns flank the rooftop pool and garden. Matching cream-colored towers rise on either side like layers of an enormous wedding cake, with floral iron railings icing the balconies.
Look a little closer, though, and the image is flawed. Gray dirt stains the walls, and the copper plating on the domes has weathered into pale green. In front of the elaborate iron arches that frame the entrance to Aviano Coffee on the ground floor, pools of slush and ice lace the sidewalk. After a snow, water drips steadily from the curved third-story ledges of the building, drenching the patio seating at Mr. Coco's Bar & Grill.
Inside the property manager's office, a stack of encyclopedia-sized binders documents a long list of headaches not visible to the casual eye: leaking windows, mold in the walls, cracks that show the balcony side walls pulling away from the building.
Four years ago, the Beauvallon was the toast of the Golden Triangle. For $225,000 to $2 million, you could buy 700-square-foot to 4,000-square-foot condos — small enough for empty-nesters, extravagant enough for Nuggets players. Each of the 200 units could be designed to match the tastes of its owners, including marble floors, granite counters and mountain views. The project followed two other similarly showy condo complexes in the neighborhood, all of them built by Craig Nassi.
"People will always buy quality," the brash young developer told the Rocky Mountain News when plans for the Beauvallon were announced. "They see long-term value in my projects. They see that I have a track record; I deliver what I promise."
But in 2007, just two years after Beauvallon residents began moving in, the home-owners' association filed a $21.7 million lawsuit alleging major construction flaws; the case had been scheduled for trial in February, but it's been delayed and no new date has been set.
Thanks to the lawsuit and the national mortgage crisis, the condos began plummeting in value, losing so many hundreds of thousands of dollars in value that some owners simply stopped paying their mortgages and moved away, allowing their lenders and banks to foreclose on their homes. By early December 2008, at least 23 condos were for sale in the Beauvallon, one listed for as little as $139,000.
Nassi himself was long gone. After selling the commercial portion of the Beauvallon to J&J Property Investments, he started working on projects in Reno, Sacramento and Houston. Although he still has employees in Denver, Nassi moved his company headquarters to Manhattan. His most public local appearances now are in Denver District Court, where he's battling the Beauvallon lawsuit — one of at least fourteen liens and lawsuits filed against him in the last decade, ranging from breach-of-contract claims to mechanic's liens filed by contractors who alleged they were not paid.
Nassi's $2.1 million penthouse at the Beauvallon, with its private elevator, 4,000-square-foot rooftop patio and zebra-wood bar, has long since been sold.
And the palace on Lincoln continues to drip water on the people below.
Nassi's ascent in the real-estate world happened quickly, before he turned 35. He grew up in New York but moved to Denver to finish high school after his parents divorced and his mother remarried. He earned a bachelor's degree in history and geography from Colorado State University, then a master's degree in education administration from the University of Northern Colorado. After that, he got a job as a social studies teacher and football coach in the Cherry Creek School District.
But Nassi was drawn to architecture and the art involved in designing buildings. So he went back to school for a real-estate license and started selling homes. Soon he switched to building homes, specializing in Cherry Creek North.
"I was more attracted to the creative part in real estate and the risk-reward in building rather than sales," Nassi, now 39, explains in a telephone interview from New York.
He was young and unknown and needed his dad to co-sign his first loan. But by 1998, he was proposing to build a sixteen-story condo tower on West 12th Avenue called the Belvedere. "People like good ideas, people like good concepts. It's not very hard to sell a good idea that makes sense," he says.
It helped that Nassi was smart, charming and supremely confident. He befriended Mayor Wellington Webb, whom Nassi calls "a smart, smart man — the best mayor we've had in a long time." Webb was known for construction projects — pushing LoDo, finishing the airport — and Nassi was eager to be a part of the building boom.
In the late '90s, with the regal new downtown library addition recently finished, the Golden Triangle was just beginning its transformation from empty parking lots and bail-bond shops to a funky collection of art galleries, restaurants, offices and condos.
"This was a real pioneering time in the neighborhood," remembers Margerie Hicks, the former executive director of the Golden Triangle Neighborhood Association.
Nassi's buildings were unique, prompting strong reactions from fans and foes. Big and bawdy, all three of his projects in the Triangle — the Belvedere, Prado and Beauvallon — included arches and decorative pillars with a European flair.
But they were so tall that they dwarfed most other buildings in the area. With the Prado, which he started building before the Belvedere was finished, Nassi managed to anger a vocal chunk of the people living nearby. Critics complained that the eighteen-story tower blocked their mountain views and didn't fit with the neighborhood's plan. They wanted Nassi to find a way to make the project dense, but smaller.
"We had many meetings with him on the subject," says Billie Bramhall, a former city planner who also serves on the Golden Triangle's board. "He really thought we were nuts."
While other developers had gone out of their way to be good neighbors, making it clear they cared both about the residents and the future of the area, Nassi brushed them off. "That was not his concern," Hicks says.
"To tell me I can't build the maximum amount of square feet allowed by zoning is like taking my property rights from me," Nassi told the Rocky Mountain News at the time. "People can scream all they want, but all they can do is scream."
Few could argue with the attention the young developer was attracting to the Golden Triangle, however. Denver Nuggets star Carmelo Anthony lived in a penthouse at the Prado, which was featured on MTV's Cribs. Stanley Cup hero Peter Forsberg bought a condo at the Belvedere, then rented it to Nuggets power forward Nene.
This celebrity cachet, plus the restaurants, salons and health clubs that came with Nassi's condos, helped bring a "critical mass" of residents to the area, Hicks says. That, in turn, attracted more businesses.
"I saw the vision that Craig had and do believe that he put the Golden Triangle on the map in a good way," says businesswoman Caren Griffin, who moved her Spa Universaire into the Belvedere from LoDo.
As the years passed, Nassi began to take on a more prominent role in the community. He joined the boards of the Jewish Community Center and the Colorado State University Professional Development Committee. Always a fan of high art and antiques, he amassed a collection of fancy cars; Kathy Levy, co-owner of Matrix Fitness & Spa in the Beauvallon, remembers that Nassi once picked her and her husband up for a business dinner in a Rolls-Royce. Mayor Webb, after delivering his final State of the City address in 2002, held a private lunch for his senior staff in Nassi's own 3,000-square-foot, sixteenth-story penthouse in the Belvedere.
With 200 condos built and another 200 under way, Nassi's confidence was running high. He admits that this pace was "extraordinarily fast. No one's ever done it before."
The first few cracks were small and easy to overlook.
Take Dorothy and Thomas Littell. In 1999, they contracted to buy two units in the Prado, which they were planning to combine into one large condo. They put down a $22,000 deposit and went about designing the home. But Nassi kept pushing back the closing date, Dorothy Littell says, because "the unit wasn't anywhere near done." Finally, when it still wasn't ready by December 2001, the Littells sued the Prado Condominium Corporation, the company Nassi set up to build the condos, to get their deposit back.
The dispute was referred to arbitration, and in January 2004, arbitrator Mark Gruskin sided with the Littells. Court documents show that he awarded them the amount of their lost deposit, plus interest. But Littell says they were never able to collect: "We had virtually no one to go after. The guy's, you know, a real piece of work."
Nassi disputes this account, saying the lawsuit was settled confidentially and that the Littells were paid. "Everything's done," he insists.
But Dorothy Littell was so angry that she launched a website, www.bewarecn.com, highlighting a handful of other complaints about Nassi and negative newspaper articles.
Nassi, in turn, created a counter-site, http://bewarecn.blogspot.com, featuring a blog titled "Don't Beware of CN." It reads: "She put a deposit down on a residence and couldn't close on it when the time came. She consequently lost her deposit to our banks that would not return deposits...Nevertheless this person has gone out of her way to slander us with plenty of meaningless, frivolous and immature comments."
Meanwhile, other condo buyers were discovering that Nassi's deposit deals had a habit of falling through.
Lachelle Shambe put down a deposit on a Prado condo in 1999. When the home still wasn't ready two years later, she sued Nassi and the Prado Condominium Corporation. In September 2004, an arbitrator awarded her more than $33,000. Shambe couldn't be reached for comment.
Coy and Lovie Cunningham, who alleged the same problem with their Prado deposit, were awarded $35,000 through arbitration. But they also had trouble collecting. In court documents, Roy Penny Jr., the attorney for the Cunninghams and Shambe, wrote that the Prado refused to return the Cunninghams' money. It's unclear if Shambe or the Cunninghams were ever paid. The Cunninghams didn't return calls seeking comment, and Penny declined to comment because of a confidentiality agreement in the case. (Nassi says that both suits were settled confidentially.)
In 2001, Robert and Jill Lucas put down a $73,000 deposit for three units in the Beauvallon, which they planned to combine into one large home. But again, construction wasn't finished by the closing deadline. "There were delays and delays and delays...and the contract expired," says Thomas Helgeson, the attorney for the Lucases.
The Lucases got nervous about their investment and asked for their earnest deposit money back. When Nassi didn't hand it over, they sued him and the Beauvallon Corporation, demanding three times the original amount. Their Denver District Court complaint alleged that Nassi used "bait and switch" advertising and acted in "bad faith" by keeping their deposits. Eventually, Helgeson says, the two sides reached an agreement, and Nassi returned the money.
But that turned out to be just the beginning of Nassi's troubles with his latest and most extravagant project.
Four months after the Beauvallon broke ground, the September 11 attacks shook Wall Street and the rest of the nation. As real-estate funding all over the country vanished, so did Nassi's financing. Neighbors watched anxiously as the months passed and the project remained a hole in the ground. Nassi soon found new investors, but residents didn't start moving in until 2004 and 2005. By then, many of his deals had started to sour.
He had wooed the owners of Matrix Fitness & Spa with special deals on rent and promises of abundant parking. Larry and Kathy Levy were planning a club that fit with Nassi's opulent vision for the Beauvallon: private rooms for massage and facials, elliptical machines equipped with individual screens to watch TV or check e-mail. Nassi, in turn, could use the Matrix as an incentive to hook buyers, giving them a steep membership discount as part of their homeowners' fee.
But the gym's construction finished eleven months late, according to court allegations made by Larry Levy, and some of the parking spaces never materialized. Flaws in the heating and ventilation system left gym members boiling in the summer time, and drains in the locker rooms sloped up instead of down. In 2005, Levy sued Nassi for $1.2 million in damages.
"He builds a beautiful facade, and basically it's only skin deep. Everything behind it is cheap," Larry Levy says. Nassi disputes Levy's claims, and the case is still pending in Denver District Court.
Nassi says the Matrix was finished late because little details kept changing — the carpet was ripped up, the tiles in the bathroom switched. Plus, he says, any money that Levy lost on the delays should have been compensated for by his four years of free rent. "Larry's issues are his own issues," Nassi says.
Jay Chadrom signed a lease in April 2005 for a restaurant space on the first floor of the Beauvallon, but heating, ventilation and plumbing problems delayed the opening of the Aqua oyster bar until August 2006. Still, Chadrom doesn't blame Nassi. In fact, the two are good friends, and Chadrom held Nassi's birthday party at Aqua on opening night.
"Everybody runs into certain bumps in their career," Chadrom says. "I just know he's a good guy, he's a good person. He's highly motivated; he thinks beyond the average-Joe concern.... He's a very smart kid."
The two men met years ago through their mutual friend, nightclub owner Regas Christou. Since then, Chadrom has never wavered in his loyalty. They share a special kinship, since Chadrom is Iranian and so is Nassi's father. In Chadrom's view, people who sign a contract with Nassi deserve what they get. "He's just smart putting deals together," Chadrom says. "They're a bunch of idiots that keep signing."
As for Nassi's rise and fall in the Denver real-estate scene, Chadrom considers it a problem of timing: "He was too fast, for his own sake and Denver's sake, really."
Still, because of the gutter problems and other concerns, Chadrom recently shuttered Aqua and moved the business across Lincoln to his other restaurant, Opal.
Nassi sold the commercial portion of the Beauvallon to J&J Property Investments in 2005, but no one from that company could be reached for comment. The phone number listed for owners Maria and Johnson Lin, in the town of Superior, has been disconnected. Realtor David Fried says he is trying to lease the properties on behalf of a court receiver; he wouldn't comment further.
In the past four years, a number of other businesses have also opened and quickly closed in the Beauvallon, including Deli Zone and Moda Ristorante and Lounge. Today, three of the nine storefronts are empty.
While they acknowledge that his methods may have rubbed some people the wrong way, two other former Nassi business partners also give him credit.
Joe Simmons, the architect who designed the Prado and the Belvedere, calls Nassi a "hard-ball businessman, and I think some people in this town aren't used to that... But he paid me every penny he owed me. I admire the man. He's very ambitious.
"He always operated under the premise that a dollar he didn't have to spend was a dollar he could put in his pocket," adds Simmons, who lived in the Belvedere for five years after designing it. "I don't think that he was unethical in the way he did business, but he was a pretty willful man."
Spa owner Griffin explains it simply: "Craig's always going to get the one-up on a deal. But that's what keeps Craig successful."
It's just really an incredible place. We love it there...we've had no negative experiences," gushes Barbie Gummin, owner of one of the Beauvallon's penthouses, which she recently put up for sale for $2.3 million.
With two master suites, heated floors, soundproof walls and four private parking spaces, there's little to complain about. Gummin has rented her condo out to former Nugget Marcus Camby and is now selling because she and her husband have moved to Florida to care for her mother. She doesn't understand what all the fuss is about, why her neighbors in the homeowners' association have decided to sue. "We feel bad he's gotten such a bad rap," she says of Nassi.
But such rosy views are rare.
In 2006, condo owners in the Beauvallon began reporting leaks in their homes after snowstorms, so attorneys for the homeowners' association hired an outside expert, Professional Investigative Engineers, to check it out. The company noted that there was indeed water seeping in through windows. They also discovered a more sinister problem: mold in the walls of 44 condos, according to the lab results included in the firm's public report. The engineers concluded that the synthetic stucco-like material covering the outside of the building wasn't waterproof and allowed water to creep in, causing mold to grow in the walls and rust to corrode the building's steel frame. Pictures included in the report showed cracks big enough to fit a credit card at the point where balcony-side walls connect to the outside of the building. The edges of windows and sliding glass doors on the fourteenth and fifteenth floors had gaps that allowed water to enter. One photo, from a condo on the seventh floor, shows black mold growing beneath a window.
Environmental consultants hired by the Beauvallon's property management company took a closer look at some units. Although Gandalf Associates couldn't say for sure where the mold was coming from, they said it appeared to be "the result of affected building materials being repeatedly wet or kept moist for extended periods of time, likely from water infiltration from the outside," according to a May 2007 report.
In April 2007, the Beauvallon Condominium Association sent a letter to every owner in the building informing them that the association had filed suit against Nassi, his company, BCN Development, Swinerton Builders, Big Horn Plastering and other firms involved with the construction. The complaint alleged a slew of construction defects, from flaws in the material covering the outside of the building to bad roofing and leaks in the penthouses. Repair estimates reached $21.7 million and included the cost of removing and replacing the entire exterior of the building.
Association attorney Scott Sullan declined to comment on the problems or on Nassi, saying only, "I believe that my job is to help these folks get their homes repaired. We're trying to get the building fixed." Peter Mannetti, president of the Beauvallon homeowners' association, also declined to comment. Several residents contacted for this story didn't return calls seeking comment. Many who moved out of the most damaged condos couldn't be located.
Kevin Ott, Colorado division manager for Swinerton, says his company attempted to address a list of problems that the homeowners' association came up with. "We tried to take care of everything that we knew about and were allowed to take care of."
Ott's company has its own bone to pick with Nassi. Last year, Swinerton sued the Beauvallon Corporation to recover $1 million the company says it was never paid. An arbitrator awarded Swinerton $1.7 million, but the company has been unable to collect since the Beauvallon Corporation was a limited liability company set up only to build the condos; it no longer has any assets. Swinerton's lawyers are now trying to prove that Nassi is the Beauvallon's "alter ego" and therefore responsible for payment.
"He's very hard to find," Ott says. "We're trying to serve him."
Nassi says he's in settlement negotiations with Swinerton but is waiting to resolve the dispute until the homeowners' association suit is settled.
What's not clear from the homeowners' suit is how the city of Denver allowed the Beauvallon to be built with windows and walls that leak. It's so bad at times that neighbors around Lincoln Street and Ninth and Tenth avenues have gotten accustomed to navigating the waterfalls that pour off the building whenever it rains or when snow melts, not to mention the ice patches that form in the winter.
City building records show that an inspector with the last name of "Ramirez" signed off on the Beauvallon's roofing, gutters and downspouts in April 2004. But there are no gutters to be found on the building. Chief inspector Jim Morgan referred questions about the gutters to planning department spokesman Julius Zsako, who says the Beauvallon has scuppers — small metal boxes that drain water from roofs or walls — instead of gutters.
Yet they don't appear to do anything to stop water from pouring off the ornate upper ledges onto people walking below. As Professional Investigative Engineers noted in its report, this violates the Uniform Building Code, which says that "roof drainage water from a building shall not be permitted to flow over public property."
Zsako insists that the inspector's sign-off at the Beauvallon means that "all work was performed according to code," adding that inspector Ramirez has since retired.
"There's not a code requirement...for gutters or downspouts," Zsako adds, explaining that the Beauvallon was built according to the approved drawings, and that the drawings were approved because they met the city's building codes.
It's an explanation that surprises Matrix owner Levy.
"How can that happen? It's not correct," he says. "Because then why don't all these other buildings downtown have that?"
Nassi dismisses all the construction complaints as a lawyer's ploy to get money from the building's insurance policy, which would have to pay the costs. "If there was no insurance on this, there would be no lawsuit," he says. And he claims that Swinerton tried to fix construction problems early on, but the homeowners' association wouldn't allow it because of the lawsuit. As a result, Nassi says, the leaks and other water issues worsened. As for the gutters, those are up to J&J — or whatever company now owns the commercial portion of the building — to fix. "We sold the building to them as is," he says. "Gutters are a simple thing. They cost a few hundred dollars to put up in each section. If I was the landlord there and enough people requested it, of course I'd put it up." But, he adds, when the building was first constructed, it "wasn't something the architects thought of putting in."
It's an oversight that sounds strange coming from a developer who prides himself on attending to minute details — such as the $150,000 gate from Buenos Aires, Argentina, that Nassi bought to frame the entrance to what is now the Aviano coffee shop. It symbolizes the "elegance of the building," he says. "I worry about the details all the time. I don't think anyone will ever build anything as gracious and elegant as that building."
In the years since the lawsuit was first filed, it has become very difficult to sell a condo in the Beauvallon. Some buyers who research its history consider it a risky investment, while realtors are often hesitant to steer clients there.
"There are known construction defects in the Beauvallon building and it is causing educated buyers to be a bit standoff-ish with the building," Allison Smookler, a real-estate agent for Coldwell Banker, wrote in a May 2008 posting on the real-estate website Trulia.com. Smookler wouldn't comment for this story.
RE/MAX Alliance agent Joe Powers says he recently tried to sell two bank-owned condos in the building but only managed to sell one — for a fraction of its previous value. The three-bedroom home had an original foreclosure value of $925,000, but it ended up selling for $300,000. Several of the building's other three-bedroom units are also listed in this price range. One ad describes a 2,200-square-foot condo with two terraces, views of the pool, and newly upgraded tile and counters selling for $315,000.
"It's a sign of the times," Powers says, explaining that banks are desperate to recover whatever money they can before the economy spirals further out of control. He's watched the race to the bottom continue in real estate for more than a year.
But at the Beauvallon, Powers says the situation is even worse because of the construction defects, the lawsuit, the number of people trying to sell and the homeowners' association fees that can reach $500 a month for a one-bedroom condo.
Many of the original residents bought in the era of "creative financing," when you didn't have to put much money down for a $300,000 condo, Powers adds. Then, when the value plummeted to $160,000, they just walked away.
It wasn't that they couldn't afford to pay their mortgages; they just didn't think it was worthwhile. Although foreclosure may have damaged their credit scores, they still might have been able to rent a new home for less than their mortgage payment. "Why should we?" Powers says, explaining the reasoning of some of these owners. "You know what? Screw it, I'm out of here."
Dick Allen, who has lived in the Beauvallon since the summer of 2005, admits that "there have been a lot of rentals" in the building, but he thinks the situation "improved considerably" as the homeowners' original trial date approached. Although he and his wife haven't had any problems with their two-bedroom unit, they support the lawsuit. "Some of the exterior problems did not get fixed," Allen says.
Nassi, meanwhile, has moved on to other states — and racked up another suitcase full of complaints. In 2006, a court-appointed receiver took over the 92-unit Palladio Condominiums that he'd built in Reno, Nevada, after BCN Development and its partner, Royce Royal Capital Advisors, ran over budget on a construction loan and couldn't cover the cost of finishing the project, according to the Reno Gazette-Journal.
In Sacramento, California, Nassi made plans to build two condo towers with famed architect Daniel Libeskind, who designed the Hamilton addition to the Denver Art Museum. But in October 2007, Libeskind's attorney wrote a letter to Nassi saying he owed the architect money and that there had been a "substantial breach" of their agreement. One of the projects, the 38-story Aura tower, stalled in late 2007 after Nassi failed to secure financing and lost a $10 million loan that had been offered by the City of Sacramento. Libeskind couldn't be reached for comment.
Nassi says that the two parties reached an "amicable" settlement. "We paid him part of the fees that were owed. We're all happy." Neither condo complex has been built.
In the summer of 2007, Nassi moved BCN's headquarters to Manhattan, where he says he is building and leasing out office space and planning a hotel project. But his website provides no details about his latest New York ventures, just photos and drawings of buildings in Greenwich Village, Chelsea and other neighborhoods.
Nassi says he moved on for a simple reason: There was more money to be made outside of Colorado. The appreciation of property values in Denver is slower than in other major cities, he says. He blames an abundance of land, overbuilding, and zoning regulations that allow for high-density buildings (such as the Beauvallon). "The market is very finicky and doesn't sustain high prices."
But Nassi says he's coming back — with plans for projects in Washington Park and the Vail Valley. He won't give any details, however, saying only that they will be a mix of residential and commercial buildings on land he already owns.
Denver councilmen Chris Nevitt and Charlie Brown, both of whom represent Washington Park, say they haven't heard of any new Nassi project. A planning official in Vail said she was not familiar with BCN Development.
If Nassi does return, developer David Zucker says he will have to deal with the "questionable" reputation he has created with many buyers, owners, neighbors and developers.
Even the best developers can get sued, says Zucker, who is known for projects such as the Zocalo and RiverClay condos. But Nassi is different, because the complaints aren't just about one or two problems.
"One gets the sense that there's something pervasive," Zucker says. "There seems to be a cloud that follows Craig, whether he is in Denver or Sacramento."
But Nassi seems confident that Denver will welcome him. In his view, neither the complaints about construction at the Beauvallon nor the stack of people who have sued him over monetary disputes tarnishes his accomplishments.
"We've had a pretty good run," he says. "Bottom line is, everything we've done, we've paid off. We've never had any foreclosures; we've never had any bankruptcies. We have a great track record, even in these terrible times."
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