Durango City Council approved the sale of a prime piece of downtown real estate on Tuesday, but not before a third party with eyes on the property made its case for an open public bidding process.
The property in question is a city-owned parking lot on west College Drive purchased from the Durango & Silverton Narrow Gauge Railroad in 2002 for $2.5 million. Assistant City Attorney Jim Martin said the city leased the parking lot back to the railroad for about $100,000 per year. Now, the city is ready to sell the parking lot back, and the railroad is primed to purchase it.
Councilor Gilda Yazzie said the catastrophic 2002 Missionary Ridge Fire hurt Durango businesses, including the railroad, which approached the city for a bailout.
“As a good neighbor, we did,” she said. “And now … we’re at the point where we can get this property back to the railroad and finish up our good neighbor deal.”
She acknowledged sentiments that the city could make more money if it pursued a public bidding process, but said that would be complicated by the fact the railroad still owns the access point to the parking lot, and anyway, the original plan was to sell the property back to the railroad.
She added the sale revenue would bolster the Durango Transportation Department, which faces a budget deficit come 2026.
The city hasn’t always stuck hard to the idea of selling the parking lot back to D&SNG, however. Councilor Melissa Youssef said at one point the property was considered as a new location for Durango Fire Protection District’s new downtown station, for example.
Another example appeared in person at Tuesday’s City Council meeting.
Durango resident Richard Reitz attended the City Council meeting to speak on behalf of the Durango Arts Conference and Events Center, a subsidiary of the Durango STEAM Park, which has tasked itself with supporting and improving Durango’s arts and culture scene.
He requested the sale be scrapped in favor of a public bidding process.
The Durango Arts Conference and Events Center and Bud Franks, Durango STEAM Park president, were one of two finalists that responded to a city request for proposals for developing the parking lot in 2022. The other finalist was D&SNG itself, represented by Reynolds Ash + Associates. The city canceled its search after it learned the railroad’s proposal had been modified to exclude a parking garage after the results of a 2022 traffic study.
Franks signed a letter delivered to the city earlier on Tuesday that made DACE’s case for holding a public bidding process for the parking lot. The letter said the parking lot in question is a “prime site for a performing arts/conference center development” and public bidding or a new RFP process is more ethical than to “exclusively deal with the party that did not follow RFP process rules.”
Reitz posed to City Council the same questions raised in the letter. He asked why the city agreed to sell the property back to D&SNG for $4,375,000 despite the lot being valued at $4,971,940 by the La Plata County Assessor’s Office.
He asked if the city is obligated to sell the parking lot through a public bidding process and how the city will hold the railroad to obligations described in the sale agreement. And he also asked for an explanation of why a public bid would not be in the city’s best interest, assuming it followed an original 2002 purchase agreement between the city and the railroad.
“We would expect these values to be exceeded with a public offering,” he said of the city’s agreed upon sale price.
City Attorney Mark Morgan said the city and the railroad each had independent appraisers assess the parking lot, and each appraiser came up with their own values different from the county’s, which he said is not an accurate market value. The city and the railroad met near the middle of their respective appraisals.
He said the county’s assessed values are not reliable because the county appraises properties every two years and it’s hindered by the number of properties it has to assess.
He told The Durango Herald the city’s independent appraisal for the parking lot was $4,900,000 and the railroad’s independent appraisal was $3,700,000.
Morgan said holding the railroad to its agreement to develop the property is trickier, but ultimately, the city would take the railroad to court to enforce its agreement. But he said that shouldn’t be necessary because the railroad is amenable to its development obligations.
The original 2002 contract between the city and the railroad contains provisions that would hold the city responsible for monetary damages to the railroad were the city to sell the parking lot to another party, he said. Basically, the railroad could claim another development on the parking lot cost it ridership and money because of the loss of parking for its customers.
City Manager José Madrigal added a third party sale would be further complicated by the fact D&SNG still owns the access to the parking lot. And, the city’s original intent in buying the parking lot was to help the railroad, which had financial woes at the time.
City Council voted 4-1 to approve the sale of the parking lot. Councilor Olivier Bosmans voted “no,” pointing to his stated reasoning at a Nov. 5 City Council meeting that the city is missing out on other development opportunities by following through with the sale to the railroad, and that the city has enough money to sustain its transportation department for now.
Councilor Dave Woodruff agreed with Yazzie’s comments to fulfill the original agreement with D&SNG.
He pointed to the city’s most recent Durango Transit ridership survey data to make his case for selling the parking lot to obtain funding for the transportation department.
He said he brought ridership findings to a Durango Chamber of Commerce meeting Tuesday morning where he heard overwhelming support for bolstering transportation funding.
Youssef said the railroad is a strong partner with the city and given the transportation department’s funding needs, she supports the sale.
cburney@durangoherald.com
