OURAY – Citing concerns about public safety, the Ouray City Council agreed by a vote of 4-1 at a public hearing on Wednesday, Nov. 7, not to enter into a proposed settlement agreement, which would have given Alpenhof LLC a path forward to develop its property in the Ouray Vista Subdivision. 

Councilor John Ferguson articulated the argument against entering into the agreement, stating that he still wasn’t convinced it was safe for Alpenhof to develop its property, known as Parcel C, which lies in the flood path of Skyrocket Creek and is protected by a manmade berm.

Alpenhof LLC sued the City of Ouray in August 2011, after the company’s development plans for Parcel C were thwarted by action of the Ouray City Council. 

The settlement agreement was the outcome of court-ordered mediation process, in which Alpenhof principals Galen and Rod Rasmusson, Ouray City Administrator Patrick Rondinelli and attorneys for both parties have been participating in recent months. That process culminated with a 12-hour session with a mediator on Oct. 23, at which the settlement agreement was hashed out. 

While the proposed agreement granted the city very favorable financial terms, Ferguson  and fellow councilors Gary Hansen and Michael Underwood, along with Mayor Bob Risch, concurred that it ultimately did very little to address their fundamental safety concerns with the property, and that the city and taxpayers would ultimately end up having to pay to maintain the berm, should the property be developed. 

Councilman Richard Kersen was the only councilor who favored entering into the settlement agreement, citing the private property rights of the developers.

“It’s a difficult situation; it’s something we’d like to see resolved,” said Risch. “The majority of council felt we need something more specific in terms of how the berm could be protected; I know the city staff and Alpenhof worked very hard through a 12 hour day trying to reach an agreement and we appreciate their work. But we had to sign off on it and live with it. The history we have with flooding here is impressive and will get worse, not better, with the effect of climate change, and warmer, moister, more violent storms.

“Unless there is something very much more specific about how berms can be designed to be pretty bomb proof, we couldn’t see agreeing to the settlement.”

Risch also acknowledged there was some worry over the liability the city might incur if it signed off on the settlement agreement and allowed the property to be developed. “That’s always out there, the concern over the city taking on longtime liability, or expensive maintenance issues, or both.” 

Ferguson dismissed the settlement agreement as essentially a “buyout offer” from Alpenhof, in which the company offered to pay for armoring the berm and to reimburse the city for legal expenses it has incurred in the lawsuit, among other things, in exchange for the right to develop Parcel C. 

“Even though it looked financially attractive, there were bigger issues,” Ferguson told The Watch. One concern was a proposed special improvement district to pay for maintenance and upkeep of the armored berm. The settlement agreement could be interpreted to imply that all residents in Ouray Vista would be expected to participate in the special district, not just those who may eventually live in flood-threatened Parcel C, which Ferguson viewed as “somewhat of a betrayal.”

Ouray Vista residents concurred; a large contingent of them attended the hearing last week to vehemently protest the settlement agreement. 

“They didn’t want to be taxed. They didn’t have any part of this negotiation,” Ferguson pointed out.

Ferguson also cited the moral imperative of council to prevent development from occurring in the path of obvious natural hazards.

“I did feel vindicated after the denial (of the settlement agreement), when (city attorney) Dave Masters came up and said he thought we made a good decision,” Ferguson said. 

The decision came as yet another tough blow to Alpenhof, however. 

Earlier this year, District Judge Steven Patrick had ruled in favor of the City of Ouray on a key component of the Alpenhof lawsuit known as the “106 ruling” in which Alpenhof had argued that the city’s action in denying its development proposal constituted a legal taking of its property.

Alpenhof appealed, and it was at that point that Judge Patrick ordered mediation. Now that mediation has failed, the 106 appeal “is going to be coming down soon,” Ferguson said. “The whole legal situation is on hold until the appeal is settled.”

Alpenhof principal Galen Rasmussen said this week that he was surprised the city didn’t go for the agreement. “That was half a million dollars their way we were going to put into the project,” he said. “It’s pretty much over now. I don’t know what’s next.”

The matter may end up being resolved in a court trial. An ideal outcome would be for the city to obtain ownership of Parcel C – at a considerable discount – so that it can never be developed, Ferguson said.