Inheriting a hornet’s nest

Mitchell pleads for patience with Tallus

The Mammoth Lakes Housing Board agreed on Feb. 3 to recommend letting Tallus Project Manager Rob Mitchell off the hook for his project’s affordable housing mitigation unit requirement—at least for a year.

Mitchell approached Mammoth Lakes Housing (MLH) in January with a request for several amendments to the 2004 Tallus project tract map and use permit. As some may recall, the original Tallus project was approved in 2004, went bankrupt in 2007, and was acquired for less than $10 million by Chase Merritt, a privately owned real estate investment firm located in Irvine, in 2011.

Mitchell is a partner in Chase Merritt.

His request to MLH included changing six of the existing nine units to whole rather than fractional ownership. Currently the Tallus units are divided into 1/6 ownership shares. Each share was originally priced at $800,000; now they sell for closer to $450,000.

Mitchell also requested relocating the affordable housing unit required as part of the project from its current location above the Tallus clubhouse to a 1970’s A-frame on Joaquin Road adjacent to Tallus. At the Feb. 3 MLH Board meeting, Mitchell added another request: that the Board consider suspending the requirement for an affordable housing unit altogether, until Mitchell has a chance to build a new and more appropriate unit on-site as part of Phase 2 of the Tallus project.

In order to relocate affordable housing offsite to the Joaquin unit, renovation alone would cost Mitchell $100,000-150,000, said Interim Town Manager and Board member Dan Holler. Considering the A-frame was built in the ‘70’s, “it has a bit of deferred maintenance,” explained MLH Executive Director Jennifer Halferty. She added that Mitchell felt the required upgrades to the property “were excessive.”

The problem with the current affordable housing unit, which sits above the Tallus clubhouse, is that any renters would have to enter through the private clubhouse to access the unit. Renters would also be living in a unit that Tallus members would pay $1,000 per month in Homeowners Association fees to rent.

“I can’t have an affordable unit in a complex that’s renting for $2,500 a night,” said Mitchell.

Holler agreed. “For Joe Citizen to rent the place … it’s problematic,” he said. “Why would you want someone from off the street to come live in a  place with lots of activities they can’t take part in?”

Mitchell’s hope is to rent the clubhouse unit to prospective Tallus buyers. He argued that this “incubator sales tactic” was necessary to finance and sell units for Phase 2 of the Tallus project.

Phase 2, “Tallus Pines,” is currently permitted for an additional 10 units. However, Mitchell expressed a desire to build as many as 82 units on the four and a half acre lot. Board members were quick to note that an additional 82 units would mean as many as eight more affordable housing mitigation units; however, “Tallus Pines” would likely take about two years to permit.

The Board agreed that the current clubhouse unit is impractical, and that its rental to prospective buyers could be beneficial to Mitchell’s project.

The Board also agreed that renovating the Joaquin property wouldn’t be worth the $100,000-$150,000. Board President Kirk Stapp called the A-frame “Our least viable option. [Renovating it] would leave that … thing … there.”

“I always thought that A-frame ought to be torn down,” Mayor and Board member Rick Wood said bluntly.

The Board even agreed that a new affordable housing unit constructed as part of Tallus Pines would be preferable to renovating the A-frame; but what the Board didn’t agree on was how to ensure that the unit actually gets built. “We want some guarantees,” Stapp said. Several Board members floated the idea of a bond to ensure that should Mitchell fail to complete Phase 1 of the project, or continue with Phase 2 of the project, the original requirement for a unit of affordable housing would still be fulfilled.

Mitchell protested the bond suggestion. “I’m spending $6 million to finish the project,” he said. “I’m already putting $300,000 up for [a] public works [bond]. I’m getting it at both ends.”

The second suggestion from Board members was that Mitchell, as manager of the Tallus project, occupy the clubhouse unit until he builds a new affordable housing unit. This would fulfill the requirement that either an affordable housing renter, or workforce renter, live in the unit.

In fact, the clubhouse unit should have been occupied by an affordable housing or workforce renter since it was built eight years ago. “Technically, you’re in non-compliance,” noted Board Vice-President Larry Johnston.

Mitchell said he could easily move into the unit. However, he had no wish to. “I’m spending millions of dollars, working toward the future to provide more affordable housing [should Phase 2 be built] than you have now,” he said. “Without that unit for rent, the second phase will not be built. I have to have that unit as an incubator for sales.”

Stuck at an impasse, the Board suggested a third option: deferring the conversation regarding the affordable housing mitigation unit for a year, to give Mitchell time to submit an application the Phase 2 Tallus Pines project. This deferral, which would also allow Mitchell to rent the clubhouse unit as he wishes, would not mean Mitchell has fulfilled his affordable housing mitigation requirement. “He wouldn’t be in compliance with the code under which the permit was approved,” said Associate Planner Jan Daugherty.

Wood had no problem with the deferral, or with Mitchell renting the clubhouse room. “So what?” he asked.

“So what? It’s illegal,” Johnston retorted.

“I don’t think if we’re deferring, we’re condoning illegality,” said Wood.

“What you’re doing is waving his requirement,” said Johnston. “If he doesn’t come back [to complete the project], then what?”

“Then we have a clubhouse unit,” said Kirk Stapp.

The Board voted 3-1 in favor of recommending a deferral to the Planning and Economic Development Commission. Mitchell thanked the Board, acknowledging that the Tallus project has always presented challenges. “I inherited a hornet’s nest when I bought it, and I knew that,” he said.