The Optimist: Big capital projects, little valley

The Upper Roaring Fork Valley has an impressive portfolio of capital projects underway or soon to begin. We are nearly finished with the Maroon Creek Trail and are approaching Phase 0 of the Lumberyard affordable housing project. On the ballot in November’s election, we have the Draw Site affordable housing project in Snowmass Village and who could forget the airport modernization? The Entrance to Aspen looms as the next critical infrastructure project. Aspen also seeks to repurpose the Armory as a community gathering spot for affordable dining and entertainment. It is a unique privilege that a 20,000-resident county can imagine such projects. With that privilege comes an obligation to approach the project portfolio with humility and rationality.

These projects have exceptional intentions and matching price tags. The Maroon Creek Trail re-routes pedestrian traffic from the public schools to a beautifully paved trail, with an approximate final cost of $8.3 million. The Draw Site in Snowmass Village seeks to add 79 units of affordable housing for $86 million. The Lumberyard would add 277 to 304 affordable units for an original budget range of $425 million to $753 million. Early estimates for the airport suggest a total capital investment of at least $400 million, including a rebuild of the runway, terminal, and ground connection. The reconceived Armory’s budget has already increased to $40 million. A decade ago, the estimate to complete the Preferred Alternative’s tunnel and bridge for the new Entrance was $102 million. We can safely assume the cost has doubled or tripled in the intervening years.

At current estimates, these capital projects add up to $1.5 billion, on top of ongoing investments to maintain buildings, utilities, fire protection, roads, and trails. Major projects sit behind these — the public schools would like to continue the investment program recently funded by bonds, Snowmass has other housing projects on the drawing board, and the County has its eye on housing and potentially, two new pedestrian bridges to link the Intercept Lot to the Rio Grande. It’s a big list, even for a community with our resources. We would benefit from a comprehensive portfolio management approach between the city of Aspen, Pitkin County, and town of Snowmass Village that considers:

1. How we mitigate the risk of construction cost escalation;
2. How we secure as many outside sources of capital (especially state and federal grants for the airport, entrance, and housing) to mitigate risk to taxpayers; and
3. How we prioritize and manage the timing of these projects, given construction fatigue.

Cost inflation stresses the economic viability of these projects. The estimate for the Armory doubled in one year to $40 million. The Maroon Creek trail exceeded its original budget by 20%. Since 2022, Phase 0 of the Lumberyard has tripled in cost from $14 million to $45 million. This early overrun undermines confidence in the original range of $425 million to $753 million. In that original estimate, Aspen expected to provide approximately $220 million in subsidies to the project. That number will escalate with the tripling of the Phase 0 budget.

If we want to see these projects completed, humility is our ally. On the airport, the County has a path to complete the modernization without burdening our taxpayers. Under the County plan, FAA funds will cover the vast majority of the runway rebuild. The Inflation Reduction Act will fund much of the terminal rebuild. All of these funding sources go away if we choose a plan that rejects FAA standards and relies entirely on hundreds of millions of debt supported exclusively by the FBO lease.

Our community’s history of project cost inflation is one of many fatal flaws in a plan to use the FBO as the sole funding source for the airport. As is, a plan to fund airport modernization off the FBO can only support ~25% of the total capex required. But the $400 million in airport capex is just an early estimate, like the Armory estimate in 2023 and the Lumberyard estimate in 2022. Each of those projects is on track to double early cost estimates. There is a reason that the County commissioners, Aspen City Council, Pitkin Democrats, Pitkin Republicans, and every mayor from Snowmass Village to Glenwood (excluding Torre) supports 1C and opposes 200 — we need help financing a 50-year capital project like an airport. None of these leaders or governments owes allegiance to private aviation; none of them seek more growth. They recognize the importance of a world-class commercial airport to this community and see the need and risk mitigation benefits of multiple financing streams for such a large investment.

We have ample evidence that we should build large buffers into the financing plans for these projects. Moreover, we will need creativity, humility, and rationality to complete them all, especially if we encounter an inevitable economic downturn. On the Lumberyard, the City may be wise to urgently pursue an outside developer and fixed cost contract, if a partner would agree. As citizens, we can help our local governments make hard choices on the must-have versus nice-to-have projects. Given competing priorities, will it really be worth spending $20 million to $30 million on an improved pedestrian connection from the Intercept Lot to the Rio Grande? Would we prefer to prioritize affordable housing or highway projects to reduce congestion over that improved connection?

Making practical choices and leveraging state and federal money, when available, will allow us to complete more of the project list. It would also be wise to preserve some financial firepower for future projects. I am optimistic that we have a portfolio of projects that could benefit our community’s livability, affordability, and accessibility for the next fifty years. To bring these projects to life responsibly, we will need a comprehensive portfolio management and financing strategy that operates with greater urgency and realism about the dollars and cents required. Money does not grow on spreadsheets.

Greg Goldfarb lives in Aspen.