After controversial executive session, City Council endorses short sale of former city manager’s home | SteamboatToday.com

After controversial executive session, City Council endorses short sale of former city manager’s home

Scott Franz

Alan Lanning purchased his home in 2006 with the help of a $133,000 home loan from the city of Steamboat Springs.

— After very little public discussion and a controversial closed-door session, the Steamboat Springs City Council on Tuesday voted unanimously to endorse a short sale of former city manager Alan Lanning’s home, despite the fact that the transaction will not make the city whole on a $133,000 home loan it gave Lanning in 2006.

Councilman Scott Ford wanted the council to start the dialogue about the decision in public before convening a closed-door session to discuss negotiating strategies with the other lien holders on Lanning’s property.

Council members who supported entering executive session said they felt they would jeopardize taxpayer dollars if they discussed the negotiations in public. Some also committed to having more public dialogue about the decision following the session, but that discussion never materialized for most members.

Ford had a different view and felt the discussions didn’t amount to a real estate negotiation worthy of a closed-door session.

“I think this is one of those let’s do the public’s business in public,” Ford said before the council voted, 5-2, to enter the closed-door session.

Council President Walter Magill also voted against the executive session.

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Prior to the vote, Steamboat resident Scott Wedel urged the council to talk about the issue in public, saying it involved a public real estate contract.

“The only thing that going into executive session does is keep the public from hearing what is your view on the situation,” Wedel said.

Wedel’s prediction came true for most members of the council after it reconvened from the executive session and quickly voted unanimously to endorse the short sale after very little public discussion.

The council agreed to move a short sale forward with a condition that Lanning sign a new promissory note for any balance of the loan he hasn’t repaid to the city upon the closing of the sale.

The final approval of the short sale will be dependent on upcoming negotiations.

The vote was made after Magill said the council would not like to see the property enter foreclosure, because the city would be second in line to be repaid on its loan were that to occur.

Councilwoman Robin Crossan said she was “very sorry we even have to deal with this situation.”

No other council member offered an opinion on the short sale before the unanimous vote to approve.

Wedel addressed the council again following the decision.

“You’re going to hold a worthless promissory note so the city can claim it didn’t lose $50,000?,” Wedel said. “I mean, this is why people dislike government — because you guys sign an awful agreement in the first place, and now you’re basically a cover up, and you’re gonna hold a worthless piece of paper so you don’t have to admit how bad of a decision it was back then.”

Wedel also criticized the city for not including the copy of the original loan agreement with Lanning in Tuesday’s agenda packet.

Lanning was given the home loan upon being hired in 2006.

A provision in his employment contract read: "Given the difficulty in finding a suitable and affordable housing in the city, the city agrees to loan Mr. Lanning an amount equal to 20 percent of the purchase price of a residence in Steamboat Springs."

Lanning's contract required him to sign a promissory note when he closed on the house in the Silver Spur neighborhood for $665,000.

The contract stipulated that he repay the loan within six months of resigning or being terminated by the city.

That repayment period was first extended to May 31, 2009, after Lanning resigned, to allow his children to finish the next school year in Steamboat.

Previous city councils granted two more loan extensions to July 2016, due to the difficulty Lanning has had selling the home.

By the terms of the loan, if the value of the home appreciated since Lanning purchased it, the city was to have received 20 percent of the value increase on top of the loan amount.

Lanning anticipates that, after the short sale, he will have $80,000 available to repay both the city and a local bank, which, collectively, are owed $183,527.

The mortgage lender is owed $535,803.

The council’s disagreement over the propriety of the executive session to discuss the short sale comes during Sunshine Week, an annual celebration of access to public information.

To reach Scott Franz, call 970-871-4210, email scottfranz@SteamboatToday.com or follow him on Twitter @ScottFranz10