Amid Ex-Enron Chief’s Troubles, a Rocky Mountain High
Five days before former Enron Corp. Chairman Kenneth L. Lay took a verbal whipping from members of the Senate Commerce Committee, a 3,015-square-foot home he and his wife, Linda, bought in 1991 for $1.95 million sold for a soothing $10 million.
The Lays had planned to retire to the cozy retreat they called “the cottage.” One of their grandchildren was baptized there, and they’d celebrated a son’s wedding in the yard, which borders the Roaring Fork River, a scenic stream that meanders around the village of Aspen and through some of its most desirable residential areas. Now the Lay cottage, an architecturally undistinguished product of the 1950s, is someone else’s tear-down: Brad Bell, executive producer and head writer of a CBS soap opera, could replace the house with something bold and beautiful.
“In Minneapolis or Cincinnati, people would make some improvements on a house like that. But here, someone paid $10 million for the dirt,” said Bruce Carlson, an investor who has lived here for 32 years. “The buyer will probably scrape the house and build a pretty nice place for another $10 million.”
The Lays, who are often described as unpretentious, collected some rarefied Rocky Mountain dirt. Before the collapse of Enron and the specter of stratospheric legal bills mandated some quick de-accessioning, the couple owned three houses and a lot here, in addition to property in Houston, where they are based, and Galveston, Texas. Besides the cottage on Shady Lane, they are also selling a 4,537-square-foot house for which they paid $4.825 million in November 1999 (list price: $6.125 million) and a slightly larger house across the street, for which they paid $6.145 million in August 2000 (list price: $6.150 million). A 3-acre lot in a subdivision of $5-million homes that face the ski runs of Ajax Mountain sold for more than $2 million on Feb. 12, the day Lay, 59, was in Washington exercising his 5th Amendment right against self-incrimination.
Midwestern merchant princes, Wall Street power lords, Texas oil barons, Hollywood knights and Bel-Air trust fund princesses have been coming to Aspen, a once-booming silver mining town nestled 8,000 feet above sea level, since the 1950s. As luxury playgrounds go, Aspen has it all: spectacular natural beauty, athletic diversions, sophisticated restaurants and a range of intellectual pursuits and cultural activities, crowned by a summer music festival. What other American ski burg has Chanel, Gucci, Prada, Fendi, Bulgari, Louis Vuitton, Dior and Baccarat boutiques? The Alpine Bank automated teller machine at the foot of Aspen Mountain’s Silver Queen Gondola spits out crisp, new $100 bills so anyone getting $500 of pocket change won’t be burdened by a messy wad of twenties.
Among its other charms, Aspen, which has only 6,000 year-round residents, has become known as a smart place to invest in real estate. “I’ve been selling property in Aspen for 25 years,” said Carol Dopkin of Carol Dopkin Real Estate Inc. “People who have significant wealth are comfortable parking it here, because historically, they haven’t lost their principal and in the last few years there’s been dramatic appreciation. There have been modest downturns of 10 or 15%, but most of the time it just goes up. And that’s particularly true in the high end of the market.”
Here, that means prices that soar higher than big hair in Texas: The average home price is $3.6 million. In November, Priceline. com Inc. chief executive Richard S. Braddock paid $22 million for a house on Red Mountain, not far from where Leslie Wexner, billionaire founder of the Limited, just closed the deal on a $15-million lot. Wexner already had a mansion on the hill, but the additional property will ensure his privacy.
Such extravagance notwithstanding, even Aspen has its version of hard times. Shopkeepers complain that business is down, and realtors admit there are too few buyers for a swollen inventory of pricey homes. Anyone house shopping in the $5-million-to-$8-million neighborhood could choose from 45 alternatives to the Lay’s homes.
Full-time residents such as Carlson, an oral surgeon who began buying property in Aspen in the early ‘70s and retired in his 40s, aren’t worried. “You don’t get disaster sales in Aspen,” he said. Joshua Saslove of Joshua & Co., who represents all the Lay properties, reduced the prices of the pair of larger homes last week from $6.5 and $6.8 million, “to reflect current market conditions.” Until those homes sell, the Lays will be on the hook for monthly mortgage payments of $36,429 and $28,217. The annual property taxes on the two homes are $9,967 and $7,672.
Saslove received inquiries about all the Lay properties even before three of them were listed on Nov. 12, about three weeks before Enron filed for bankruptcy on Dec. 2. He was understandably pleased that the cottage, appraised at $4.13 million and never officially on the market, sold for more than twice that. “The true value of any property is what a ready, willing and able purchaser will pay,” he said. “The sale price reflects the desirability of the lot, which is large, close to town, right on the river, yet secluded.” On a wooded private lane, the single-story home, built in 1959, features sweeping views of the mountains and is surrounded by towering spruce trees.
“Aspen is a safe haven for money,” Carlson said. “To me, if someone has three houses and a lot here, they’re parking cash. That’s what you would do if you didn’t care if you were going to make money, but you didn’t want to lose it.”
A number of corporations--including Warner Bros.--keep homes in Aspen for business entertaining. Yet Kenneth and Linda Lay’s names, not Enron, are on the deeds of all their Aspen properties.
The two 4,500-square-foot houses on the market sit on a pretty cul-de-sac with views of Aspen Mountain, in a neighborhood called Oklahoma Flats. Once it was home to a mine dump and miners’ shacks; now, mega-chalets and grand cabins are gradually replacing more modest, older houses. An 8,000-square-foot house is under construction next to the Lays’ riverfront place. The man who sold them that house built himself an imposing stone starter castle down the street that’s just been completed.
According to neighbors, the Lays, who have five adult children and six grandchildren, preferred to stay in the cottage while their family members would vacation in the Oklahoma Flats homes. Linda Lay, 56, decorated the cottage herself and designed some of the landscaping.
In the living room of the larger Oklahoma Flats house, which has river frontage, a red, yellow and blue plastic child’s table and bench is the only element that clashes with the earth tones of the formal country decor. All the conventions of the Aspen look are included: high, vaulted ceilings, exposed lodgepole beams, a two-story rock fireplace in the living room, windows generous enough to do justice to the dramatic environment and a natural stone wall surrounding the property.
Across Spring Street, the other home isn’t on as plum a lot, but it reeks of all the good taste money can buy. By liberally appointing every room with exquisite materials, local developer-designer Kristeen Church created the feeling of a medieval manor in the English countryside. A wood-salvage company in Pennsylvania provided old barn siding that’s used inside and out, as well as weathered, mitered beams that could have graced an Amish farmhouse. For the floors, Church had random widths of antique wooden planks sanded and glazed with a natural finish that lets the warm brown, orange and golden tones of the wood shine through. The marble in the master suite has been crushed and tumbled to give it a more primitive finish, then molded. In the house’s 51/2 bathrooms, cabinets of distressed alder wood are stained a deep chestnut. The kitchen cabinets are of whitewashed bead board.
No element is ordinary: Stairway railings attached to the wall are carved branches, hand-hewn and waxed; reproductions of old, rustic hinges are dark metal; local farmer’s stone in the living room fireplace has been aged; burnished copper exterior pipes glimmer in the afternoon sun.
It was Church’s idea to sink wide logs into the plaster of one wall in a guest bedroom. But Courtney Herrold, the wife of Linda Lay’s son David, chose all the furnishings and fabrics. Like many Aspen locals who got to know members of the Lay family, Church speaks well of them. “Courtney is very talented and did a beautiful job with the house, which was not quite finished and unfurnished when the Lays bought it,” she says. “Linda does interior design as well, and is very artistic. They were kind and thoughtful, wonderful to be around, different from a lot of the Texas people who come here. If you saw them walking around town, they wouldn’t look fancy.”
Church honed her skills in the Aspen spec house market, which boomed throughout the ‘90s, in more ways than one. The bigger the houses got and the more luxurious their appointments (heated marble bathroom floors, gyms and massage rooms), the higher the prices climbed. Aspen had an airport where private jets could land and zoning that favored single-family homes, not high-rise condo buildings.
The supply of lots was limited, so speculators found they could make the greatest profit building homes for people who could afford to pay millions for a second, third or fourth residence. Saslove has been in Aspen real estate for 30 years. “I’m almost embarrassed to tell you that I’ve never sold a house to someone who needed a primary residence,” he said.
Aspen buyers aren’t known for their patience. Once they acquire a dream house in the mountains, they want to use it. Developers began providing instant gratification in the form of homes that were “toothbrush ready,” a term that gave new meaning to “fully furnished.” Wine was in the cave, silverware in the drawers, towels in the linen closets. Stories were told of deals signed in the afternoon and housewarming parties given that night. “Some people want to say, ‘I’m here. Where do I put my toothbrush, and I’m going skiing,’” Saslove said. The downside of the fully stocked vacation houses is many of them feel generic and impersonal, like very nice, expensively done suites at a Four Seasons Hotel. And the patina a little real living would give them never forms, because they’re empty from six to 11 months a year.
“A lot of people come here for six weeks in the summer and six weeks in the winter,” Carlson says. “It makes the neighborhoods of big houses less desirable because if you live in them you can feel like you’re in a ghost town. Your house will be the only one with lights on.”
The electricity might be in use if caretakers are in for the evening. Some absentee owners hire managers, others install workers in staff quarters. Employee housing is a problem that Aspen government has made an effort to address by requiring developers and homeowners to provide affordable space to workers. “The city has tried,” Carlson said, “but employee housing is kind of a joke. You’ll find a lot of Ivy League graduates from upper middle-class families spending a year in Aspen who find a way to qualify for it. The chambermaids and busboys have to live in Paonia, Basalt and Silt. On a winter day, that’s a two-hour drive.” During the Christmas holidays, the Lays sometimes took half a dozen rooms at a $300-per-night motel for their staff.
When they were in town, the couple made an effort to get involved with a number of local organizations. All but $4 million of the $52.5 million in the Lay Family Foundation in 2000 was in Enron stock, according to the Wall Street Journal, so it isn’t clear whether a $300,000 pledge they made to the Aspen Music Festival and School and a $110,000 payment, the second of a pledged $550,000 to the Aspen Center for Environmental Studies, will be made.
Even part-time residents can climb Aspen’s social ladder by supporting the right community groups. If the Lays can’t afford to continue being charitable, will their social standing suffer? If a man has been touched by scandal, does he find himself alone on a chairlift designed for four? Convicted insider traders and trophy wives with questionable histories have settled happily in Aspen.
“This is a very forgiving town,” said Saslove. Bill White, whose family owned the Bank of Aspen from the ‘60s to the ‘80s, agreed. “In Aspen,” he said, “the only sin is not having enough money to come to the party.”
