By Leslie Jorgensen
THE COLORADO STATESMAN
COLORADO SPRINGS — After two years of wrangling, Colorado Springs officials gloated when the city finally landed a new agreement to keep the United States Olympic Committee headquarters here for 30 years. But less than a month later, the deal is being derailed by a lawsuit that challenges its legality.
The new agreement, like the city’s original deal to secure the USOC, is being stymied by a problem with its funding mechanism — the sale of Certificates of Participation.
Last year, the city couldn’t sell the COPs because the financial market had melted down. Now the sale is being blocked by a pending lawsuit.
Attorney Lindsay Fischer, as a concerned citizen, filed a lawsuit against the city challenging the legality of its plan to finance the bulk of the USOC deal by selling $38 million in Certificates of Participation. Unlike bonds, the COP funding mechanism doesn’t require voter approval.
“If they had any brains, they would’ve put this to a vote of the people … the city would have been doing something proactive,” said Fischer.
The city had promised to raise $38 million within 45 days — or the end of this month — to finish construction of the USOC headquarters and settle a lawsuit filed by LandCo Equity Partners, the
developer contracted for the original deal, which soured.
If the city misses the deadline, the USOC could withdraw from deal, as could LandCo, which could then renew the lawsuit against the city it had filed in the U.S. District Court in Denver.
“The city is working to extend the deadline with both parties — the USOC and LandCo,” said John Leavitt, Colorado Springs senior communication specialist.
Fischer filed the lawsuit on Aug. 17.
Although the city fought to dismiss the case, Fourth Judicial District Court Judge Scott Sells ruled in favor of Fischer on Sept. 2. A trial date will be set in the near future.
“I’m very happy about the judge’s ruling,” said Fischer. “I think the city is wrong, and we’ll prevail.”
Fischer argued that the USOC deal should be funded by bonds — not COPs — because the city is using the Colorado Springs Police Operations Center and Fire Station 8 as collateral.
Bonds would be subject to voter approval — but the City Council hasn’t discussed putting the question to voters on the November ballot. If COPs are taken off the table, the City Council would have to renegotiate the deal and extend the tight money-raising deadlines.
The $38 million was part of a $43.5 million incentive package City Council approved Aug. 11 by an 8-1 vote.
During the hearing before Judge Sells, Fischer said the city failed to produce adequate examples of COPs being used to fund nonprofit corporations like the USOC. COPs are typically sold by government entities in order to fund government projects.
“It was bizarre,” said Fischer of the city’s legal arguments.
“The irony of the city’s plan was the decision to essentially mortgage Fire Station 8, which was funded by voter approval of a sales tax increase in 2002 for safety improvements,” he said.
A status conference was scheduled this week with City Attorney Pat Kelly and Fischer, primarily for purposes of discovery and to discuss any outstanding issues.
Fischer is either revered or reviled by veterans of previous USOC battles, who have watched various USOC deals die and be revived.
Fans of the USOC resent that he has hurled yet another obstacle in the path of the city’s agreement. Opponents of the deal are lauding Fischer for his courage — and proposing him as the next Colorado Spring mayor.
“Despite what some people say, we’re not spoilers,” said Fischer. “We want this to be done on a proper basis.”