Colorado Springs nails USOC deal amid tumult
By Leslie Jorgensen
COLORADO SPRINGS — The Colorado Springs City Council has approved a new economic development agreement to entice the U.S. Olympic Committee to keep its headquarters and training facility in the city until 2039.
The deal, however, hinges on whether the city can meet quick deadlines to raise capital to fund the projects.
“I’m certainly excited about the agreement and that we can move forward in the new partnership with the U.S. Olympic Committee for the next 30 years — and, hopefully, beyond,” said Colorado Springs Mayor Lionel Rivera in announcing the deal.
The Council voted 8-1 on Tuesday, Aug. 11, to approve both the economic development agreement and settlement of a lawsuit filed against the city by developer Ray Marshall and LandCo Equity Partners.
In the original agreement in March 2008, Marshall and LandCo Equity Partners were awarded a $53 million contract for construction of the USOC headquarters, two building renovation projects and upgrades to the U.S. Olympic Training Center. When deadlines were missed earlier this year, USOC backed out of the deal and LandCo sued the city and the USOC. The USOC was later dropped from the lawsuit.
The new agreement, which was approved by the USOC last month, calls for tight deadlines to raise capital and a settlement with Marshall and LandCo.
In order to meet the terms of the agreement, Colorado Springs must oversee:
• Issuance of $31 million in certificates of participation (COPs) within 45 days;
• Raising of $1.5 million within three months and $3 million within 25 months, all from private donations;
• Completion of the core and shell of the USOC headquarters at 27 S. Tejon St. by Sept. 30;
• Completion of the building’s interior finish by March 31, 2010;
• Raising of $16 million for upgrades to the USOC Training Center;
• Payment of $18.8 million to settle the lawsuit filed by LandCo Equity Partners.
“I look at this as an investment in our future,” said Rivera, who conceded that “there is a risk in fundraising — there is no question about that.”
“There’s going to be a group of people working very diligently over the next 90 days to ensure we have $1.5 million in the bank by the deadline,” said the mayor, who predicted that the additional $3 million will be easier to raise.
Vice Mayor Larry Small said the fact that the city will have no control over the $4.5 million private fundraising effort “gives me heartburn.”
“I feel very hopeful — I have quit using the word confident lately — that all of this is going to work out okay,” said Small.
“The city isn’t the one that’s going to raise this money — it’s the community,” stressed Councilman Jerry Heimlicher.
“It’s going to give us the chance for school kids to put their pennies and nickels into jars (and reach) all the way up to major benefactors of the city,” said Heimlicher.
Councilman Darryl Glenn cast the lone votes against the USOC agreement and lawsuit settlement, citing financial risks that could result in the city having to pay several million dollars from its general fund. The city is grappling with a projected $23 million budget deficit.
If the community fundraising falls short or misses the deadlines, Glenn predicts the city would have to make up the difference because it’s so heavily invested in the USOC deal.
“If there’s a shortfall, I can guarantee you that we’ll be looking at the general fund to make up the difference,” declared Glenn.
Another sticking point for Glenn and others is the decision to sell the Colorado Springs Police Command Center and possibly a fire station to the Public Facilities Authority (PFA), which would use the assets as collateral to sell certificates of participation to raise $31 million. The city will continue to occupy the facilities, but would pay rent to the PFA.
“That puts a multimillion-dollar city asset at risk…. I’m not very comfortable with that,” said Small.
The certificates of participation are like bonds that don’t require voter approval. Yet, taxpayers will ultimately foot the bill. The loan repayments — starting at $1.7 million — will escalate 2 percent annually over a period of 30 years.
Glenn said that the question of providing $31 million in funding for the USOC deal should have been put on the November ballot for voters to decide.
“I would campaign for it,” said Glenn, adding that he knows that his City Council colleagues and the USOC don’t want to wait that long.
Lindsay Fischer, a Colorado Springs attorney, also wanted the funding issue decided by the voters because government buildings are being used to sell the certificates of participation, and the money is being diverted for the USOC, a private, nonprofit entity.
“There’s not a single (certificates of participation) case where it’s used for a non-governmental purpose,” said Fischer. “Their justification is economic development, but they’re skirting the law, and they’re violating it.”
“This is going too fast,” declared Glenn, reeling off more objections including his concerns that the USOC hasn’t invested money in the project and that no other city has emerged to compete for the USOC headquarters.
“We’re bidding against ourselves!” said Glenn, an attorney and candidate for the El Paso County Commission.
He also raised concerns about the settlement with Marshall and LandCo.
The city’s Public Facilities Authority, a nonprofit entity, will pay $18.8 million to LandCo to purchase the top five floors of the building at 27 S. Tejon St. The PFA will lease the floors to the city, which will sublet them to the USOC for $1 per year.
Small said Marshall and LandCo, which originally owned the building, would retain the lower two floors and be responsible for paying the building construction loan.
El Paso and Teller County District Attorney Dan May is continuing his investigation of LandCo. Glenn said he’s concerned that the settlement has no provision regarding compensatory damages should the DA find criminal wrongdoing on LandCo’s part.
“As an attorney, I’d advise my client not to proceed without that protective provision,” said Glenn.
The city might have a few knights in shining armor to rescue their funding dilemma for the USOC training center. The city needs to provide $16 million to the USOC, which will choose a contractor and oversee the project.
Stonewall Springs Quarry Partners, which includes developers Mark and Jim Morley, have offered to sell property east of Pueblo to the Colorado Springs Utilities for its Southern Delivery System to pipe water from the Pueblo Reservoir. The partners are asking $38 million for the land — and offering to give $12 million to the city for the USOC training center upgrades.
Colorado Springs Utilities Chief Executive Office Jerry Forte said that he met with the Morley brothers to discuss the offer and is working on a real estate analysis.
“We have been in negotiations since last week,” said Forte. “We’re doing everything we can to expedite the analysis through independent appraisals and other types of instruments.”
Most council members voiced regret that the process of developing agreements to retain the USOC had not been more open to the public. Although the council held a meeting for public comment, several members said that too few opponents had emerged, and, therefore, the city’s agreement with the USOC had gone virtually unchallenged.
“I’m very distressed by the attitudes of the mayor, city attorney, deputy city manager and some City Council members,” said Fischer, one of the citizens who questioned the USOC deal at the public meeting.
Rivera, City Attorney Pat Kelly and Deputy City Manager Mike Anderson were the key negotiators in the deal with the USOC.
“They view it as the second coming of Christ,” lamented Fischer.