- Courtesy LandCo
- This is how the new USOC offices should look in a few more months.
Insiders are consistent on one point: They want to see the $53 million USOC expansion completed, which would guarantee the Olympic presence in Colorado Springs for at least 25 more years. But there's little consensus on what's holding it back.
In spring 2008, the agreement looked solid. The USOC would stay and move its offices downtown. The city envisioned a huge economic impact. And developer Ray Marshall, whose LandCo Equity Partners played a big part, looked to be the Springs' new star.
But enough deadlines have been missed already that the initial agreement, signed last March 31, is being updated and amended to reflect changing dates and expectations. What follows is a mix of information from eight sources on all sides of the project, each asking not to be named.
The original problem
For a long time, everyone was blaming the bond market: It was frozen, or tight, or interest rates were too high. That's why the city was late to issue $27 million in bonds, money that would purchase most of the new USOC headquarters building at 27 S. Tejon St. from LandCo, which was, frankly, frustrated at carrying as much as $20 million in debt on a building that it never planned to keep.
Four months ago, about two weeks before the city's Nov. 14 contractual deadline to issue the bonds, assistant city manager Mike Anderson said he believed the market was loosening from when "it didn't exist."
But the city didn't meet that deadline. In fact, it still hasn't issued the bonds, even though Doug Houston, a private financial adviser hired by the city, believes they would likely be "acceptable to the market." Houston's waiting for the big OK, but the city isn't giving it.
Apparently, that's because the city fears LandCo might not be able to come through on its $16 million promise to expand the Olympic Training Center at Union Boulevard and Boulder Street. That, in turn, could cause the USOC to back out of the whole deal.
In the original contract, no one holds as many cards as the USOC. It's not on the hook for a dime until it signs a lease agreement (still not completed). And if deadlines to complete any part of the project aren't met (a foregone conclusion at this point), the USOC can walk, leaving either LandCo, the city, or both with an empty building, a lot of debt and no deal.
So the city and the USOC are wary of LandCo's ability to fund the OTC project, which explains why the city is reluctant to fork over millions. It doesn't want to be stuck with a losing hand, and, according to the contract, it doesn't have to issue the bonds until after all leases and subleases are signed.
"Everybody's got a different priority in this deal," noted one source.
LandCo finds itself in an awkward position. It's the only partner that has already assumed huge debt. To get the city and the USOC to take its respective plunges, LandCo must prove it can fund the rest of the project.
But where is the money?
Sources aren't providing a clear, consistent picture of how LandCo was supposed to come up with the $16 million for the OTC renovations.
Some of it, they agree, was to come from LandCo's metropolitan districts local entities with the ability to tax tenants or residents for privately owned assets like streets, curbs and gutters. Depending on whom you believe, that funding was overestimated, can't be produced, or will trickle in slowly.
Other funding may have been expected from donations, though the original contract made clear only that LandCo was ultimately responsible.
LandCo would generate money by selling the headquarters to the city (which was to have been done in November). But with its initial construction debt, along with other expenses and bills, it probably won't be left with enough to cover the OTC project.
It appears more likely that LandCo simply believed it could secure another loan for most of that $16 million, and use various means to slowly pay it off. (LandCo never expected to make money on the USOC project, instead viewing it as a way to build its reputation and help the community.)
Whatever LandCo's plan was, it hasn't worked yet. Observers now are keeping an eye on the larger community: By offering cash or guaranteed loans, other local players could help LandCo close the deal.
For all the troubles, though, there are signs of progress. Construction continues full-speed on the downtown building, and USOC and LandCo planners are meeting or communicating daily.