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Ripple effect



Homes with acreage and perfect views of Pikes Peak look like they'd rent for more than $300 a month. But that's what seven rural renters pay, as they have for eight or nine years and likely will for years to come.

The low rents stem from Colorado Springs Utilities' decision almost a decade ago to lavish $6.1 million on the owners of 400 acres near the site of the proposed Jimmy Camp Creek Reservoir in northeast Colorado Springs. Property owners were paid up to four times what the El Paso County assessor said their homes were worth. Then they were allowed to rent those homes, with assurance of first shot at buying them back if the city didn't need them.

Nine years later, most renters are still there, and the chance of a reservoir being built in this area for the Southern Delivery System pipeline is "minimal," says SDS deputy program director Keith Riley. "We're completely focused on Upper Williams Creek."

Generous offers

In 2002, drought gripped the region and development boomed. City Council, which also comprises the Utilities Board, put SDS on a fast track. And Utilities responded, trying to secure the Jimmy Camp Creek site by offering huge settlements to 14 landowners.

In all, Utilities paid $4.4 million for properties and another $1.7 million for relocations. In one case, in which one house was appraised at $276,700, Utilities paid $720,800 to buy the house and pay moving fees. That couple still lives there today.

While many residents didn't return phone calls or e-mails seeking comment, Joan Bryant says she and her husband, Clyde, moved to Black Forest six months after accepting $320,000 for their property, which included $65,000 in moving expenses.

"They did make certain compensations for the fact you had to move," Bryant says. "I thought it was pretty fair and square."

The situation with Donald Watkins isn't so simple. Spokeswoman Janet Rummel says Utilities records show Watkins was paid $785,000 for his home and 25 acres and $140,000 for another 10 acres.

Watkins, meanwhile, has told the Indy only about the $140,000 deal. He also claims that Utilities "misrepresented the situation" a decade ago.

"Everybody here was under the impression [Utilities] could take property under eminent domain," he says, "but they couldn't because they didn't have a registered public project going on." (SDS didn't get its permit from the Bureau of Reclamation until 2009.)

To this, Rummel notes that one Utilities worker who handled the deals has died, and the other has retired. "It's hard for us to know how it was misrepresented if the people involved in this transaction aren't around."

One thing that is clear: After buying its parcels, Utilities ran into problems. In 2007, the Bureau of Reclamation was informed that Jimmy Camp Creek harbors important fossils and archeological artifacts dating back some 70 million years. In addition, says Rummel, federal agencies determined that waterfowl in the area were in the flight path of Colorado Springs airport; a reservoir would attract even more birds.

Moreover, Utilities still needed 1,500 more acres at Jimmy Camp. That land was owned by Banning Lewis Ranch Co., and a Council member in mid-2007 said the company was demanding up to $150,000 per acre.

No defense

Without such problems, Upper Williams Creek has been tapped by federal regulators as the "least environmentally damaging practicable alternative," Riley says. But Utilities doesn't own any of the 2,000 acres, and one family that owns about 700 of those acres wants to build its own reservoir there ("Choppy waters," News, May 2).

Riley says if things go sour at Upper Williams Creek, the city could fall back on Jimmy Camp. But that would bring another federal permitting process, plus excavation and collection of artifacts. In addition, those outstanding 1,500 acres would have to be purchased from a new owner: Ultra Resources, a Houston-based oil drilling company. In an e-mail, Ultra vice president for exploration Doug Selvius tells the Indy that "it's just too early for us to make any decisions or commitments with that acreage.

"I will add, though, that prospectivity for oil wouldn't really be relevant since we'd likely be able to drill horizontally under the Jimmy Camp Creek area without disturbing the surface."

While signs in the area say "private homesteads," they're now publicly owned, meaning nobody gets tax revenue from them. The city, county, Falcon School District 49 and others have foregone roughly $140,000 in property tax money in the past nine years, according to a calculation based on mill levies. Meanwhile, Rummel says, Utilities has collected about $247,700 in rent and, since 2010, has spent about $10,000 on repairs and maintenance.

Other than the Bryants, only one renter has moved; the new tenant is paying "market rate" of $1,395 a month, Rummel says.

Rummel admits the transactions weren't Utilities' finest.

"I just don't think we can defend what occurred back then," she says. "We have learned from what is viewed as possibly a mistake, and we're not conducting business that way today." In 2006, Council ordered an overhaul of the city's land acquisition policies, all but abolishing relocation payments.

She won't disclose if renters have fallen behind on rent, saying that's confidential because the renters are considered "customers," even though they don't get utilities from the city.

And as for whether Utilities could ever sell the Jimmy Camp properties, that's an open question. The leases automatically renew "until such time as the property is needed by Landlord."

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