City Council candidate involved in city lawsuit

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A lawsuit filed against the city doesn’t seem to present a conflict of interest for an asset manager who is running for City Council, despite concerns to the contrary.

“If it was, I’d recuse myself,” said Kevin Butcher, who is running for a seat on City Council representing District 2, the northeast section of Colorado Springs.

Butcher is one of three partners in The London Group, a local consulting firm that manages property and acts as a land broker for clients. He is also the asset manager for 700 acres of undeveloped land near the airport on the Banning Lewis Ranch property.

When owners of the property defaulted on tax payments, El Paso County annexed the property and took possession. The county issued $6.7 million worth of bonds to fund infrastructure on the land. Now, bondholders are waiting for a return on their investment.

The courts assigned co-receivership of the land to C. Randall Lewis of Golden and David S. Cohen of Denver, who are attempting to sell the desolate domain. Receivers are persons appointed by a court administrator to take into custody the property or funds of others, pending litigation.

Intel has considered purchasing 312 of those acres for a second Colorado Springs site. This would be in addition to the 500,000-square-foot, 61-acre facility on Garden of the Gods Road it is currently renovating.

To sell the land, Lewis and Cohen hired Denver-based Fairfield and Woods P.C., who filed a lawsuit against the city.

The complaint seeks to separate the 700 acres from the remainder of the 24,000 acres and sever obligations to all property owners presently under the annexation agreement, said Caroline Fuller, an attorney for Fairfield and Woods. Then, potential buyers of the property would know how much of a financial burden they are responsible for. At this point, interested buyers cannot determine that.

The Banning Lewis annexation agreement in 1988 contemplated certain improvements for the entire ranch, including a parkway, an interchange at Highway 24 and other costs to handle impact and drainage studies. The original agreement outlines infrastructure obligations for the entire property. The lawsuit seeks to quantify a fair and proportionate share of those obligations for the smaller parcel, said Butcher, because the owners of the 700 acres can’t take on the financial responsibility of building out all 24,000 acres.

The goal of the lawsuit is to release the 700 acres from the agreement that binds the rest of the property. A number of options for resolution were included in the lawsuit, including selling the 700 acres in spite of the annexation agreement. Another resolution would acknowledge the nearly $7 million spent on infrastructure, such as roads and drainage, on the 24,000 acres of land and grant a land separation for the 700 acres.

“We continue to hope we will work out a resolution that makes sense with the city of Colorado Springs,” said Fuller.

If a resolution is found, the land could be sold and bonds could be paid. The lawsuit, filed in the 4th Judicial District Court, states that $3.4 million is owed in outstanding bonds, and interest is accruing at a rate of about $1,000 per day, said Butcher. The court granted an extension for a decision on the lawsuit, which should be rendered by March 23.

Lewis and Cohen hired Butcher’s company to manage the receivership. The London Group possesses the real estate knowledge of the community and has local contacts, Butcher said. Also, representatives from his company can attend local meetings concerning a resolution, de-annexation and the sale of the land. His company can set projections for land value and work out a fair market value of the land.

Butcher stresses, however, that although his company was hired by the same receivership that hired the law firm to sue the city in the name of the bondholders, he has no connection to the lawsuit process and, therefore, no conflict of interest as he seeks his City Council seat.