Grand hotel: Mining Exchange Building’s next incarnation?

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Perry Sanders has purchased three office buildings on the southwest corner of Pikes Peak and Nevada avenues and has begun work to convert them into a luxury hotel.

The historic structures, the Mining Exchange Building, the Independence Building and the Freeman Telegraph Building, were built between 1899 and 1902.

The upper floors of all three have been gutted and interior walls are under construction.
Sanders was a member of a previous investment group that had planned to convert the buildings to retail and residential uses.

To help finance the project, Sanders said he plans to ask the city to “allow the Mining Exchange Hotel Complex to keep 75 percent of new sales and lodging tax revenue that will be generated if this becomes a hotel complex, until $4 million is generated to the hotel.”

Sanders said that he expects the hotel and its associated enterprises will produce $12 million in annual taxable revenue.

“At that rate,” he said, “the $4 million would be achieved in less than 15 years, and the city would net $1.5 million in sales tax revenue that it would otherwise not receive.”

Total project costs, Sanders said, will be between $16 million and $18 million.

Sanders’ plans for the hotel, spa, and entertainment complex include a bar/restaurant in the main lobby (located in the old Adams Bank), a high-end restaurant on the main level of the Mining Exchange Building, and a basement comedy club.

A report by HVS hotel consultants says the hotel could directly employ 100 people.

However, it’s not clear whether the project can go forward without city approval of tax-increment financing.
During the past two years, plans for the construction of two hotels in downtown Colorado Springs have failed to materialize.

A group headed by Ray O’Sullivan assembled properties on the southeast corner of Kiowa Street and Nevada Avenue and announced that a 24-story hotel/condominium project would soon be launched.

The project was eventually abandoned, and the properties are in foreclosure.

And Missouri hotelier John Q. Hammons announced plans to build an Embassy Suites near America the Beautiful Park.

While nothing has materialized downtown, Hammons has completed construction of the Renaissance Hotel in northern Colorado Springs, which features 300 rooms and 41 suites.

Les Gruen heads Urban Strategies, a downtown-based consulting firm which provides development and advisory services to owners of real estate.

“A hotel is perhaps a more viable plan than apartments, but it all depends on execution,” he said. “If rates are competitive with the Antlers (Hilton), they could do very well. But if rack rates are two-to-three times what the Antlers charges, then that’s another challenge. It’s an interesting concept.”

7 Responses to Grand hotel: Mining Exchange Building’s next incarnation?

  1. Hey John! Guess what?………

    Your story is interesting for a variety of reasons, not the least of which is :

    -The top three floors of the Mining building are officially owned by Mining Exchange Luxury Residences, LLC. Perry Sanders is the registered agent.

    -The principal who created Mining Exchange Luxury Residences, LLC., is none other than…….are you ready?…….are you sure?…….Ray Marshall.

    WHoa Bubba! He’s suing the city and now wants to avoid the Hotel tax for another new development that he can’t pay for? Huh?

    Maybe its just coincidence……….and maybe it’s really the Easter Bunny that wants to build the hotel……

    There has GOT to be more to the story……and you’re just the guy that can find out…..

    John Whitten
    June 9, 2009 at 11:49 am

  2. Gosh if you let them get away with holding on to the Hotel sales tax ‘How will Experience Colorado Springs be able to give $100k+ to golf tournaments @ The Broadmoor?’

    RJF
    June 9, 2009 at 12:47 pm

  3. Sounds like a breath of fresh air to downtown…that means it will be stepped on and thrown in the trash.
    Too bad.

    Jason H
    June 9, 2009 at 1:10 pm

  4. … great idea !
    ……. fabulous location !
    ….. public financing !
    …….. and they STILL don’t have any parking !

    Like it'll matter .....
    June 9, 2009 at 2:05 pm

  5. Sanders says, in a document that he’s given to elected officials and others, that he has owned “100 percent of the equity” in the three buildings since May 15th. Is someone else-e.g., Ray Marshall pulling the strings? Were these sham transactions? The public record is somewhat murky. But after the USOC debacle, I’d guess that Marshall is not the most popular guy in City Hall. Any deal to which he might be linked would be regarded with great suspicion. Putting this project together will take money-lots of it. I’d guess that Marshall has his hands full at the moment, and the city isn’t exactly flush. The $ that would flow into the project from tax-increment financing are significant, but a minor portion of the total cost-so we’ll see.

    John Hazlehurst
    June 9, 2009 at 3:55 pm

  6. John,
    This article and its facts as outlined is so unrealistic on so many fronts, It make one wonder if Sanders has any real business acumen.
    Sanders has it all wrong, other hotel developments have failed because there is no new demand for hotel rooms, 7 year occupancy history in CS tiers around 62%. The cost of building a hotel room today is in the range of $150-180,000 per key and that would translate to an 85-95 room hotel. No room rate premium is going to make that limited number of rooms pencil out an ROI, and for the final fun fact to this business model, abatement of the lodging tax? I would guess that the other owner/operators of the remaining 3,000 rooms in the greater Colorado Springs hotels would have a dim view of city government attempting to pass that by them. It must have been a slow news day in the annals of business journalism to have you feature this story.

    Vee
    June 9, 2009 at 7:08 pm

  7. Those are good points. Nevertheless, it seems to me that a downtown boutique hotel, which would include upper-end entertainment venues, would find a ready market for its product. Do the numbers make sense? That’s not my bailiwick. I can only report what I see, what the principle in the projected deal says, and what happens as things go forward. Maybe he’s being absurdly optimistic, or maybe his numbers are better than our guesses, or maybe he’s the guy who won the $232 million on Powerball. Who knows? Either it’ll go forward or it won’t. Those buildings are vacant, gutted, and derelict-hopefully, something positive will happen.

    John Hazlehurst
    June 10, 2009 at 2:41 pm