The cost of the deal: more than $50 million.
If agreed to by City Council, the city, acting through a so-called Public Facilities Authority, will buy the top five floors of the building at 27 S. Tejon from LandCo Equity Partners for $18.8 million, and spend an additional $2.7 million on interior finish. The building will be leased to the USOC for a symbolic annual payment of $1. In addition, the city will reserve 240 parking places for the USOC’s use in the city parking structure at the intersection of Colorado and Nevada.
The ground floor and lower level of the building will be retained by LandCo, at least for the present. It’s not clear whether LandCo will lease it to an Olympic-related entity, or simply make it available to any prospective lessee.
If it chooses the latter, there are some businesses that won’t qualify, regardless of financial soundness.
The new economic development agreement between the city and the USOC says that, “The city shall obtain agreement of any owner of the first floor or lower basement of the building through the Condominium Declaration or otherwise that the first floor and lower basement space shall not be used by such owner or any assignee for a business primarily involving the sale of nutritional supplements or similar products or for a business that primarily sells goods that are sexual in nature and such space shall be offered for use to USOC sponsors as a right of first offer on commercially reasonable terms.”
The city also is on the hook for $16 million in improvements to the campus of the Olympic Training Center, which LandCo had originally agreed to finance. The agreement calls for the city to provide $13 million for funding the improvements within 90 days, and the remainder within 25 months.
The El Pomar Foundation has agreed to provide $1.5 million of the total, and the state’s economic development unit will provide $500,000. Although the city is responsible for the remainder, city leaders plan to provide only $9.5 million in public funds, and raise $4.5 million from private donations.
Such donors will be recognized, as long as they ante up at least $30,000. The new EDA says that, “After the occurrence of the phase 1 funding date, the USOC agrees to construct, in its reasonable discretion, a permanent recognition display within a publicly visible portion of the Olympic Training Center to show appreciation for all individuals and entities donating $30,000 or more to fund the OTC improvements …”
In addition, the city also will complete the renovation of the former city gas department building at 30 Cimino Drive, and lease it to the USOC for a dollar a year. The USOC will use the building to house national governing bodies.
The USOC will agree to lease both buildings for a period of 30 years, and to maintain its headquarters in Colorado Springs during that period. If the USOC decides to leave town and break the leases, it will be responsible for repaying much of the city’s investment in the buildings, depending upon the length of their tenancy.
The original deal had a purported annual price tag of $1.7 million, the estimated cost of debt service on the certificates of participation that the city, through the PFA, will issue to pay for the acquisition and/or renovations of the two buildings.
It is now estimated that the city will issue as much as $35 million in COPs, up substantially from earlier estimates. Annual debt service will depend upon prevailing interest rates, but it will likely exceed $2 million annually. There will, in addition, be other annual costs, as the PFA, in its capacity as landlord, will be responsible for maintenance, repairs and miscellaneous expenses associated with both buildings.
According to the city’s Web site, council has scheduled a special meeting at 4 p.m. today at city hall “… to publicly discuss the proposed Economic Development Agreement and proposed LandCo settlement. At council’s formal meeting on Aug. 11, public comment will be heard on this item, and then council will vote on the agreements in their public session.”