City pays, USOC stays

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As City Councilman Bernie Herpin predicted several weeks ago, the new U.S. Olympic Committee deal is very much like the old USOC deal, except that the city is now the only paymaster.

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.”

8 Responses to City pays, USOC stays

  1. This is absutlely crazy that we as a city are going to spend $50 million dollars to keep the USOC here in town. We loose high paying, profit, tax paying, jobs at places like HP, Intel, Verizon, Aligent, and many others. Would the money be better spend keeping large employers that pay larger salaries here in town. How about the city commissioners take a drive up Garden of The Gods Rd. Do you remember when that was a viable area with more jobs and money? Not anymore because of poor ideas of keeping a non-profit happy which they will never be. Lets start thinking with our heads and wallets.

    Jay
    July 31, 2009 at 2:34 pm

  2. “City comissioners?” Jay, you’ve been playing too much rugby without a helmet!

    Dick Burns
    July 31, 2009 at 3:30 pm

  3. The USOC is one of our crown jewels and very much a part of our brand and our sports and fitness image. In addition to all that the USOC brings to our community, many of the 50 national sports headquarters in our town are here, paying taxes, holding sporting events that drawing tax paying visitors etc. because of the USOC presence. This is a win for our community and we should be proud as American’s to be the host of our Nation’s Olympic Headquarters, training facitity and olympic athletes. In the end, we get far more than we pay in real dollars and in the positive marketing of our community. Bravo City Council for getting the deal done!

    Mike
    July 31, 2009 at 3:42 pm

  4. I suspect if we took an honest national poll about American Citizens think of as being “Colorado Springs,”
    the order of association in the Public’s minds would look about like this:

    1. Pikes Peak
    2. Air Force Academy
    3. NORAD
    4. Garden of the Gods
    5. Focus on the Family.
    6. Rocky Mountains

    If we took a poll to relate the Olympic Committee with a City, Beijing would get 3 times the votes Colorado Springs would get.

    fact finder
    July 31, 2009 at 10:07 pm

  5. Here’s my understanding of the events around the USOC deal to date. First the USOC threatens to leave Colorado Springs based on offers (wink, wink) from other cities that they don’t reveal. The city swings into action and comes up with a proposal (via the traditional smoke filled room) that totals $53 million. Most from the city using COPS that require no pesky public assent and part, $16 million, from Landco. The Gazette and all but one council member join the cheerleading crowd at the one mandatory public meeting. Some of us, however, smelled a rat…but I digress. The renovation begins but the USOC doesn’t see the $16M from Landco which, if it ever existed in the first place, has now disappeared. They demand that it be deposited into their account with no restrictions. When this doesn’t happen they refuse to sign a lease which means the city can’t issue the COPS. Landco, which now owes GE Johnson $4 million for work done to date, sues the city and the USOC in federal court. The USOC quickly settles their part and now with the new plan we know how that was done. It would appear under the new deal Landco will still get the bottom 2 floors of the building but the $16 million will now come from the city via more COPS.

    The end result is the USOC gets everything for nothing, Landco gets what they wanted for nothing, the mayor’s political career is trashed, and the citizens pay for it all having no say in the matter at all. My input to the public review of the new proposal is to walk away from the whole deal. The USOC had no viable offers in the first place and even less now in this economy so there not going anywhere. Landco and the bank in Denver should own the building downtown and this whole mess should be a “learning moment” for the city.

    Tim O'Donnell
    August 1, 2009 at 7:20 am

  6. There should be a good new city motto in here somewhere. Something like: “Colorado Springs, the city so great the USOC was paid to call it home.” Give me some help here, readers. There should be a more catchy, creative version of this. Perhaps after my second cup of coffee.

    Dave Gardner
    Founder, SaveTheSprings (from ourselves!)
    http://www.savethesprings.org

    Dave Gardner
    August 1, 2009 at 8:38 am

  7. A penny for my thoughts, it will be cheaper in the long run:

    Realistically Focus on the Family is probably number one on Fact Finder’s list (that is always the first thing I hear about during my travels), followed by the Academy, followed by any of our other incredible attractions listed in a variety of orders depending on what day of the week it is, whether or not it is snowing, and if mayor is talking out of both sides of his mouth or just one.

    Mike- Only a quarter of the 46 (not 50) Governing Bodies are actually located here, and the only reason they are here is because of the USOTC, oh and they are all non-profits so no tax revenue there.

    The National Governing Bodies are stand alone entities that find themselves at odds with USOC a lot of the time and have their own board that makes the real decisions. The USOC is the figure head of the Olympic movement. Since all of the NGB’s are financially independent there is no reason they have to stay here either. They stay because they want to not because the city has formulated elaborate deals to entice them into sticking around. It is a good thing they stick around too because the real money is coming from all of those aspiring athletes and their families who spend a boat load of money to come out for two week camps and bring their families along to enjoy everything else we have to offer. I’ll bet Anaheim loves the extra revenue coming in from all those teenage girls going to volleyball camp and using their down time to go on sunny southern California shopping sprees. The kid brother is all for it to because he gets to take his picture with Micky and Minnie while sis chases her dream. What about Phoenix? All those future Dream Teamers are heading down there. I pity them for not having the opportunity to taste on of those fine doughnuts on the summit of Pike’s Peak, or the cinnamon ice cream in Old Colorado City, or a sunset looking out over Garden of the Gods. I wonder if our leaders see it the same way?

    The Olympic Training Center is what people want to come and see, and they do, and they spend money while they are in our city, no doubt about that. I wonder if people will make special trips downtown and pump our parking meters full of quarters (thank you council for causing an overflow of dimes and nickels in my change jar) to see an office building full of talking heads and bunch of whinny bureaucrats. Maybe they will snap a picture of Ray Marshall through his first floor office window instead of a group shot sitting in the Olympic rings or a Christmas card photo with a life sized cut out of Michael Phelps. What? They might actually see some of these olympic heros in real life, training here in our city?! You have got to be kidding! This is too good to be true.

    Keep in mind that while the USOTC is run by the USOC, the USOC is a bunch of talking heads sitting in offices pushing paper and screwing up 40 year old sponsorships (that kind of work can be done from anywhere and probably should be done where the major sponsors are located i.e. New York, Chicago, LA, they could even out source it to India if they wanted to save a few million on salaries).

    So here is my suggestion: Put 16 Million into renovations and upgrades at the OTC, they need it. Pay Jim Johnson for his work, especially since he is the only one that has held up his part of the deal. Let the USOC pay their own way. The governing bodies have been doing it for years. Take the remainder of the money and use it for the common good: schools, roads, parks, something that everyone can benefit from; better yet, let us keep our money since we didn’t get a say on any of this in the first place. Otherwise let everyone put the rings on our business cards too, after all we are the ones that are paying for all of this right?

    Or how about this: Take some of that money and make our city government a strong mayor model and actually pay them to do their job adequately. …..(Now that is just crazy talk why would we ever want competent and focused people running our city).

    Take it for what its worth, not much I am afraid, just one more perspective from a long time resident who loves his city. Wonder what Lionel is up to right now? An intense game of mine sweeper? Solitaire perhaps?

    What a joke.

    JDub Jr.
    August 3, 2009 at 3:15 pm

  8. Has anyone actually calculated the economic benefit of keeping the USOC here vs. not? I highly doubt it is worth $50M.

    Matt
    August 4, 2009 at 11:38 am