Residents paying high price for city leaders to save face

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In common with most residents of Colorado Springs, we’re glad that the U.S. Olympic Committee will be staying in town. We’re pleased that they’ll be occupying the building at 27 S. Tejon within a few months, and bringing yet more vitality and activity to a renascent downtown.

But we continue to be dismayed by the apparent incompetence of city officials during the last two years.

Once informed during 2007 that the USOC might leave Colorado Springs unless the city could create an acceptable retention package, city officials swiftly launched a secret search for a developer to partner with the city. When this newspaper learned of the effort, Assistant City Manager Mike Anderson demanded that we not publicize it, saying that to do so would alert other cities that the USOC was in play, and thereby put the city in jeopardy.

Believing then, as we do now, that the public interest is best served by open and honest government, we rejected Anderson’s plea.

The process continued.

The city maintained its policy of secrecy. On March 31 of last year, the city, the USOC and LandCo Equity Partners unveiled the original “economic development agreement” between the parties, which was greeted with enthusiasm from much of the community.

The agreement, consisting of many pages of impenetrable legalese, had been hammered out by representatives of the city, LandCo and the USOC during closed negotiating sessions. The public had neither knowledge of nor input into the process.

Months later, the agreement fell apart.

As an e-mail from Mike Anderson to LandCo CEO Ray Marshall on Nov. 25 of last year stated, “Ray: the city’s underwriting team stated yesterday that they will not be able to market the COPs (unless) LandCo raises the $16 million for the OTC improvements. In other words, we are all screwed unless the $16 million problem is resolved!”

As events unfolded, it was clear that the city’s negotiating team had been overmatched.

The agreement stated that the city would “issue certificates of participation (COPs) in the amount of $20,786,000 …”

Lawyers representing the city, not anticipating turmoil in the municipal bond market, apparently failed to include a so-called force majeure clause, which would have protected their client against such eventualities.

As both City Councilman Randy Purvis and City Attorney Pat Kelly made clear, once LandCo filed a lawsuit claiming damages as a consequence of the city’s non-performance, the city’s legal position was tenuous at best. Faced with a lawsuit that might have dragged on for years, the city had little choice but to put the best face possible upon things, and pay up.

Now that council has approved yet another complex legal document which, we are told, involved “thousands of hours of city staff time” (not to mention “12 USOC lawyers”), we hope that the city’s interests are adequately protected.

Questions remain.

Will the deal’s basic structure, which entails the sale/leaseback of the Police Operations Center and the diversion of the sale proceeds to a private nonprofit, be challenged in court? And will such a challenge derail the deal, even temporarily?

Will “community leaders” be able to raise the required $4.5 million to complete the deal, including $1.5 million within 90 days?

And finally, are there, as the much-maligned Donald Rumsfeld used to say, any unknown unknowns that we don’t know about that might upset our newly constructed applecart?

We certainly hope not — but, given past history, we’ll be pleasantly surprised if the whole process unfolds as planned.