Mining Exchange hotel developer ready to transform downtown

This photo composite shows what the Mining Exchange Hotel might look like after renovation.

This photo composite shows what the Mining Exchange Hotel might look like after renovation.

Only remaining hurdle is sales tax-sharing agreement with city

It’s taken four years and three different ownership groups, but the Mining Exchange building and its neighbors, the Freedom Telegraph, Independence and Municipal Utilities buildings, are ready to be transformed into a 150-room “boutique” hotel and conference center.
That is, as long as the city leaders approve key sales tax-sharing provisions.
“I think the city likes what we’re doing — especially the sales tax we’ll generate. Eventually we could employ up to 400 people. Without their buy-in, I don’t know,” said Perry Sanders, co-owner of the property. “The alternative would be to turn it in to apartments, but then you’d lose all the new jobs and the (sales tax) revenue.”
Sanders said that he and partner Raphael Sassower have been working with the city’s economic development office on a tax-sharing agreement. The project also might qualify for Downtown Development Authority property tax sharing.
The sales tax-sharing proposal could be presented to City Council for approval before the end of the year and the hotel could open as early as next spring.

Early buzz

So far, stakeholders appear enthusiastic about the 157,000-square-foot renovation — even in the face of projects like Cooper Tower which never materialized.
Sanders said his vision is grounded in solid business potential, based on a market study completed by industry analysts at HVS.
“Not only can the downtown market handle the additional rooms, but upon completion and stabilization, the entire project is expected to represent a $30 million value,” the report said.
Vice Mayor Larry Small said he’s walked through the project and is, so far, impressed.
“This will be a huge benefit to downtown and to the city as a whole,” he said. “We’ll attract more tourists and conferences to our downtown. In the past, the city’s actually lost tourism business because we didn’t have many historic downtown structures. The Mining Exchange project has the potential to generate tremendous sales tax revenue, both directly through the hotel operation as well as revenue generated by surrounding merchants and restaurants. You don’t see many opportunities like that in today’s economy.”
While the property does not qualify as a “blighted area,” which would make it eligible for Colorado Springs Urban Renewal Authority tax incremental financing, CSURA spokesman Chuck Miller said he expects that once financing agreements are hammered out, the hotel will receive approval.
“We’re all for it, whether we’re directly involved or not,” he said. “It’s a great addition to downtown.”

Developer’s vision

Sanders, an entertainment lawyer with a home in Woodland Park and a Hollywood clientele, bought the three-building complex with partner John McSween during fall 2005, and assumed full ownership shortly thereafter. He then entered into a partnership with developer Ray Marshall on a portion of the property. During May, however, he purchased Marshall’s interest.
Five years ago, the Sanders-McSween partnership completed one of the city’s first historic condominium conversions, The Trestle Building.
“I have predominantly owned and rehabbed old buildings,” Sanders said. “My Louisiana law office was originally an old bus station. I did a … warehouse project in Los Angeles many years ago, but I’ve never done a real estate project of this magnitude.”
He said that in the process of “peeling away a century of renovation” at the Mining Exchange, the building revealed itself to be one of the “finest and most amazing I have ever seen.”
Sanders and Sassower have committed millions of dollars to the project, along with “a small amount” of bank financing. The two are now betting that, despite three years of wait-and-see, their vision for a hotel-restaurant-entertainment complex in the city’s center can be realized.

Old but new

Blue Spruce Contractors, the general contractor for the Mining Exchange project has left no stone unturned — marble, granite, tile or otherwise — during its initial work on the buildings near the southwest corner of Nevada and East Pikes Peak avenues.
While Sanders plans to save and refurbish the turn-of-the-century Mining Exchange building’s ironwork stair railings, multiple walk-in safes once used for gold and silver storage, its original floor tiles and massive granite and marble arched façade, he stopped short of pursuing national historic registry status.
“We want to preserve the distinctive architecture and highlight its glorious historic features,” said Bobby Hill of Bobby Hill Designs, “but we also want to create a modern, luxurious feel that appeals to today’s travelers.”
Hill is handling interior design and finishes for the project.
“They’ve brought the vision to life on paper,” Sanders said, adding that he also has hired photographer John Skiba to document each step of the renovation process.

Proposal for sharing sales tax revenue

The Mining Exchange Group is requesting that it be able to share in the additional sales tax revenue in the following way: 75 percent of city sales tax, or 1.5 percent to the MEG and $0.05 of the county sales tax for a total of 2 percent of the retail sales taxes going to the MEG until MEG has received $4 million. According to projections, this should occur within 10 years of operations beginning, or by 2020.

Project highlights and public benefits include:
1. Rehabilitation of a historic landmark in downtown Colorado Springs
2. Renovation of three buildings that were arguably a downtown fire hazard
3. Permanent employment for up to 400 in the downtown area
4. Increased sales tax on retail and hotel sales
5. Increased property tax
6. Increased use of the downtown parking garage for an extra 125 cars daily average
7. Increased downtown entertainment for mature adults: comedy club, dueling piano club and live music jazz venue
8. Beautification of downtown sidewalks and a large outdoor public pedestrian mall between the alley and Pikes Peak Avenue (between the Mining Exchange Building and the Independence Building). This mall will have public seating for any and all venues associated with the property as well as be open to the public to sit outside but covered
9. Total alley upgrade, including lighting, etc., from Nevada Avenue to the back of La Baguette. The alley will now have four new entrances into retail establishments. Starting from Nevada down the alley they will be 1) Spa 2) Jazz Club 3) Event center restaurant 4) Dueling piano/comedy club and alley restaurant bar open from lunch through dinner
10. The addition of a historically significant tourist attraction and the only downtown boutique hotel, to help service the hospitality industry and local businesses travel.
11. Public valet parking
12. Conversion to energy efficient building
13. Removal of a tremendous amount of asbestos from the buildings
14. Total expenditure on the project of at least $18 million, with all of that money going toward the overhaul of the three historic buildings for public use and benefit, the creation of permanent jobs, the revitalization of the South Nevada corridor and the creation of significant city and county revenue.
Source: Perry Sanders

7 Responses to Mining Exchange hotel developer ready to transform downtown

  1. I, too, have walked the facility. It has the potential to be a real asset to downtown. With the relocation of the USOC headquaters, it could serve as accommodations for out of town USOC visitors and a meeting location. I hope it succeeds as well as Perry believes it will!

    Bernie Herpin
    October 23, 2009 at 12:23 pm

  2. Anybody checked with the Antlers to see what their occupancy rates are? And wasn’t there a story recently about the Missouri bigshot who was going to build a hotel somewhere downtown and who, now, won’t return calls?

    So, we get a downtown boutique hotel, that can’t be paid for unless the city gives up some of its tax revenue. (Are we sure Ray Marshall still isn’t involved with this booddoggle?) Anyway, what happens if the city doesn’t agree to the proposal? As mentioned, the developer won’t be asking for the tax break until the end of the year which, conveniently, is also after the election. Sometimes, timing is everything…….

    Some of the advantages of the hotel include an adult comedy and jazz club. COOL!…now all the vomiting and trash and fighting can be extended from Tejon east to connect up with the vomiting, fighting, and trash on Pikes Peak Ave west of Weber. How lucky can we get?

    The source of all these so-called advantages is, of course, the developer…….whose vision is influenced (or clouded …) by his attempt to get everybody else to help pay for it. Who says the Land of OZ doesn’t exist?

    Maybe the developer could get the city to issue more COPS……..well maybe not, since Mike Anderson is going to retire…soon, apparently, so his retirement check isn’t effected by all the budget mess……….

    This tax break request may be Paiges first real opportunity to display his professed common sense approach to governing. He will,of course, be out voted…….

    John Whitten
    October 23, 2009 at 2:52 pm

  3. Beautiful building, Great idea for the heart of Colorado Springs.

    Mark Martinez
    October 24, 2009 at 3:56 am

  4. It’s fun to get to address healthy skepticism like that expressed by Mr. Whitten above so I will attempt to do so point by point.

    1. We not only checked Antlers occupancy rates…and numerous other similarly situated properties, we checked their revenue per available room and all other relevant data by using one of the top hotel consultants in the world, HVS. Based upon their conclusions in their feasibility study and appraisal, we are moving forward. The fact that John Q. Hammonds has withdrawn from the downtown market does not mean that we will do likewise any more than it means that others will do a hotel just because we are doing one. On this point, Mr. Whitten’s comments are based in classic fallacious reasoning. We also return ALL calls and welcome tours of the ongoing construction.

    2. We can pay for this project whether or not the city gives up tax revenue, but it does not mean we WILL do the project without the tax sharing incentive. A hotel which creates jobs and tax revenue is much riskier and requires much more cash equity than the safe alternative, apartments. Mr. Whitten misstates that we CAN’T do it without the city, but we have said since day one that their involvement will guarantee us doing a hotel and employing many people and creating lots of sales tax. We are not waited till years end to get a vote if we can help it, and I have actually urged the city to get this before the council as soon as possible with no concern for political timing. The project stands on its own. It is well confirmed by everyone who has taken the time to confirm I bought 100% of Mr. Marshall’s interest in May of this year and currently have only one partner, Raphael Sassower. This particular boogie man comment by Mr. Whitten is unfortunate but understandable. It just has no basis in reality.

    3. We are specifically appealing to a mature crowd that wants an alternative to vomiting and trash, so these particular comments by Mr. Whitten should not concern anyone. This will be a classy comfortable establishment end to end.

    4. Not interested in COPS and am merely requesting that we get to keep a portion of the NEW sales tax we will create in order to mitigate the risk associated with this project that will employ hundreds.

    5. I will be contacting councilman Paige next week for a tour and explanation and strongly hope he will be a yes vote on our very good proposal. This is classic private sector capitalism helping solve public problems with a proposal that costs the City zero and nets them plenty of money and employs lots of people.

    Thanks

    Perry R. Sanders, Jr. (Colorado Springs, not Woodland Park)

    3. We are fo

    Perry Sanders
    October 24, 2009 at 10:22 am

  5. I’m so happy to hear that the old Mining Exchange building could possibly be restored as a Hotel, conference and entertainment center. I’ve always considered Colorado Springs to be a Sleeping Beauty, and I love the idea that one of Winfield Scott Stratton’s finest buildings will be restored to “a classy comfortable establishment end to end” for the general public to enjoy. As a result, I believe that many more people from other areas will have a welcoming opportunity to enjoy our great town.

    As a downtown resident, I can tell you that the choices are slim for downtown hotel recommendations to my out of town visitors. Antlers or…..the Albany? Clarion is nice, but it is not historic and neither is the Antlers Hotel. I hope that you, Mr Sanders, would make make Mr. Stratton proud in your renovations of the building. What a great way to restore the old and generate new business. An alternative to the Tejon st. party is most welcome…and I love Jazz. If you serve up live Jazz, I’ll be there often.

    It all sounds like a great idea to me. How can we help you?

    Monique Vollmer

    Monique Vollmer
    October 26, 2009 at 12:42 pm

  6. “Privatize profits – socialize risk and cost”

    Terry Shattuck
    October 26, 2009 at 2:18 pm

  7. Not sure I’ve ever been called fallacious (Did I spell it right?) That must be one of those fancy lawyer/developer terms which, I assume, means I don’t see Mr. Sander’s vision for making a ton of money for himself, while getting somebody else to pay for it……Terry Shattuck, obvioulsy another person with the same lack of vision as me, is right.

    If the developers, or anyone else, want to risk their own money, then all the rewards should stay with them. But the historical developer MO in this town has been: get somebody else, (an investor or lender ) to put up the money, and if it works, the deveoper is a genius and rich. And if it fails, too bad. The investor or lender is stuck, while the developer moves on to his next ‘vision’…….

    I have been in this town a lot longer than Mr.Sanders. His vision for the upscale boutique hotel kind of reminds me of the theme park that was going to be built up on the north end……remember that? The one that was going to be based on the American Constitution? Or how about the the NASA facility that was going to be built east of Shriever…..there were actually people, including the developer, who thought the space shuttle would land here. Or, the 27 floor mixed use retail, residential, and upscale hotel that was going to be built across the street from this project? All they needed was money and tax breaks……

    The list of boondoggles,and the developers who thought them up, is long and distinguished. (some of these folks even moved on to other boondoggles, in places like Balize and Florida,………..)

    But, as recent local events have proven, sometimes the Tooth Fairy really does show up…this time, in the form of the City Council granting the tax exemption to Mr. Sanders.

    I suppose, at the end of the day, having an empty, but completed, building is better than the boarded up mess that exists now….

    John Whitten
    November 16, 2009 at 3:42 pm