The City of Colorado Springs paid $19,007,454.43 for the building and property at 27 S. Tejon St. which will become the headquarters of the U.S. Olympic Committee.
But who exactly got what?
The closing statement for the property, which was obtained by CSBJ through a public records request, provides the following details about the transaction.
The first mortgage holder, United Western Bank of Denver, received $15,111,570.61.
GMP/G.E. Johnson, the building’s general contractor, collected $3,276,809.
That left $619,074.82, which was swallowed up by a dozen different line items.
Prorated property taxes accounted for a little more than $40,000.
El Paso County’s use tax chipped away $38,000; title insurance another $22,000.
Survey/mapping fees were $7,500.
Payment of a lien from OZ Architecture totaled $198,000.
And an escrow payment to settle a lien from Innovar Environmental totaled $251,000.
Those payments, and a dozen smaller charges (e.g., “past due stormwater” for $295) ate up all the cash, leaving the building’s owners/developers, LandCo 27 LLC and 27 South Tejon Partners, LLC, with this payoff line: Cash from/to seller : $0.00.
Nevertheless, the sellers didn’t leave the closing table with nothing to show for their labors.
Documentation provided by the city shows that both entities retain a portion of the equity in the two lower floors of the building. The space includes the entire ground floor and a “lower level” (i.e. basement) space.
Title to both units was transferred by LandCo and 27 South Tejon Partners to 27 South Tejon Partners II (an undivided 81 percent) and 27 South Tejon Investors (an undivided 19 percent)
Only two principals signed the various closing documents on behalf of 27 South Tejon Partners, 27 South Tejon Partners II and 27 South Tejon Investors: Ray Marshall and Don Lester.
Marshall, who was indicted last week by the El Paso County District Attorney’s Office on charges of fraud, theft, conspiracy and violations of the Colorado Organized Crime Control Act, is the CEO of LandCo and a principal in 27 South Tejon Partners.
Lester is a principal in Rubicon Alliance LLC
On its Web site, Rubicon describes itself as “a privately owned and operated financial services organization headquartered out of Colorado Springs, Colorado (which) owns and manages businesses and investments in real estate, fixed income, and energy.”
Neither Marshall nor Lester were available for comment.
Regardless of ownership, the units are scarcely unencumbered.
According to Sandy Hook at the El Paso County Clerk & Recorder’s office, there are two outstanding deeds of trust.
One, from United Western Bank, shows an original principal amount of $4,442,000, while the other, apparently created when LandCo and 27 South Tejon Partners transferred title to 27 South Tejon Partners II and 27 South Tejon Investors, shows a balance of $3,360,000.
The ground floor contains 11,717 square feet. The lower level, at 16,116 square feet, is substantially larger.
Sources in the real estate community say the ground floor space is being offered for lease at $30 a square foot, triple net, which would suggest that the owners expect annual rents of $330,000.
Veteran commercial real estate broker Tim Leigh, who has represented clients in scores of downtown real estate transactions, said that $30 a foot may be a little high, but that it’s not outlandish.
“Just across the street in the Alamo Corporate Center, comparable space leases in the low 20s,” Leigh said. “I’d say that $22 to $25 a foot is about right (for the street-level space), and the USOC may add some value as well.”
The county assessor set the condo’s market value at $291,561.
The title commitment for the property, issued by Stewart Title, also has some interesting information.
The original principal amount of the deed of trust executed by LandCo and 27 South Tejon Partners on Oct. 19, 2007, to United Western Bank was $17.5 million. The amount was increased Jan 30, 2008, to $23.5 million.
The bank reportedly cut off the flow of money before the loan had been completely taken down, but the title commitment notes that new deeds of trust giving UWB a security interest in both condos were recorded prior to the Oct. 15, 2009, closing.
And buried deeply in boilerplate, there’s an exception.
The title policy does not insure against “any loss, damage or failure of title resulting from any subsequent Order issued by any District or Appellate Court in that proceeding entitled Lindsay E. Fischer, Plaintiff vs. City of Colorado Springs and the City of Colorado Springs Public facilities Authority, Defendants …”