That seems improbable, at least in the short term, but a determined Jannie Richardson, the developer whose company filed for Chapter 11 bankruptcy protection, says she is working with a lender interested in financing her 150-acre mixed-use project.
“I can’t say anything yet, but we’re working on financing this week and next,” she said at last week’s Rocky Mountain Region meeting of the International Council of Shopping Centers at the Cheyenne Mountain Conference Resort.
Richardson also said she’s proceeding with plans to finish two existing office buildings, but may reconfigure their use for retail on the first floors with loft-style offices upstairs.
“We also want to get the theater open, but that depends,” she said, referring to a 14-screen multiplex that was left unfinished after work came to a halt on the project.
The fate of the project, a casualty of the worst economic downturn since the Great Depression, will be left to a bankruptcy judge to decide. Until then, the massive development, once dubbed “Colorado Springs’ second downtown” sits vacant and unfinished, a sobering remnant of the real estate boom and the bust that followed.
G.E. Johnson President Jim Johnson said he’s heard reports about Richardson’s hopes of lining up financing, and is afraid that a lender may not be willing to pay the project’s 40 lienholders for work completed.
“She’s told me the same thing, maybe eight times,” Johnson said. “We’ve been owed about $2 million for two years and including our subcontractors, we have a judgment for $8.4 (million).”
Johnson had additional concerns about the notion of a lender stepping into the picture.
“She never had any loans on the property, so any additional indebtedness would work against our getting paid,” he said. “That’s why we don’t think it’s a good idea. We’ll be very concerned if she encumbers that land — that’s where the value is.”
He also accused Richardson of dragging her feet in court.
“She still owes the bankruptcy court several documents,” he said. “Once those are received, we’ll (the lienholders) will get a chance to respond. The bankruptcy trustee could give a ruling in the next 45 days or so, but it could take several more months.”
Richardson rejected any notion she was stalling.
“We have a right to time to put together a reorganization plan, and this project is very complicated. It’s going to take time,” she said.
Last week’s ICSC two-day conference provided a glimpse into how retail developers and cities are surviving these credit-strapped times.
No surprise: the future of malls and large-scale redevelopment or new projects in a tough economy depends more than ever on public-private partnerships. Case in point: the city of Westminster, Colo., had to step in and buy an abandoned Macy’s and a former Trail Dust Steak House in order to attract a private-sector development partner to its 1.2 million-square-foot waning Westminster Mall.
Fort Collins City Manager Darin Atteberry said his city, like most others, has grown increasingly dependent on strong working relationships with developers. It is also willing to use tools like eminent domain or buying properties to ensure success.
“We see it as a long-term investment in our future,” he said. “Tenants and their ownership are both consolidating, demographics are changing and there’s more competition. I advise partnering with the private sector.”
He offered a concrete example. The Foothills Shopping Center in Fort Collins, owned by General Growth Properties, which also owns Park Meadows shopping center near Denver and Chapel Hills Mall in Colorado Springs, is now being redeveloped jointly by the city and the owner.
General Growth Vice President of Asset Management Barry O’Connor said that without the city’s collaboration, it would be almost impossible to generate the return on investment necessary to redevelop the Foothills center.
“The city was key. They actually paid a premium to attract two new anchors so we can attract a third. That move was in both of our best interests,” he said.
Somewhat along these lines, the Colorado Springs City Council recently approved an urban renewal designation for the proposed 2.4 million-square-foot Copper Ridge lifestyle center in north El Paso County.
The city hasn’t contemplated becoming directly involved in the project, but the council’s support was critical if the project is to have any chance of succeeding.
Fortunately, the deal doesn’t require the developer to sign its first anchor tenant for at least five years. All of the ICSC panelists agreed that the outlook for new retail development is dim and would remain so for at least the next couple of years.
Becky Hurley can be reached at firstname.lastname@example.org or 719-329-5235. Friend her on Facebook.