El Paso County commissioners learned in June that millions of dollars in unanticipated utilities infrastructure costs would complicate their otherwise solid contract to buy multiple buildings and a parking garage at the Corporate Ridge Office campus.
The problem arose during a due diligence inspection of the property after the deal had been announced.
El Paso County facilities engineers discovered that the centralized utilities electrical plant and distribution system used by Intel would have to be completely rebuilt, or that a new system provided by Colorado Springs Utilities would have to be installed.
Work to meet CSU’s specifications involves rerouting the existing electrical system’s service to what’s known as Building I.
That’s because both Everest College — which leases 70,000 square feet in an adjacent building — and the county need to be metered separately.
The cost to switch out electrical service could run as much as $4 million — or more.
The county has hired consulting architects and engineers to evaluate how to best solve the problem.
“If it was cheap and easy, we’d have it worked out by now,” said county facilities director George Diestelkamp.
If forced to absorb part or all of the cost, El Paso County’s financing agreements with investment partner George K. Baum Co. might have to be renegotiated.
El Paso County Deputy County Administrator Monnie Gore initially said the issue might delay the deal’s planned Sept. 2 closing.
Hoping to stay on track, however, Gore and county officials scrambled to negotiate a new deal with the seller, Los Angeles-based IRG.
New provisions under discussion call for a few trade-offs.
They include foregoing some building renovation slated for county buildings that would be vacated downtown as part of the relocation. So instead of spending the money on the old buildings, the dollars would go to the new electric utilities system.
That means the Sheriff’s Department, which is supposed to expand into 27 E. Vermijo St., might not see the rehab it was expecting before its move.
Other upgrades to existing county buildings also are likely to end up either delayed or abandoned.
IRG vice president Bruce Haas could not be reached for comment on the negotiations.
Commissioner Jim Bensberg said the changes won’t cost the county any more money.
That’s good news, because the deal’s $49.5 million cost — that figure includes $13.5 million in energy performance upgrades for existing county buildings — has already come under fire.
County Attorney Bill Louis has worked with IRG to finalize both the contract for purchase and any changes.
He downplayed concerns the deal might be sidelined by who-pays-for-what negotiations.
“We’re in agreement on the big points but are still fine-tuning. They’re still a few relatively minor items,” he said.
Louis did predict a week’s delay, however, in presenting a contract addendum to the commissioners for a vote. Originally on the commission’s agenda for this past Thursday, the proposal is now on the books for this Thursday.
Louis also dismissed any other potential deal breakers such as financing concerns to slow the process.
“We just got our Moody’s rating and it was very high, an Aa2. And Standard & Poor’s rated us a AAA-. Our first move-ins will take place this fall as planned,” he said.
Still, exact dates and times for departmental move-ins remain unclear.
The Department of Human Service is slated to be the first to relocate to the third floor of Building I, as early as September if all goes as planned.
It will be followed by the Health and Environment department, the Clerk and Recorder’s and the county treasurer’s departments, the coroner’s office, the office of emergency management, and eventually, by the Pikes Peak Workforce Center.
“There are still lots of moving parts,” Diestelkamp said.