Banning Lewis Ranch Co., the Newport Beach, Calif.-based company trying to develop the 21,400-acre ranch on the far east side of Colorado Springs, left quite a few area companies on the hook when it filed for bankruptcy last week.
The company’s bankruptcy papers listed $242 million in debt related to the project, though companywide liabilities could be even higher, possibly double that figure. Its assets, according to the filing: a range between $50 million and $100 million.
Fortunately for the Pikes Peak region, none of the heavy money came from local investors –unless, of course, you count the $75 million the county has already spent on road, water, sewer and recreation projects, or the $880 million set aside for the city’s planned water delivery pipeline to the area.
The $242 million in liabilities include $70.2 million to Connecticut investment firm Greenfield BLR Partners, $65.6 million to Atlanta-based Key Bank, $35.1 million to Farallon BLR Investors in San Francisco, and $14.7 million to a Banning Lewis subsidiary in Newport Beach.
A number of Colorado Springs companies also are owed money, and though the dollar amounts might not be as big, the news couldn’t come at a worse time for construction and development firms struggling to maintain cash flows in a restrictive lending environment.
According to the filing, Banning Lewis owes $23,655 to local urban planning and architectural firm Thomas & Thomas, $11,738 to parking garage owners Palmer Center Ltd. and $11,733 to Ash Construction.
A call to Banning Lewis attorney Kevin Mann was not returned, but there is some good news for these small creditors at the bottom of the pecking order in what is sure to be a protracted bankruptcy.
Craig Goetsch, who heads the Colorado Springs arm of Mortenson Construction, said the firm received its $23,850 pay-off just before the bankruptcy filing. Mortenson did some consulting and estimating work for Banning Lewis.
It might be too much to hope for, but perhaps Banning Lewis will clear the crumbs before breaking up the loaf.
As you might have read, I reported last week on the myriad reasons that might cause developers and homebuilders to fall behind on their property tax payments. Some are holding off until the last possible moment due to the current scarce nature of cash, some view the liens sold on delinquent properties as strategic short-term loans from local investors, while others are finding temporary exemption through bankruptcy filings.
Colorado Springs developer and nightclub owner Sam Guadagnoli, who owns an office building at 19 N. Tejon, represents a new variation on the theme.
The county treasurer auctioned off a tax lien on the delinquent Tejon property earlier this month, but Guadagnoli said he didn’t pay because the property should be eligible for a full exemption.
“We have state workers in that building, and my understanding is that you don’t owe taxes on a property when that’s the case,” he said.
According to Steve Schleicher at the El Paso County Assessor’s Office, a portion of the building is indeed occupied by the Colorado Springs Public Defender’s Office, but that only makes it partially exempt.
Schleicher said that 21.2 percent of the building qualifies for an exemption, which leaves Guadagnoli on the hook for $80,801.11 in back taxes for 2009.
“We’re in the process of working through that lease and the paperwork,” Guadagnoli said. “This is not an issue of my financial stability. If we find that we’re wrong, we’ll pay the taxes. We have a great lease with them here.”
The county has already recovered tax funds on the property by selling the lien at auction, so Guadagnoli will have to redeem the lien through the treasurer’s office in order to become current on the property.
He’ll want to hurry. The lien is currently accruing 10 percent interest for the lien-holder, and a 1 percent monthly fee due to the county.
Empty office buildings are, of course, a sign of a stagnant real estate market, but Colorado Springs got a shot in the arm on this front last week.
ITT Corp. renewed its 75,225 square foot space at 5009 Centennial Blvd., and a division of the Army has finally committed to the 64,000 square foot former campus of Northrop Grumman at 1555 N. Newport Road. Negotiations for the latter began 26 months ago, and the property comes with a great deal of embedded infrastructure for the Army.
Jonathan Easley can be reached at email@example.com or 719-329-5208. Friend him on Facebook.