SDS shaping into election issue amid Banning Lewis bankruptcy

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The midterm elections are over but in five months, residents of the Springs will choose a new mayor and six new council members and one issue may overshadow every other: the Banning Lewis Ranch bankruptcy and its impact on the Southern Delivery System.

The successful passage of the “strong mayor” initiative this week gives the City Council sole authority over city enterprises. The mayor will exert substantial power over the city, but none over Colorado Springs Utilities.

The new nine-member council will have at least five new members and if the new majority decides to postpone or cancel SDS, the mayor will be unable to either veto or alter their decision.

Vice Mayor Larry Small, whose terms ends in April, said every potential candidate for council he’s spoken with thinks SDS is too expensive and that the region doesn’t need the water, not at the moment anyway.

Dave Gardner, a civic activist and former council candidate who has long questioned the need for SDS, hopes that it will be an issue. “Without question, it will put that deal under a microscope,” he said. “When (SDS was conceived) the residents of Banning-Lewis were going to pay for it, and now we’re seeing a different spin. The fact is that we’re subsidizing growth, and getting no return.”

“Will the (cost of and need for) SDS be an issue? And will there be candidates raising the issue?” asked Les Gruen. “The answer is yes and yes.”

Gruen owns Urban Strategies, a development consulting firm. He’s been involved with the ranch since 1977, both as a participant in Mobil Land’s original acquisition of the Banning-Lewis ranch, and as an interested observer in the decades since.

SDS has long been associated with Banning Lewis, touted for two decades as the locus of future growth in Colorado Springs. When the 21,000-acre property was annexed by the city in 1989, developers projected that 20,000 homes would be built on the property by 2010.

Only about 200 homes have been built on the ranch. Last week, the present owner filed for bankruptcy court protection, listing more than $240 million in liabilities. It is unclear what impact this will have on the continued development and ownership structure of the ranch.

While Banning Lewis has stagnated, other parts of the region did see plenty of growth before the recession.

“Much of the development that might have occurred in Banning Lewis has taken place outside the city, in Fountain, in Falcon and even in the Tri-Lakes area,” said Gruen. “Had the ranch developed as originally conceived, we would have seen a different pattern.”

According to city documents, officials believed that by agreeing to annex and provide water to the master-planned community, the city would control regional growth for the next half century.

The records also confirm that SDS was planned as a means of supplying water to growth within the city, and specifically to Banning Lewis. “The whole reason for SDS is Banning-Lewis,” said County Commissioner Jim Bensberg.

Colorado Springs Utilities takes a different position. “The need for SDS has never been about supporting one specific neighborhood in our community but rather serving the continued population growth in our service territory,” CSU spokeswoman Janet Rummel said this week.

“With or without SDS, Colorado Springs and surrounding communities will continue to grow. Our forecasts are based upon long-term demand (and) we already adjusted the project schedule water delivery date from 2012 to 2016 to factor in the slower economic conditions.”

Regardless of economic conditions, one thing is certain. Water bills will increase by 12 percent annually through 2016, jumping 97 percent from 2010 levels. That increase will cost the average homeowner $600 annually. SDS funding will account, according to CSU, for roughly two-thirds of the increase.

That’s why commercial real estate broker Tim Leigh, who is thus far the only declared candidate for City Council, thinks that SDS will be an issue. “I’d be surprised if it isn’t,” he said. “I can see it very easily being a bone of contention.”

Beyond cost concerns, there’s another question raised by the Banning Lewis bankruptcy.

With much of the ranch still undeveloped, who will buy the water, should SDS move forward? Council member Sean Paige, who is considering a run for mayor, suggested an option this week.

“We can make agreements with other jurisdictions to provide water while they seek other long-term sources,” he said. “These short-term partnerships can benefit the city and give ratepayers some relief until we needed the water.”

Landscape architect Bill Guman, who served two terms on City Council during the 1990s and is fluent in water issues, dismissed that notion.

“Good luck with that!” he said.