El Paso County's attempt to acquire yet another building, a portion of 4425 Arrowswest Drive, has been riddled with problems. And the latest round coincides with the announcement that County Attorney Bill Louis — who warned commissioners it was a bad deal and advised them to get out — will be leaving soon.
Louis, who raised allegations of bribes surrounding the deal in November, said Dec. 22 that he will resign in six months and pursue private practice. His announcement came seven weeks after he called for County Administrator Jeff Greene to be placed on leave over his handling of the Arrowswest deal. Commissioners backed Greene.
Meanwhile, time is running out in the county's bid to buy part of the building, and there are conflicting reports regarding a possible extension. A seller's representative says a 30-day extension "will get signed this week"; the county's spokesperson says no extension has been formally requested, and may not be before the deal expires on Dec. 30.
For his part, Commissioner Darryl Glenn wouldn't mind seeing the whole thing die.
"I've made it clear I don't support it," Glenn says in an interview, noting he thinks the city and county should further explore shared space. "I don't feel comfortable entering into any lease agreement until we do that."
Glenn also questions how the deal has been handled — including estimates of tenant improvements and repairs that approach $2 million and an offer to funnel money to the Colorado Springs Regional Economic Development Corporation. "It makes me shake my head," he says.
E-mails about the Arrowswest deal obtained by the Independent through the Open Records Act draw a picture of a deal that went from a zero-sum arrangement for storage of county records to a so-called "investment-based transaction" in which the county would front $1.8 million to fix up the building for several nonprofit agencies.
The Arrowswest building, a 171,500-square-foot office and warehouse structure, sits less than a half-mile from the former Intel complex that the county purchased in 2010 for $22 million. The three-story Citizens Service Center has cost well over $500,000 to remodel and houses various county offices, including the Department of Human Services.
Creating an incentive
DHS contracts with nonprofits, such as Goodwill Industries, to provide services that otherwise would require hiring county employees. And county officials have said the Arrowswest building, identified during a review of sites several years ago, is needed to house some of those nonprofits.
But the idea of buying part of it began at least in part as a way to store county records — and, depending on how you read one e-mail, maybe help the EDC retain the Space Foundation.
In 2010, Scott Bryan, owner of Bryan Construction, Inc., who was chairman of the EDC board until Sept. 30, 2010, was involved in the EDC's effort to make a deal to keep the foundation around. Established in 1983 with help from the influential El Pomar Foundation, it reportedly was being wooed by other cities.
On Dec. 22, 2010, Bryan contacted Greene by e-mail about a press conference for the Space Foundation deal. The incentive package included relocating the foundation from its longtime South 14th Street site to about 45,000 square feet at Arrowswest.
According to county assessor records, the building had been purchased six days before by Foundation for Colorado Springs Future, an EDC-created nonprofit. A Gazette report later explained that the foundation divided the building into three condominium units: one for the Space Foundation, and two it quickly sold to a limited-liability company formed by Bryan, which would look to lease those spaces. At the time, the county was "considering taking about 85,000 square feet," including 24,000 square feet for records.
By Dec. 28, county officials were trading e-mails about the possibility of moving Goodwill Industries into some of Bryan's space.
On Jan. 24, 2011, Deputy County Administrator Monnie Gore noted to Greene in an e-mail that the Arrows-west building would need a new roof and other work. Bryan estimated Feb. 28 that $322,500 was needed to repair the parking lot, the roof, sidewalk, doors and electrical equipment.
Apparently above and beyond that, on March 2, Gore reported tenant improvements, such as reconfiguring office space to fit their needs, at about $603,600. At that time, those tenants (besides the Space Foundation) would be Goodwill and Colorado State University Extension Service, according to e-mails.
A deal apparently was reached, and on April 12, County Budget Officer Nicola Sapp outlined the terms in an e-mail to Greene, Gore and County Attorney Louis, noting the county would finance $2.2 million for 25 years to acquire 41,672 square feet at Arrows-west. It would also pay Bryan an ongoing "condominium management fee," which would cover property management, security and janitorial costs.
Sapp also noted that there'd be a "$30,000 one-time payment to Bryan Construction to either be identified as down payment or earnest money (Bill this is for you and their attorney to determine what we call this in the lease). But ultimately is intended to be passed through to EDC to support the Economic Development efforts to retain the US Space Foundation."
Here's how public information officer Dave Rose explains that remark, which could easily be construed as the county passing public money through the EDC to a private entity: "It indicates that the landlord suggested that he would provide an additional benefit to the Space Foundation but the County was (and is) trying to provide DHS required services in a location that is both convenient and efficient."
In late April, Court Appointed Special Advocates (CASA) of the Pikes Peak Region, which provides services to DHS under a contract with the county, came into the picture as a third possible tenant, with Goodwill and CSU Extension. Trudy Strewler, CASA's executive director, says in an interview she told Commissioner Sallie Clark and DHS that CASA was looking for more space.
In July, Goodwill advised via e-mail, "we will not be able to financially support tenant finish [improvements]." That led Gore to advise in an e-mail to Greene and others that Greene had developed "other cost strategies which can assist the tenants with tenant finish costs." He didn't explain further, though this would come up again.
Meanwhile, the Space Foundation moved in.
In August, the county evaluated the building and reported "pigeon droppings INSIDE the air handlers," air filters that are "dirty and collapsing," and "rusted grease fittings [that] indicate no maintenance on motor and fan bearings," according to county facility maintenance manager Jeffery Brewer.
In addition, there were no signs of roof repairs, he wrote. (E-mails obtained by the Indy don't make it clear who was to have paid for them, or when they were to have been completed.)
Then, in mid-September, Sapp noted in an e-mail to Bryan Construction's CFO Vince Shoemaker that the nonprofit tenants would not be able to afford the management fee. In a separate e-mail to Gore, she also noted Greene was concerned that "if the facility is in much worse shape than originally discussed, than [sic] we may need to negotiate something different."
The next day, Sept. 14, Gore advised Sapp and Greene that Bryan had not done the maintenance work, adding, "We don't have the money to make these repairs."
Still, the deal was not abandoned. Just postponed. Commissioner approval was moved back a week, to Sept. 27.
'Outrage and ridicule'
Other problems then surfaced, such as a warning on Sept. 19 from county economic development officer DeAnne McCann that the condominium arrangement was such that the "building could be sold out from under the county."
The agenda item was again postponed, to Sept. 29, and then to Oct. 6.
On Oct. 4, Bryan forwarded a comparison with other buildings to Greene, noting, "You are getting a heck of a deal."
At 8:58 p.m., Oct. 5, the night before commissioners were to take action, Clark asked Rose in an e-mail to provide "some talking points" on Arrowswest. Rose responded with 11. Among them: The deal would help the EDC in retaining the Space Foundation; and the county would need less than 17 percent of the space it was buying, while Goodwill and CASA would use and pay for 83 percent.
On Oct. 6, commissioners approved paying $2.1 million for the space, pending finalizing subleases with tenants, with Clark parroting Rose's points.
"I see it as a win-win opportunity for agencies the county currently works with through our contractual DHS arrangements," Clark wrote in an e-mail to the Indy at that time.
On Oct. 23, Gore estimated in an e-mail that those aforementioned tenant finish costs would total $1.6 million. He also cited a $140,000 cost for design.
County Attorney Louis cited a figure of $1.8 million in a Nov. 4 e-mail to commissioners. (The Indy obtained this e-mail from a source familiar with the Arrows-west transaction; the county had withheld it under attorney-client privilege.)
Louis also wrote that he'd just learned that Greene had agreed to front the money to tenants, interest-free. He asked that Greene be placed on paid leave pending an investigation.
Stressing the deal "doesn't make sense," Louis ended his two-page advisory by saying, "I strongly counsel you to stop involvement in Arrowswest. To [do] otherwise will only expose you to media and constituent outrage and ridicule. The County has accomplished so much good in the past years. We took a hit with term limits. I am counseling you to avoid another black eye.... Sorry to do this, but I felt compelled and duty bound to do so."
He also e-mailed commissioners and Greene that Bryan's attorney, David McDermott, told him that "Mr. Bryan has written campaign checks but he is not going to present them unless this deal closes."
Fourth Judicial District Attorney Dan May looked into the bribe allegation and found nothing. Louis later said McDermott never used the word "campaign."
Responding to the Nov. 4 message, Commissioner Dennis Hisey told Louis he didn't agree with placing Greene on leave and added, "He has been negotiating as instructed in exec [closed executive session]..."
Going forward, or not
County records show only $10,000 has been paid on the Arrowswest deal, to a title company. If it's earnest money and the county backs out, it could lose the money. But as Louis said in his Nov. 4 message to commissioners, it would be "a small price to pay to get out" of paying tenant improvements.
Commissioners had been expected to decide on Thursday, Dec. 29, whether to nail down the Arrowswest purchase. But Rose said Wednesday morning that the county still hasn't nailed down agreements with CASA and Goodwill, and will not be ready to finalize anything by the 30th.
Hence talk of an extension. Rose says the county attorney told Bryan that an extension request may be forthcoming, but he notes that no formal request can be made without an open vote from the commissioners.
Yet reached Wednesday morning, Bryan CFO Vince Shoemaker told the Indy that the company was "in the process of finalizing a 30-day extension."
Rose suggests "a sort of semantics issue" could be to blame for the disconnect. He reiterates that no extension can be requested without a formal commission vote.
Which brings us to one last issue muddying the waters: The commissioners' Dec. 29 agenda includes nothing at all about Arrowswest. Asked whether that suggests that commissioners may be willing to let the deal expire, and see the whole thing peter out, Rose starts his response by saying, "I think you're reading that right."
One thing is for sure: Louis won't have to worry about any of this for much longer. After 14 years with the county, he announced his plans to resign in six months. Though he didn't respond to an Indy interview request after making that decision, he insisted to the Gazette last week that he's not being forced out.
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