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Oil change possible at Banning Lewis Ranch 

Colorado Springs could jump in where Ultra Resources leaves off

Since Ultra Resources has ceased exploratory drilling on Banning Lewis Ranch, there's been a lot of speculation over whether developers might buy Ultra's 18,500 acres there, and what for.

But there's another potential bidder that hasn't been discussed much — the city of Colorado Springs.

Mayor Steve Bach refused an interview for this story, so exactly what he may have in mind isn't clear. But several sources report he's spoken with Ultra, and confidante Richard Skorman says Bach has told him, "We need to be at the table and see what's possible."

There are other signals, too:

• Skorman, a member of Bach's Parks Solutions Team, recently inquired if Utilities could change the Southern Delivery System's reservoir site from east of the city to Jimmy Camp Creek, which lies on the ranch's northeast side. Jimmy Camp was once envisioned as a recreational lake that would boost surrounding property values.

• When Ultra bought the property, two years ago parks advocates wanted 2,000 to 3,000 acres of the ranch for open space around Corral Bluffs open space but didn't submit a bid. They still want that land, open space advocate Lee Milner says.

• The city remains in bankruptcy court with Ultra over the 1988 annexation agreement, which requires developers to build roads, fire stations and other public infrastructure valued at $100 million, according to City Attorney Chris Melcher. Ultra wants to undo the agreement. Will the city capitulate to accommodate either its own vision or that of developers?

• Bach has publicly advocated for infill development before the city extends services to Banning Lewis, an area twice the size of Briargate.

All of which signals that the city will be involved at Banning Lewis, or at some point even dictate what happens.

"The compelling thing about this," says Les Gruen of the Urban Strategies planning firm, "is there's an opportunity at a very, very favorable price for the city or some sort of public entity to come in and rethink this entire property to benefit the entire area."

Assuming, of course, that Ultra doesn't increase the price substantially from the $20 million it paid.

Annexation nation

The biggest hurdle for Banning Lewis developers is the annexation agreement. Then-Mayor Bob Isaac insisted developers pay their way, and the agreement reflects that philosophy: It requires developers, not taxpayers, pay for public infrastructure.

It's been a sore spot with developers, and not much has happened outside of several hundred homes popping up on its north side. (Oakwood Homes bought 2,600 acres of the Banning Lewis Ranch in 2012, the Gazette reports.)

Ultra, the chief landowner, isn't the only one affected. Oakwood and roughly two dozen others with property in the vicinity have a stake in the annexation agreement, Melcher says in an interview.

The agreement has been on hold pending passage of oil and gas regulations, Melcher says. (City Council deadlocked 4-4 on an ordinance last week, effectively defeating it.) The city and Ultra are due to make a report to the bankruptcy court April 1.

"The [annexation] dispute remains to be resolved," Melcher adds. "The issue still remains whether the annexation agreement applies to that Banning Lewis Ranch parcel, and obviously the city believes it does." If Ultra decides to sell, buyers would want to know whether the annexation agreement applies, he says.

But a new agreement "that made sense for Ultra and the community" could be negotiated, Melcher says.

And "if the city gets involved," notes Gruen, "then all of a sudden that allows a bunch of different perspectives."

For example, if the city bought the property, it could force development elsewhere by refusing to sell it. It could resell the property piecemeal under an altered annexation agreement. Or, he says, the city could carve out the Jimmy Camp Creek area for a reservoir to be developed with Utilities' help. But that idea comes with complications.

Reservoir reservations

Early this month, Skorman asked if Utilities could move the SDS reservoir to Jimmy Camp Creek.

In response, Utilities issued a memo to its board, composed of City Council, that outlined potential problems. Federal officials, through a six-year permitting process, found Jimmy Camp "would have caused greater environmental effects." For example, archeological values there might need to be preserved, and the reservoir might draw birds that would disrupt flight paths from Colorado Springs Airport. Moreover, changing the site would reopen the environmental process, delaying the project.

For now, Utilities is moving ahead with SDS. In fact, it was to hold a groundbreaking for the water treatment plant at a site east of Marksheffel Road and north of Highway 94 today (Wednesday).

Even if it wasn't going to build a reservoir out there, the city would do well to secure as much of that property as possible, Skorman says.

"We have a chance to create a greenway around the city," Skorman says, "to protect the Jimmy Camp Creek corridor, the Rock Island Trail through Banning Lewis Ranch to Falcon."

Skorman, though, worries Ultra might not be a willing partner. "Ultra isn't happy with us," he says. "We fought them over the annexation agreement. They couldn't even do their test wells [in the city]. They had to go to the county. It's not like they have this loyalty to the city."

The latest skirmish involves land for SDS. The city needs to buy 25 acres for a pump station, 29 acres for a permanent easement for the 66-inch pipeline, and 32 acres for a temporary construction easement.

The city sued Ultra over this in January, after negotiations reached an impasse, Utilities spokeswoman Janet Rummel says. "We've gotten to the point where further delays would increase costs for our customers by delaying our contractor." The city values the property at $73,400, a figure Ultra disputes.

In court papers, Ultra argues the city is seeking too much land, including enough for a second pipeline for SDS Phase 2, which hasn't received Council authorization. Rummel says the city's request is consistent with other portions of the pipeline. The second line would convey more water from Pueblo Reservoir in years to come.

A hearing was to be held Tuesday in El Paso County District Court, after the Independent's press deadline.

Money matters

It's anybody's guess how much Ultra would demand for Banning Lewis land. Or if it's willing to sell.

"All I can say at this time is that we haven't made any decisions with regard to the ranch," Vice President Doug Selvius says via e-mail.

Also in question is where the city would get the money, considering Bach is already poking around for hundreds of millions of dollars to fund the city's stormwater drainage backlog.

One possible source is from the Trails, Open Space and Parks tax, which generates about $6.6 million a year. About $3.4 million is earmarked annually for open space, or $40.8 million over the life of the tax, which expires in 12 years. Even if that's enough, parks advocates note that any TOPS open-space purchase must remain purely open space and can be resold only if approved by voters.

Will Ultra sell the property in one parcel or in pieces? Will it retain mineral rights for future drilling? All are possibilities, Selvius says. And Council President Scott Hente notes that for now, it's Ultra's call. "Maybe their attitude is sit on it for a while," he says. "Even if they want to sell it off, that market is only going to go up."

zubeck@csindy.com

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