Besides Nor'wood, one other 'entity' submitted an undocumented bid for downtown land 

click to enlarge Former Commissioner Dennis Hisey backed the sale. - FILE PHOTO
  • File photo
  • Former Commissioner Dennis Hisey backed the sale.

When homeowners want to sell, they usually hire a Realtor and post a "for sale" sign in their front yard. The goal: to attract many buyers who will compete and ultimately offer the highest price the market will bear.

But it appears there was little or no competition for two prime lower downtown properties when the government owner, Pikes Peak Regional Building Department, decided to sell. Rather, a deal was made with the region's biggest developer, Nor'wood Development Group.

While RBD's attorney Todd Welch says via email the agency "followed its own procedures for the sale," that process departed from steps used by Colorado Springs and El Paso County for disposal of surplus land.

And while it's common practice for government agencies to disclose all bids submitted after a sale is approved, RBD won't release the sale price for Nor'wood or information about "one other entity" that showed interest but reportedly submitted an unacceptably low bid.

At issue are two properties — a building at 101 W. Costilla St., RBD's former headquarters, and a nearby vacant lot at 435 Sahwatch St. that RBD bought in 2010.

Both are near the Olympic Museum and Hall of Fame site at Vermijo Avenue and Sierra Madre Street. Groundbreaking for that project is to take place this year and is expected to trigger other kinds of development in that vicinity.

RBD's Costilla property shares borders on three sides with property owned by entities controlled by Nor'wood, which owns other tracts in the Southwest Downtown Urban Renewal Area for which it serves as master developer.

On Aug. 24, 2016, the RBD commission voted unanimously to OK a "participation agreement" with Nor'wood. The commission was composed of then-El Paso County Commissioner Dennis Hisey, Colorado Springs City Councilor Larry Bagley and Green Mountain Falls Town Trustee Tyler Stevens. (Commissioner Mark Waller has since replaced Hisey, who left office in January under term limits.)

The agreement was to form a partnership between RBD and Nor'wood under which RBD's two tracts and several others owned by Nor'wood would be developed. The agreement didn't specify how much RBD would receive or what type of development would take place, but did designate RBD as a 37-percent partner, though values of its property were nearly double those of Nor'wood's.

The agreement also posed potential conflicts of interest, because RBD would have been called upon to regulate its own business partner regarding building codes and permits. (RBD denied any conflicts existed.)

But the deal fell through after the Independent reported that state law bars government agencies from certain types of investments, including land speculation, leading RBD to pull back.

After abandoning the participation deal, RBD agreed to sell its parcels to Nor'wood. Asked what process was used, Welch says via email, "The item was presented to the Regional Building Commission ... in open public meetings where any member of the public could attend and speak. ... The public was advised in open public meetings that PPRBD was considering the sale of the property."

The first meeting agenda that mentioned a land transaction was for the Nov. 17 meeting. The agenda was posted on RBD's website without any links to backup materials. It's the same meeting at which the sale to Nor'wood was approved.

The agenda included this closed executive session request: "Discussion of Real Estate Matters, i.e. 101 West Costilla Street and 435 Sahwatch Street." (Notably, the agenda contained no reference to a pay raise for Building Official Roger Lovell, though meeting minutes show the executive session also included discussion "of personnel matters" and report a subsequent vote in open session to grant him a 5 percent pay hike.)

Minutes of the Nov. 17 meeting report the executive session, which lasted 52 minutes, was for the purpose of discussing "the purchase or lease of real estate." The notice did not state commissioners would consider sale of real estate.

After resuming in open session, the minutes say, "Todd Welch noted that no decisions were made during the Executive Session, and the only items discussed were the two items on the agenda." (The pay hike was not on the agenda.)

The minutes then report: "Hisey stated in review of RBD's legal options in disposing of excess property, it has been determined that it is in the best interests of the public good to enter into negotiations with the Master Developer to sell 101 West Costilla Street and 435 Sahwatch Street."

The vote was unanimous.

The next mention of the transaction came in the Feb. 22 meeting agenda, which contained an item titled, "Resolution for Sale of Property at 101 W. Costilla Street and 435 Sahsatch [sic] Street."

The motion to approve was made by Bagley, seconded by Stevens and passed on a vote of 2-0. Waller was not present at the meeting.

"The Resolution that was passed in February," Welch says in an email, "authorized RBD to enter into the agreement to sell the property but came with the request from the Board that prior to sale the item would come back to the Commission for approval of sale price and terms / conditions."

Asked if other bids were received, Welch tells the Indy in an email, "One other entity expressed interest in one of the properties but the offer from that entity was about 1/3 less than the appraised value." He didn't respond further, so it's not publicly known who submitted the bid, when it was submitted, the amount offered, or when commissioners voted to reject it. None of that information can be found in RBD minutes. Welch also didn't specify how much Nor'wood will pay for the properties or under what terms.

"There is currently no contract in place," Welch said, "although Norwood [sic] has stated it will pay market value." Waller confirms he's told Nor'wood will pay appraised price.

Thomas Colon & Associates, Inc., which RBD paid $6,500 for an appraisal, set the two tracts' combined value at $3,265,000.

In contrast to RBD's opaque process, Colorado Springs' transparent and fairly complex procedures for selling surplus land are laid out in a real estate manual. It says the city uses a sealed-bid auction process, unless the property is part of a land exchange or is sold to "one logical, potential purchaser," in which case other procedures are used. If property is sold via sealed bids, the manual calls for the city to publish a sale notice in a newspaper of record and post notices on the property 10 days prior to bid opening. The manual says the buyer is required to "bring certified acquisition funds" to the closing table.

El Paso County's procedure, as described by county spokesperson Dave Rose via email, involves hiring a consultant to evaluate properties and advise county commissioners. Rose didn't outline a specific step-by-step process, saying methods vary from parcel to parcel. One property listed on the open market before being sold was the former human services building on Spruce Street, for example.

Another large property, the former Health Department building at 301-305 S. Union Blvd., currently is listed for sale for $1.5 million. Though no sign is posted, the listing appears online.

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