City strikes deal on southwest downtown property 

Ground rules

click to enlarge The pedestrian bridge, planned to open this summer, is under construction. - PAM ZUBECK
  • Pam Zubeck
  • The pedestrian bridge, planned to open this summer, is under construction.

More than three years after approving a trade of city property to the region’s largest developer for a downtown development project, the city of Colorado Springs is only weeks away from closing a major land exchange.

Under new terms that deviate from the original proposal, the developer, Nor’wood Development Group, wouldn’t be liable for a legal settlement involving environmental contamination on land adjacent to America the Beautiful Park.

The transaction will enable completion of the $11 million pedestrian bridge between the park and the United States Olympic and Paralympic Museum and Hall of Fame, set to open this summer, and additional development to the north, which could include a hotel.

Pollution left behind by a coal gasification plant that operated for decades and gave rise to a lawsuit filed by a neighbor against the city complicated the deal, delaying the closing. The lawsuit apparently is on the verge of resolution.

“We have been promised a settlement agreement from the City by June 19,” environmental attorney Randall Weiner of Boulder tells the Indy via email.

When the land swap goes through, it will lay to rest one of the city’s more sordid environmental episodes and clear the way for additional lower downtown rejuvenation.

Councilor Andy Pico calls the deal “pretty good” for the city.

In April 2017, Council agreed to trade 5.58 acres on either side of the pedestrian bridge site, 25 and 125 Cimino Drive, to CSJ No. 7 LLC and Urban Enterprises LLC, two entities controlled by 
Nor’wood. In exchange, the city would receive title to Nor’wood’s 1.12-acre trail connection at 301 Cimino near the Cimarron Street Interchange. (The trail connection has already been built.)

The El Paso County Assessor’s Office valued the city’s two properties at $1.2 million and Nor’wood’s tract at $270,000. The city’s appraisals, however, found the city’s two parcels were worth only $360,400 due to the contamination, and Nor’wood’s property, $904,000.

In any event, the original land swap required no money to change hands but assigned liability for environmental cleanup to Nor’wood.

The exchange was deemed good for the city, because Nor’wood agreed to remediate contamination left there by the coal plant that operated from 1890 to 1931, the last six years under city ownership.

But since the initial approval of the exchange in 2017, it’s been held up due to Nor’wood’s reluctance to inherit the lawsuit’s liability and that of the contaminated site, records show.

The coal plant was razed at mid-century and a brick Colorado Springs Utilities office building was erected in its place. That building was demolished in 2013, but cancer-causing hydrocarbons from coal tar, a byproduct of the gasification process, saturated the soil and underground water and remain there today. An environmental study from years ago pegged the cleanup cost at $4.5 million.

During that demolition, high winds whipped dirt and debris onto a neighboring property, 219 W. Colorado Ave., known as the Trestle Building and owned by Kat Tudor. She, her business partner Don Goede and her Smokebrush Foundation sued the city, alleging chemical and asbestos contamination and possible health impacts. The asbestos claim didn’t pass muster in court, but on Feb. 6, 2018, the Colorado Supreme Court dismissed the city’s argument that it’s immune from responsibility for the coal tar pollution.

By ruling the city liable for gas pollution it generated 80 years ago that’s migrated to the Smokebrush property, the court essentially cleared the way for Smokebrush to sue the city for damages.

Weiner says the case is expected to settle soon, and Pico says that negotiations are continuing, though a settlement appears to be pending.

Pico also says the city likely will agree to mitigate the site’s surface only. Asked what that would involve, considering that asphalt currently covers the site, Pico says, “Pretty much nothing.”

Mitigation beneath the site, however, would be left to Nor’wood under the closing agreement. At one time, a hotel was envisioned there with an underground parking garage.

It’s worth noting that the chunk of land the city will get in the deal from the entities controlled by Nor’wood was originally owned by the city. In 2005, the city deeded the property to the Colorado Springs Urban Renewal Authority, which, in turn, sold the property for $550,700 to another developer, Palmer Village Development LLC, controlled by Jeffrey Smith who founded Classic Homes. Several transactions later, entities controlled by Nor’wood acquired the property.

click to enlarge Tracts around America the Beautiful. - CITY OF COLORADO SPRINGS
  • City of Colorado Springs
  • Tracts around America the Beautiful.
Bob Cope, the city’s economic development officer, says via email that Nor’wood has agreed to pay the city $214,500 for the 125 Cimino parcel, the bridge site, along with giving the city 301 Cimino Drive. That’s the difference between the estimated values of those two properties, resulting in an even exchange, he says.

Should Nor’wood acquire 25 Cimino, there would be no additional payment to the city, Cope says, because that tract has “a negative value due to the estimated cost of environmental remediation exceeding the estimated value of the property as remediated.”

But the agreement leaves Nor’wood in charge of remediation, he says.

Colorado Springs Utilities, which reportedly also bears some liability for the pollution, cited the lawsuit and declined to comment. Nor’wood’s presi
dent Chris Jenkins didn’t respond to an email seeking comment.

A land swap resolution — queued up for approval on May 26 but postponed indefinitely — notes the city is responsible for any court-ordered or voluntary cleanup mandated by a settlement, and that Nor’wood would then buy the 25 Cimino property for $3,683,100. But Cope says no payment from Nor’wood is being required, although the developer is responsible for remediation of the property below the surface.

Nor’wood also wants to claim as a donation for IRS tax-deduction purposes the difference between the value of 301 Cimino and the combined values of the city’s two tracts. Cope says that’s pending.

The resolution notes that the new arrangement “is in the best interest of the city,” but City Councilor Bill Murray has expressed skepticism, noting the transaction could lead to America the Beautiful Park being viewed as privately owned by Nor’wood.

But as Pico says, “It’s pretty good for us. We get out from underneath the cleanup. We get out from under a continuing liability.”

And, he adds, “When they [Nor’wood] start digging, they have to do it [mitigation].”

The bridge is being built with museum bond funds and Pikes Peak Rural Transportation Authority tax money. Nor’wood also is contributing.


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