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Ultra announcement raises Banning Lewis questions

March 8, 2013
photo - Looking west across a portion of Banning Lewis Ranch from Highway 24 Wednesday, March 6, 2013.  Photo by MARK REIS, THE GAZETTE
Looking west across a portion of Banning Lewis Ranch from Highway 24 Wednesday, March 6, 2013. Photo by MARK REIS, THE GAZETTE 

Colorado Springs has changed dramatically since the city annexed the massive Banning Lewis Ranch a quarter-century ago.

But one thing hasn’t changed: The fate of the ranch itself remains a giant question mark.

Since it was annexed by the Springs in summer 1988, the more than 21,000-acre ranch has gone through multiple owners. Little of the residential and commercial development envisioned for the property has taken place.

After one set of owners filed for Chapter 11 bankruptcy protection in 2010, the 18,000-acre lion’s share of the property was purchased several months later at an auction by Houston-based Ultra Resources. The energy company surprised many in the community when it announced it wanted to drill for oil and gas on the ranch.

But that hasn’t happened. Ultra tangled with the city in court, seeking unsuccessfully to get out from under an annexation agreement that regulated the ranch’s development. Meanwhile, Ultra drilled three exploratory wells outside the city, in unincorporated El Paso County.

Last week, citing disappointing results from those wells, Ultra said it would shelve its oil and gas drilling efforts for now — waiting to see if another Texas-based company that’s drilling in the county has better results.

But what happens if that company also decides that drilling in the area isn’t worthwhile?

“We have made no decisions regarding the future of Banning Lewis Ranch,” Doug Selvius, Ultra’s exploration vice president, said via email.

Ultra could sit on the land and do nothing, or sell or lease it to another energy company, some local real estate industry members say. But Ultra also could sell the property to somebody other than an energy company — raising new questions about the future of the Banning Lewis Ranch.

If Ultra sells its land, who’d buy it? Would its 18,000 acres be sold in one parcel or piecemealed? Would a new owner resume residential and commercial development on the property, as originally envisioned? Or should a community discussion take place about potential uses for the property?

“It’s a fascinating situation,” said Les Gruen of the Urban Strategies planning firm, who worked for Mobil Oil when it owned the ranch in 1981.

The Banning Lewis Ranch is bounded roughly by Woodmen, Marksheffel and Meridian roads and Fontaine Boulevard. When the ranch and another parcel were annexed 25 years ago, the land formed the eastern one-third of the city.

The ranch’s development was estimated to take about 50 years, and at one point was expected to accommodate 75,000 households, 180,000 residents and 79 million square feet of commercial space. Since its annexation, however, only a few hundred homes have been constructed, southeast of Woodmen and Marksheffel.

That homebuilding has taken place on land now controlled by Denver-based Oakwood Homes. Oakwood and a financial partner bought the northern 2,600 acres of the Banning Lewis Ranch — separate from Ultra’s 18,000 acres — from a bankruptcy creditor in 2012.

Oakwood probably would be interested in buying more of the land if it becomes available from Ultra, said company CEO Pat Hamill.

“I think we’re going to have a nice conversation with them and talk about options,” Hamill said about Ultra Resources.

But Oakwood wouldn’t be interested in buying the entire 18,000 acres, Hamill said.
“Absolutely not,” he said. “It’s too big.”

If Ultra walked away from the ranch, it might get more money for the land if it sold it off in chunks, said City Council President Scott Hente, who’s also a homebuilder. Smaller parcels would be easier to develop and therefore would have more value to buyers, he said.

Yet, multiple sales would take longer, and therefore it would be easier for Ultra to sell to a single buyer, said John Cassiani, a longtime member of the Springs’ real estate community who served as an executive overseeing the ranch’s development under previous owners.

There are a few groups around the nation that might have interest in buying the entire 18,000 acres, Cassiani said.

Other members of the local real estate industry are dubious there would be buyers for the property — at least, for the entire acreage.

Any buyer would have to make a costly financial commitment to prepare the property for development — and that’s on top of the purchase price, said Doug Stimple, CEO of Classic Cos., the Springs homebuilding and development company. The property would need tens of millions of dollars worth of utilities, roads and other basic public improvements.

“Development on that scale, when you’re talking about extending water, sewer and electricity, you’re talking a very large development obligation,” Stimple said.

Classic, Stimple added, isn’t interested in making that level of financial commitment. Sure, the single-family housing market is recovering, but Classic already has plenty of home sites it’s developing and building on; it’s also buying lots from Oakwood and building homes on the ranch’s northern parcel.

“We’ve got enough to do,” Stimple said.

Regardless of whether all or portions of the property are sold, the property’s annexation agreement would be a barrier to any buyer, some real estate industry members said.

The agreement makes developers responsible for roads, utilities and other improvements as the land is developed. And while all developers must make similar commitments even on far smaller parcels, the Banning Lewis annexation agreement requires even more improvements, Cassiani said.

“It’s always been a major obstacle for developers,” Cassiani said. “It put more onus on the developer of the Banning Lewis Ranch than any other developer.”

Special districts created on the property require homeowners to pay extra property taxes to help pay those costs. Still, “if you add up the costs of all those obligations, before you even start to build a house or sell a lot, it makes someone uncompetitive in the market,” Gruen said.

Hente said the annexation agreement was put in place by previous council members to protect current Springs residents from being stuck with the tab for developing the ranch’s public improvements.

As a builder, however, Hente acknowledged that changes in the annexation agreement could make the land more attractive to developers.

With a decision still to come from Ultra, several business people and community members said now is the time for a public conversation about the property’s future.

That discussion should focus on what uses could best serve the area, and should include Springs Mayor Steve Bach, city officials and civic leaders, among others, said Oakwood’s Hamill. Perhaps the property would be suited for a reservoir, a job-generating research and development park or other uses, he said.

“I think the whole Ultra property should be looked at,” Hamill said. “How can it become an amenity and asset for the region? We don’t need a master planned community that’s another 18,000 acres.”

Dave Gardner, founder of Save The Springs, a growth control advocacy group, said the community needs to consider it should look like in the next 50 years — and examining the Banning Lewis Ranch should be part of that effort.

The wisest long-term use would be for Colorado Springs, possibly in partnership with El Paso County, to buy the land and avoid the kind of burdensome infrastructure costs associated with growth over the last 10 to 20 years, Gardner said. The property could become open space or even be used for broader community benefits, such as raising food, he said.

“Something other than traditional development, that’s for sure,” Gardner said of the ranch’s future.

For his part, Bach said in an interview that he was disappointed that Ultra might walk away from the property, which could cost the community jobs and a potential economic windfall.

Still, he endorsed Hamill’s idea for a community conversation about the ranch,. A large recreational lake, open space and trails all could draw tourists to the area if developed on the ranch, while a research and development park and perhaps residential uses could benefit the region, he said.

Like Gardner, Bach said he was concerned about the costs associated with sprawl. What’s more, Bach said, there’s roughly 12,000 acres in the city that could serve as infill sites for development.

“Pat’s got it right,” Bach said of Hamill. “It’s a great opportunity to reset our thinking on that (the ranch) and redefine what it should be.

“I’m just anticipating that we’re going to have a pretty, thoughtful, robust conversation,” Bach added. “It’s a great time to start over. What do we really want the Banning Lewis Ranch to be long term?

Contact Rich Laden: 636-0228 Twitter @richladen
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