March 18, 2009
The developer of the U.S. Olympic Committee's new Colorado Springs headquarters faces another financial hurdle: A northside property owned by a partnership he heads is in foreclosure.
Ray Marshall, whose LandCo Equity Partners is transforming a downtown Colorado Springs corner into a six-story office building for the USOC, signed for $7 million in loans on 110 acres north of the Briargate area on behalf of a partnership he heads. The lender, a unit of Dutch financial giant Ing Group, sought foreclosure Feb. 12 on the loans made to the partnership, Mount Vernon Estates Land Holdings LLC.
However, Marshall's Denver attorney, Mark Greenberg, insisted that neither Marshall nor LandCo have "any obligation with respect to" the loans. He also said the loans have no relationship to either Marshall's or LandCo's ability to "access the financial markets" to fund work on the USOC headquarters and related projects.
The foreclosure comes as LandCo, the USOC and the city are trying to renegotiate the terms of a $53 million deal reached a year ago to keep the USOC in Colorado Springs for 25 years and finance its move to the new headquarters building. That deal also includes creating a new home for national governing bodies for Olympic sports and constructing improvements to the Olympic Training Center in town.
Marshall is listed in El Paso County land records as manager of North County II LLC, which in turn is manager of Mount Vernon. He is the only person to sign the 2006 loan for the property on behalf of Mount Vernon. He personally guaranteed part of the loans, Greenberg acknowledged. However, he added that Marshall was released from that guarantee once zoning and other land-use approvals were completed late last year.
The property ended up in foreclosure, Greenberg said, because "certain investors failed to respond to capital calls," which are requests for money, needed to make payments on the loan. "There is only so much the manager can do," Greenberg said.
The property is scheduled to be auctioned June 24 by the El Paso County Public Trustee's Office if Mount Vernon doesn't make delinquent payments or pay off the loan. The entire $7 million balance is still due, according to the foreclosure notice.
Meanwhile, construction on the USOC headquarters building, at 27 S. Tejon St., is half-done and scheduled for completion July 30. A city agency was supposed to buy the top five floors of the headquarters building in November after selling $27.5 million in securities called certificates of participation, but the transaction was delayed because of weak financial markets.
City officials said in mid-February they expected the certificates to be issued in four to six weeks. Mayor Lionel Rivera said Tuesday that they would be issued "soon," but declined further comment.
The USOC has not signed a lease on the headquarters because it is not yet required to sign it, USOC spokesman Darryl Seibel said. "The city confirmed several weeks ago that it could issue the certificates of participation ahead of our signing the lease, and that's what we expect will be done." He said last week the USOC is "still proceeding with the expectation that the proposal that was presented will be completed."
The deal also includes $7.1 million in upgrades to a former Colorado Springs Utilities building at 30 S. Cimino Drive to house the national governing bodies and $16 million in improvements to the training center. Marshall said the NGB building is "about 50 percent done" and should be ready within two months, but work hasn't started at the OTC and likely won't be done by the Dec. 15 deadline.
If the USOC signs the lease on its new headquarters, it could lose leverage to ensure the OTC work is completed. Under the agreement among LandCo, the USOC and the city, LandCo was to fund the OTC improvements.
The financing delays come as two contractors who allege they haven't been paid for work on the USOC headquarters building have filed mechanic's liens or paperwork giving them more time to file liens against the property.
Call Heilman at 636-0234