Burger joints, supermarkets and fast-casual restaurants are hardly the kind of architectural marvels that make passers-by stop and gawk. But they're doing wonders for South Nevada Avenue in Colorado Springs.

Just over three years ago, the City Council declared a 100-acre area — about a mile south of downtown and anchored by South Nevada and South Tejon Street — as an urban renewal site. Since then, Natural Grocers, Chick-fil-A, Five Guys Burgers and Fries, Smashburger and Tokyo Joe's have been among the newcomers along Nevada's west side, while nearly 20 townhomes have been built just west of Tejon.

More development is on the way, too, including additional restaurants and townhomes, stores, apartments and a hotel.

"Everybody's doing well down there," said Ray O'Sullivan, a developer working with local businessman Sam Guadagnoli, who heads one of three redevelopment groups brought on board by the Colorado Springs Urban Renewal Authority to improve the area. "It really cleaned it up nicely."

South Nevada, however, has had a rocky reputation because of its 1950s-era motels, used-car lots, pawn shops and crime problems. So it shouldn't come as a surprise that the nearly 3 1/2-year-old redevelopment effort hasn't always been a smooth one.

One of the redevelopment groups hasn't yet gotten its project off the ground, even as the others have seen some quick successes.

At the same time, the future revitalization of Nevada's east side has been the source of a thorny, ongoing dispute among at least two of the redevelopment groups.

One group now questions if any significant redevelopment will take place on Nevada's east side as a part of the current redevelopment effort. And some Urban Renewal Authority members acknowledge they might have erred by allowing three groups to handle the redevelopment project instead of casting their lot with a single master developer.

"Three developers makes it much more challenging and a little bit messier in the kitchen," said Wynne Palermo, the authority's chairwoman. But, she added, "the end result will be a wonderful experience."

The project's end, however, remains several years away. In the meantime, here's a look the South Nevada project up to this point:

WHAT'S NEW?

The City Council in November 2015 designated the 100-acre area — bounded roughly by Interstate 25 on the north, Cheyenne Road on the south, Wahsatch Avenue on the east and Tejon on the west, with Nevada running almost down the middle — for urban renewal. The decision came after a consultant determined that blighted conditions spelled out under the state's urban renewal law were present in the area, such as a poor street layout, unsafe conditions and decaying buildings.  

Like other urban renewal projects, the designation meant that increased sales and property tax revenues generated by new development within the South Nevada and South Tejon zone could be used over 25 years to fund public improvements in the area.

Three local groups signed agreements with the Urban Renewal Authority to redevelop portions of the area: On the Ivy, headed by Guadagnoli, who owns several downtown Colorado Springs nightclubs and developed a retail project at Powers and Stetson Hills boulevards; Harder-Diesslin Development Group, co-owned by Walt Harder and the developer of properties for several national retailers; and The Equity Group, headed by longtime developer Danny Mientka.

Guadagnoli and Mientka bought land in the area several years before the City Council's urban renewal designation, El Paso County land records show. Harder's group purchased property in 2016.

Guadagnoli's group has completed 19 townhomes as part of its Canyon Creek Townhome project. It also opened the Prime 25 steakhouse in a remodeled building on South Tejon and constructed a multi-tenant building northwest of Nevada and Ramona Avenue, which houses Smashburger, Tokyo Joe's and European Wax Center.

Harder built the Shoppes on South Nevada southwest of Nevada Avenue and Navajo Street, now home to Natural Grocers, Five Guys Burgers and Fries, Zoes Kitchen and Chick-fil-A. Natural Grocers and Chick-fil-A, Harder said, have been top-performing locations for the two chains.

"There’s such a dearth of good product in the area," he said. "There's nothing else like it in that neck of the woods. So the demand for good product in that quadrant of town is high and it hasn't been served in the past. And now it's there. It's just a function of availability."

And in a classic case of addition by subtraction, the seedy Chief and Cheyenne motels — where police routinely responded to reports of drug dealing and prostitution — were among several aging, vacant and dilapidated structures torn down to make way for the new uses. 

WHAT'S NEXT?

Guadagnoli's On the Ivy is poised to begin a 24-unit, second phase of its Canyon Creek Townhome project, O'Sullivan said. The group also plans three, 25-unit apartment buildings that would start construction in six to nine months along Navajo, Brookside Street and Mount Washington Avenue.

The group's signature project would be a hotel planned southeast of the Prime 25 steakhouse, along Cheyenne Creek. The hotel has been on the drawing board since the redevelopment project began, but it's evolved over the last few years and is changing again.

The hotel now is expected to be 144 rooms. But it no longer will be a Hilton, and instead will carry the name of another top hotel brand, O'Sullivan said. He declined to identify which brand that might be, but said the change was meant, in part, to bring in a brand the Springs lacks and that would be successful in this market.

The hotel is targeted for a 2021 opening, O'Sullivan said.

Another project coming to the South Nevada area: Creekwalk, a 50,000-square-foot, five-building shopping center planned by Mientka, which would be developed northwest of Nevada and Cheyenne Road. The single-story buildings would be constructed just west of a McDonald's and a Wells Fargo bank; several structures in the area are being razed.

Mientka expects Creekwalk to have up to 10 sit-down restaurants — no drive-thrus — that could include as many as a half-dozen that would be new to Colorado Springs. Stores and service providers also would be part of the shopping center, whose buildings and storefronts — some with patios — will be laid out to enhance access and views to Cheyenne Creek and turn it into an amenity for shoppers.

"There just isn't anything like this that's been developed for 15 years," he said. "With what we're going to do with the creek, it will be a real shopping center, as opposed to a retail strip or quick-serve restaurants."

Palermo credits Mientka as being the driving force behind South Nevada's redevelopment, though he's trailed the Guadagnoli and Harder groups in terms of launching his own project.

But the nearly 8-acre Creekwalk project has required time to buy and assemble 26 parcels in the southern portion of the redevelopment area, Mientka said.

"Each of the developments that have been completed on Nevada involved two or four parcels, individually," he said. "Ours is 26. We have assembled 26 parcels from 16 different owners with 24 structures. And you need every one of them. It's a puzzle, and...it's not something you can get a development plan approved upon, or borrow against or issue bonds against until every piece of the puzzle is in its place."

A City Council-approved business improvement district created for Creekwalk would issue about $20 million in bonds to finance public improvements to support the project, Mientka said. The City Council must authorize the business improvement district's issuance of that debt, which could happen in May.

The district's bonds would be repaid by a public improvement fee, a special property tax levied by the district and increased sales and property tax revenue generated by Creekwalk's stores, restaurants and other businesses. The Urban Renewal Authority still must agree to pledge the sales and property tax money toward repayment of the bonds.

If the council gives its OK on the bonds, Mientka said he expects them to be marketed and sold to investors in May. Talks are in various stages with restaurants and other shopping center users, he said, and his goal is to open store and restaurants starting in the fourth quarter of 2020.

• WHAT'S GONE WRONG?

As part of the South Nevada project, the Urban Renewal Authority negotiated separate agreements with the three redevelopment groups that spell out their responsibilities and expectations — a routine part of any urban renewal effort.

In the case of the South Nevada project, the authority gave Mientka control over increased sales and property tax revenue that would be generated from redevelopment on Nevada's east side and a small portion on the west side outside his Creekwalk project.

In exchange, Mientka agreed to use that money to fund so-called common-corridor improvements in the South Nevada and South Tejon area — burying power lines along Nevada, widening Cheyenne Road and implementing city-approved street designs along Nevada to improve its sidewalks, curbs, landscaping, signs and lighting.

But while Mientka has control of the tax revenue to be generated by development largely on Nevada's east side, he's not pursuing projects on that side of the street and instead is focused on Creekwalk on the west side. 

Harder says he was shocked when he learned Mientka had been given authority over future revenues from development on Nevada's east side. Land costs are pricey on that side of Nevada, and he can't afford to buy properties as well as undertake east-side redevelopment unless he's allowed to tap some of the tax money controlled by Mientka and pledged for common-corridor upgrades, Harder said.

Making one developer the gatekeeper of east-side revenues was a mistake and redevelopment of that side of Nevada now is languishing as a result, Harder said. Up to now, no redevelopment has taken place on Nevada's east side other than a new Starbucks and Dunkin' Donuts; those projects were done by the owners of those properties and businesses and not the three redevelopment groups.

Mientka, however, says Creekwalk and other projects on Nevada's west side will help position the rest of the corridor for redevelopment and will encourage east-side activity.

Palermo, the Urban Renewal Authority chairwoman, said the three redevelopment groups negotiated their own deals with the Urban Renewal Authority. Mientka, she said, was the only one who stepped up to accept responsibility for making the common-corridor improvements tied to future east-side revenues.

Mientka, Palermo added, has championed Nevada's redevelopment as a way to clean up a corridor that's been an eyesore for decades, and not just as an opportunity to bring restaurants and stores to the area.

O'Sullivan, meanwhile, said he and Guadagnoli aren't thrilled with the way the east-side dispute has played out. But at this point, he said he and Guadagnoli have plenty to do on Nevada's west side and support Mientka "wholeheartedly" as he moves ahead with Creekwalk.

For her part, Palermo says she's trying to look beyond the spat and instead focus on the completion of South Nevada's makeover.

"It’s been disappointing that they’ve been on different pages or some are not as patient as others," she said. "Danny has a longer planning time, a longer acquisition time. It's just taking him longer...We think that in the end, it's going to be what we want it to be."

Business writer, Colorado Springs Gazette

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