USOC: Q&A

Q and A: USOC DETAILS

The Gazette

2008-04-13 09:57:26

What happened?

The USOC agreed March 31 to accept a nearly $53 million incentives package from the city, a private developer and other parties that will keep its offices here for another 25 years. The City Council and Springs developer LandCo Equity Partners also approved the deal.

Why is this significant?

A local economist estimates that the USOC, which employs about 330 people locally, pumps $341 million a year into the local economy. The city also enjoys the prestige of having an internationally known corporate headquarters.

What will the USOC get?

New downtown offices in the six-story Stratton Pointe building planned for the northeast corner of Colorado Avenue and Tejon Street, which is owned by LandCo. The company plans to add four floors to the existing two stories on the site; the new building will be finished by July 30, 2009. USOC offices will occupy the upper five floors - 90,000 square feet of the 126,000-square-foot building. An Olympic-themed entertainment venue might be developed on the building's ground floor and lower level.
   The Olympic Training Center in the Springs, a part of the USOC's 34-acre campus at Boulder and Union Boulevard, will undergo a $16 million upgrade, including demolition of about 100,000 square feet to make way for 158 athlete housing units and an expanded cafeteria. Other improvements include renovation of the visitor's center and a new Union Boulevard entrance. Several USOC national governing bodies will move from the site to 40,000 square feet of renovated space in the former Colorado Springs Utilities gas operations building downtown.

Does the USOC pay anything?

Not much. The USOC will lease each of the two downtown buildings for $1 a year, and assume ownership of both after 25 years. The USOC will have to pay building operating costs.

Who's footing the bill for the $53 million package?

The city and LandCo, for the most part. LandCo will finance the construction of Stratton Pointe. Later this year, a nonprofit city entity will issue $20.8 million in certificates of participation - or COPs - and purchase the building's upper five floors from LandCo. COPs allow the city to borrow money without voter approval and repay the debt over time. After the COPs are issued, the nonprofit entity will lease the office space to the city, which will sublease it to the USOC for $1 annually.
   To fund the purchase and renovation of the former Utilities building, the city will issue $5.6 million in COPs. The Springsbased El Pomar Foundation will chip in $1.5 million for the Utilities building work.
   At current interest rates, and without any private contributions to offset its costs, the city estimates it will pay $1.7 million a year for 25 years to repay the COPs.
   Other elements of the package:
- LandCo will pay the $16 million in Olympic Training Center improvements. The company will be reimbursed for about half that cost from a downtown special district and the Downtown Development Authority, the voter-approved entity created by voters in 2006 to promote and fund downtown projects.
- LandCo will provide 50,000 square feet of temporary office space for the USOC in one of its other downtown buildings until the organization moves to Stratton Pointe. The space has a value of $700,000 and the El Pomar Foundation will pay $500,000 to renovate it.
 - LandCo will pay $6.8 million to renovate the first floor of the Stratton Pointe building.
 - A $600,000 pedestrian skybridge will be built to link Stratton Pointe with a city parking garage across the street; the city and its parking fund will share the cost.
 - The city and El Paso County will provide $500,000 in sales tax rebates to LandCo on its purchase of building materials for Stratton Pointe and other downtown projects.

What does the city get out of the deal?

Use of the USOC's logo. The USOC severely limits its use, and a local economist estimates the value to the city at millions a year.Springs officials say the city would have lost millions of dollars a year in tax revenue had the organization left.

What does LandCo get out of the deal?

In addition to Stratton Pointe, the company owns four buildings downtown and is considering building another. Having the USOC downtown likely will enhance the value of LandCo's properties, company officials say.
   Also, LandCo is working out a deal with the USOC to create the first-floor, Stratton Pointe entertainment venue. According to the deal worked out with the USOC, LandCo and the city, there will be two restrictions on the use of that space: no sexually themed businesses or those that sell nutritional supplements.
   LandCo also will be allowed to use the USOC's logo. And, company officials say they suspect Land-Co's ties to the USOC will boost the company's image as a residential and commercial developer.

What safeguards are built in for taxpayers?

Between years 15 and 25 of its deal with the city, the USOC will have the option to accelerate ownership of the Stratton Pointe and former Utilities buildings by paying off the outstanding principal and interest owed on the COPs.
   If the USOC were to move its headquarters out the Springs during the first 15 years of the agreement, it would be required to repay the city all of the principal and interest paid on the COPs up to that point. The city would then take title to the building, and could lease or sell it.
   If the USOC acquires ownership of the building after year 15, and then leaves town, it would be required to pay a percentage of the remaining principal and interest owed on the COPs. That percentage would start at 50 percent in year 16, and decrease each year until it reached 5 percent in year 25.

USOC: COP$

City of Colorado Springs pays, U.S. Olympic Committee stays

by John Hazlehurst

 Colorado Springs Business Journal / Jul 31, 2009

As City Councilman Bernie Herpin predicted several weeks ago, the new U.S. Olympic Committee deal is very much like the old USOC deal, except that the city is now the only paymaster.

The cost of the deal: more than $50 million.

If agreed to by City Council, the city, acting through a so- called Public Facilities Authority, will buy the top five floors of the building at 27 S. Tejon from LandCo Equity Partners for $18.8 million, and spend an additional $2.7 million on interior finish. The building will be leased to the USOC for a symbolic annual payment of $1. In addition, the city will reserve 240 parking places for the USOC's use in the city parking structure at the intersection of Colorado and Nevada.

The ground floor and lower level of the building will be retained by LandCo, at least for the present. It's not clear whether LandCo will lease it to an Olympic-related entity, or simply make it available to any prospective lessee.

If it chooses the latter, there are some businesses that won't qualify, regardless of financial soundness.

The new economic development agreement between the city and the USOC says that, "The city shall obtain agreement of any owner of the first floor or lower basement of the building through the Condominium Declaration or otherwise that the first floor and lower basement space shall not be used by such owner or any assignee for a business primarily involving the sale of nutritional supplements or similar products or for a business that primarily sells goods that are sexual in nature and such space shall be offered for use to USOC sponsors as a right of first offer on commercially reasonable terms."

The city also is on the hook for $16 million in improvements to the campus of the Olympic Training Center, which LandCo had originally agreed to finance. The agreement calls for the city to provide $13 million for funding the improvements within 90 days, and the remainder within 25 months.

The El Pomar Foundation has agreed to provide $1.5 million of the total, and the state's economic development unit will provide $500,000. Although the city is responsible for the remainder, city leaders plan to provide only $9.5 million in public funds, and raise $4.5 million from private donations.

Such donors will be recognized, as long as they ante up at least $30,000. The new EDA says that, "After the occurrence of the phase 1 funding date, the USOC agrees to construct, in its reasonable discretion, a permanent recognition display within a publicly visible portion of the Olympic Training Center to show appreciation for all individuals and entities donating $30,000 or more to fund the OTC improvements ..."

In addition, the city also will complete the renovation of the former city gas department building at 30 Cimino Drive, and lease it to the USOC for a dollar a year. The USOC will use the building to house national governing bodies.

The USOC will agree to lease both buildings for a period of 30 years, and to maintain its headquarters in Colorado Springs during that period. If the USOC decides to leave town and break the leases, it will be responsible for repaying much of the city's investment in the buildings, depending upon the length of their tenancy.

The original deal had a purported annual price tag of $1.7 million, the estimated cost of debt service on the certificates of participation that the city, through the PFA, will issue to pay for the acquisition and/or renovations of the two buildings.

It is now estimated that the city will issue as much as $35 million in COPs, up substantially from earlier estimates. Annual debt service will depend upon prevailing interest rates, but it will likely exceed $2 million annually. There will, in addition, be other annual costs, as the PFA, in its capacity as landlord, will be responsible for maintenance, repairs and miscellaneous expenses associated with both buildings.

According to the city's Web site, council has scheduled a special meeting at 4 p.m. today at city hall "... to publicly discuss the proposed Economic Development Agreement and proposed LandCo settlement. At council's formal meeting on Aug. 11, public comment will be heard on this item, and then council will vote on the agreements in their public session."