Business ties disclosed; Rivera denies conflict

Colorado Springs Mayor Lionel Rivera denied Friday that he had a conflict of interest in a $53 million deal he helped negotiate between the city, LandCo Equity Partners and the U.S. Olympic Committee to build a downtown headquarters and other facilities for the USOC after Friday's revelation that he had a financial relationship with LandCo Chairman Ray Marshall.

In fact, Rivera said, he favored another proposal by a different developer, Ray O'Sullivan, some of whose properties are now in foreclosure.

"I would have loved to have seen Cooper Tower being built across the street from City Hall, a new (22-story) skyscraper with the big (Olympic) rings on top, but that didn't happen," Rivera said in a telephone interview from Rhode Island, where he is attending the U.S. Conference of Mayors annual convention.

"Personally, I didn't express any favorites to anybody, but the idea of downtown expanding to the east with a new building was pretty exciting to me," he said.

The mayor, as he has in the past, declined to say whether Marshall was a client of his at UBS Financial Services, a global financial institution where Rivera is vice president of investments. He said industry standards prevent him from doing so.

The business ties between Marshall and Rivera, long rumored, became public at a meeting of the city's Independent Ethics Commission on Friday, when Marshall's attorney, John Cook, told the commission that Rivera managed at least three accounts tied to Marshall. The commission is investigating a complaint against the mayor that alleges he had a conflict of interest in the USOC deal because of a business relationship with Marshall.

Construction continues on a downtown headquarters building for the USOC, but other issues are dogging the deal, including a lawsuit, an investigation by the 4th Judicial District Attorney of Marshall and various financial problems.

Chantell Taylor, director of ethics watchdog group Colorado Ethics Watch, said Cook's acknowledgement of the Marshall-Rivera business relationship seems to place Rivera squarely in the middle of a violation of the city's ethics code.

"Even if the business relationship technically terminated within days or weeks of when the negotiations began, that doesn't cure the appearance or perception of a conflict of interest," she said.

Cook told the panel that in 2007, Rivera was handling the accounts tied to Marshall.
That was the year the USOC deal took shape.

In an Aug. 28, 2007, letter that USOC consultant Jim Didion sent to Rivera and the City Council, Didion said the USOC needed 90,000 square feet of administrative office space and 200 housing units for athletes who train here. Didion, a real estate veteran, was heading the USOC's effort to upgrade its facilities.

On Sept. 12, 2007, Colorado Springs officials authored a "request for information" that explained that the city's Economic Development Division was seeking to "attract a headquarters operation to downtown" and wanted to know if local real estate firms were interested in responding with development proposals.

The RFI said the firms needed to submit "letters of interest" to the city's Economic Development Division by Sept. 19, 2007, and submit their development proposals by Oct. 10, 2007. The RFI was sent to LandCo; Griffis/Blessing Inc.; O'Sullivan's RDS Development; Nor'Wood Development Group; and Classic Cos. Classic and Nor'wood responded Sept. 12 with a letter of interest; Griffis/Blessing submitted a letter the next day. RDS submitted a development proposal Sept. 21. It's unknown when LandCo responded.

LandCo beat out the three other developers, and a three-way deal with the USOC, LandCo and the city was announced March 31, 2008.

Cook, a partner at Hogan & Hartson, told the commission Friday that Marshall and the mayor severed their financial relationship on all three UBS accounts in October 2007.

"Mr. Marshall required Mr. Rivera no longer be his account representative," Cook said.

He declined afterward to explain why Marshall made the request.

Cook told the commission that one of the accounts was an individual account opened in February 2005. The last statement for that account with Rivera's name on it was in December 2007, he said.

The two other accounts involved an entity in which Marshall "had a remote interest in," Cook said. The first of those two was opened in January 2007; the last statement for that account with Rivera's name on it was in December 2007, Cook said. The third account was opened in July 2007 and closed in December 2007, also the last month in which a statement shows Rivera as account representative.

"We do not know the reason for a modest delay in paperwork showing Rivera no longer the account representative," he said.

The panel on Friday decided to ask Rivera and local businessman Ron Johnson, who filed the complaint, to submit witness lists to the ethics commission.
Mal Wakin, a member of the commission, requested a face-to-face meeting with the mayor to delve into his relationship with Marshall.

"That would give us some idea where we want to go from there," Wakin said.
Rivera said he will cooperate with the commission's request for a meeting.

"I'm more than willing to cooperate with the ethics commission, and I'll work with them on whatever kind of follow-up they want to do to (Friday's) hearing," he said.

Rivera said he stands by his decision to participate in the USOC negotiations.

"I have recused myself from many items on City Council, and any time I believe I have a conflict of interest, I recuse myself," he said. "I don't believe I have one now. I didn't have one back then."

Rivera also said Friday he didn't ask City Attorney Patricia Kelly for legal advice as negotiations as the USOC project got underway.

"I never asked the city attorney whether or not I could be involved in negotiating with the U.S. Olympic Committee on the project," he said.

Rivera also noted it was the USOC and not the city that picked LandCo for the project.

"They did their own analysis of the proposals," he said. "They narrowed it down and then they chose LandCo. The city didn't have a vote in who got to provide the development services for the USOC. That was the USOC's choice."

USOC acting CEO Stephanie Streeter on Friday discounted the ethics question, saying it doesn't matter because it occurred under the old agreement, which is bogged down in a lawsuit filed by LandCo in March.

"The deal as it existed with LandCo doesn't exist anymore," she said.

In the lawsuit, LandCo accused the city and the USOC of failing to live up to their obligations. This week, it dismissed the USOC from the suit, but the fight with the city continues.

City Council members had mixed reactions to Cook's revelations Friday.

"What would I have done? Under my standards, I would have recused myself," Vice Mayor Larry Small said.

City officials are negotiating a new deal to keep the USOC in Colorado Springs, but Councilman Jerry Heimlicher said the ethics investigation may slow things down.

"I personally could not vote on the new agreement until those allegations are cleared and the lawsuit is resolved," he said

Still, he said he doesn't think Rivera did anything wrong.

"I took it as good news that the relationship between the mayor and LandCo and all the various others had been terminated prior to the final selection of LandCo and before the final contract," he said. "I'm not surprised that he was their financial adviser, but being their financial adviser doesn't prove anything was done wrong. It proves he had a relationship, and they had enough sense to dissolve that relationship prior to the final selection (of LandCo) and prior (to the signing of the contract)."

Former Councilwoman Margaret Radford, who served on the council during the USOC negotiations, echoed a similar sentiment.

"Apparently, the mayor saw a potential conflict of interest coming and, in plenty of time, ended the relationship that would have caused that conflict. I see no conflict then. I see no conflict now," she said. "This in my mind meets every standard of having prevented a conflict of interest."

But Councilman Tom Gallagher said Rivera made "an error in judgment" by not disclosing his ties to Marshall.

"He should have disclosed it to the public," said Gallagher, who was accused by some of his colleagues of a conflict of interest in 2006 because of his ties to a firm competing with the city for water rights.