USOC deal was months in the making

Secret communications and lawyered-up meetings.

An eleventh-hour, Western Slope plane trip to solicit cash.

Disappointment on the part of one developer who lost the deal; frustration and, eventually, elation on the part of another who won.

When the U.S. Olympic Committee accepted a nearly $53 million incentives package March 31 to keep its headquarters in Colorado Springs for 25 years, it capped months of tense negotiations and emotional ups and downs.

All the while, city officials sweated out an ultimatum from the USOC: Meet our needs for new offices and other upgrades or we'll leave town.

"You have to make the assumption that we would have gone if the city had not been as responsive as it was," Jim Didion, former chairman of national real estate giant CB Richard Ellis and the USOC's volunteer consultant on its search for new facilities, said last week. "We had proposals from other places that were very good."

The Springs package - funded with taxpayer money and private contributions - includes free downtown offices that will allow the USOC to move from its aging headquarters at Boulder Street and Union Boulevard, where it's been since 1978.

Moving the headquarters will free more space for athletes at the USOC's adjacent Olympic Training Center, which will receive millions of dollars in upgrades.

This wasn't the first attempt to cement ties with the USOC. Four years ago, two local real estate companies proposed moving the organization's offices to southwest downtown as part of their plan to build a convention center. That deal was unsuccessful, but city officials and local businesspeople continued to discuss a move with the USOC.

Based on interviews with people familiar with the USOC deal and documents released by the city after Gazette open records requests, here's some of what happened in the past year:

April-May 2007

Springs developers Classic Cos. and Nor'wood Development Group pitched a plan: After their unsuccessful attempt to bring the USOC to a downtown convention center, they proposed to build 90,000 square feet of office space and a sports arena for the USOC at the companies' InterQuest Marketplace commercial development on the Springs' far north side, said Classic Chairman Jeff Smith.

June-July

Didion came to town in June to tour InterQuest Marketplace, as well as Palmer Village, the Classic-Nor'wood residential and commercial project proposed for southwest downtown, according to Smith.

A few weeks later, Smith said, he received a call from Didion, who said the USOC didn't want a sports arena at InterQuest, but needed new housing at the Olympic Training Center.

Around that time, Smith said he and El Pomar Foundation Chairman Bill Hybl met with Colorado Springs Mayor Lionel Rivera, who expressed support for the InterQuest plan.

Rivera recalls the meeting differently. Even as he was open to moving the USOC to the north side, Rivera said he opposed Smith's funding plan.

It called for the city to designate InterQuest an urban renewal site and earmark future revenues from a hotel and shopping center to pay for USOC facilities. But the land could hardly be considered an urban renewal site, Rivera said; its location near Interstate 25 and on the city's fast-growing north side makes it prime real estate.

Also, Rivera said, the InterQuest plan would have required the city to kick in about $67 million, more than twice as much as it contributed to the $53 million incentives package the City Council approved last month to keep the USOC.

August

Didion wrote to the City Council to outline what the USOC wanted to stay in the Springs: 90,000 square feet of first-class offices, space for national governing bodies that oversee Olympic sports and about 200 new housing units at the Olympic Training Center.

In his letter, Didion said he hoped the process would finish within 60 to 90 days, which Rivera and Assistant City Manager Mike Anderson said was a clear sign of the USOC's "sense of urgency."

"In an economic development deal, the first one who puts it together and makes the offer, it's a lot more difficult for someone else to come in and try and develop something concrete, like we had," Rivera said.

The urgency, USOC spokesman Darryl Seibel said last week, was fueled by the organization's need to focus on the upcoming summer Games in China, as well as its desire not to hold up developers and cities that might submit relocation proposals.

September

The city asked Springs developers Classic and Nor'wood, LandCo Equity Partners, Griffis/Blessing Inc. and RDS Development to submit proposals on how to meet the USOC's needs for office space and housing. The proposals were due Oct. 10.

All four companies owned property downtown, where city officials said a USOC headquarters would generate more visitors, shoppers and diners.

October

The city received at least five proposals, Rivera and Anderson said; Classic and Nor'wood submitted one each for Palmer Village and InterQuest, according to Smith. City officials spent weeks determining if the proposals met the USOC's needs, how much the city would need to contribute, whether developers could meet the USOC's desire to have new facilities in 2009 and the developers' financial plans, according to Rivera and Anderson.

City officials decided to keep their USOC talks a secret, fearing a "bidding war" with other cities if word leaked out, Anderson said. The USOC felt the same way, and developers were required to sign confidentiality agreements.

In mid-October, a Chicago business publication reported USOC officials had toured office space in that city.

November

As Didion studied the developers' proposals, local officials learned he was all business - tough, but fair, said LandCo Chairman Ray Marshall. He probed developers' finances and pushed to know if they could deliver what they proposed.

According to Smith, USOC Chief Executive Officer Jim Scherr called to say the organization liked Classic and Nor'wood's plan to construct a building in southwest downtown that would be part of their Palmer Village project.

"We were giving high fives," Smith said after Scherr's phone call.

But, Smith said, Scherr called the next day and backpedaled. After meeting in California with Didion, Scherr now told Smith the USOC was going with Land-Co's proposal. LandCo sought to move the USOC to the company's planned six-story Stratton Pointe building in the heart of the Tejon Street retail corridor.

Smith said he was told the USOC liked the LandCo project because the company already had obtained regulatory approvals and had a construction loan in place.

Smith supported the USOC's decision, but was disappointed.

"How would you feel if you worked on something for five years, and in the last 90 days, it goes in a different direction?" he said.

Scherr couldn't be reached for comment about Smith's account; Seibel said he didn't know about the conversations.

Meanwhile, Rivera wrote Didion a Nov. 21 e-mail, advising him to send future correspondence to the mayor's personal home and work e-mail accounts because The Gazette had sued two weeks earlier to obtain USOC-related documents. The newspaper alleged the city's refusal to release USOC documents violated the Colorado Open Records Act. The city settled the suit and released a handful of documents.

This month, The Gazette requested more USOC-related documents. The city has released three sets of e-mails, phone records and other information. But the city has refused to provide other documents.

December

The Downtown Partnership, the area's leading advocacy group, opposed a skybridge that would link LandCo's Stratton Pointe building to a city parking garage across the street; the organization considered the skeletal steel design ugly and argued the skybridge would steer shoppers off the street and away from stores.

The partnership apparently didn't realize the USOC was considering Stratton Pointe and was attracted, in part, by the skybridge, said one person familiar with the USOC-city talks who asked not be identified because of the sensitivity of the matter.

A few weeks later, the Downtown Partnership dropped its opposition after the skybridge was radically redesigned, said Executive Director Beth Kosley. The person familiar with the USOC-city talks said it's possible somebody warned the partnership that its opposition threatened to derail the USOC deal.

January

In a Jan. 24 e-mail, Didion told Rivera that after an "all hands meeting" with various parties and lawyers, and assuming there were no hitches, a deal to keep the USOC in the city could be sent to the organization's board and the City Council within 10 days to two weeks.

February

The USOC board convened in Atlanta for a meeting, and LandCo's Marshall and city officials were on edge, expecting a decision.

They were stunned when USOC Board Chairman Peter Ueberroth announced the organization wanted more information from cities that had submitted bids so that the organization could be certain any proposals were "bulletproof." A decision wasn't expected until maybe May, he added.

Seibel said the delay came because of the complexity of the deal and that USOC board members simply had more questions.

"What we wanted was a ‘yes' or a ‘no,'" Marshall said. "We didn't want a ‘maybe.' We wanted the deal to be done, whether the city gets it or they announce they're going to go somewhere else."

While waiting for the USOC to commit to Stratton Pointe, Marshall's company had been forced to tell other potential building tenants to wait.

"We had multiple assets sitting, just sitting," Marshall said. "We couldn't go from March to May without an answer."

But LandCo declined to deliver its own ultimatum to the USOC.

Anderson and Rivera, meanwhile, said they were at a loss. "I thought we had given them everything they wanted," Rivera said.

March

After the Atlanta meeting, Rivera said he heard that USOC board members wondered why the state of Colorado hadn't contributed money to the project.

That prompted a drive to Denver by Rivera, Scherr and others to meet with Don Elliman, director of the Colorado Office of Economic Development. Rivera said he asked for $1 million, but Elliman offered only $500,000.

The Colorado Economic Development Commission was to consider approval of the $500,000 March 12 at a meeting in Grand Junction.

"Great," Rivera said he thought. "How am I going to get to Grand Junction?"

He said he called in a favor from Springs businessman Steve Ducoff, whom Rivera said once offered his plane if the mayor ever needed to get somewhere in a hurry.

Ducoff flew Rivera to Grand Junction, where the mayor waited an hour for his turn on the agenda. The commission approved the money.

"It was a worthwhile trip," Rivera said, "because it got the state in the game."

A few days later, the USOC board apparently met via a conference call, made no decision, but set in motion another meeting for the next week.

On March 27, the USOC board met on a conference call and authorized Ueberroth to proceed with the Colorado Springs deal.

That night, while on vacation with his family in Breckenridge, Marshall said he received a phone call about 8:30 from Anderson letting him know the USOC was accepting Colorado Springs' offer, subject to City Council approval.

Marshall took a sip of champagne.

"It was like a huge weight had been lifted off," he said.

City officials released details of the deal March 28, the City Council approved the agreement March 31 and the USOC conducted a news conference later that day.

Rivera said he couldn't sleep the night before the council meeting and news conference.

"You're excited about what's going to happen," Rivera said. "Maybe that's why I tossed and turned. I was so excited just for it to get here, and get it done."

THE PLAYERS IN THE USOC DEAL

Lionel Rivera

The Colorado Springs mayor was elected in 2003 and reelected last year. Like other council members, he's a part-time official who often spends full-time hours on the job. Rivera, vice president of investments at UBS Financial Services in the Springs, was the USOC's point man with the city and heavily involved in negotiating terms of the incentives package.

Jim Didion

Former CB Richard Ellis chairman known as one of the nation's top real estate experts, he volunteered his time to the USOC in its search for new facilities. City officials described him as intelligent, extremely thorough and somebody who didn't play games. His sister is writer Joan Didion.

Mike Anderson

Assistant city manager and an economist, he's been the city's budget director. For more than 20 years, he has been the go-to guy in Colorado Springs city government on complex issues such as major annexations and the new airport construction.

Ray Marshall

LandCo Equity Partners chairman has developed residential and commercial property in Colorado Springs for a little more than a decade. His projects include housing on the Springs' south side and in Monument; a partnership that transformed a seniors building into the CityWalk lofts; and ownership of the Mining Exchange and four other downtown buildings. He's the nephew of Jeff Smith, chairman of Springsbased Classic Cos.

Jeff Smith

Classic Cos. chairman is a banker who joined the Classic Homes homebuilding company in the early 1990s and turned it into one of the Pikes Peak region's largest builders. Classic also has evolved into a residential and commercial development company. He was on the Wasson High School team that won a state basketball championship in the 1970s.

Peter Ueberroth

He was named chairman of a downsized USOC board in 2004 after ethics scandals rocked the USOC. Ueberroth is highly respected in the worlds of business and sports. He was the chief organizer of the successful and profitable 1984 summer Olympic games in Los Angeles and served as Major League Baseball commissioner from 1984 to 1989.