City terminates agreement with LandCo, USOC on downtown building

The city of Colorado Springs on Thursday ended its agreements with LandCo Equity Partners to buy the top five floors of a downtown building now under construction that would become the headquarters of the U.S. Olympic Committee, alleging LandCo failed to live up to the pacts.

The move comes three weeks after the USOC withdrew from the agreements signed in March 2008 that were designed to keep the sports organization, national governing bodies for Olympic sports and the USOC's training center in the Springs for the next 25 years.

The USOC also terminated a separate agreement with LandCo to design, finance and build $16 million in improvements to the training center, including additional housing for Olympic athletes.

The city said in a statement that the termination does not "reflect any diminishment of the city's commitment to keeping the USOC headquarters and its Olympic Training Center in Colorado Springs." The city "regrets having to take this step" and continues to work "diligently" to resolve a federal lawsuit LandCo filed in March against the city and the USOC, alleging they failed to live up to the $53 million, three-way agreement.

Resolving the suit would "allow the parties to move forward with new agreements for implementing the project," the city's statement said.

"We were trying to continue to work out the issues and keep the deal alive. We are at the point now where it appears that won't work," said Sue Skiffington-Blumberg, a city spokeswoman. "We are still very much in play with the USOC" to reach a new agreement.

Russ Rizzo, a spokesman for LandCo, declined to comment on the city's move. USOC spokesman Darryl Seibel said, "We are still interested in working with the city and LandCo to resolve these issues and, if possible, see the projects fully developed and delivered."

In a letter to LandCo's lawyers, City Attorney Pat Kelly detailed more than a dozen ways LandCo has failed to live up to the agreements, including:

• Failing to complete the headquarters building by the July 30 deadline in the agreement.

• Having liens filed against the headquarters building by contractors who allege they weren't paid.

• Failing to provide $16 million for training center improvements.

• Filing documents in El Paso County land records to divide the building into condominiums without the city's or the USOC's approval.

• Filing the lawsuit against the other parties in the agreement.

• Failing to pay 2008 local property taxes on the headquarters building.

• Using payments from the construction loan to pay for "amounts not related to construction of the headquarters building." The city also said it anticipates LandCo "will assert further costs and fees over and above the contracted amount, $20,786,000, must be paid by the city."

The four-page letter also alleges the city, a nonprofit agency set up to buy the headquarters building, Mayor Lionel Rivera and Assistant City Manager Mike Anderson "have suffered substantial injury and damages as a result of the conduct of LandCo and its assorted breaches of the agreements. Each reserves its or his right to pursue any and all of its claims to the full extent of the law."

Skiffington-Blumberg declined to comment on that part of the letter.

The city's Independent Ethics Commission on Monday postponed action on a conflict-of-interest complaint against Rivera, saying it needs more information to determine whether it has jurisdiction. The three-member panel asked Ron Johnson, a local investment adviser who filed the complaint, for more "specificity" about the allegations that Rivera, a stockbroker with UBS Financial Services, has monetary ties to LandCo Chairman Ray Marshall.

The March 31, 2008, agreement signed by the city, LandCo and the USOC called for LandCo to build the USOC a new headquarters at 27 S. Tejon St., renovate a former Colorado Springs Utilities building near downtown to house the national governing bodies and complete the training center improvements. The city was to issue $20.8 million in certificates of participation, but hasn't yet done so, to buy the top five floors of the building and lease them to the USOC for a nominal fee.

G.E. Johnson Construction Co., general contractor for the headquarters project, continues to work on the project even though it has not been paid for three months and is owed up to $3 million for work already completed. Jim Johnson, president of G.E. Johnson, said earlier this month that the company will at least finish the building's outer shell, which he estimated would cost "several million dollars" more to complete.

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