Southwest downtown plan hits toxic snag

Southwest downtown’s long-delayed redevelopment now faces more problems: how to dispose of hazardous material under a proposed hotel site, how much the cleanup will cost and who will pay for it.

It’s not clear how the problems will affect the redevelopment, which has languished for six years.

City officials say the environmental problems aren’t insurmountable and don’t expect them to delay the long-term makeover of southwest downtown, a light industrial area mostly southwest of Colorado and Cascade avenues where offices, housing and the hotel are envisioned.

Yet questions related to the disposal of the material have delayed the scheduled June 28 purchase of a portion of southwest downtown property by the Colorado Springs Urban Renewal Authority, which oversees the area’s redevelopment.

And at least one developer is getting antsy. Jeff Smith of Springs-based Classic Cos. says a partnership formed by his company and Nor’wood Development Group of Colorado Springs won’t buy the property as planned from Urban Renewal until it’s cleaned up. The companies plan a residential and commercial project called Palmer Village on the site.

“Anybody in the real estate world knows you don’t buy contaminated property and get in the chain of title,” Smith said. Speaking of city officials, he added, “If they want a project down there, they’ve got to get it cleaned up, and I would recommend they get it done in a timely manner.”

At issue is the site of the former Colorado Springs Utilities gas department administration building and two smaller structures, southeast of Colorado Avenue and Cimino Drive, and on the northern portion of the 100-acre redevelopment area.

From 1890 to 1931, a coal gasification plant operated on the site and heated coal to produce natural gas, according to EDI Services Inc., a Springs company hired by the Urban Renewal Authority and which researched the plant’s history.

The process left behind residual material known as coal tar. Some of the chemical compounds that are part of the dark, sometimes gooey substance — and which are found in gasoline and other petroleum products — can cause cancer, said Mark Walker, an official with the Colorado Department of Public Health and Environment.

The coal tar is in the soil and groundwater on the site, but recent tests conducted by Springs Utilities and EDI have determined the material has not migrated west toward America The Beautiful Park and Monument Creek, Urban Renewal Authority and utilities officials say.

City officials have known about the coal tar for years, but as long as the material was undisturbed, there were no questions regarding it status.

The material has become an issue because of plans to move ahead with southwest downtown, which triggered environmental testing of the gas building site as part of Urban Renewal’s scheduled June 28 purchase of 8.7 acres from its current owner, the city.

The agency has budgeted $500,000 to dispose of the material, said Chuck Miller, a retired city government planning official and now an Urban Renewal Authority consultant. The initial presumpton was that the material could be dug up and hauled away to an approved site, he said.

Since the testing, however, city officials have been told the material might have to be incinerated, which could drive the cost above $1.5 million and prompts questions over how it will be funded and by whom, Miller said.

City, Urban Renewal and Springs Utilities officials expect to meet sometime in the next few weeks with representatives of the state Public Health and Environment Department and the federal Environmental Protection Agency, Miller said.

The goal, he said, will be to lay out specific options on how to dispose of the coal tar or whether other alternatives exist, such as building on top of the material without disturbing it. Leaving the material alone isn’t likely, he added.

Meanwhile, the city, Springs Utilities and Urban Renewal will attempt to obtain a more exact figure on the cleanup cost, while determining how to pay for it.

Urban Renewal had agreed to pay $4.1 million to buy the 8.7 acres from the city. It’s possible Urban Renewal will try to renegotiate that price downward — freeing up money that could go toward disposal of the coal tar, Miller said. But there’s no guarantee such a deal will be struck, he added.

If the disposal and funding questions can be resolved within six months, a hotel, office building, parking garage and other initial pieces of the southwest downtown project shouldn’t be delayed, he said.

Construction of those projects probably wouldn’t begin until 60 days after Urban Renewal sells bonds to finance public improvements in the redevelopment area. That bond sale won’t take place until late next year, Miller said. Construction is required to be completed two years after it starts.

One idea floated to resolve the environmental issue is to flip-flop the location of a planned 220- to 240-room Embassy Suites hotel and a 600-space parking garage, putting the garage on top of the former gas administration building site.

But Smith, of Classic Cos., said Missouri hotel developer John Q. Hammons, has rejected the idea because he doesn’t want to lose views of Pikes Peak and America The Beautiful Park.

Hammons and his representatives couldn’t be reached for comment. Miller, however, said all options must be explored because of uncertainty over the cost of cleanup. “We don’t pack our bags and just go home,” he said. “We’ll try and figure out something else, whatever something else is.”

CONTACT THE WRITER: 636-0228 or rich.laden@gazette.com

DEVELOPMENT PLAN

The Colorado Springs City Council designated 100 acres of southwest downtown as an urban renewal site in August 2001; the land is southwest of Cascade and Colorado avenues, with a small portion extending north of Colorado.

Springs real estate giants Classic Cos. and Nor’wood Development Group plan a residential and commercial project for the area called Palmer Village, and the two companies have spent millions of dollars buying land in southwest downtown over several years.

But construction of America The Beautiful Park has been one of the area’s few changes. Civic leaders and developers failed two years ago in their efforts to anchor the area with a convention center.

The latest plans for the area call for remodeling of a former Colorado Springs Utilities gas operations building into office space, in part, for U.S. Olympic Committee national governing bodies. Other initial projects include construction of an Embassy Suites hotel, a 100,000-square-foot office building and a 600-space parking garage.

In June, the Colorado Springs City Council approved the sale of 8.7 acres from the city to the Springs Urban Renewal Authority; the land includes Colorado Springs Utilities’ former gas administration and operations buildings.

The Urban Renewal Authority plans to sell that property to Classic and Nor’wood. In turn, Missouri hotel developer John Q. Hammons would buy property for his Embassy Suites hotel from Classic and Nor’wood.

RICH LADEN, THE GAZETTE