NO MORE SKYSCRAPERS FOR SPRINGS JUST YET

0 Comments | Gazette, The (Colorado Springs), Jul 23, 2008 | by RICH LADEN

Downtown Colorado Springs' skyline won't be changing anytime soon, despite ambitious plans announced in recent years by two local developers.

Construction of a 22-story downtown complex that would have been the city's tallest building has been shelved indefinitely and might never happen, developer Ray O'Sullivan, head of Realty Development Services, said this week. Meanwhile, Nor'wood Development Group plans to wait out the slumping local and national economies before it starts construction of a highrise on the same block.

O'Sullivan said he's been unable to get financing for Cooper Tower, which was planned for the southeast corner of Nevada Avenue and Kiowa Street, next door to the historic City Auditorium. Cooper Tower would have included 19,000 square feet of commercial space, 59 condominiums, 327 parking spaces and nearly 240 hotel rooms, according to plans the City Council approved with much fanfare in January.

The project remains economically feasible, and there's a market for the hotel and other uses, O'Sullivan said. But the fallout from the nation's housing mess -- too many mortgages given to buyers with risky credit -- has rippled through the commercial real estate market, he said.

Now, federal regulators are pressuring banks to be tougher on lending practices, he said. That's created a credit crunch in the nation -- a reluctance by lenders to make loans.

The difficulty in obtaining financing isn't confined to Colorado Springs. From Denver to Phoenix to Las Vegas and New York, large and small commercial developments have been delayed or scrapped as lenders tighten credit standards on construction loans.

"I don't know what's going to happen with it," O'Sullivan said. "I've been searching high and low, Europe and everywhere else, to get financing.... We really haven't had any luck. I continue to work on it, but it's grim. I hope it's going to be built, but I'm not going to be able to build it without a source of competitive financing. At this time, it's on hold. But we're certainly working on it."

At 22 stories and 257 feet tall, Cooper Tower would have topped the downtown Wells Fargo bank building, which is 15 stories and 247 feet.

O'Sullivan proposed Cooper Tower three years ago; in 2006, the City Council designated the City Auditorium block -- bounded by Nevada and Pikes Peak avenues and Kiowa and Weber streets -- as an urban renewal site.

The project's latest cost was about $175 million, and O'Sullivan said he's spent millions so far, including the purchase of the land in 2004 and 2005. His partners in the project include downtown Colorado Springs nightclub owner Sam Guadagnoli and local businessman Alan Brown.

Over the next couple of years, O'Sullivan said, he might look for interim uses for the property, which covers a little more than 1 acre. Part of the site would continue to be used as a parking lot. But the former Ute 70 movie theater on Nevada Avenue, which was most recently an antiques mall, might be torn down, while a single-story building would continue to be leased as office space, he said.

O'Sullivan said he also might consider selling the property.

"We're still enthusiastic about it, but we cannot get it financed in this credit market," he said.

The credit crunch hasn't affected a second high-rise planned for the City Auditorium block by Nor'wood Development Group of Colorado Springs, said Chris Jenkins, a company vice president. Yet, Jenkins said, there are no plans to start construction of Pikes Peak Place because of the slow pace of local job growth, a slumping economy and the rising cost of building materials.

Nor'wood remains committed to the project, Jenkins said, and will look to announce a timetable when the economy improves. Pikes Peak Place would occupy the south half of the City Auditorium block, and include at least 20 stories of retail space, offices and housing.

The decision to shelve Cooper Tower is an obvious disappointment, said Beth Kosley, executive director of the Downtown Partnership advocacy group.

"Everybody had hoped to see Cooper Tower come out of the ground, and Pikes Peak Place come out of the ground," Kosley said. "But the reality is, we need the national economy to turn around."

Yet, there are several other downtown construction and remodeling projects planned or under way, Kosley said. Those projects reflect downtown's strength as a commercial, cultural and employment hub, as well as the ability of the new Downtown Development Authority -- a quasi-governmental entity created by downtown property owners in 2006 -- to offer financial help, she said. Among the projects:

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