The Dirty Underbelly of City Politics

The Real Estate Espresso Podcast

The Dirty Underbelly of City Politics

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The Dirty Underbelly of City Politics

Welcome to the Real Estate Espresso podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce. On today’s show, we’re talking about our project in Colorado Springs. If you’ve been listening to the show for a while, then you’ll know that we’re the developer of a master-planned community on the edge of Colorado Springs. This 1,800-acre project was successfully annexed into the city at the end of January this year.

This is where I need to give you a little background on the landscape in Colorado Springs. First of all, members of the city council in Colorado Springs are paid an annual salary of $6,250. You heard me correctly. And voters of Colorado Springs voted against an increase to this amount back in 2013. I personally believe that such a low salary is a problem. It increases the possibility of forms of improper compensation outside the city council’s salary, has the potential to lead to corruption. More on that later.

Second, there’s a single large development inside the boundary of the city which comprises approximately 18,000 acres. This property is called Banning Lewis Ranch, and it was annexed into the city in the 1990s. The Jenkins family owned Banning Lewis Ranch. Over 85% of the city’s development land is owned by the Jenkins family and Chris Jenkins is the decision maker for Norwood, the developer of Banning Lewis Ranch. Norwood has a public relations consultant working for them named Daniel Cole. I know I’m throwing a lot of names at you so stay with me.

Norwood has been taking steps over the years that would stifle competition for new homes and make Banning Lewis Ranch the only game in town. For example, there was a water ordinance, introduced a couple of years ago, that would aim to block new annexations into the city under the guise of protecting a shortage of water supply. Now that is myth, but nevertheless the ordinance was implemented, designed to freeze out further development and further expansion of the city, make Banning Lewis Ranch the only game in town.

Some might consider this type of anti-competitive behavior as violating antitrust laws. Now if pattern behavior like that could be proven, it just might attract the attention of the Attorney General’s office. I don’t know that but I’m just saying that that’s a possibility.

The latest move has been the launch of a petition. Having a sufficient number of signatures would put the annexation of our property up to a special election. This is precisely what was done. The ballots and the special election were mailed out to Colorado Springs voters, and that election could have the potential to overturn the annexation of our property into the city.

Now you might wonder, who would have funded a small army of petitioners to fan out across the city and collect thousands of signatures? It was stated publicly as a wealthy donor. Well, the source of funds came from Norwood, and in fact it was Daniel Coale, the PR consultant for Norwood, who wrote the check.

The public argument from the opponents of our project is that the city lacks sufficient water to add more homes, but the truth is the city has ample water. The city is selling thousands of acre feet of water each year that the city cannot use to agricultural users downstream of the city. The city has land for a reservoir, which would provide additional buffering and further secure the city’s ample water supply. The land for that reservoir is located immediately next to our property.

In the world of development, when a developer puts a burden on the city to create new infrastructure, it’s the developer who’s supposed to pay for those improvements. The annexation agreement and the development agreements consistently follow that practice. For example, our annexation agreement says we have to pay for all of the utilities extensions. We have to build the roads and donate them to the city. We have to widen the roads leading to our property at our expense and donate those improvements to the city. You get the idea.

Well, somehow back in 2018, the Banning Lewis Ranch Annexation Agreement was amended which would have the sewer line extensions for Banning Lewis Ranch paid for by the City of Colorado Springs instead of being paid for by the developer. That change amounts to downloading 400 million dollars of developer expenses onto the taxpayers of Colorado Springs.

Now the petition to oppose our project was funded by Norwood, not the citizens of Colorado Springs. The election advertising is being funded by Norwood. We’re aware of numerous investigations underway with the media, the FBI, the Attorney General’s Office, about the corruption that has taken place in the city of Colorado Springs at the hands of one developer. We’re even hearing that a citizens-led class action lawsuit is being launched that would force discovery of even more layers to the story.

We don’t know what the outcome of the election will be? Norwood wants the election to be about managing growth and water sustainability. The citizens of Colorado Springs need to know that the election is not about a small patch of land immediately adjacent to land that’s owned by the city. It’s about a developer and corruption, about a monopoly for a single developer. There’s many moving parts to this story, more than I can cover on a five-minute podcast.

As a developer who’s active in multiple markets, we know that development must be in line with the long-term interests of the community. We’ve put that first in all of our designs. The election ballots are due back by the 17th of June, at which time we’ll know the outcome.

Fact is, the residents in the city should have choice. U.S. Space Command is our immediate neighbor and the Space Force Base has growing needs for housing. The newly announced Golden Dome Program which aims to protect the entire continent from the threat of the newest generation of hypersonic missiles will have a large portion of the technology and coordination developed only a few hundred yards from our property. We could not have predicted the trajectory of this development project. We did not expect to uncover the dirty underbelly of politics and corruption.

There’s so many surprises where Norwood has embedded their control into the community. We do know that we’re on the right side of history. We’ve developed a solid plan A, a plan B, a plan C, and a plan D to ensure this project will succeed no matter what Norwood tries to do.

As you think about that, have an awesome rest of your day. Go make some great things happen. We’ll talk again tomorrow.

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