|By Rich Laden, The Gazette, Colorado
Springs, Colo.McClatchy-Tribune Regional News
December 22, 2009 --A high-profile attorney who has a track record of restoring older buildings is making another run at transforming the historic Mining Exchange Building in downtown Colorado Springs.
Four years ago, Perry Sanders Jr. and partner John McSween bought the five-story, 157,000-square-foot building at 8 S. Nevada Ave. and planned to turn it into ground-floor retail and upper floor office condominiums. Those plans later went in a different direction.
Now, Sanders says he and new partner Raphael Sassower, former owner of the Warehouse Restaurant, want to turn the Mining Exchange Building into downtown's first boutique hotel Â— a high-end venue with 140 rooms, restaurants and recreation areas in the hotel and an adjoining building where guests could play dominos, ping pong and even bocce ball, among other games.
The remodeling is under way, although Sanders is waiting to hear whether city officials will support an incentives plan he's proposed that would help pay for the project.
The Mining Exchange Building was opened in 1901 by mining baron Winfield Scott Stratton. It originally housed the Colorado Springs Mining Exchange, a stock market where shares of mining corporations were traded. In recent years, the building was home to office users and a bank operated on its first floor.
A Louisiana attorney and real estate investor, Sanders became familiar with the Springs when he represented clients in property damage lawsuits against local employer Schlage Lock. Since becoming a resident a few years ago, he and McSween converted the downtown Trestle Building into office condominiums.
Sanders said he bought out McSween in 2007, deciding he wanted to turn the Mining Exchange Building into residences. He said he then entered into a joint venture agreement with Springs developer Ray Marshall and LandCo Equity Partners, who developed the new U.S. Olympic Committee offices downtown. However, Sanders said he bought out Marshall's interest in May, and now owns 90 percent of the Mining Exchange project with Sassower as his minority partner.
In addition to the Mining Exchange Building, Sanders has a lease to use a former Colorado Springs Utilities building at 18 S. Nevada Ave., where he envisions bocce ball and other game areas; he plans to connect the two buildings via a skybridge.
Sanders said he's spending more than $20 million on the makeover, although he declined to be more specific. He said he hired hospitality industry consultant HVS International, which concluded there was a market for his hotel concept. Sanders says he wants to return the building to its original look and feel wherever possible. He's removed Italian marble slabs from the building's first-floor facade to showcase its original granite arches and columns. The building's safes and vaults also are being retained.
Sanders declined to say what room rates will be. About 400 people will be employed by the hotel, restaurants, valet parking, catering and other operations; parking spaces will be leased at a nearby city garage, he said. He hopes to open in mid-2010.
Even as the building's makeover is under way, Sanders said he's seeking financial help from city government; he wants the city to split with him its 2 percent sales tax collections on retail activity at the hotel.
Sanders calls the proposal a no-risk proposition because he and the city would share only newly created sales tax revenue generated after the hotel opens. Such sales-tax sharing arrangements could serve as an incentive for many businesses, he added.
He estimates annual sales taxable transactions eventually would total more than $10 million annually, which means he'd keep 1 percent, or about $100,000, that he'd use to repay money he's borrowed on the project. The sales tax arrangement would run for less than 20 years, he said.Sanders said he can complete the hotel without the city, but says at least five members of the nine-member City Council have indicated their support. He declined to identify them.
Bob Cope, an analyst with the city's Business Development Division, said city staffers are studying Sanders' proposal.
City Council members have discussed the idea in a closed-door executive session. Mayor Lionel Rivera said if the benefits of Sanders' project to the city outweigh its costs, he'll consider it Â— the same stance he's taken on other economic incentives.
Councilman Scott Hente, however, raised a concern. The City Council and the Colorado Springs Urban Renewal Authority, on which Hente also sits, have declared southwest downtown as a redevelopment site. That's where Missouri developer John Q. Hammons is considering a hotel and where future sales and property tax revenue from that project would pay to upgrade nearby areas.
"If Mr. Hammons goes through with his hotel in the southwest urban renewal area, how many hotels can the city get in partnership with and give (tax incentives) to?" Hente asked. "That's the question in my mind. If the city gives it to both, is the city competing with itself?"
Terry Sullivan, who heads the city's convention and visitors bureau, said if Denver can support three or four such hotels, the time is right for the Springs.
However, Sullivan said, a second, 300-room Hammons hotel in northern Colorado Springs is scheduled to open in summer 2010. That would mean two new hotels at a time when Sullivan says he'll do less marketing because of $600,000 in recent city government cuts to his budget.
"We're in a very fragile, fragile hotel economy at this moment, and perhaps the biggest challenge we've faced in the last decade," he said. "And putting all of this inventory into the market at one time presents a pretty monumental challenge."
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