July 18, 2008

Gold Hill Mesa May Get New Funds: Developer Expects to Obtain Conventional Loan Next Week

By Rich Laden, The Gazette, Colorado Springs, Colo.

Jul. 18--The developer of Gold Hill Mesa on Colorado Springs' west side, who couldn't afford to water down blowing dirt on the site a few months ago because of his lender's money woes, said Thursday the project's financing has been reorganized and he's on a more stable footing to continue with development of an initial round of home sites.

Bob Willard of Gold Hill Mesa Partners told the Colorado Springs Urban Renewal Authority board that he and his Seattle-based partners, along with their investors, came up with money recently to buy out the financial interest of a British hedge fund, which had been providing funding to Gold Hill Mesa's Denver lender. Willard said the amount of money is confidential.

Willard said he and his partners next week expect to obtain a conventional loan that would pump new money into the project, which covers 210 acres southwest of U.S. 24 and 21st Street. He declined to identify the lender and said the amount is still being negotiated.

The new funding will pay for installation of curbs and gutters and complete development of an initial 152 home sites at Gold Hill Mesa, where 850 homes and townhomes, stores and restaurants are planned. So far, 50 homes and townhomes have been built in the area, where about 110 people live, Willard said. A park and community center building also have been constructed.

Colorado Springs is a city of many mixed-use developments, but Gold Hill Mesa has a particularly high profile.

About 14 million tons of gold, silver, arsenic and lead tailings were left on the property from a turnof-the-century gold and silver milling operation that closed in 1949. State health officials have signed off on environmental measures to allow homebuilding and commercial construction on the site -- one of the few sizeable projects left in the heart of the Springs, as opposed to its sprawling outskirts.

Several months ago, California-based builder John Laing Homes delayed its acquisition of home sites in Gold Hill Mesa, Willard said. When that happened, Gold Hill Mesa's lender halted funding for the project, he said.

In February, and without money to pay for water trucks to spray the property, a windstorm picked up dust and dirt from the site and created a brown cloud visible for miles. Some nearby residents worried they were at risk from the tainted soil, although state health officials said the brief exposure wasn't enough to cause problems.

The exposed soils were later covered with clay and straw to prevent a similar dust storm, and Willard said Thursday green grass is growing on undeveloped portions of the property.

Although a national housing slump has hurt John Laing and many other builders, and the company recently closed its Springs office and consolidated operations in Denver, it remains committed to Gold Hill Mesa, John Bissett, senior vice president of Laing's Colorado division, said Thursday.

Bissett said the company likes the project's traditional neighborhood concept -- homes with front porches, a community center and parks, among other amenities.

Laing also likes Gold Hill Mesa's location a short drive from downtown. Bissett has purchased one of his company's model homes in the project, he added.

However, because of the national housing slowdown, John Laing is interested in slowing its scheduled purchase of home sites in the project, Bissett said.

Other builders are interested in joining the project, Willard said. He said he's in talks with Challenger Homes, a Springsbased builder, about buying home sites. A third builder also has shown interest, he said.

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