120th Avenue Development in Trouble

If you think the development of the City-owned property at 120th Avenue and Grant is going well, I have some disturbing news. The so called “investment” of ten million dollars in tax payers’ money is in jeopardy. Let’s begin with the information given to the City Council at the meeting of July 26th by City Staff.
.
“As the Council knows, in May the City entered into a development agreement with our development partners Zing and Prime West.” After describing the City’s current activities in the area, the following statement was made. “Our development partners, Zing and Prime West, are currently interviewing brokers that would eventually get a listing on the site and actively go out and solicit tenants.”
.
If you were led to believe that a development agreement exists, as was the Council, you would be shocked to know that it does not. After the Council meeting of May 10th, the Mayor signed all of the documents approved at the meeting. Not one other party to the agreement has signed as of this week. That includes NURA and the development partners, Zing and Prime West.
.
Why hasn’t it been signed? Upon signing, the provisions in the agreement come into play, and as you will see, Zing and Prime West will be in over their heads. They will be required to deposit $50,000 as Ernest Money and a dreaded clock begins to tick. At the end of the six months Zing and Prime West must purchase and close on eleven acres of property. The agreement states that the purchase price will be seven dollars per square foot which comes to a total of $3.3 million. At the seven dollars price, the city will still be absorbing a large loss on its “investment.”
.
There are other reasons that the principals of Zing and Prime West have not signed the agreement. Please keep the second quote in mind while reviewing what the “development partners” are supposed to be doing according to the agreement. They were to build a project; not find some brokers who will solicit tenants.
.
Six months after signing, Zing and Prime West are required to commit their resources for some major expenditures including the civil engineering, architectural design and construction of all Subdeveloper Public Improvements. Why would Zing and Prime West want the clock started ticking when they have been able to control the property for well over a year with no cost participation on their part?
.
I have to question if the City's purported development partner has the economic depth to do this deal. Not only have Zing and Prime West not funded any of the site planning done to date, the little they did last year is to be reimbursed through this Development Agreement. Why would the City, who has already taken a considerable risk by purchasing the land, continue to fund all of the pre-development expenses for the developer? Who is watching out for the interests of Northglenn?
.
There are also some even bigger reasons for Zing and Prime West not to sign. The two principals do not have the money. In fact, the City has agreed in the unsigned agreement, to make them whole for an expense they incurred in the previous, failed agreement they had with the City for the same land in 2006. The City will pay the bill they owe to RLA Design in the amount of $10,000. They did not even have the money to pay the consultant they previously hired.
.
The Council and the public are being deceived by Zing, Prime West and city staff. There are no “development partners.” The two principals are only trying to “sell” the Northglenn property to the contracted representatives of established retail and service establishments without using their own money while avoiding a time schedule.
.
The efforts to entice establishments to the property are complicated by two additional disturbing factors. First, the Council sued Century Theatre’s new owner, Cinemark, for breach of contract. Cinemark is not above letting other private businesses know what type of treatment they might expect if they choose to deal with Northglenn.

.
Second, the inability of this project to obtain any momentum has been played out in the public eye since early in 2005. How are we to know that quality retailers are not staying away from this project because of the lack of skill by the developer to work with the retailers as well as the potentially unrealistic expectations of the City? Could this project finally be tainted to the point that the more desirable users have passed us by?

.
Third, number one and two have occurred. It is time to send Zing and Prime West packing for a variety of reasons including their failure to enter into the agreement. The City should stop "playing" at being Zing's development partner, put specific zoning criteria in place on the property and put it up for sale in a traditional mode. The City's involvement so far has resulted in it carrying the land, paying all the bills and taking all the risk for the two developer "partners" with nothing to show for it.

.
Zing and Prime West have not begun marketing the project and have not brought on a retail broker to assist them in marketing the project. Maybe it is because Zing and Prime West are not being taken seriously by the brokerage community. Have their short comings hurt this project? I am afraid that this project has been branded as one where no one knows what they are doing.

.
For example, The City wants to individually approve all retail tenants. This is over and above what other cities do, and it will stall the lease-up and development of the project. Taking that decision-making away from the developer is unacceptable to all the bigname developers along the I-25 corridor.

.
Even though the agreement is nonexistent, the Council should realize that the clock has been ticking on them since they foolishly purchased the land and buildings beginning in 2004. The decision has cost us over ten million dollars in capital improvements and services. And that does not include the hundreds of thousands spent reconstructing Grant Street. The fact that they are willing to sell even the prime portion of the land for a loss speaks for itself.