The Banning Lewis Ranch, the largest development in the history of Colorado Springs, filed for Chapter 11 bankruptcy yesterday (10/28/10) according to the Colorado Springs Gazette. Chapter 11 is a reorganization, not a liquidation, and it is all of our hope that the company can work out the details in a way that keeps at least the active portion of the development (the northwest corner of the 20,000 acre plus area!) moving ahead.
I won’t bore you with a history of the property, but the place is HUGE, extending from Woodmen Road in the north, to south of the Colorado Springs airport, on the east side of town along Marksheffel Road. Much of the land is still just cattle and pronghorn grazing. The plan was for eventually as many as 75,000 homes, really the size of a decent sized city in its own right. The initial phase looks very nice, and despite the relatively large number of homes for sale in Colorado Springs, it makes for a nice new construction option for our buyers, with new homes starting in the low 200’s (really!). The charter school seems to be doing well, and clubhouse facility and pool are very attractive to new home buyers. This will likely continue, but some builders may get a little nervous about expanding their presence.
My guess (or maybe just hope?) is that some of the southern sections of the ranch will be broken off to appease creditors, so that the core of the northern portion can be kept intact. The concepts behind the development seem sound to me as a Realtor, and its Achille’s heal has always been that the development is just too massive. By breaking off some chunks that may not be built on for 50 years anyway, it seems like a logical way to get to the other side of the problem. This development is one of the main sources of new lots in the city of Colorado Springs for the future, and it does not seem likely that it will be allowed to completely fail.
What if the Banning Lewis development were to completely fail? In the past, when the economy turns up again, the developed lots get picked up for a song by other developers, and new homes that are very inexpensive often get put on them. There may be some property tax implications. There is a Banning Lewis Metropolitan District that collects approximately 40% of the taxes for the area (50 mills). In the past, these special improvement districts have had a hard time staying afloat when the developer goes under, in some cases leaving existing homeowners with massive tax increases needed to continue servicing bonds. It is unclear whether that will at all be the case here, but it is an issue that will bear watching. Here is a document containing more details and contact information for the Banning Lewis Metropolitan District: Banning Lewis Metropolitan District General Disclosures.