With the commercial real estate market depressed and lending standards tight, few commercial developers qualify for loans these days. Competition between banks is fiercer than ever.
It might come as a surprise, then, that two competing local banks, 5 Star Bank and Central Bank and Trust, are collaborating to finance a $3 million redevelopment project. It’s the first time the banks have co-financed a project.
The project occupies nearly six acres south of downtown and includes the vacant Ivywild Elementary School. The area was recently designated as “blighted” by the Colorado Springs Urban Renewal Authority.
Three partners comprise the redevelopment group: Mike Bristol, owner of Bristol Brewing Co.; Joseph Coleman, owner of Blue Star restaurant; and James Fennell, owner of Fennell Group, an architectural firm.
“It’s a tough environment out there for financing, and this is a project that doesn’t exactly fit into the check box that the big banks use,” Bristol said. “You have to be here to (appreciate) a lot of the factors involved.”
Tony LeVeque, executive vice president of Central, and Mike League, CEO of 5 Star, visited the site several times and walked through the building. They were interested in the project for several reasons.
“It’s a community-specific project. The school is an anchor and the pride of the area,” said League. “That old neighborhood (will) come back to life.”
Despite the assistance of the Pikes Peak Regional Development Corp., which has agreed to finance a Small Business Administration 504 loan for the project, there’s still risk involved. Having two banks split the loan spreads the risk, League said.
The project’s cost will be financed according to the typical 504 formula: 50 percent by the banks, 40 percent SBA, and 10 percent equity from the borrowers.
Joseph Coleman, owner of Blue Star and other businesses, said it was rare to see banks cooperating to finance a project.
“I think it’s fabulous. Usually banks fight over business rather than collaborate,” Coleman said.
Blue Star will remain at its South Tejon Street location, but Coleman will build a bakery and “dessert diner” in the renovated Ivywild school.
He’s in discussions with Pikes Peak Urban Gardens to grow plants in front of the building. If all goes as planned, the development will eventually include a large common square in front, which will connect cuisine and commerce with community gardens, art and housing.
After construction is completed, the brewery and tasting room will move to the site, occupying about half the building. And Fennell, the architect, will relocate from his current office on North Tejon.
The Colorado Springs Urban Renewal Authority has expressed interest in the project, Bristol said, which could mean assistance with infrastructure.
“With their help, we’ll be able to, hopefully, get sidewalks, curbs, lighting and streetscape improvements, so we can deliver the full package for the neighborhood,” Bristol said.
Until then, the partners await final approval from the City Council, which voted 8-to-0 in favor of the development plan on the first round.