On April 1, 1989, the first edition of the Colorado Springs Business Journal rolled off the press. The city has evolved over the past 30 years. Colorado Springs has grown to be one of the 40 largest cities in the country, the economy is booming and people are flocking to live in the Pikes Peak region. But what did the local business environment look like in 1989? As they say, the more things change…
Sitting on my desk this morning are bound copies of the Business Journal’s first year of publications, from April 1, 1989, to March 15, 1990. Such troves are unusual these days, since libraries and media rarely archive printed newspapers. Yet thanks to 30 years of editorial packratting, printed copies of almost every CSBJ issue from Volume 1, No. 1 (April 1, 1989) to this one (Volume 29, No. 52) have been preserved.
The Journal’s inaugural year was far from the best in the long history of Colorado Springs business. The city’s once-thriving real estate sector suffered hit after hit as a consequence of the savings and loan crisis of the late 1980s, which peaked locally and nationally in late August 1989.
“Developer Frank Aries has returned the 24,310-acre Banning-Lewis Ranch back to its principal lender, the insolvent Western Savings & Loan of Phoenix, which has taken possession in lieu of foreclosure,” CSBJ reported Sept. 1, 1989, noting that the value of the property is now thought to be “only a fraction of its cost.”
Aries, who had borrowed $240 million from Western to finance his $130 million acquisition, stiffed taxpayers with the entire balance. He didn’t crash and burn either — it was a non-recourse loan, so Aries didn’t appear to alter his lifestyle. The flamboyant mega-borrower sold his home in Colorado Springs and found a comfortable refuge in Florida.
“He now lives in south Florida with his wife, Judy, aboard a 98-foot yacht named Scheherazade,” The Washington Post reported in 1990. “On his answering machine recently, this message greeted callers: “Hi, this is Frank. And this is Judy. We’re not home right now, we’re probably out… sailing, sailing over the bounding main.”
But back here in Colorado Springs, local entrepreneurs and former real estate magnates were sorting through the wreckage and rebuilding their lives.
“I know it’s affecting not only me, but a lot of people I know in businesses such as development and real estate,” said Les Gruen when the CSBJ asked him that year how the sluggish economy in Colorado Springs had affected him personally. “My wife was driving home the other day and she told me that she saw over 40 For Sale signs in front of homes. Colorado Springs is a great city and I see things turning around in the future. People just need to hold on. It will improve, I’m sure.”
Gruen held on. He had come to the Springs in 1981 as the marketing manager of the Banning-Lewis Ranch, then owned by Mobil Land. After the ranch was sold to Aries, Gruen had a long career in real estate planning and development, opening his own firm, Urban Strategies, in 1999.
“With 30 years of perspective, you realize that things don’t stay the same,” Gruen told the Business Journal last week. “These kind of disruptions can happen very quickly, both up and down. When I was interviewed in 1989, I had moved out of my office in the Perkins-Shearer building because I couldn’t afford it and was working out of my home.”
The Business Journal noted on June 15, 1989 that one civic leader, “stands at the forefront with bright vision and optimism. Steve Schuck, who has recently suffered personal setbacks in his own company, is not one to let pervading pessimism defeat him.”
Then in his early 50s, Schuck had recently withdrawn from the Colorado gubernatorial race, realizing that it was time to take care of business at home.
Like almost every developer in Colorado Springs in the 1980s, Schuck had been forced to liquidate much of his portfolio and start over. Unlike many others, Schuck stayed here, paid his debts, rebuilt his company and got back in the game. He took more hits in the Great Recession, rolled with the punches and climbed back on the bus. And today? He’s doing just fine.
Although CSBJ did its best to give its 1989 readers useful information about business trends, we missed the biggest story of the year. We weren’t alone — no one in the media paid any attention to a memo that British computer scientist Tim Berners-Lee wrote to his colleagues at CERN (the European Center for Nuclear Research) on March 12. Titled “Information Management; a Proposal,” the memo created the World Wide Web.
The internet has so profoundly changed our lives and businesses that it’s difficult to imagine life without it. But even in the disconnected world of 1989, computers were important business tools, as an advertisement from Computer Resources in the June 15 issue shows.
Headed “Laptop Computers for People on the Go!” the quarter-page ad offers an IBM compatible Turbo 286 with 1MB RAM and a 20MB hard drive. The price: $2,495. It may have been serviceable at the time, but let’s hope that any buyers depreciated it as fast as possible. By contrast, Dell now advertises a 15-inch Inspiron 3000 laptop with 4GB RAM and a 500GB hard drive for $299.95.
But if the buyer was reasonably liquid, the May 1 edition offered a couple of options. On page 6, a half-page advertisement for Merrill Lynch offered cash management accounts yielding 9.66 percent. And if you wanted to take a flyer on the market, you could have followed the lead of an unidentified “officer, director or major shareholder” of Apple Computer, who bought 6,000 shares for $7.75 a share. The stock split two-for-one in 2000 and 2005 and seven-for-one in 2014. Had you bought and held, you’d now have 168,000 shares. Apple closed Monday at $188.02, so your original investment of $46,500 would have increased to $31.5 million. Not a bad return on investment!
You might have done well in real estate too, had you followed the same strategy. The Patterson Group advertised a “Spanish style rancher” on Sept. 1 with four bedrooms, four baths, an elegant interior and a large treed lot on Mesa Avenue for $342,000. Seem a little pricey for that era? The average price of homes sold in Colorado Springs in the first three months of 1989 was $92,239, according to a column written by Bud Patterson (Kevin’s dad, for readers unfamiliar with local real estate history). Noting that prices had remained stable during the last two years, Patterson opined that “while other areas of the country are experiencing continued housing inflation, our housing stock looks more attractive to relocating companies.”
And for readers hoping for a little local price inflation, Patterson offered some measured optimism. Citing substantially increased sales of single-family homes from March 1988 to March 1989, Patterson made a prescient forecast.
“The housing market is stronger in Colorado Springs than some would have you believe,” he wrote in May 1989.
HBA president Jerry Novak was also an optimist, although the first half of 1989 saw the lowest number of building permits issued in El Paso County since the early 1970s.
“There are a large number of pre-sales this year (at June’s Parade of Homes),” Novak told the Business Journal 30 years ago, “and interest rates coming down couldn’t have happened at a better time. These indicators and seeing the Parade come together with people working so hard makes it all worthwhile.”
By early November, the local real estate market was mixed at best. Bud Patterson noted that sales of single-family homes in the Westside/Old Colorado City area for the first eight months of 1989 totaled 102 units, compared to 153 in the comparable period in 1988. Yet the average price increased from $62,987 to $67,892.
In a lengthy November interview, then-Mayor Bob Isaac discussed the city’s economic development efforts, which had come under fire during the prolonged downturn.
“The basic strength of our economy is still there — tourism and government with industrial jobs increasing,” said Isaac. “I hate to hear of negativism. There may be problems in individual areas, but not in the overall economy. We have a typical problem facing many other communities in the country involving the savings and loan situation. Questionable appraisals and over-ambitious projects resulted in loans that in many cases should not have been made. When loans are made based on inflated land values and incorrect projections as to buildout, then you have a problem not only with the thrift institutions but also with the overbuilding situation. … I think some people blame the economic development organization if there’s a slowdown, but we wouldn’t have had this remarkable growth in industry without outstanding efforts by both the city and the private sector.”
Asked whether the “lack of cohesion” between the mayor’s office, the city manager and city council discouraged relocating companies, the mayor was blunt.
“If there is any lack of teamwork, it only started recently (with a 5-4 split on council),” Isaac said. “The votes aren’t always 5-4, but there is definitely a group working on its own agenda.”
Although he didn’t identify his foes, Isaac was particularly displeased with councilors Mary Lou Makepeace, Wayne Fisher and Mary Ellen McNally. They believed that the mayor was out of touch and dictatorial and that it was time that the city had a new generation of leaders.
The then-CSBJ editor/publisher had a suggestion. Noting that Frank Aries’ donation of a site in the Banning-Lewis Ranch for the Olympic Museum and Hall of Fame was “in doubt,” Chuck Shelden suggested that it was time to find a new location.
“A jewel like this should not be relegated to the eastern frontier,” Shelden wrote. “A viable, more centralized location is crucial if the Hall of Fame is going to be something more than a white elephant.”
Thirty years later, the Museum/Hall of Fame will soon open on its downtown site.
Better late than never!