Colorado Springs
Colorado Springs and Pueblo area residents spotlighted for high debt
In a previous post, we noted a study conducted by the organization Credit Karma which applauded Colorado residents for lowering their credit card debt by an average of nine percent during 2010. While the state as a whole may be practicing successful debt management, a new study suggests that the same cannot be said of the area surrounding Colorado Springs.
Experian-a national credit reporting company-listed the Colorado Springs and Pueblo region one of the foremost areas for credit card debit in the nation. According to Experian’s research, the outstanding credit card balances held by residents of this area were the 15th largest in the nation in December 2010. In addition, residents generally make payments towards reducing these large balances at a slower rate than the rest of the country. Combined, these two trends create the kind of financial trouble which can eventually lead to payment defaults and bankruptcy.
Although Experian reports that residents from the Colorado Springs-Pueblo area actually reduced their average credit card balance by one percent compared to 2009 figures, the total remains almost seven and a half percent higher than the national standard.
In the same study, this region ranked 29th highest credit balance in the nation during 2009 and 64th during 2006. These numbers indicate that residents have steadily increased their credit spending at a higher rate than the rest of the nation.
The director of public education at Experian cites unemployment as a potential reason why residents struggle to lower their credit card balances. The unemployment rates in December 2010 for both Colorado Springs and Pueblo were higher than any of Colorado’s other large metropolitan areas. Combined, unemployment in the two areas is also slightly higher and the national average.
Source: The Gazette, “Colorado Springs ranks 15th in credit card debt.” Wayne Heilman, March 3 2011.
CO City Hopes Bankruptcy Judge Will Sign Off on Venue Transfer of Banning Case
In an earlier post titled Developer of 21,400 Acre Colorado Springs Ranch Files for Chapter 11, we announced that the developer of the Banning Lewis Ranch filed for Chapter 11 bankruptcy. The city of Colorado Springs now asks the federal judge presiding over the bankruptcy proceedings to move them back home to Colorado. The case had been filed in a Delaware bankruptcy court where the two California-based limited liability companies who financed the project incorporated their businesses.
Where the case is heard could potentially have a significant impact on the decisions made concerning the bankruptcy depending on the state law that is used. While the companies hope to remain in Delaware courts known for their corporation-friendly laws, the land owned by the developer amounts to a significant portion of the city and could affect the residents and officials of the Colorado city.
The Banning Lewis Ranch was a development plan for a piece of Colorado Springs property that spans across 21,400 acres and comprises a large portion of the Eastern side of Colorado Springs. Plans for the ranch stretched several decades into the future and included estimates of approximately 75,000 residences.
Because the property was annexed by the city in 1988, Colorado law should govern taxes and other matters involved with the land. A Delaware attorney who requested the transfer said that “Colorado Springs has a very important interest in having local controversies decided by Colorado courts.” The developer has opposed the request and argued that although the property is in Colorado, the bankruptcy involves the “sale and recapitalization of Delaware entities,” and that most of their creditors made claims in Delaware courts, under Delaware law.
Source: The Gazette “City wants Banning Lewis Ranch bankruptcy proceedings moved” Rich Laden 12/7/10
Developer of 21,400 Acre Colorado Springs Ranch Files for Chapter 11
The plan for Banning Lewis Ranch in Colorado Springs, Colorado dates back to the 1960s, but continues to await completion. In 1988, the property that covers a significant portion of the east side of Colorado Springs was annexed by the city. Ownership of the 21,400 acres was bought and sold by a number of investors until the Banning Lewis Ranch Co. LLC and its subsidiary, Banning Lewis Ranch Development I & II LLC purchased the property and began construction in 2007.
As the housing market began to decline, so did the funding and support for the ranch and Banning Lewis Ranch Co. LLC and the subsidiary were forced to file for Chapter 11 bankruptcy. The company hopes to restructure their debt through the bankruptcy process and continue operation of the project into the future.
Mayor Lionel Rivera believes that the community project will “move forward” into the future as the city continues to expand. Plans for the project include the prediction that 75,000 residences will be built that can house approximately 180,000 people. The predictions are far from realization as only 200 families currently live on the property and only 50 more homes have completed closings.
Over $75 million has already been spent to prepare the area for housing development by adding roads, water and sewer lines and the company owes approximately $242.4 million to six different creditors. The subsidiary company owes $186.7 million to 20 of its larger creditors. Although the city’s $880 million water delivery pipeline was going to be accessed by the ranch development, the city assured its taxpayers that the pipeline was planned to serve a number of other developments as well.
Source: The Gazette “Banning Lewis developer files Chapter 11 bankruptcy” Wayne Heilman, Andy Wineke and Rich Laden 10/28/10