In third quarter 2001, Capital Pacific Holdings Inc. will take control of the Banning-Lewis Ranch, a 21,400-acre spread that is owned by billionaire Ibrahim Khalid. He bought the site in 1993 for $18.5 million, a year after the Resolution Trust Corp. failed to find a taker for a minimum asking price of $41.5 million.
The RTC had acquired the ranch during the savings and loan crisis of the 1980s, going down in record books as the single-largest project ever secured by the RTC, a Federal agency that had been tasked with property dispositions from failed S&Ls. The property makes up the entire eastern border of Colorado Springs, the state's second-largest city. The Banning-Lewis Ranch also represents the largest loss to taxpayers of RTC-secured properties during the crisis. Records show taxpayers took more than a $200-million hit from the sale to Khalid.
Before it went under, Phoenix-based Western Savings had provided a non-recourse loan of more than $235 million to flamboyant developer Frank Aries, whom ultimately defaulted on the loan. Aries later had been grilled on CBS' 60 Minutes for his role in what had been categorized as the biggest RTC real estate failure in the US.
For the past seven years, the low-profile Khalid family has sold off some minimal acreage, but has not added to the original infrastructure. Some locals had believed the Khalid family wouldn't part with the ranch unless they would be offered a princely sum--in excess of $40 million. Others believed the family would be lucky to get any more than they paid for it. The sale price has been the subject of considerable speculation since Capital Pacific builds homes in California that sell for as much as $10 million.
"Maybe they just don't want the headache of owning it anymore," one land broker speculated to GlobeSt.com. "They never seemed to be following any kind of conventional investment strategy when they bought it. Maybe they want to deploy their cash elsewhere, where they can get a pay back."
And there is a question of what Capital Pacific, which has built more than 20,000 homes, will do with the land. Rocky Scott, president of the Greater Colorado Springs Economic Development Corp., says Colorado Springs has so much undeveloped land that it will take another two decades before it makes sense to develop the Banning-Lewis Ranch. He predicts growth won't seep to that area for another 20 to 50 years.
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