Downtown eyesore sold to developer

One of Old Town Fort Collins' most underdeveloped and downtrodden city blocks has a new owner planning major changes.

Developer JD Padilla of Post Modern Development on Monday purchased 3 acres along College Avenue between Cherry and Maple streets, land that spans a city block and houses the Fort Collins Bike Coop, a shuttered Taco John's and vacant Tire Distribution Services.

The property had been bank owned and on the market for $3.79 million since 2011. Padilla declined to disclose what he paid for the property.

Padilla is still developing plans for the site and construction is a least a year away, but he said it will likely include retail, residential and offices in a mixed-use development. He also owns the former Riverwalk property at Harmony Road and Interstate 25 that is in the early stages of development.

Between the two sites, "we control two of the most iconic pieces in Fort Collins for development," Padilla said. "This property will lend itself to a multitude of things ... in terms of the type of downtown living people want to see."

The city is ready "for something more like resort living," with retail and all the services that come with it, he said. Zoning on the site would allow Padilla to build up to nine stories, but he said how high he goes will be a function of economics.

Padilla had the site under contract for nearly a year before finalizing the deal. He is the third developer to put the land under contract after two previous attempts fizzled as developers studied the land, the market and economics of development.

"It's the right place and the right time," he said. "Rents have come up with demand in the market for both retail and residential."

The city has identified the parcel as a key opportunity site in its Downtown Strategic Plan, said Josh Birks, the city's economic health director. "Clearly it's an important piece of property ... I'm pleased to see it's in someone's hands to develop."

As with most downtown projects, there is still a question of parking, Padilla said. "The biggest stumbling block for any business is parking and the mortality rate on small business in Old Town — a lot of it is due to the parking factor."

Padilla said he has talked with the city and Downtown Development Authority about the project and may seek financial help or a public/private partnership, particularly to help with parking. "Both the DDA and city want to see something developed there as much as I do," he said.

The DDA has invested about $4.7 million in projects that surround Block 23 — the land Padilla bought — including $3 million in the Fort Collins Museum of Discovery, $1.1 million in the Penny Flats mixed-use development and $600,000 in MAX, the city's bus rapid-transit system along Mason Street.

The city is looking for opportunities for public/private partnerships on parking, Birks said. "It's an interesting location to evaluation as a public/private partnership given its proximity to the museum. "But the challenge is how do we become a partner? There is no dedicated fund" to pay for such a collaboration.

Padilla already owns the commercial space in the city-owned garage at Mason and LaPorte.

Once heralded as a key location for a proposed downtown hotel, the Block 23 property has become an eyesore surrounded by chain-link fence.

Brinkman Partners purchased the block's southwestern quarter in 2012 where it is finishing construction on 83 apartments in a five-story building. Brinkman had considered buying the entire block but chose instead to build a smaller project on the southwest corner.

"Obviously, Brinkman felt they would test the market with what they had and it's obviously been successful," Padilla said.

Former owner Mike Jensen put the property on the market for $8.8 million just as the economy stumbled. Bank of Choice foreclosed on the site in 2011 and hired Brinkman Partners to market it.

Bank of Choice was closed in 2011 and the property went to CBC Front Range Colorado, part of a bank holding company.

The underdeveloped land, the last and largest tract available in Old Town, has drawn wide interest from several development groups, informally housed an Occupy Fort Collins contingent and was once under contract to McWhinney of Loveland. McWhinney pulled the plug because the company said it couldn't make the economics work for a project that envisioned building about 300 apartments, office and retail space, and a parking garage.

Brokers Aki Palmer, Jim Palmer, Russell Baker and John Baker all of DTZ Global Real Estate Services, brokered the deal.