By William J. Dagendesh

The La Fun Motel continues to generate derision for its shoddy appearance in what residents regard as a family-oriented community.

Built in 1937, the motel at 123 Manitou Ave. (1.3 miles from the center of town) has been abandoned since the city revoked its business license due to criminal activity there. The property is an eyesore, and criminals and/or transients break in, vandalize or set fire to the property.

A fence sporting a developer’s sign now surrounds the property. Outside of a couple of the newer hotels, marijuana outlets and a couple of restaurants, the area is run-down and aesthetically uninviting for tourists. Residents want to know what is being done about the property.

Formed in 2006, the Manitou Springs Urban Renewal Authority seeks to revitalize and cure blight in the corridor just east of Highway 24 in Manitou Springs. Its funding mechanism is sales tax revenues but wasn’t effectively funded until Manitou legalized recreational marijuana.

MSURA Board Chair Debbie Sagen first learned about the motel’s activity from her daughter, whose classmate at Manitou Springs Elementary School and her family (three children, four adults) lived in one room at the motel.

“By the time I joined the MSURA board in 2019, this illegal short-term rental activity at the motel was on the rise and the city began taking enforcement action within a year. While the owners were trying to comply with city codes, they could not do so successfully, so the motel was shut down after losing their license to operate,” Sagen said.

The owners put the motel and property up for sale. The total market value is about $702,562, according to the El Paso County Assessor. The assessor’s site lists the owner as Paragon Manitou Gardener LLC, filed in August, with a registered agent in Littleton and a principal address in Fishers, Indiana.

The MSURA recently finalized a deal with a developer to purchase the motel for re-development. Actual use hinges on how ideas would fit within current building codes, and/or if city planning and leadership are open to adjusting those codes to accommodate thoughtful, innovative development.

Sagen said this type of re-development can’t happen without public/private partnership — given the condition of the properties in the MSURA, and specifically, La Fun, requiring asbestos mitigation and scrape off.

Manitou Springs wasn’t part of the Pikes Peak Regional Building Department until 1985, resulting in possible significant challenges and issues within the MSURA.

All-Phase Environmental Consultants most likely is involved with asbestos mitigation, but could not be reached for comment.

A development group approached the MSURA board in late 2021 to consider re-developing the property, but the sale fell through. In February 2022, the Paragon group stepped in and, with the MSURA board, began exploring development ideas through the first half of 2022.

According to Sagen, the board used its authority and funds to assure the Paragon team could successfully redevelop the property.

John Block, the property’s development manager, said residents will be happy to see the La Fun torn down and that demolition plans are in the early stages.

“Ideally, the city would like to see a small grocery store built there or maybe apartments offering ground-floor retail. Manitou has few apartments and I think the community would welcome this,” he said.

Sagen said the MSUA authorized a development agreement that spells out what the MSURA funds will be used for as the property is redeveloped.

“We do this because these types of property are far more expensive to develop than vacant land, so most of the properties within our boundaries are very difficult to develop without assistance,”
Sagen said.

“Fortunately, the completion of the Westside Avenue Action Plan project made the La Fun re-development viable for the Paragon team, but they still wouldn’t have pursued the project without MSURA’s financial assistance.

“The property is safer now since a fence now surrounds it, and the buildings will be demolished once the asbestos is safely removed. Once re-developed, the property will generate more taxes than the La Fun ever could, and the residents of Manitou will benefit from new business activity.”

Farley McDonough of Adam’s Mountain Café said the motel has been a liability to her establishment for years. Homeless people and others struggling with addiction and mental health crises have trekked back and forth between 31st Street and the motel near Adam’s location.

“It’s no secret that there has been illegal, and sometimes dangerous, activity happening on the property. Adam’s has had personal property stolen and found located at the La Fon,” McDonough said.

“We have had to take numerous precautions to protect our staff, customers and our building as a result of prior activity based at the old motel. Further, being a very large and visible property, the dilapidated and mismanaged business could only have a negative impact on those customers driving to Adam’s from the Highway 24 interchange.”

McDonough initially did not request to participate in using MSURA funding to upgrade the Adam’s building, she said.

“We had a solid lender and obtained the construction loan without incident. But, when we dug into the property, we discovered several issues had to be addressed, such as a decrepit sewer system, a grossly inadequate grease trap system, and the flat roof over the kitchen was dangerous and had to be replaced,” McDonough said.

“I went to the URA for additional funding to make the financial gap needed to complete the project. Full disclosure: I was on the URA board at this time but recused myself from any discussion and/or voting conducted by the board under the guidance of our attorney.”

According to resident Karole Campbell, who’s helping with PR for the project, the URA was hitting its stride in the past few years (new Holiday Inn Express, renovation and improvement of Adam’s Mountain Café, Beckers Lane Bridge, public art and new lighting) and the marijuana money was largely the impetus for that.

“It’s always more expensive to redevelop than to build on ‘virgin’ land, because you may have hazardous materials mitigation, you may be tearing down an old building. You don’t know what you’ll find underneath. These factors create risk for developers/investors and can make it harder to get projects done in these types of areas,” Campbell said.

In August, Manitou Springs City Council removed the MSURA’s funding stream. A portion of retail sales tax within that Urban Overlay Zone was dedicated to the MSURA for improvement. Council members feared recreational marijuana sales would be approved in Colorado Springs and anticipated a decline in revenues.

Since re-development projects can be expensive due to property values, demolition and infrastructure upgrades needed to get a property ready for development, public assistance often is needed to encourage property owners to rehabilitate or redevelop a property. The La Fun Motel is an example of this and is very blighted, according to MSURA Executive Director Jim Rees.

“MSURA believes the financial assistance will result in an asset for Manitou that will provide jobs, retail and/or housing opportunities as well as long-term tax revenue for the city, county and school district,” Rees said.

MSURA is working with Paragon to come up with the best use for the site that will meet the needs of the city and be economically viable. Paragon is considering retail as well as multi-family housing options, Rees said.

“This will take months to complete and get approved by the city. Meanwhile, the asbestos abatement will be completed soon and demolition will be finished early next year,” Rees said.

McDonough sees this situation as a catalyst for change that might inspire new and interesting businesses to the end of town including more restaurants and retail.

“We need to feel a sense of place in our little east end of Manitou Springs, so I am excited to see if this project is the spark,” McDonough said.

Campbell agreed, adding, “Look at South Nevada Avenue and the cool stuff happening there. It was blighted, lots of homeless, fleabag motels and the URA over there has built new condos, restaurants, shops.

“The public/private partnership did an amazing job of changing the profile of that area. We can do that in Manitou as well.”

Sagen looks forward to the day when she can take her family to shop, eat and play along this stretch of the avenue, she said.

“I think this re-development project is the best way to accelerate that vision,” Sagen said.

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