Greed Acres

Colorado developer Frank Aries had no intention of carving out another piece of ho-hum suburbia when, in 1985, he went calling on the Driggs boys, the freewheeling moneylenders at Phoenix's Western Savings and Loan.

The land sultan of Colorado Springs, fresh from a slick parceling of the old Howard Hughes estate in Tucson, was out to build a living monument to his own ingenuity, a master-planned community on a scale with Del Webb's desert retirement havens or the great orange-belt developments of Southern California.

Aries, who drove a Rolls-Royce, lived in a $1.6 million home in the ritzy Broadmoor district of Colorado Springs and liked to brag about the multimillion-dollar sailboat he had his eye on, was not a man who thought small. He envisioned 25,000 acres of homes, schools, industry, shops and golf courses surrounding the old Banning-Lewis Ranch east of Colorado Springs. The blueprints even called for upscale anchor projects: a plush new headquarters for the U.S. Space Foundation, complete with a $3 million big-screen IMAX theatre, and alongside it a high-tech Olympic Hall of Fame peopled with the talking ghosts of champions like track-and-field great Jesse Owens.

All Aries needed to pull off the deal was $240 million of somebody else's money.

The high rollers at Western, who had already sunk millions into gambling casinos in Las Vegas and Atlantic City and huge tracts of desert land, were happy to oblige.

So were the members of the United States Olympic Committee. After all, Aries was offering to deed them 150 acres of the land he'd bought with the thrift's money and, to sweeten the pot, build a major parkway and other amenities.

The Phoenix thrift wasn't the only publicly backed entity enamored of the developer's Shangri-la. The city of Colorado Springs also got in on the act, swallowing the entire property in the largest annexation in state history.

Everybody was a winner--until they all crapped out.
Today the Banning-Lewis Ranch property sits vacant, king turkey in a Colorado real estate market filled with birdbrained schemes. Banning-Lewis is the largest single parcel in the Resolution Trust Corporation's entire national inventory and may be the most spectacular challenge facing the federal agency, which is charged with putting the nation's savings and loan industry back together again.

The Olympic Committee's promised infrastructure is nowhere in sight. The USOC still has the land Aries donated. But it only gets to keep the acreage if it actually builds a Hall of Fame there, an increasingly iffy proposition. Plans for the Space Foundation's new digs are up in the air, too.

Colorado Springs is stuck with a dead weight on its tax rolls that must be patrolled by the police and fire departments. Officials are even toying with the idea of de-annexing whatever land they can.

Western Savings is insolvent, having been seized by federal regulators several months ago. And the Driggses, who ran the thrift for decades, were tossed out by their shareholders--though they fell to Earth gently, thanks to golden parachutes.

Viewed in retrospect, the Banning-Lewis deal takes on an almost surreal quality. Aries' willingness to pay top dollar for raw land in a time of economic uncertainty and Western's blind faith in the bet-it-all principles of Sun Belt real estate are straight out of a financial fairy tale. But they raised few eyebrows in the wild and woolly mid-Eighties, when land was being bid up by speculators seduced by the old saw that you can't get hurt in dirt. Most of them, including the shareholders of insolvent Western, wound up buried to their necks in it.

But not Frank Aries. The remarkable loan agreement he worked out with Western saw to it that he wasn't personally responsible for a dime of the money. At last word, the 56-year-old Aries was making plans to sail "probably all over the world." Speaking from his 98-foot sailboat in Miami Beach, Aries told the Denver daily newspapers last month that he's also selling his Colorado Springs home and moving back to Tucson. "I plan to retire, but not until next fall," he told reporters.

As Aries sails off into the sunset, Western Savings is now under the control of the government's thrift bailout agency, the RTC. The taxpayers will pick up the tab.

THE SHEER SIZE of Western's loan to Aries still boggles the brains of banking experts.

"It's the largest loan I have ever seen to a single borrower in any institution," says Bob Stallings, Western's new chairman. Anthony Scalzi, the boss of the RTC's western region, has referred to it as "a doozie." "I'd say it violated some principles of sound financial operation," notes the federal overseer, who tends to wear his sarcasm on his sleeve when discussing his bulging portfolio of loser loans.

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Andy Van De Voorde