COLORADO SPRINGS -- When the time comes to build a monument to the savings and loan scandal, Colorado Springs will have an ideal site to offer.

It is a vast stretch of grassland near the base of Pikes Peak called the Banning-Lewis ranch and it is the biggest mistake ever made by a savings and loan association.

Even by the standards of the most costly scandal in American history, the Banning-Lewis ranch qualifies for superlatives:

It is, at 25,000 acres, the biggest piece of real estate taken over by the Resolution Trust Corp. (RTC), the agency created in August 1989 to supervise the government's thrift cleanup.

It was financed with the biggest thrift loan ever to turn bad -- a $240 million mortgage from Western Savings and Loan Association of Phoenix.

If it can ever be sold, the ranch will probably produce the biggest single loss ever suffered by the RTC -- a $200 million hit by the reckoning of local real estate experts, who figure the property is worth only a fraction of what has been borrowed against it.

And it is illustrative of the biggest problem the government faces in clearing its shelves of the debris of collapsed S&Ls -- what to do with hundreds of thousands of acres of undeveloped property for which there is little or no market.

If the figures on the ranch aren't extraordinary enough, there is the fauna: the only herd of antelope in the inventory of property acquired by the government from failed financial institutions, plus an assortment of deer, eagles and rattlesnakes.

The Banning-Lewis ranch was supposed to be a new city someday, a 25,000-acre Reston-by-the-Rockies where 170,000 people would live and work. There would be an interstate highway running down the middle of the 14-mile-long property. The United States Olympic Hall of Fame and the U.S. Space Foundation Museum were to be there.

The promise was so alluring that the Colorado Springs City Council agreed to annex the ranch into the city and provide the precious water that would transform the near-desert into the new development.

None of that dream has come true. Nothing has been built. What has happened instead is a case study of how real estate speculators financed by federally insured S&L deposits came to create a national financial disaster that is now expected to cost the American taxpayers $500 billion, with the tally still rising.

The man behind the Banning-Lewis dream was Frank Aries, a Tucson real estate entrepreneur who made his fortune buying, subdividing and reselling another ranch -- one in Arizona once owned by the legendary eccentric billionaire Howard Hughes.

Neither as wealthy nor as eccentric as the late Howard Hughes, Aries was rich enough and eccentric enough to create his own legend in Colorado Springs. At 6 foot 4 inches and 300 pounds, he was a dealmaker with a Rolls-Royce, a helicopter, a jet plane, a $1.5 million house in foothills of the Rockies and a free-spending business style.

Aries flew to Denver Broncos games in his helicopter, hosted a black-tie picnic on the ranch, once offered to fly the entire Colorado Springs City Council to Arizona for a party and promised million-dollar donations to the U.S. Olympic Committee and the Space Foundation, the city's most prestigious groups.

"He kept romancing everybody," said City Councilman Frank Parisi, recalling a style more familiar to Texas than the mountains of Colorado.

Aries would not talk about the Banning-Lewis ranch or his dealings with Western Savings, both of which are involved in civil and criminal investigations by federal authorities, according to government sources.

Aries left town about a year ago. By that time, he had lost the helicopter and the jet, and the house was up for sale. The ranch had been repossessed by Western Savings, and Western had been taken over by the government. He now lives in south Florida with his wife, Judy, aboard a 98-foot yacht named Scheherazade. On his answering machine recently, this message greeted callers: "Hi, this is Frank. And this is Judy. We're not home right now, we're probably out... . Sailing, sailing over the bounding main."

The story of how the Banning-Lewis ranch became a multimillion-dollar burden on the taxpayers began in outer space.

A few miles west of the ranch is the Air Force's Consolidated Space Operations Center (CSOC). It is one of the Pentagon's most sensitive facilities, so secret that computers scan the eyeballs of employees as they enter to confirm their identity. Deep within CSOC bunkers designed to survive nuclear attack are the command posts for the nation's military space ventures.

Construction and staffing of the space command center poured hundreds of millions of dollars into the Colorado Springs economy during the 1970s and early '80s, and then in 1983 President Reagan offered even greater growth. Proclaiming a massive push to create space weapons systems, Reagan launched his Strategic Defense Initiative, better known as "Star Wars."

Real estate speculation resulting from the SDI program was like a second-stage booster for the skyrocketing Colorado Springs economy. Just as the National Aeronautics and Space Administration made Houston boom, SDI would bring thousands of highly paid, high-technology workers to a community that already was one of the nation's fastest-growing cities, thanks to a military-industrial boom tied to the Air Force Academy, the North American Aerospace Defense Command, Fort Carson and Falcon Air Force Base.

One of those who came to cash in on SDI was Frank Aries. Linking himself to the stars, Aries chose the zodiac sign of the ram -- the constellation Aries -- as the symbol of his company, Aries Properties Inc.

Other real estate developers began buying land around Colorado Springs and drawing blueprints for shopping centers, housing developments and office parks, but Aries had bigger plans.

Starting in October 1985 he arranged to acquire enough land to build an entire city -- 39 square miles between the Consolidated Space Operations Center and the Colorado Springs city limits.

In the days when Colorado Springs was a sleepy cow town, the Banning and Lewis families had raised cattle on the land, but they were long gone. Except for the old family homestead and a spectacular outcropping known as Picnic Rock, the ranch was owned by Mobil Land Development Corp., the real estate subsidiary of the oil company and a specialist in planned communities.

Mobil Land, one of the developers of Reston, had purchased the Banning-Lewis ranch and adjacent parcels to build another new town, four times as big as the Virginia original.

The property was not listed for sale when Aries approached Mobil with an offer of $98 million for 20,483 acres. Mobil, which had bought the ranch in 1981 for $23 million, quadrupled its money and kept 3,000 acres of the property.

"When he bought it, I said, 'Man, Mobil really cut a deal,' " said Councilman Parisi, a real estate appraiser by profession. Aries paid almost $5,000 an acre for property that Mobil had bought for less than $1,000 an acre only four years before. "I started putting some numbers together and it just didn't compute," he said.

None of the money to buy the Banning-Lewis ranch came out of Aries's pocket, said former business associates and RTC officials. Aries borrowed all the money from Western Savings and Loan.

Aries did not stop there. He borrowed $41 million to pay for a 4,000-acre development next door, $6 million for a dairy farm, $1.4 million for a stock car racing track. El Paso County real estate records show his acquisitions ultimately added up to more than 25,000 acres and cost $167.9 million.

But Western, which hoped to share in the development's profits, lent Aries far more than that, providing the money not only to buy the land but also to finance the operations of Aries Properties. Money from Western's depositors paid for Aries's salary, his helicopter, the corporate jet and the generous contributions he spread around Colorado Springs.

Over three years, Western Savings lent a group of companies controled by Aries $240 million -- $72 million more than the purchase price of the land. Thrift regulators consider it highly risky, but not necessarily a violation of banking regulations, to give mortgages that exceed the value of the property that is the collateral.

By December 1988 "substantially all the loans were delinquent," Western Savings disclosed in a report to federal regulators. Western Savings executives assured regulators that "the outstanding balances of the loans on this project plus related interest are collectable," but when Western Savings was seized by the government six months later, the Banning-Lewis loan was the biggest loss on its books.

Former Western Savings Chairman Gary Driggs, who personally handled Aries's loan and made frequent trips to Colorado Springs to work on the project, did not return phone calls seeking comment on the project. Western Savings is one of 100 large S&Ls that have been assigned top priority by the Justice Department task force investigating possible fraud in thrift failures.

Federal thrift regulators seized control of the S&L in June 1989. Soon afterward, they cut off Aries's line of credit and began steps to foreclose on the loan. In August 1989, Aries transferred all his land holdings to the RTC, which is still trying to sort out financial details of the Banning-Lewis venture.

"There's not a very clear trail of where all the money went, whose hands it ended up in," said Lana Jones, the RTC official in charge of the Banning-Lewis ranch. "It's going to take a good many years to determine where all the money went."

Much of the missing money went to pay the planning, zoning and development costs that are necessary for any large-scale real estate project, but those expenditures do not add up to $72 million, according to RTC officials and others involved in the venture.

Even after Western repossessed the land, Aries Properties continued to collect $250,000 a month for managing the property. Since most of the land was leased to local ranchers for cattle grazing, the only "management" required was a security patrol to keep poachers away from antelope and deer that roam the rolling grasslands. Aries's management contract was canceled after the RTC took over Western Savings.

Western Savings is now projected to be one of the most expensive thrift failures ever, costing the taxpayers $1.7 billion -- the second most costly thrift failure to date. The association has now been taken over by a California bank, but the RTC was left with $2.9 billion in bad loans and repossessed property, including the Banning-Lewis ranch.

Although Western's books showed the $240 million spent on the ranch as a loan, the S&L was really a partner with Aries in a highly speculative real estate venture. In addition to interest on the loan, Western was supposed to receive a share of the profits. Western never should have gotten into the Banning-Lewis ranch project in the first place, said Colorado Springs Mayor Robert Isaac, who tried to block Aries's venture.

Although Colorado Springs had been one of the nation's fastest growing cities for 30 years, "We were already way overbuilt" by the time Aries arrived, Isaac said. "Who would lend $240 million in an area that was already overbuilt? I haven't been able to figure out how a prudent businessman could do that."

Aries never expected to build the new city himself, said executives of P&D Technologies, a well-known engineering and consulting firm that was hired to plan the project. Originally a division of Planning Research Corp. of McLean, P&D had worked on the development for Mobil Land and was kept on by Aries.

His strategy, like that of most land developers, was to devise a master plan, get the necessary approvals from local governments, then sell off large tracts to other developers who would build the homes, offices and stores. Aries managed to sell only a couple of small tracts before the venture collapsed.

Developing a 25,000-acre new city is an awesome undertaking even for a company the size of Mobil, which ranks sixth in Fortune magazine's listing of the nation's largest industrial corporations. For comparison, the 7,400-acre Reston is far from finished after 25 years of development and the Colorado Springs project was expected to take twice that long.

Aries spent two years and several million dollars creating plans and persuading the Colorado Springs City Council to annex the property into the municipality. Annexation was crucial for success, explained Mayor Isaac, because there is no source of water on the 25,000 acres. Without water the property could be used for little other than grazing land. The city has vast water resources, but it legally could supply only its own residents.

In addition to courting community organizations as part of the effort to persuade the City Council to annex the huge tract, Aries assured city officials that local taxpayers would not be burdened if the ranch became part of the city.

The developers would take care of everything, he promised. They would build a new freeway allowing Interstate 25 traffic to bypass downtown Colorado Springs. They would put in the water mains, the roads, the schools and the parks.

Little of the infrastructure had even been started by the time the ranch fell into the hands of the government, but under terms of the annexation agreement, all those facilities will have to be built before the land can be developed.

That multimillion-dollar cost, which must be borne by any buyer, will not make it any easier for the government to unload the property, said Theodore Leary Jr., a principal in Lowe Enterprises Inc., the Los Angeles real estate company hired by the government to figure out what to do with the property.

Lowe Enterprises is being paid about $39,000 a month for managing the property plus a commission based on how fast the land is sold and how much it brings. Leary said he is confident the ranch can be sold.

Neither Leary nor RTC officials would say what they think the ranch is worth.

"It's obvious they are not going to sell it for $240 million," said Isaac.

"It's going to be sold for pennies on the dollar," predicted John Winslow, whose Denver firm Dresco Inc. tracks Colorado real estate prices.

The property today would be appraised at no more than $30 million to $35 million, estimated Paul Turner, research director for the Colorado Springs office of Grubb & Ellis, a nationwide real estate firm. Even at that price, finding a buyer will be difficult in today's market. "It's just going to sit there," Turner added.

"I can't even see a fire sale attracting anyone," agreed Councilman Parisi. "There's nothing out there but Kitty Litter."