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As for his delinquent tax debt to the state, Yates says he was unaware he was in arrears until receiving a notice from the Department of Revenue in 1992. "That was the first time I'd seen it," he says. "I didn't have the energy to fight it." And there was nothing wrong with paying the $3,000 debt with money from Woodmen's Trust, he says, because he'd loaned American Woodmen's much more than that earlier that year. "My commitment [to the company] was clear," he says. "I don't think anybody would question that."
After a review of the matter, Frank and other officials accepted Yates's explanation. "We were satisfied there was no criminal or even imprudent handling of that account," says Frank. "He put more money in than he took out."
However, court records indicate that regulators were sufficiently concerned about the account last year to order that the Rossonian and Five Points Plaza be taken from American Woodmen's and placed under the control of a nonprofit corporation. (Even though the state regulators' job technically was to distribute American Woodmen's assets to creditors, the two Welton Street properties were so heavily encumbered by city loans that they had taken on a negative value.)
Yates asked that the two properties instead be given to a former American Woodmen's subsidiary called AWL Financial, and that the company be allowed to court investors and begin operating as a new, for-profit real estate company. State officials refused. Instead, they formed the Five Points Community Development Corporation. The nonprofit now owns Five Points Plaza outright and is the general partner in a new entity called the Rossonian Limited Partnership, which in turns owns the Rossonian. Bank One, which invested in the Rossonian in return for $287,000 in federal tax credits, is the nonprofit's limited partner in the venture.
Yates now serves on the board of the Five Points Community Development Corporation. Last September he was given a one-year contract that pays him an annual management fee of between $35,000 and $40,000 for his ongoing work on the Rossonian project. That money is taken out of the MOED loans.
But how much control the nonprofit actually exercises over the development is unclear. One director, Anne Job, of the Downtown Denver Partnership, resigned earlier this year only a few months after her appointment. Job says she agreed to serve on the board after a request from John Huggins, former director of the MOED. But when she couldn't decipher what the board's duties were, she says, she decided to step down. "I didn't feel comfortable being on a board when I didn't know what the purpose was," says Job.
Another boardmember, Denver Housing Authority attorney Cynthia Jones, has also resigned. Jones did not return calls, but DHA spokeswoman Phyllis Searles says Jones "just couldn't commit the time to it." The other two boardmembers--Lisa Peterson, of the Five Points Business Association, and Elmer Jackson, a Denver accountant--couldn't be reached for comment.
Today Yates and the City of Denver are actively seeking a tenant willing to open a jazz club on the Rossonian's first floor and finish out the project. MOED's Lysaught argues that the city is in a "perfect situation" now that the DHA has moved in and is making payments on the existing Rossonian debt.
"We're in a position to offer the right operators a deal they can't refuse," Lysaught says, referring to the availability of the $500,000 in additional loan funds. "We can take our time and make a good selection of the investment team to bring back the [Rossonian] club."
Denverites with experience in the music business say the nightclub phase of the Rossonian project may be the riskiest phase of all, especially since any operator will ultimately be required to pay the substantial start-up costs whether the loan comes from the city or from a bank.
"I wouldn't put a ton of money into that place," says Allan Roth, co-owner of the Denver rock club Herman's Hideaway. "It would be tough to get it out of there." Others agree. "During the week, they'll be lucky if they make a dime," says Jerry Krantz, owner of the El Chapultepec jazz club on Market Street. "Denver is a weekend town. It's going to be very, very, very hard."
Lysaught and Yates say they know that nightclubs and restaurants are among the toughest of all business ventures. But with a low-interest loan from the city, they say, it should be possible to find a club that will succeed. "There will be risk," Lysaught admits. "But not knowing who's going to do it, it would be hard to say how large a risk it's going to be."
Yates, meanwhile, says he's entertaining two serious proposals for the club right now. He says he will be "ecstatic" if the club opens by Christmas, shortly after the light-rail line starts running past the Rossonian from downtown. He's giving the club concept two years, he adds. If he can't find a solid tenant by then, he'll begin looking at other ideas for developing the first-floor space. The important thing, he says, is to get the building finished, because no matter how much progress the rest of Five Points makes, the neighborhood won't have arrived until the former hotel's redevelopment is complete.
"It was the most prominent building on Welton Street," Yates says. "Just given its history and its reputation, Five Points is not really on its way until the Rossonian gets done.