By Joel Warner
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By Alan Prendergast
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By Patricia Calhoun
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King Soopers, the grocery chain Denver city officials touted last summer as the anchor tenant for a redeveloped Stapleton International Airport, may end up checking out of that major role.
At a press conference in July 1993 in Mayor Wellington Webb's office, it was reported that the grocery chain would spend up to $100 million to move its headquarters, production and distribution facilities to Stapleton. Webb at the time said that the sprawling King Soopers complex would serve as a catalyst for the redevelopment of Stapleton, whose 4,700 acres will be left vacant whenever Denver International Airport opens.
But a King Soopers official says "the only planned development at this point in time" is a frozen-foods warehouse for Dillon, the chain's Kansas-based parent company. According to a city official, Denver's largest grocery chain appears to have cooled on the idea of a massive relocation of its local facilities.
"During our first discussions, they had a master plan that included those things," says Errol Stevens, who heads Mayor Webb's Stapleton 2000 redevelopment agency. "But over time they have begun to say, `Well, you know, we really need to make these decisions as we go along.'"
The city has never asked King Soopers to make a firm commitment to a headquarters relocation or other moves, says Stevens, who notes that officials have always viewed Stapleton redevelopment as a long-term proposition. But he acknowledges that, with regard to the King Soopers deal, "our image of what would happen has changed some." He says the city's view of King Soopers's role at Stapleton "is a little bit blurrier than it was."
No other major tenants have been announced for the redevelopment of the airport.
Dillon Real Estate last month negotiated a deal that would allow it to purchase up to 196 acres of Stapleton property over five years. But King Soopers vice president for real estate Russ Dispense says that even the frozen-foods warehouse "is not a commitment. I don't see anything that will stop it, but it's not a signed agreement yet," Dispense says of the warehouse, whose construction was heralded by city council members after they voted unanimously last month to approve the land sale to King Soopers.
Early reports put the warehouse size at 250,000 square feet. At last word, it was down to 140,000.
Denver city councilman Ted Hackworth says his understanding has always been that King Soopers officials "intended to move their entire operations to Stapleton." In fact, he says he voted for the land sale last month because "I made the assumption that the reason they'd be an attractive tenant was the fact that their total operation would be there."
King Soopers president Don Gallegos says he "thought he made it clear" at last summer's press conference that his company viewed the airport site as "a long-term situation" and didn't have a timetable for building facilities.
"It was a good move for us, and a good move for the mayor politically, because I know he wanted somebody out there," says Gallegos. "We were really just looking at a frozen-food warehouse, but then when this much property came available at one spot, we thought we better tie up the land." Company officials haven't "changed our mind on that location," says Gallegos. "It's a question of timing."
According to Dispense, the company's ultimate use of the land "could be warehouses" or it could be something else. "Right now we have no other plans other than we are building a frozen-foods facility. Hopefully, we will have a major distribution center there, but we can't commit to that," he says.
Dispense insists his company has no plans to sell any part of the Stapleton property in the future. However, the agreement negotiated with the city gives Denver the right to acquire any undeveloped land the chain might put on the market.
If King Soopers does ultimately back away from aggressive development of the Stapleton property, it won't be because it didn't get a good deal on the land. Hackworth says the Federal Aviation Administration ruled that a fair market value for Stapleton property was 50 cents per square foot. The deal negotiated by the city will allow King Soopers to buy its acreage for between 21 and 29.5 cents per square foot, says Stevens, who notes that the FAA has given the proposed sale its blessing.
Hackworth says the federal agency may want the city to make up the difference by charging more for other Stapleton parcels it sells in the future.
The Kansas-based Dillon, itself a subsidiary of Cincinnati's Kroger Company--has agreed to pay the city $2.4 million if the land sale closes. However, those payments will be spread out over five years, and King Soopers has an option to decline the purchase of 24 of the 196 acres.
The city, meanwhile, has agreed to spend $1.4 million of the $2.4 million sale proceeds to pay for street improvements. The city also will pay a real-estate commission of $270,000.
King Soopers will contribute an additional $1.8 million over nine years to an enterprise zone fund that will be used to construct public improvements such as storm drains.