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Park Hill businessman and his wife have received a six-figure, low-interest loan from the City of Denver even though they have a long history of financial problems and until recently owed the city treasury almost $60,000 in delinquent real estate taxes.
Johnny and Bernice Copeland, owners of the Holly Shopping Center at Holly Street and 33rd Avenue, scored a $270,000 loan in late September from the Mayor's Office of Economic Development (MOED). The money, along with a loan from a local bank, will finance a complete facelift for the center, now known to police as a gang hangout and drive-through market for illegal drugs.
Officials in the administration of Mayor Wellington Webb defend the Copeland deal, saying it should spark commercial activity in an area blighted by crime, poverty and other symptoms of urban decay. They argue that MOED, which loans out about $2 million a year (in mostly federal funds) across the city, is supposed to venture into troubled areas that private lenders won't touch.
"That's part of the business of economic development," says Myrtle-Rose Green, Denver's director of asset management and the official overseeing the Copeland project. "You're dealing with risky clients."
But Denver City Councilman Ted Hackworth says the Copelands' recent debts to the city should disqualify them from special financial breaks courtesy of taxpayers. "I can't imagine that I'd loan money to a guy that owed me $60,000 already," Hackworth says. The Copeland project didn't require the council's approval.
According to Green, the MOED loan is part of an economic-development "package deal" initiated this past spring when the city bought a three-quarter-acre parcel adjacent to the center from the Copelands for $93,000. The city plans to build the new, $540,000 Dahlia Branch Library building on the vacant lot.
The library branch now occupies space leased from another shopping center at 33rd Avenue and Dahlia Street. It is scheduled to move to the Holly Street site when the new building is finished in the fall of 1995. "The old library is very inadequate," Green says. "It's just barely functional."
The Holly Shopping Center has been an eyesore and trouble spot in the Dahlia neighborhood for years. Police say they frequently catch drug dealers flagging down potential customers driving by the center's parking lot. In June 1993 a stray bullet from a gang shootout wounded six-year-old Broderick Bell three blocks away.
But Green says the Holly center parcel was "the only feasible choice" in the neighborhood for the new branch building. She says the city got the Copelands to sell the property for about half their original asking price of $185,000.
The city also forced the Copelands to agree to fix up the center so it won't detract from the library, Green says. MOED kicked in the three-year, $270,000 loan, which will pay for renovations of the center's facade. The Copelands, meanwhile, found a private lender to refinance the debt they owed on the center, a move that lowered their loan payments considerably.
Green notes that MOED is charging the Copelands 6 percent interest on the loan, which isn't too far below current bank rates. "Six percent to me is not much of a break," Green says.
Records show the Copelands have been struggling to pay their debts for years. The city has placed liens on their property at least twice for failure to pay storm-drainage charges. The Internal Revenue Service slapped a lien on one parcel partly owned by Johnny Copeland for nonpayment of federal taxes in 1987.
The same year, Bernice Copeland was sued by an equipment rental company after she and a business partner failed to make payments on a walk-in refrigerator and display counters and shelves they'd leased for a Park Hill liquor store. A judge ordered Copeland and her partner to pay the company more than $28,000.
In May, when the City of Denver bought the library plot from the Copelands, the couple owed $59,100 in real estate taxes, records show. Most of the $93,000 the city paid for the property went toward retiring the tax debt.
City councilman Ed Thomas says he's not familiar enough with the details of the Copeland venture to comment on MOED's involvement in the project. But, like Hackworth, he says the city should have serious reservations about making public loans to anyone with a large outstanding tax bill.
"The line should be drawn at sound financial management," Thomas says. "If it's not there, goodbye."
Calls from Westword to Johnny and Bernice Copeland were returned by Johnny Copeland's sister Mary Lewis, who says she is helping the couple fix up the center.
Lewis says that despite the Copelands' past financial problems, there's no cause for alarm over their ability to repay the MOED loan. Their old loan, she says, carried a 16 percent interest rate, but the couple never skipped a payment after acquiring the center eleven years ago.
"He didn't miss a month," Lewis says of her brother. "I would think eleven years is a pretty good history."
Jay Soneff, a development consultant working with the Copelands on the project, says they've "hung on with their fingernails" at the center for years and should be lauded--not criticized--for agreeing to fix it up. "I think it's a huge positive," Soneff says.