Mammoth owner Manuel Fernandez and his partners are seven months behind on mortgage payments to the Colorado Housing and Finance Authority, a quasi-governmental agency that has loaned the center almost $800,000 since 1986. Last month CHAFA obtained a court order authorizing it to sell the building and use the proceeds to pay off principal and interest accrued on Mammoth's loans, which now total more than $1 million.
The possible foreclosure has jeopardized more than $400,000 in other, taxpayer-backed loans to the venue's owners from the City of Denver. The city, which made the loans through the Mayor's Office of Economic Development (MOED), wouldn't receive any money from the sale of the center unless all of CHAFA's loans are paid off first.
Fernandez says he's been negotiating with CHAFA and is confident the agency won't foreclose on the loan. "We're working something out," Fernandez says. "I'm not too worried."
But CHAFA spokesman David Martinez is less optimistic. Martinez confirms that CHAFA is still talking with Fernandez to try to find a way to avoid the seizure and sale of the building. Mammoth's loan agreement with CHAFA, however, has already been modified a number of times to alleviate cash-flow problems, most recently in 1994 after Fernandez fell more than $40,000 behind on payments.
"The history is not great," Martinez says.
Mammoth has a long but troubled past as one of the city's premier music halls. Over the years, rock bands like the Doors and the Who performed there; recently the center has hosted a string of well-known alternative bands. But the building has always had trouble turning a profit, and it has seen owner after owner driven away by failure.
When Fernandez bought the auditorium in 1986, it was dilapidated. He and his partners borrowed money from CHAFA and MOED, refurbished the place and opened it that December. Now Mammoth hosts a wide variety of events, from concerts to trade shows to weddings.
Mammoth is particularly important to Denver's large Hispanic community, Fernandez says. More than half of the eighty-odd events at the center every year are Latin-music concerts and dance festivals, he adds.
MOED deputy director Bill Lysaught says the closure of Mammoth would be a severe setback for the surrounding neighborhood, which is the target of an ongoing economic-development effort by the city. Over the last few years, MOED has poured hundreds of thousands of dollars in low-interest loans into businesses along East Colfax in an effort to revitalize the troubled business corridor ("A Loan Again, Naturally," February 1).
"It would not be good to have it boarded up with no activity," Lysaught says.
Lysaught says Fernandez and his partners have paid off about $50,000 of the $315,000 MOED loan Mammoth received in 1986. The city loaned the center $180,000 more in 1989 for remodeling.
It's not clear whether Mammoth, if sold, would fetch enough money to retire both its CHAFA debt and its loans from the city. "It's a difficult building to appraise," Lysaught says.
Martinez, however, says it's "highly unlikely" that the auditorium has enough value to pay off the $1 million owed to CHAFA.
But Lysaught says that even if Denver got no money from the sale of Mammoth, the city wouldn't be completely stuck. Under the terms of its loan agreements, the city could also go after the assets of Fernandez and the other Mammoth owners. "We will pursue everything we need to, to attempt to collect this debt," he says.
Another MOED loan is threatened by the possible sale of Mammoth. A few years ago the city loaned the nonprofit neighborhood group Colfax on the Hill $350,000 to buy and demolish the old Clarko Hotel, a fleabag adjacent to Mammoth that had become an eyesore.
After the Clarko was torn down, the nonprofit leased the vacant lot to Mammoth as a kind of entrance plaza. Colfax on the Hill uses the lease payments to service its debt to the city. According to Dave Walstrom, executive director of the neighborhood group, it would be difficult for the nonprofit to pay off its MOED loan if Mammoth shut down.
Fernandez says he's "99.9 percent sure" the foreclosure can be avoided. He points out that Mammoth has paid more than $500,000 in sales and property taxes to the city since it opened--money the city would not have received if the auditorium had remained closed.
"Nobody has anything to gain by having this place the way it was in 1986," Fernandez says.
