Hopin' for Business

Ignoring skeptics, Denver pushes ahead with its plans to bail out a convention-center hotel. Will anyone check in?

Denver City Councilwoman Susan Barnes-Gelt isn't known for holding her tongue. She often jousts with the mayor and fellow councilmembers, pushing through proposals such as the city's new ethics policy, which put an end to the lobbyist-supplied meals and drinks that have long added inches to the waistlines of Denver politicians.

And for the past two years, Barnes-Gelt has been trying to tell anyone who will listen that Denver is on the verge of making a huge mistake by doubling the size of the convention center and backing an adjacent 1,000-room hotel. Nonetheless, the city will soon break ground for the construction of a $285 million expansion of the Colorado Convention Center, which was approved by voters in 1999. When completed, Denver will have roughly 600,000 square feet of meeting space, which backers claim will allow it to compete with major convention cities like San Diego, Chicago and Boston.

To house all those conventioneers, several consultants have told Denver it must have a new hotel next to the center. So even before voters okayed the expansion, the city had already started negotiating with Denver developer Bruce Berger to build a 35-story, $220 million structure at 15th and California streets, for which he was promised $55.3 million in city subsidies. Since then, Berger has repeatedly told the city he can't find private funding for the project and has won several extensions of a city deadline to have the financing in place.

Mitch O'Connell
Councilwoman Susan-Barnes Gelt (above) thinks Denver's on the verge making an elephant-sized mistake.
Anthony Camera
Councilwoman Susan-Barnes Gelt (above) thinks Denver's on the verge making an elephant-sized mistake.

And that, says Barnes-Gelt, may mark the beginning of a financial debacle that could make Denver taxpayers the proud owners of downtown's newest luxury hotel. Not only did the city make the mistake of selling bonds for the expansion before a hotel deal was finalized, she notes, but if Berger can't find financing, the city may have to take on the burden of building the hotel.

"We've painted ourselves into a corner and said, 'Hit me again,'" says Barnes-Gelt.

If Denver does have to get into the hotel business, it will become part of a trend around the country. With banks and other potential funders increasingly hostile to the idea of building large new convention-center hotels, cities like Houston, Chicago, Sacramento and Austin have simply taken on that burden themselves.

Barnes-Gelt has been skeptical of the need for an expanded convention center from the start. The area around the existing convention center is one of the most blighted parts of downtown, and she says the massive new building will be an eyesore that will make it impossible to foster the pedestrian ambience that has revived areas such as lower downtown. While Denver spends hundreds of millions of dollars trying to get itself into the convention big leagues, Barnes-Gelt says, a dozen other cities are doing exactly the same thing, preparing to flood the market with new meeting venues. If the most-sought-after conventions continue to bypass Denver, she fears the city could wind up with two white elephants: a huge, half-empty convention center across the street from a huge, half-empty hotel.

"We're being lemmings, our usual posture," says the councilwoman. "We're still marching blindly on this path. It's too bad we haven't learned."

Backers of the project scoff at Barnes-Gelt's pessimism. They say huge projects are always difficult to pull off, but Denver could one day be enjoying a new status as an important convention city, with thousands of free-spending conventioneers filling up our bars and restaurants -- and depositing millions of dollars into Denver's civic piggy bank. Consultants have predicted that Denver will garner an extra $100 million a year from the expanded center. And they insist that the hotel is essential to make Denver's dream of convention glory come to pass.

"I think the hotel is very important to the convention-center expansion," says John Hickenlooper, owner of the Wynkoop Brewing Company and boardmember of the Denver Metro Convention & Visitors Bureau. "You have to have a convention-center hotel with the large conventions we plan on having. When you get those big conventions, you're talking 6,000 to 8,000 people. That brings millions of dollars into the city. Without that hotel, the large conventions will keep going to Chicago or Las Vegas."

Bruce Berger swept into town a decade ago after making millions in Manhattan real estate. A savvy investor with a remarkable sense of timing, Berger had sold 3.5 million square feet of commercial property in New York just before the real estate market tanked. When he arrived in Colorado, he knew the state was poised for a rebound and began buying up property in the Golden Triangle neighborhood south of the Civic Center. That area is now one of the hottest development sites in town.

When Denver seriously began to consider expanding the Colorado Convention Center, Berger moved quickly to acquire the block of land just across the street. In a series of transactions that left observers marveling at his business acumen, Berger gained control of an entire downtown block at a bargain price, got the city council to approve the destruction of the former Denver Post building, won a zoning variance to put in a parking lot, and then announced that the value of the block had tripled in just over a year ("A Game of Chance," August 26, 1999).

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