The windows by the entry are still painted with evergreen and holly, but this building hasn't seen a very merry Christmas for many, many years. The onetime True Value store stands empty, and beside the faux holly is a notice that the former occupant owes $11,376 in property taxes. The property itself will be auctioned off by the Small Business Administration on December 16, according to another posting: "This is an excellent location on the corner of 25th and Welton Street. The whole area is under urban renewal by the city of Denver and is still ongoing with a recently completed public library."
The phone number listed at the end of that slightly awkward notice reaches Bill Warren, an independent agent who'll run the auction for the SBA. "I'm getting loads of inquiries," he says. "Two people want it for a church, another well-intentioned guy wants it for a grocery store, and he's had architects, electricians on the site. I went in and showed it Saturday."
The SBA has a minimum bid in mind, but Warren's not revealing what it is. "We don't advertise that, sir," he told one prospective buyer. "You can start where you like, but it's where you finish that matters."
Warren started out in England but moved to this country 22 years ago, at the age of fifty ("and two days"). On Friday, after many interviews and much paperwork, he'll finally become an American citizen. "I'm as clean as tomorrow's laundry," he says.
And that makes him about the only clean thing in this deal.
The million-dollar mess that was Park Avenue West, dba Park Avenue West True Value, fills three thick folders at U.S. Bankruptcy Court.
Michael Smith and Jim Johnson incorporated PAW in 1991; they envisioned creating "the largest and only black-owned True Value west of the Mississippi." And they had some help seeing that vision become concrete. "In 1990, Mr. Smith and Mr. Johnson were approached by representatives of the city and county of Denver, which assisted them in obtaining the funds necessary to construct a building and operate a hardware store in the Five Points area of Denver," noted their bankruptcy attorney in one filing. "Five Points is an area that has been economically disadvantaged and was still in the midst of a recession in 1990. The city encouraged the debtor in order to create a neighborhood business to serve the area."
Encouraged, and then some: On April 10, 1992, "acting pursuant to federal grant conditions with respect to making Neighborhood Business Revitalization Loans," Mayor Wellington Webb and Bill Lysaught of the Mayor's Office of Economic Development signed off on a $461,000 loan to Park Avenue West, to be repaid in sixty months at interest rates of 3 and 5 percent. On December 18, 1992, the SBA loaned PAW another $258,000 through Denver Urban Economic Development. On that same day, Colorado National Bank loaned $250,000 to the venture.
Park Avenue West defaulted on all three loans in 1996. The excavation of the property had taken longer and cost more than the partners had anticipated, and even once the hardware store was finished, the business was a struggle. But it was a boon to the neighborhood, a place where both longtime residents and new homeowners in the gentrifying area could buy some paint, maybe pick up some popcorn. And so the city continued to help out, lending another $37,000 and, in 1997, buying out CNB's $250,000 loan for $160,000.
But while the rest of Denver boomed, business in Five Points was slow. And in 2002, even as its fancy, $17 million African American Library and Research Center was going up at the other end of the block, at 24th Street, the city finally foreclosed on the store, planning to auction off its contents on April 9. But on April 8, PAW filed for Chapter 11 bankruptcy protection.
The company was down, but not out. It was beginning to bid on industrial projects, its attorney noted in one bankruptcy filing, "providing such materials as building supplies, hardware, electrical components, paint and small appliances." PAW had already supplied drywall used in the construction of the Wellington E. Webb Municipal Building, for example, as well as the new library next door, and it would be soon be acting as a "conduit for the purchase by Ludvik Electric Co. of electrical supplies needed for the Denver convention center expansion project from WESCO Distributing." For that task, it would collect fees of $21,618.
"Debtor intends to abandon the property and discontinue its retail hardware business," the lawyer noted. "This will allow the debtor to focus on the most profitable segments of its current business." In fact, projections showed that if the bankruptcy court approved its reorganization plan, PAW would collect $207,872 in revenues in December 2003 alone.
But a funny thing happened on the way to reorganization. This summer, after the debtor had been in Chapter 11 well over a year, the city decided it was done playing nice with PAW. Having sold off its loans to the SBA for $650,000, it began playing hardball over other outstanding bills the company owed the city -- for property taxes, for sales taxes. And not just sales taxes owed by the now-defunct hardware store, but sales taxes that had been covered by the companies contracting with PAW, such as Ludvik, which PAW never passed on to the city.
Denver filed a motion that PAW move into Chapter 7 bankruptcy, which means the company will go away. Just where, though, is still a question. "The city's position is that whether or not these gentlemen go to jail doesn't actually return the tax dollars that were stolen," Assistant City Attorney Laurie Heydman stated in one filing. And the city's looking for the return of a few other things, too. According to Heydman, it has "four witnesses to testify regarding serious allegations of failure to account for money, equipment or inventory," and the file includes an affidavit from one independent contractor who says he saw Smith taking equipment out of the building after the city had foreclosed. The city is curious about other discrepancies. In 2001, PAW reported income of $2,034,000 to the federal government, $1,450,000 to the state -- and told the city it had collected just $1,050,000.
The very last document added to the bankruptcy file provides more detail. "It has come to the attention of Mr. Smith and myself that Mr. Smith is the target of a grand jury investigation," his bankruptcy attorney said at a September hearing. "He's been told that one of his former customers has had their records subpoenaed." So Smith had hired a criminal attorney, that lawyer told the bankruptcy trustee overseeing the Chapter 7 dissolution, and would not be speaking at that day's proceedings.
And since the PAW investigation is ongoing, the city attorney's office isn't talking, either, referring all calls to the Denver District Attorney's Office -- which will only confirm that the matter went to the grand jury in August.
Although business bottomed out on that corner of 25th and Welton, the city has high hopes for Five Points. "I'm pretty optimistic about where we're at in that neighborhood," says Lysaught. There's the library, of course, and the East Village replacement now getting under way, and the new Point project two blocks up Welton has "two very interesting retail proposals" that could open in the next sixty days. As for the old True Value, once the SBA bought the city's loan position, "it took us out of the decision-making process," he points out. "It's really up to the SBA. We hope it's something that relates to the neighborhood."
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Included in the bankruptcy filing is a note that says the city would like to "use the debtor's property as a book store." That would have been the Hue Man Experience, according to Denver City Councilwoman Elbra Wedgeworth, who represents the district -- but the bookstore closed this fall. "We know there's a need in the community," she says. "We've struggled many years. We're still committed to try to get business there."
But in the meantime, Warren has paid to have the property, which is now appraised at $950,000, cleaned for auction, seeing "your money and my tax dollars every time I looked at it," he says. "It's clean and tidy enough now."
And last decade's deals are so much dirty laundry.
In his native country, there's a saying that "he was overcome by the exuberance of his own verbosity," Warren says. "Here, in your language, he's full of shit."