Trouble Ahead, Trouble Behind

When Joanne and Manny Salzman moved into their 3,500-square-foot loft on Wynkoop Street in 1980, no one had heard of LoDo. The area was filled with empty warehouses and broken windows, and the couple's former neighbors in Hilltop worried about them walking the deserted streets at night.

But the opportunity to live in the oldest part of Denver was exciting to the Salzmans. They loved the beautiful row of warehouses lining the south side of Wynkoop and the old businesses and restaurants that had managed to survive years of boom and bust. The best part, though, was the graceful, century-old train station across the street, a genuine piece of the city's history that had managed to hang on even as Denver zoomed into the space age.

Widely regarded as the most important building in lower downtown, Union Station occupies a proud place at the center of old Denver. Although it was written off as train travel declined in the last few decades -- only two passenger trains a day enter the station -- the Regional Transportation District now sees it as a future hub for a transit network that would include not just the railroad, but light rail, shuttles, buses and bicycles. It would be Denver's own Grand Central Station. Already in the middle of a surge of new construction in LoDo and the Central Platte Valley, the picturesque depot would be the centerpiece of that plan.

But while many people assume that the landmark is as permanent a part of the landscape as the State Capitol, it actually sits outside of the Lower Downtown Historic District, which protects many buildings from being torn down or severely altered. It is also privately owned. In fact, as part of a 1988 deal to save the station from the wrecking ball, the City of Denver gave the owners the right to put up two 22-story towers behind the terminal.

In cooperation with the city, RTD is currently negotiating to buy the station and sixteen acres around it at an asking price that reportedly begins at $20 million. But the dealings have been complicated by a dispute between the station's three owners. Trillium Corporation, a large real estate company that owns half of the station, would benefit greatly from the sale since it also owns land zoned for high-density development that would suddenly be across the tracks from the best-connected place in town. Sources say the company is ready to make a deal. However, Denver real estate investor Pat Broe, who owns one sixth of the station, and Union Pacific Railroad, which owns a third, are said to be claiming that the property is worth more than RTD wants to pay. The reason: the zoning for the two 22-story towers that Denver approved in 1988, which could add millions of dollars to the value of the property.

The Salzmans, who founded the first neighborhood group in LoDo and played an important role in the creation of the historic district, believe the towers, if they are ever constructed, would be an "obscenity."

"Union Station is a lovely old building," says Joanne, who serves on the powerful Lower Downtown Demolition Design Review Board. "It could be the center again of a lot of wonderful things, but having the terminal next to these huge towers would submerge the whole thing."

Manny, the former chief of radiology at Denver General Hospital, vividly recalls testifying before the city council against the zoning deal that allowed for the construction of the twin towers. He says the owners of the beloved icon will find out just how much Denver has changed since 1988 if they try to press for the massive development now. "It's a different time," he says. "The whole neighborhood would be outraged. I think the whole city would be outraged."

Whatever happens, Union Station is about to become the center of a new wave of development. Its owners have never hesitated to use Denver's affection for the train palace to strike deals, even hinting that they might demolish the building if the city didn't give into their demands. Whether the city can protect its heritage is still open to question.

Union Station was the place where Denver came to be.

In the days when a city lived or died at the whim of the railroads, Union Station was the epicenter, the stepping-off point for every new resident and the only link between the isolated high-plains town and the rest of the country. Done up in granite and wrought iron, two-story-high windows flooding its large waiting room with sunlight, the Renaissance Revival-styled station was designed to impress. Even the warehouses that sprang up across the street were something special, their owners embellishing the brick facades with fanciful stonework and arched windows that seemed to say "You've arrived."

In the chaotic 1870s, Denver was served by eight different railroads, each with its own tiny depot. By 1879, the railroads decided it made more sense to have one station, and they incorporated the Denver Union Depot and Railroad Company to build it. Walter Cheesman, the real estate developer now remembered for the Denver park that bears his name, assembled four blocks for the station between 16th, 18th, Wynkoop and Delgany streets. New York mogul Jay Gould, who controlled the Denver Pacific, Kansas Pacific and Union Pacific railroads, helped finance the construction.

The first structure opened in 1881, a $525,000 Italianate swirl of pink lava stone from Castle Rock with limestone trim from Manitou Springs. In 1894, a fire destroyed the center section, which was rebuilt with a Romanesque Revival square clock tower. By 1914, traffic had increased to the point that Denver needed a bigger station, so the center section was demolished and replaced with a larger, Beaux-Arts-style building designed by Aaron Gove and Thomas Walsh. That granite-and-concrete masterpiece is now an icon. (Only the building's two wings remain from the original 1881 station.)

Lower downtown grew up to serve the station, offering hotels and restaurants to travelers and storage-and-transfer facilities to businesses moving goods through town. Union Station reached its peak in the 1940s, when more than sixty trains chugged in every day, including a dozen from Chicago. As rail traffic dropped following World War II and the introduction of airplanes and interstate freeways, however, the area went into a decline.

While Union Station has never been as extraordinary as the massive depots in Washington, D.C., St. Louis and other cities, there are several things that make it special. Most important, it survived. Many historic stations in other cities have been torn down and replaced with glorified sheds. And despite years of neglect, Union Station is largely intact. Best of all, it's in a remarkably central location, with easy access to the highways and just steps away from the 16th Street Mall.

"I think the station's setting is very important," says Kathleen Brooker, president of Historic Denver. She says train stations have been at the heart of the historic-preservation movement in many cities. The demolition of New York's legendary Pennsylvania Station in 1963 infuriated thousands of people and led to the passage of the first national preservation laws. Later, a plan to build a skyscraper on top of Grand Central Station in New York resulted in an important 1978 U.S. Supreme Court ruling that local preservation laws were constitutional. Since then, other cities, including Seattle, Kansas City and Los Angeles, have renovated their train stations.

In past decades, Brooker says, few people believed that train stations would ever again be transit hubs. "Twenty years ago, a lot of them became restaurants and historical societies," she says. "It's only now that people are talking about reusing them for transportation."

Just a few years ago, only visionaries could have imagined that Union Station would take on new life as a transit hub. Denver wasn't seen as the sort of place that would ever have the elaborate commuter rail systems found in older cities in other parts of the country. The city's own long-term plan called for preserving the station as a relic, a monument to a lost form of transportation that had created Denver and then became extinct.

Then something happened that changed the minds of powerful people: Denver got stuck in traffic.

The 500,000 people who moved to the area in the past decade brought their cars with them, and the resulting gridlock angered the public. To someone sitting on a freeway, the notion of riding a train to work no longer seemed far-fetched. The opening of RTD's light-rail line to Littleton last year has also made rail seem a viable alternative. Despite the predictions of conservative talk-radio hosts that the line would be a fiasco, it has proven to be popular, with ridership running 56 percent above projections and standing room only on many cars.

With construction about to begin on a second light-rail line down I-25 to Lincoln Avenue, a metro rail network is beginning to take shape. Although it will be years before there is convenient rail transit to places like Boulder and Denver International Airport, the decision to create a metro transit hub at Union Station was a momentous one, and the eventual cost is estimated to be as much as $200 million.

"It will be customer-oriented, a seamless transportation hub," says Marilee Utter, a development specialist with RTD. "To do that, you have to have all the buses and trains there at the same time; you have to have a place where they all come together."

In RTD's grand scheme, Market Street Station would be closed and all its bus lines moved to a new facility underneath the tracks at Union Station. The 16th Street Mall shuttle would run to the station, and a new "intermodal" facility would be built behind the rail tracks. All of the area's light-rail trains, as well as regional buses, would stop at the station. There would also be Greyhound buses, a bike-rental facility, and even an electric-car depot, where visitors could rent non-polluting vehicles for trips around downtown. There are also plans to extend the Platte River Trolley, with its antique street cars, to the station. "We could also have Vespas, vans to Vail, and taxis," says Utter.

Since the metro rail network is still in its infancy, the station would probably cater more to these non-rail uses at first, Utter says. "One of the things it's hard for people to appreciate is the lead time on infrastructure. Until it's being built, it's hard for it to seem real."

Next year, RTD will extend its light-rail line from the Auraria campus to Union Station, serving the Pepsi Center, Mile High Stadium and Elitch Gardens along the way. A new facility for bicyclists is slated to open a year from now at 16th and Wynkoop streets. It calls for bicycle rental, a full-service repair shop, secure parking and shower facilities, all of which are intended to make bicycling a viable option for commuters.

"The intent is to provide a place that would foster the culture of bicycles," says Gwen Anderson, director of the Union Station Transport Development Company, a nonprofit group promoting reuse of the station.

To do all of this, RTD will need help. So several other government agencies will be involved, including the Denver Regional Council of Governments, which plans to channel $20 million of federal highway money toward the project, and the City of Denver, which may give as much as $10 million of surplus TABOR tax revenues that voters approved last year. RTD would fund the balance.

"The city will put up a substantial amount," says Wayne Cauthen, the mayor's chief of staff. "We have a lot invested in that part of town, and we feel an intermodal facility would allow us to meet regional transit needs."

But an agreement to buy the station will have to be made first, a goal that may be difficult now because of the deal that the city made with the station's owners in 1988.

Denver in the 1980s was a sad place.

The oil and gas industry, a major employer, went into a depression. After years of speculative construction, the real estate market crashed, and thousands of homes went into foreclosure. A house just minutes from downtown could be had for $40,000. Office buildings sat half empty, companies laid off employees, local governments slashed their budgets.

Denver was in the dumps.

Desperate to turn things around, Mayor Federico Peña's administration frantically tried to stimulate the economy. A huge new airport was planned, as well as a new convention center. The city also turned its attention to the dusty railyards along the South Platte River. For years, people had talked about redeveloping the railyards, which were no longer heavily used. Now the city wanted to show that something could happen there.

"Denver was really in a situation similar to other cities like Chicago and Boston, where we were trying to redevelop the center city," recalls former Denver planning director Bill Lamont.

The key to opening up the valley was to get the cooperation of the railroads. If they hadn't been willing to work with Denver, notes Lamont, today there would be no Elitch Gardens, Pepsi Center or Coors Field.

In order to do this, however, the city had to make some sacrifices.

In addition to redeveloping the Central Platte Valley, the city also wanted to create a historic district in lower downtown, one that might create a real estate buzz and eventually inspire investments and tourism.

The idea was a radical one at the time, and most property owners opposed it, including the railroads that owned Union Station. Former Denver planner Dick Farley, who now works for the landscape architecture firm Civitas, says the railroads were adamant about being kept outside the historic district. Plans called for moving the tracks away from the station and into the valley and building a makeshift shelter for Amtrak and Ski Train passengers. That would have taken Union Station out of service, says Farley, and "the owners were making threats about what they might do to the building. They'd say, 'You don't want to see this thing boarded up or left to the whim of our real estate guys.'"

This prompted the negotiations that led to the 1988 deal. In return for agreeing to preserve the main building and the two wings of Union Station, the owners won the right to build two 250-foot towers behind the station, as well as smaller buildings along Wynkoop Street. They also remained outside of the historic district. "We didn't want to lose the building," Farley says. "We were playing poker with a really valuable part of our history. It's tough to play hardball at that point. I think it was the right thing to do at the time. It kept Union Station an active and beautiful building."

Lamont agrees, saying the railroads were powerful enough to have killed the idea for the historic district. He also points out that the city needed their cooperation in order to open up the Central Platte Valley. "If this hadn't happened, the redevelopment of the Central Platte Valley and LoDo wouldn't have been jump-started."

The agreement makes it clear, however, that should the city try to change the zoning and take away the right of the owners to build the two towers, the owners can demolish the station.

"A breach or default by the city...shall be defined as zoning, land use or historic preservation action, direct or indirect, taken without Denver Union Terminal's consent," the document reads. "It shall be an additional breach of this agreement by the city if, after termination by the DUT for a breach or default by the city, the city prevents demolition of the station by means of the application of any ordinance, resolution, rule, regulation or other city-imposed control."

The agreement even specifies that if the city alters the zoning and the owners decide to demolish the building, "no further approval shall be required except such approvals as are customarily required to obtain a permit for demolition or alteration of non-historic buildings."

Tom Ragonetti is the Denver attorney who represented the railroads in 1988 and is negotiating for them now with RTD for the sale of the building. He says the agreement was justified since the railroads had to give up significant pieces of property to Denver for the construction of Wewatta Street behind the station, as well as for the extension of the 16th Street Mall and several other streets into the valley.

That's why they demanded the right to do high-density construction on their remaining property. "By the time you looked at all the different things the city wanted, there wasn't much land left to be developed," he says. "In order to enjoy the basic development rights in the Platte Valley, you have to go up. It was just a matter of geometry."

Current city planning director Jennifer Moulton headed up Historic Denver when the 1988 agreement was made, and she doesn't hide her loathing for it. "I hated it then and I hate it now," she says. "We've looked at the agreement every way we can to see if we can undo this. They gave them the right to do this for fifty years. I want to get rid of it and the city wants to get rid of it."

In the end, market realities may make it impossible to ever build the two towers. Amtrak and the residents of LoDo successfully resisted the idea of moving the passenger rails away from the station several years ago. Now, anyone putting up high-rises would have to build over active rail lines, an expensive proposition, Farley says. "There's tremendous cost in building over rail lines. Ever since they decided to keep the tracks there in the early '90s, the development reality of building there was pretty slim. There's plenty of places to build that are easier than that."

But in real estate, zoning is money, and the owners of the station, at least two of them, have claimed in negotiations that their development rights entitle them to top dollar for the property. That means the 1988 agreement has now come back to haunt RTD. Since Denver will also put up a substantial amount of cash in any deal to buy the station, city taxpayers may also have to pay for the decisions made thirteen years ago.

Moulton says she can't fault the owners for claiming the zoning makes their property more valuable; she says if she were in their shoes, she'd make the same claim. "It's a right they have," she says.

Union Station's ownership structure reflects the tangled legacy of the railroads in Denver. The station had always been jointly owned by the railroads that served it, and when the 1988 deal was consummated, there were half a dozen railroads involved. Since that time, a series of mergers has steadily reduced the number of railroads serving Colorado. Those changes in the railroad industry have also changed the ownership of the station.

In 1992, Trillium Corporation, a Bellingham, Washington, timber company and real estate developer, bought the real estate holdings of the Burlington Northern railroad for more than $50 million. Overnight, that made Trillium the largest landholder in the Central Platte Valley and gave it a major stake in Union Station. The next year, reclusive Denver real estate magnate Pat Broe picked up the Santa Fe Railway's share in the station in a deal involving his system of short-line railroads. The only original owner that still has a stake in the station is Union Pacific.

Trillium now owns half the station, Broe has one-sixth, and Union Pacific has a third. Before the station can be sold, all of the parties have to sign off on a deal, and that has been a source of conflict between the owners.

"One of the issues is that we've got owners who don't like each other much," says Moulton. "It makes it difficult to work with them."

Trillium has much at stake. It has been an enthusiastic proponent of the idea for a major transit hub at the station, and it's not hard to see why: Trillium owns the property across the street from the station, on the northwest side of the existing tracks. The company has the right to develop 3.6 million square feet of office space on that ten acres. "With an air train to DIA and light rail coming, it just makes sense that the intermodal facility be there," says Trillium attorney Steve Farber.

Utter worked for Trillium for several years, and she acknowledges that the company has been a longtime booster of the idea. "Trillium always envisioned an intermodal station there; they've been a big advocate of that," she says.

Unfortunately for Trillium, they're partnered with one of the most notoriously difficult developers in Denver. Broe is a legend in local real estate circles for his dedication to squeezing every last dollar out of a deal. He spurned repeated offers to sell the Sugar Building at 16th and Wazee Streets before finally selling the building (and an adjacent parking lot) in 1998 for $5 million, earning a hefty profit on a property he had picked up for just $1.2 million in 1991.

Two years ago, construction began on a $31 million project at 1899 Wynkoop; it was the first new office building downtown in a dozen years. As the project was being planned, its developer realized that balconies on the west side would jut out about eighteen inches into air space owned by Union Station. Trillium didn't care, but sources say Broe "threw a fit" and demanded $50,000 for the air rights.

"In the final analysis, we worked it out so we didn't have to pay," says Randy Nichols, the developer. "We ended up not putting balconies on that side of the building."

And at one point last year, Trillium offered to give RTD free use of part of the station for the new light-rail line, an idea that Broe reportedly vetoed.

Now sources say Broe is claiming that the rights to develop the two towers substantially boosts the worth of the Union Station property.

"It makes the valuation part of the agreement more difficult," says Utter.

Clark Robertson, managing director of the Broe Companies, claims that there has been no conflict between his firm and Trillium over the terms of the sale. "Generally speaking, we've been on the same page," he says.

He says RTD and the station owners have an informal agreement to allow an independent appraiser to determine the worth of the property and adds, "Our intent is to get the thing under contract."

Farber declines to comment on behalf of Trillium, saying he believes the parties had agreed not to publicly discuss the negotiations.

If the negotiations stall, the city could condemn the station, since government agencies have the right to condemn private property for transit projects provided they pay "fair market value."

"The RTD board wants a deal by April 17," says Utter. "If there's no deal by then, they'll proceed with eminent domain." In that case, the value of the station and the land would be determined by a judge.

If RTD and its partners succeed in acquiring the station, the threat of having two 250-foot towers behind the landmark will disappear, Moulton says. "One of the conditions I put on this was that if the city puts money in, that (1988) agreement goes away." Even so, development at Union Station is still in the cards, because the public agencies trying to buy it want to eventually bring in a private developer to work with them on creating office, retail and residential projects. The profits from those projects would help pay for the redevelopment of the station. Mayoral chief of staff Cauthen says Denver wants to create the same amount of density as the current zoning allows, but without the 22-story towers. And he adds that the city will work with the neighborhood to come up with an appropriate plan. "We want to make it more horizontal than vertical. This will make that part of downtown even more exciting."

Ironically, it's the railroads' long neglect of Union Station that may have saved it. Historic Denver's Brooker says that if the city had acquired the station twenty years ago, it might have been torn down. Instead, the station has survived to become not just a symbol of the city, but the heart of what may become a new era of rail transit in Denver.

"It could become the entry point for a huge number of visitors," she says. "It's a very powerful gateway building. The State Capitol is the only other thing of its stature in terms of symbolic weight. It's probably the most significant reminder of our history we still have.

"For a hundred years, it dominated our growth and everything we did in Denver. Now we have the chance to use it for another hundred years."

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