Peter Blake

High-stakes wrangling over tourism subsidy continues

Marriott International, which is trying to glom onto an $81.4 million state development subsidy awarded last year to another project in Aurora, could use a lesson from the sometime libertarians running the enclave of Glendale.

Glendale, turned down in its bid for a subsidy from the same pot, has decided to proceed with its “riverwalk” project anyway.

Marriott International, with the help of RIDA Development Co., wants to build the Gaylord Rockies Hotel and Conference Center in Aurora. The subsidy was first issued in May 2012 to Gaylord Entertainment, which was given 120 days to finalize its plans.

But Gaylord soon decided it didn’t want to follow through with the 1,500-room project and sold its rights to Marriott. The Colorado Economic Development Commission, which had awarded the subsidy under the Regional Tourism Act, gave Aurora until January 2013 to figure out what to do next. The commission didn’t meet in January and no further extension was granted. Aurora, meanwhile, acted as though the tentative award was final and transferable and wants the project to proceed.

icon_op_edNot so fast. More than a score of hotels, most of them from Denver and some of them even Marriott franchisees, have demanded that the commission revoke the award on grounds that the project, under new ownership, has changed considerably. Joining in the complaint are the Colorado Hotel & Lodging Association and the Metro Denver Hotel Association.

In a letter to Ken Lund, director of the development commission, they note that:

— Aurora hasn’t submitted the required background information and organization charts of Marriott International and RIDA;

— No estimated overall cost and financing commitments have been filed by the new developers;

— Marriott hasn’t demonstrated that the project is of “an extraordinary and unique nature” that will contribute to tourism in the state, as the law requires;

— The estimated cost of the project has dropped from $824 million to $735 million, and RIDA’s internal documents have shown that the project could be profitable even without the tax subsidy.

These all amount to “material changes” in the proposed development and a new application must be submitted, they argue.

After a hearing last week, the commission said it would have a decision by Aug. 15. If it goes along with Aurora, as expected, the protesters have the option of appealing its decision to Denver District Court.

Just another fight between Denver and Aurora, which has already grabbed off several Denver medical facilities and is now aiming at the convention business? No doubt that’s part of it, but the Denver hotels have a point. Why should they have to compete for conventions with a huge hotel project that’s getting tax subsidies that they didn’t get?

As for Glendale, it was very unhappy with the 2012 awards (a smaller one went to Pueblo for an entertainment district and a bull-riding school). Chuck Bonniwell, publisher of the Glendale Cherry Creek Chronicle, called it a ”sham process,” claiming the fix had been in for Aurora and Pueblo for months.

He was probably correct about the fix being in, but what is more surprising is the fact Glendale too had submitted an application for a subsidy. It wanted a Rugby Hall of Fame and a riverwalk along Cherry Creek featuring shops, bars, parks, parking garages, a trolley and a man-made canal.

You may ask why Glendale would be seeking a state subsidy, as contemptuous as Mayor Mike Dunafon is of governments larger than his own. YouTube has numerous videos of Dunafon preaching the free enterprise gospel, expressing sentiments like “more and not less liberty, less and not more government… Get the government out of our business!”

With an attitude like that, the fix will never be in for Glendale. And it should be proud of that.

In any case, Westword recently ran a long story on Glendale’s riverwalk project. Dunafon is still upset about the “short-sighted individuals” who denied his town the subsidy — the city had spent $200,00 preparing its application — but he has decided to proceed with a scaled-down $400 million project. The trolley and a man-made canal are out, according to the story by Melanie Asmar. The financing would be helped along by a proposed metropolitan district that could issue bonds paid off by higher taxes on tenants.

The Regional Tourism Act allows favored developers to pay down their construction debt with the 2.9 percent sales tax on hotel rooms and other sales that they would normally forward to the state.

If every developer could use this tax increment financing, it might be fair. But of course the state can’t afford such a liberal policy, and so the awards go to the favored few who know how to play the political game. It’s crony capitalism.

Perhaps the Glendale project will pay off, perhaps it won’t. But if it doesn’t work, nobody has to pay for the loss but Glendale.

With any luck the economic development commission will reject — or the courts will overturn — the Marriott International subsidy and require a new application. And before it is awarded the state legislature could get around to repealing the misguided and unnecessary Regional Tourism Act. 

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