Denver City Council passes East Colfax hotel financing, but bulk of new members vote no

A scaled-back plan to redevelop a dilapidated East Colfax hotel with the help of public funds moved forward on Monday, although it got a chillier reception from the Denver City Council than it did last year.

In June 2022, the council voted 9-3 to support the redevelopment of the All Inn Motel at 3015 E. Colfax Ave. with tax increment financing, or TIF. That mechanism allows a developer to be reimbursed for certain costs by the additional tax revenue their project creates.

At the time, property owner Inspire Investment Group, led by Brian Toerber, planned to renovate the existing 54-unit building and build an adjacent new structure, which would have 27 additional rooms and retail space.

But a lender on the project backed out last year, forcing Toerber to come back to council this month with a new plan: Just renovate the existing building and skip the new structure.

The vote was closer this time: eight in favor and five against.

“I don’t believe that utilizing $3.3 million in city tax increment financing for a private hotel for visitors to our city aligns with our city’s urgent needs today,” said Councilwoman Sarah Parady.

“It drastically changes the scope of the project. I do not see that a boutique hotel is the solution for what we’re facing currently,” said Councilwoman Serena Gonzales-Gutierrez.

The closer vote speaks to not only the shift in the scope of the project, but also the shift in the 13-member council, which seated six new members in July. Four of those new members — Parady, Gonzales-Gutierrez, Shontel Lewis and Flor Alvidrez — voted against the amended TIF plan, along with second-term Councilwoman Amanda Sandoval.

It was the council’s first significantly divided vote on a development-related issue since the new members joined.

Inspire purchased the All Inn property in 2016 for $3.55 million. At the time, Toerber said, it was master-leased to a family that operated it, providing cheap rooms that were a step above homelessness.

Toerber said he bought the site expecting to do a residential project at the site, but that then-Councilman Albus Brooks encouraged him to consider a hotel. Toerber said he spoke to neighbors and found they supported a hotel, and also heard that National Jewish Health, the hospital one-half mile east, was interested in seeing more rooms near its campus. The attractions of City Park are also nearby.

“It became pretty clear to me that was a very desirable outcome here, but it took me a long time to get comfortable with it,” Toerber said Monday. “I’m not a hospitality developer; my background is multifamily, so I had to kind of get the learning curve, and when I got there the pandemic hit.”

Financing the project was a challenge. Toerber told the council he encountered “a lot of concern from a lender standpoint about East Colfax in general, and hospitality specifically on East Colfax.”

The lender that backed out last year did so primarily because of the increase in both project costs and interest rates, Toerber told BusinessDen. He tried to find a replacement lender, but no one would take on the project in its full scope.

“Their feedback was, we would never support a development this large, this speculative in this neighborhood,” he said.

Councilwoman Sandoval voted in favor last year. But this time, she questioned what benefits the community was getting in return for the financing. She noted that the new structure that won’t be built was supposed to house “affordable commercial” space for nonprofits, artists or local businesses.

Tracy Huggins, executive director of the Denver Urban Renewal Authority, which drew up the TIF plan, said the public will still benefit from the preservation of the historic building, as well as the improved conditions of the property.

“Blight doesn’t have a tendency to stay within the four corners of the property,” Huggins said. “It impacts the other areas as well.”

About 10 nearby residents spoke in support at the meeting, saying the area needs revitalization and praising Toerber for communicating regularly with the neighborhood. Some said they appreciate the hotel’s expected price point; Toerber said the project is underwritten at about $200 a night.

Councilman Chris Hinds, who represents the area, praised Toerber prior to voting in favor.

“You have demonstrated your commitment and engagement with the community on multiple occasions and we should have more developers like you,” Hinds said.

The council’s newest members were hung up on the property’s intended use. Parady, Gonzales-Gutierrez and Lewis said they voted against the measure because housing is the city’s greatest need.

“Public money should be invested in the All Inn for all of the reasons you’ve described,” Parady said. “But to me, it is inexcusable to use that funding for anything other than housing.”

Speaking to BusinessDen on Tuesday after the vote, Toeber said he was “relieved” and noted the property is already home to a hotel, albeit one that hasn’t been in its prime for decades.

“It’s not a change in use,” he said.

Toerber said he expects to close on the project’s financing next month and get underway with work immediately after.

“Hopefully you’ll see dirt being moved early November,” he said.

This story was reported by our partner BusinessDen.

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