Published: September 12, 2013
DENVER - Eight hotels, including The Broadmoor, sued the Colorado Economic Development Commission Thursday to block $81.4 million in tax incentives promised to a massive Aurora hotel project.
The lawsuit, filed in Denver District Court, is a last-ditch effort for hoteliers to air their concerns about giving tax dollars to the hotel and conference center proposed near Denver International Airport.
To those invested in the project - including the city of Aurora, which has promised its own incentives to the developers - the lawsuit is a stall tactic.
"To do it on the last day when they legally had that option, when they didn't do it anytime over the last year, just continues to feel like it is some people trying to create delay because they don't want competition," said Aurora Mayor Steve Hogan after learning about the lawsuit. "It has nothing to do with the constitutionality of the statute."
The city of Aurora applied under the Regional Tourism Act for state income tax dollars on behalf of the Gaylord Entertainment project. In May 2012, the Economic Development Commission awarded the 1,500-room hotel and conference center $81.4 million in sales tax breaks over the next 30 years.
When Gaylord Entertainment sold the project to Marriott International shortly after the project was approved, the plaintiffs in the lawsuit challenged whether the sales tax award should be revisited.
"If somebody is coming in and putting up their own money and competing on an even playing field, all is fair," Broadmoor President and CEO Steve Bartolin said Thursday. "I think when you have your hand out asking for taxpayer money from the state of Colorado, you hold yourself to a little higher scrutiny."
Hogan said the lawsuit is frivolous and jeopardizes the future of the economic development program.
Bartolin said the hotels involved in the suit tried to ask questions about whether the project still needed the incentives, given a financing report under the new ownership that estimated somewhere between $65 million and $85 million in profits and a reduction in construction costs of almost $80 million.
"That's pretty healthy for any hotel business," Bartolin said.
The Broadmoor is owned by the Denver-based Anschutz Corp., whose Clarity Media Group owns The Gazette.
The Economic Development Commission went into executive session Thursday to discuss the lawsuit, and afterward voted to have the Attorney General represent its interests in the matter.
Hogan said construction of the project is scheduled to begin within the next year, and any delays won't deter the city, Marriott or the developer, RIDA Development.
Wendy Mitchell, present and CEO of the Aurora Economic Development Council, said the project will bring $273 million in economic benefits to Colorado every year.
"This is another desperate attempt by a small group of eight hotels ... who are afraid of competition and are hurting Colorado's national image and our ability to recruit businesses to the state," she said.
The hotels filing suit are The Broadmoor, the Brown Palace, The Magnolia, the Curtis, JW Marriott Denver Cherry Creek, the Courtyard Denver Downtown, the Oxford Hotel and the Westin Westminster. The latter five are owned or managed by Sage Hotel Properties.
The incentives under the Regional Tourism Act are intended to provide tax breaks to large-scale tourist sites, developments and projects that will have a positive impact on the overall economic picture of a region.
Colorado Springs was the only applicant this year for RTA dollars, and is requesting $82 million in sales tax subsidies for a City for Champions proposal that includes four projects, including construction of a U.S. Olympic museum and a baseball stadium downtown.
A final decision on the funding for the project is expected on Dec. 16.
Contact Megan Schrader