The city and county of Denver has reached a settlement with United Airlines to collect $21.6 million in back taxes.
If approved, the deal reached Thursday assures that the city can collect the taxes incurred between July 2000 and June 2004. In return, the city agreed not to oppose United’s plan to emerge from bankruptcy.
Of the total, $15.9 million will go to Denver’s general-fund reserve, City Attorney Cole Finegan said.
“This is indeed a good day for the city,” Mayor John Hickenlooper said. “Denver is richer by $15.9 million.”
The deadline for creditors to object to United’s reorganization plan is Dec. 12. If not for the settlement, “we were going to oppose them coming out of bankruptcy,” Hickenlooper said. “We were down to the wire.”
United agreed to pay the taxes by Dec. 19. Denver will use the money to replace $12.6 million used to balance its fiscal 2006 budget and to prepare for the fiscal 2007 budget cycle.
Denver will forward $92,000 in property taxes to the Urban Drainage and Flood Control District and $5.6 million in property taxes to Denver Public Schools. DPS will send $854,000 to its bond funds and use the remaining $4.7 million to repay money that it was advanced by the state of Colorado after United’s bankruptcy filing.
“We believe we got 100 percent of the taxes we would have collected had we, in fact, gone forward and completed a full audit,” said City Treasurer David Hart.
In 2004, the city filed a $27.5 million claim against United. The airline contested the figure and made a payment that lowered the amount it owed.
The $21.6 million comprises $9.1 million for 2002 property taxes and $12.5 million for outstanding sales, use and occupational privilege taxes.
United spokeswoman Jean Medina called it “a good deal for both United and for Denver” that minimizes the expense, time and energy that could have been spent on litigation.
United had sought to reclassify the claim for property taxes as an unsecured claim. If it had been successful, Denver would have received only pennies on the dollar. Thursday’s settlement resolves that issue.
United and other airlines are “our partners for the city,” Hickenlooper said. “Denver benefits tremendously if United Airlines succeeds.”
A hearing is expected Tuesday for approval of the settlement. United plans to exit bankruptcy in February.
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.
