Denver is pledging $85 million in public financing to help clean up the polluted former Gates Rubber Co. site and rebuild it into a booming retail and residential district situated next to light rail.
The project, which is the city’s biggest redevelopment since Stapleton, is expected to cost $1 billion and take 10 to 15 years to complete. The Denver City Council, which must approve the financing by a majority vote, will meet today to review the plan.
Under the proposed financing agreement, Cherokee Denver LLC, which owns the 50-acre site at Interstate 25 and Broadway, will clean up the area and put in new utilities, roads, sewers and other infrastructure.
Cherokee’s costs will be reimbursed as city property and sales taxes are generated by the new development over 25 years. This so-called tax increment financing, or TIF, of $85 million will be supplemented with an additional $41 million in taxes to come from future residents after the site is designated a special district in May.
Denver has provided such public financing to 28 other projects, including Larimer Square, Six Flags Elitch Gardens and Stapleton. The Denver Urban Renewal Authority says it considers public financing only if developers have an urban renewal project proposal in a blighted area and can show that the private market can’t adequately fund it.
“Denver has used TIF to jump- start the successful revitalization of downtown, Stapleton and Lowry, and we intend to be as successful with this project,” said John Huggins, the city’s director of economic development.
City Councilwoman Kathleen MacKenzie, whose district includes the redevelopment site, said she needed to see more details of the plan before she could make any recommendations to her colleagues.
About 37 percent of the money pledged will go to the extensive environmental cleanup that started four years ago and isn’t expected to be finished until 2009. The site of the former rubber company, which manufactured hoses and belts for 85 years, is contaminated with asbestos and trichloroethylene, an industrial solvent.
Ferd Belz, president of Cherokee Denver, said cleanup of the west side on Santa Fe Drive should be finished by the end of next year, when demolition is to begin. Retail stores are expected to go in as soon as possible. Cherokee is in the final stage of selecting a developer for that area, he said.
“This project is truly ready to go,” Belz said, noting that he has had about 20 meetings with neighborhood groups in the past 10 months to discuss cleanup and design plans. “It’s going to be a mixed-income, mixed-use and transit-oriented development.”
The rest of the public financing goes to infrastructure costs, including the construction of a pedestrian bridge over the railroad tracks and a vehicle bridge near Kentucky Avenue that will connect North and South Santa Fe drives.
Once finished, the project is expected to have about 6 million square feet of real estate. At least 10 percent of the 1,500 residential units for sale will constitute affordable housing. About 20 percent of the 1,000 rental units will be considered low-income, available only to people who make between 30 percent and 50 percent of the area’s median income.
Shops and restaurants are planned to line Broadway, and Acoma Street will have ground- floor commercial uses sprinkled with residential units above, much like downtown’s Larimer Square. Denser residential development will be on Mississippi Avenue.
The Regional Transportation District station adjacent to the site will be rebuilt to include public parking garages and covered rail platforms.
Currently, nearly 3 percent of Denver’s $361 million annual sales tax goes toward urban renewal projects through TIF, according to the city treasurer.
Those who favor public financing usually contend that the entire city benefits because a blighted area is cleaned up and a new tax base is created. Although sales tax goes to the projects, proponents say the taxes would not be there at all without the project.
Opponents of TIF tend to argue that it’s little more than a subsidy for developers and doesn’t help much of the city since the developed area keeps the sales and property revenue instead of putting it into the general fund.
Both positions are expected to surface at the council’s meeting today, including the issue of wages.
“If there is public financing involved, a project should create good, adequate-paying jobs,” MacKenzie said.
The agreement between Denver and Cherokee calls for prevailing wages, although only for the special-district infrastructure, not for the public financing component. It also includes first- source hiring, which encourages the hiring of Denver residents, especially those in the surrounding neighborhoods of construction.
A group called Campaign for Responsible Development, a self-described coalition of labor unions and community leaders, has contended for two years that the council should demand that developers of the site pay what the group defines as a living wage of at least $9.30 an hour, provide health-care and retirement benefits and build improvements in the area’s neighborhoods.
The group’s organizer, the Front Range Economic Strategy Center, released a report Friday that found TIF projects pay wages 14 percent to 27 percent below the average wages for comparable jobs and push out low-income families and minority populations in surrounding neighborhoods as housing values rise.
Huggins and Belz say mandating set wages in one part of the city would create an “economic development island” that would deter businesses from investing there and possibly shut out lower-skilled or new workers who need entry-level jobs. No TIF project in the city has ever had a set wage requirement tied to it, they said.
City Council President Rosemary Rodriguez said that despite some of the controversial issues, she expected a majority of the council to approve the plan.
“It’s essential to the economic viability of the area,” she said.
Gates Rubber was established in Denver in 1911 and owned by descendants of founder Charles Gates until they sold the company to Tomkins PLC, a London- based engineering conglomerate, for $1.16 billion. Cherokee Denver, which does cleanup and redevelopment of environmentally contaminated properties, bought 50 acres in 2001.
Staff writer Christopher N. Osher contributed to this report.
Staff writer Karen E. Crummy can be reached at 303-820-1594 or kcrummy@denverpost.com.
