DALLAS - Denver officials say the city has lost $152 million of convention business because of a lack of leadership in the expansion of the Colorado Convention Center, but others say leadership is not the problem.
"It's true that there is no one person at the helm of this process," Bob Gibson, director of financial management for the city, said yesterday. "The public works department is supervising the construction, we've sold the bonds, and the convention center itself has a team that manages the bookings. But I believe we all have the same goal in mind."
Gibson said uncertainty about the purchase of Terracentre, a building adjacent to the convention center that was originally slated as the location of a 5,000-seat auditorium, has helped draw out the expansion process. In addition, he said, controversy surrounding Denver's financing plans for its new convention center hotel is forcing the city to await a judicial decision before selling debt for that project.
City officials predict the $285 million expansion, which will include an additional 300,000 square feet of exhibition space, 60,000 square feet of meeting rooms, and the auditorium, would attract an extra $100 million a year in business.
"That building's price has escalated considerably, and, in addition, thanks to inflation, so have a lot of other costs associated with the project," Gibson said. "However, the bonds have been sold and are earning interest, which will help absorb some of those costs."
The city sold $187 million of fixed-rate revenue bonds and $75 million of variable-rate revenue bonds last year to pay for the project, which would double the size of the current convention center, allowing it to host very large parties or two large conventions simultaneously. The remainder of the project's cost would be covered by pay-as-you-go financing.
However, because no firm date has yet been set for the project's completion, the city has lost about $152 million worth of convention business in the last few months. If no firm date is set for the opening of the expanded center and its accompanying hotel, the opportunity to win another $150 million in possible convention business could be lost by this fall, said Eugene Dilbeck, head of the Denver Metro Convention & Visitors Bureau.
In addition to problems with finalizing a design for the convention center expansion, Gibson said the city is awaiting a judicial decision about the legality of the financing plan for a new 1,100-room convention center hotel.
"The City Council stipulated that a new convention center hotel should be built to serve the expanded convention center," Gibson said. "The developers Bruce and Seth Berger put together a deal with Hyatt Hotel Corp. last year, but since that time, the Hotel Employees and Restaurant Employees Union has gathered enough signatures to bring the project to a referendum."
City attorneys filed a request for a judicial ruling on whether a referendum is necessary before the city sells $55 million of certificates of participation and loans the proceeds to the Denver Urban Renewal Authority to cover that agency's share of the $265 million project. City officials maintain the loan would not constitute multi-year city debt because no city money would be used to repay the loan. The union contends that DURA's funding comes from part of the city's sales tax, which makes the debt service on the loan a city responsibility.
The city plans to use the current convention center, valued at about $100 million, as collateral for the COP sale. In addition to financing the loan to DURA, the COP sale would pay for projects such as a take-out of some COPs issued in 1996 and improvements to the Red Rocks amphitheater.
