—Image courtesy of RTD
In the early 2000s, the city of Denver had its plan to modernize the Union Station area in place. It entailed updating the historic building while also moving buses and light rail lines—underground, in some cases. Eventually, real estate developers would construct residential and commercial properties throughout the area. As Mayor Wellington Webb’s administration was winding down in 2002, soon to be replaced by the long and popular tenure of John Hickenlooper, everything, including the financing, seemed to be in place.
The only problem? It wasn’t going to work.
While Union Station celebrates its grand reopening this month, exactly 100 years after its last remodeling, the story of how the project blossomed from a simple renovation into an entirely new, transit-friendly, retail, commercial, and residential neighborhood involves some of Denver’s most prominent companies and biggest names. It involves some innovative models for financing public-private partnerships (P3s). And it involves no small amount of ego juggling among those who would like to claim credit for this impressive accomplishment—one that could reshape our city’s image regionally, nationally, and beyond.
Before the initial Union Station redevelopment plan was established in 2002, East West Partners had purchased much of the land bordered by 20th Street, Cherry Creek, Riverfront Park, and the Consolidated Main Line rail yard, with the intention of filling out the area with mostly apartment and condominium complexes. (With that in mind, the developers constructed the Millennium Bridge in 2002 and extended some of the streets in the area.) When the Hickenlooper administration arrived in office, the proposed Union Station blueprint still revolved around putting most or all of the buses, commuter trains, and light rail facilities underground, but that also meant that the buildings in the area—most of them still mere concepts—were supposed to have their infrastructures in place as well.
The Webb administration had employed a dynamic city planner named Jennifer Moulton, who’d previously played a key role in the expansion of the Denver Art Museum. But she’d fallen ill and died in 2004, which left a “void in the city leadership,” according to Mark Falcone, CEO of Continuum Partners, a prominent developer of LoDo and other parts of town that would partner with East West to create the Union Station Neighborhood Company.
The group, in cooperation with several state and local transit agencies, set to work convincing the Hickenlooper administration that the current Union Station plan had some potentially fatal flaws, primarily with its financing, and this all was happening just as other developers were vying to create competitive bids for the project. Even though voters approved the sales tax increase in 2004 that funded the FasTracks light rail plan, it called for the redevelopment of the entire Union Station neighborhood to be completed in about 12 years. However, the East West and Continuum developers quickly realized that under the existing funding plan, the new neighborhood could only be built up incrementally over a period closer to 30 years. “The Hickenlooper administration had just come in, and RTD was trying to transition to its new mission,” Falcone says. “So there was a fundamental lack of awareness that this vision everyone had bought into really wasn’t feasible.”
A series of political discussions and public presentations conducted over several months convinced everyone involved that a Plan B was needed. Through 2005 and into 2006, East West and Continuum assembled a team that also included architecture and design firms AECOM, Kiewit, and Skidmore Owings & Merrill to design and devise how this new downtown neighborhood should evolve. The consortium spent all of 2007 tweaking its master development strategy—and selling it to people in Denver who were still wedded to the original idea. “We had dozens of meetings explaining to the community why this plan everyone had bought into wouldn’t work,” Falcone says. “We were trying to reset expectations.”
By late-2008, the group had established the Denver Union Station Project Authority (DUSPA), installing longtime local power player Elbra Wedgeworth as its chair. At this point, the vision of the station itself involved a relatively simple renovation, with refurbished offices planned for the space surrounding the depot. It was only after the newly envisioned light rail station was being built around 2011 and 2012 that someone hit upon the idea to turn the Union Station wings into a boutique hotel, and the recent hubbub around the newly minted Crawford clearly grates at some of the players who have been involved in this project since its inception. “[Crawford Hotel developer] Walter Isenberg and Dana Crawford are fabulous people who are doing a great job rehabilitating the building, but they had nothing to do with our transformative project,” says Diane Barrett, Denver’s Chief Projects Officer. If that seems like a stretch—after all, absent the historic train station, this entire endeavor would have been forced to unfold in a completely different way—another player clarifies who’s responsible for what: “We’re the master developer; we planned, laid out, financed, and built everything around the station,” says Mark Smith, a founding partner at East West. “[The Crawford developers] took 30,000 square feet and turned it into a hotel. Everybody gets that confused.”
When the Great Recession hit in late-2008 and early-2009, it sent the Union Station project reeling along with the rest of the world. The DUSPA, already scrambling for creative funding ideas, employed advisers from Goldman Sachs, who worked with local attorneys Cole Finegan and Steve Kaplan, as well as with RTD. The group happened upon an innovative solution: Already in place were two relatively obscure and underutilized federal funds—the Railroad Rehabilitation and Improvement Financing program (RRIF) and the fund established by the Transportation Infrastructure Finance and Innovation Act (TIFIA)—both of which were designed primarily to upgrade existing rail lines.
Because Union Station was the centerpiece of the redevelopment project, it was qualified to receive loans from these entities. However, given that most of the development that would be funded was still in the planning stages, the city had little tangible collateral to cover the financing. “We were trying to persuade them to do a big loan to a city that would be repaid by something that didn't exist yet,” Barrett says. “There was no revenue stream or history we could point to, so it was very hard for them to get comfortable with it.” But the DUSPA also had the foresight to commission feasibility studies about the expected tax revenue the area would create; once the agencies saw those numbers, the loans totaling about $300 million were approved. What’s more, Denver already is well on its way to repaying them. “By the time we closed the loan we had already exceeded amount of development that was expected to be in place by 2015, and now we’ve exceeded the amount that was expected by 2019,” Barrett says.
This is why Denverites and visitors will soon be able to behold not just a beautifully remodeled historic train station, but an entire 21st-century transit hub surrounded by apartment and office buildings, restaurants, retail outlets, and green space. “We looked at projects around the country and the world and pulled elements from various places for this,” says Frank Cannon, Continuum’s Development Director. “But there’s nothing that was built all at one time like this.” As the project blossoms and the buildings go up, developers are also counting on the area to attract both new residents and new corporations from all over the world. “The reason foreign investors have become more interested in investing here is the infrastructure,” Falcone says. “People are blown away by this infrastructure, not the 30,000-square-foot building; that’s just its charismatic vertebra. But the way people interact with their core city is going to change because of this infrastructure.”
Follow 5280 articles editor Luc Hatlestad on Twitter at @LucHatlestad.