Google Maps Denver is considering a $20.5 million purchase deal for Park Hill Golf Club, but the details of the complex deal pin the worth on the 155-acre site’s development prospects.
Denver’s bid to purchase the Park Hill Golf Club from a private trust that supports an education nonprofit is anything but simple — and development prospects on the 155-acre site could enrich both sides.
The difficulty of boiling down the agreement with Clayton Early Learning, announced Sept. 21, has become clear as the City Council has scrutinized the proposed arrangement.
Is the deal worth $20.5 million? That’s the amount a city official says is the maximum cost the city would bear over the course of the 30-year agreement if the land sits empty.
Or is it worth $24 million? That is the target that Clayton’s leaders have in mind, since an endowment that size would provide about $1 million a year to support its operation.
Clayton could earn that much from land sales — or even more — if developers plunk down big money for portions of the land, based on a multi-tiered profit-sharing arrangement that’s set out by the contract. By that token, the city could earn back some or all of its investment.
As it stands, the city is set to pay the George W. Clayton Trust, which the nonprofit manages, a $10 million initial payment and annual $350,000 payments for up to 30 years.
During the course of the agreement, control over land sales would shift — placing the city in the driver’s seat from 2019 through 2022, and then handing it back to Clayton until 2039, when the city would own the entire site.
At one point during a council committee hearing Tuesday that was its first public crack at the deal, Councilman Paul Kashmann summed up his conflicted views.
“I don’t want any confusion that I’m trying to short-change the neighborhood or Clayton,” he said. “I find — and everyone I’ve talked to finds — this contract confusing. And yeah, I don’t think there should be a way that Clayton gets less than what they need in this.”
Among the non-monetary considerations are community interests that have come out in meetings hosted by Clayton in the last year — and which are sometimes at odds. Those include the preservation of green space, the spurring of community-serving development, or a mix of both.
Some advocates have pressed Clayton and city leaders to seek affordable housing development or retail that’s desperately needed in impoverished nearby neighborhoods, including a full-service grocery store.
“I’m excited that the city has stepped up to the plate,” said Councilman Chris Herndon, whose district includes the golf course — a fee-based activity that he said makes the land anything but “open space” currently.
Evan Dreyer, Mayor Michael Hancock’s deputy chief of staff, asked the committee members to hold the contract over for a future meeting while so many of their questions remain unresolved.
A “unique, complicated” contract
Dreyer acknowledged the “unique, complicated, complex, different” nature of the proposed contract. He said “lots of conflicting tensions, needs and desires” shaped its terms.
In short, he said, the agreement will be able to adapt the financial terms to any potential outcome of Clayton’s community-input process, which could result in the drafting of a city master plan for the site.
A more immediate factor that’s at play is that city officials want to acquire rights to up to 25 acres on the northeast corner of the Park Hill course for a stormwater detention area, as part of the city’s controversial Platte to Park Hill stormwater drainage plan.
Critics of that plan have seized on the drainage projects’ benefits for the Interstate 70 expansion project to question whether that is the true motivation behind them. City officials, though, cite neighborhood drainage problems in northeast Denver as the primary reason for the plan.
Potentially adding fuel to the fire was a city attorney’s confirmation Tuesday that Denver’s $10 million initial payment for the Park Hill golf course land would come from money committed by the Colorado Department of Transportation for the city drainage projects as part of the I-70 project.
Lilah Fay, 4, left, and Ashlynn Davis, 4, students at Clayton Early Learning, picks vegetables in the school’s garden on July 1 in Denver. Vegetables are grown to help Clayton families stretch their tight food budgets with lots of fresh produce.
Clayton Early Learning has used the privately managed golf course to generate about $700,000 a year for its programs. President and CEO Charlotte Brantley says the private golf course operator has lost money and will pull out when its lease ends in late 2018.
That likelihood sparked the nonprofit to consider selling the land.
But council members have grappled with the city’s entanglement with the land going back to 1899. That year, the city began serving as trustee for the George W. Clayton Trust. (Amid accusations the city was engaged in self-dealing, officials ended the city’s role in 1984.)
Since then, Denver officials have pressured Clayton to keep the golf course free of development. Legal agreements going back to 1997 placed open-space restrictions on the land.
In exchange, the city paid Clayton $2 million in the 1990s. It also has lent its tax-exempt status to the property to reduce, but not eliminate, the golf course’s tax burden.
History of site complicates deal
Councilman Rafael Espinoza said he struggled to square the city’s past role, and its financial support of Clayton, with the new agreement. The deal rescinds the past restrictions rather than using them as leverage.
Brantley, for her part, said the city’s past $2 million payment was a factor considered by Clayton’s board when it set the nonprofit’s $24 million income goal for the deal.
At-large member Robin Kniech questioned why the city hadn’t commissioned a land appraisal.
“Right now, we’re negotiating blind,” Kniech said. That prompted Dreyer and other officials to respond that an appraisal would be difficult until the city, after consulting with the community, set out plans for using the land.
And rezoning the land to allow for more intensive development — a strong possibility — would make it more valuable. A 2015 appraisal performed for Clayton estimated, based on certain assumptions, that the site’s rezoned value was $27.3 million.
Under the city’s proposed agreement, it would make the initial $10 million payment and take possession of half of the Park Hill site at the start of 2019, then begin making the annual payments.
The profit-sharing would kick in if any land was sold off — with Clayton receiving 75 percent of proceeds until it reached its $24 million income goal. (That sum would include the city’s payments.)
Once Clayton reaches its threshold, further land sale proceeds would go directly into city coffers, until the city recoups all its costs. If that point is reached, the final proceeds from selling land would be split equally between the city and Clayton.
If the complexities of the deal still were tripping up council members Tuesday, several said they liked the general idea.
“I just want to make clear that I think we’re in the right direction of having the city involved,” Kniech said, adding that she still needed to evaluate the contract’s terms further.