Council approves public funding for East Colfax hotel project

The All Inn Motel at 3015 E. Colfax Ave. stopped accepting new customers in March. (Photos by Matthew Geiger)

The All Inn Motel is a ramshackle structure along East Colfax Avenue that for years was considered an afterthought in the minds of travelers as a place to stay in Denver.

On Monday, however, he was at the forefront of Denver City Council’s concerns.

After two hours of deliberation, the board voted 9-3 to approve a pair of bills that will pave the way for the redevelopment of the motel at 3015 E. Colfax Ave.

Brian Toerber, plans to renovate and expand the 63-year-old motel, which in recent years has served those coming out of homelessness and in need of temporary housing.

The project is estimated at $31.2 million. Monday’s vote approved $3.5 million in tax increment funding for the project.

Toerber bought the property out of bankruptcy in 2016 for $3.6 million, which will be his first foray into the hospitality industry. His experience has been primarily in multi-family development.

When asked why he was interested in renovating the property into a hotel, Toerber said the idea came from other people, namely former councilor Albus Brooks, who previously represented the area.

“I had no hotel experience, it wasn’t what I planned to do here – I wasn’t comfortable with a hotel,” Toerber said during the meeting. “But, as a commitment to him (former councilman Brooks) and the city, I felt compelled to investigate and have conversations and see if it was viable.”

all hostel sinkers to scale

The property was bought by Brian Toerber in 2016 for $3.6 million.

Toerber said it led him down a “three-year rabbit hole with a lot of self-reflection, risk and conversation” which ultimately led to the current proposal today.

The existing building has 54 hotel rooms. Toerber plans to renovate the existing structure and build a new structure on the southeast part of the property with another 27 rooms. A swimming pool would be installed between the two buildings.

The ground floor of the buildings will be used for commercial purposes, housing a restaurant, a café and a “community space” which could be used by outside organisations. The community space will be approximately 700 square feet – slightly larger than two double queen hotel rooms.

The new boutique hotel will have a total of 81 rooms: 54 single king units of approximately 265 square feet and 27 double queen rooms of approximately 335 square feet.

The expected average daily rate for the new hotel will be $181 per night. Currently, most renters pay weekly, around $320 to $400. This averages out to $46 to $57 a night.

Tax increment financing is a mechanism in which the city forgoes future tax revenue on a property in order to reimburse some of the development costs associated with the project.

TIF projects don’t take money away from the city, Tracy Huggins, executive director of the Denver Urban Renewal Authority (DURA), said at the meeting. The taxes that the property currently generates are called the “base tax”. Any additional tax revenue generated on top of this base as a result of the redevelopment will be part of the TIF.

In a later interview, Huggins said that TIFs are “one of the main reasons DURA exists”. She explained that the reason the tool is used is both to help the property during development and after opening so it can be commercially viable.

All inn doors to scale

The new boutique hotel will have 81 rooms after the renovation and expansion of the existing motel.

Downgraded properties are a “market limiter,” Huggins said. Developers of these properties find it difficult to raise funds through traditional means, so a TIF can act as a counterbalance to this.

FITs don’t last forever. For this particular project, it will expire either when the full amount due to the developer is paid, or after 25 years, whichever comes first.

The motel closed to new guests in March. DURA is working to move people living at the All Inn to other options.

There was heated debate between the two sides, stemming from the fact that the motel generally serves those who might otherwise be homeless. Comments from residents were split almost evenly between support and opposition to the bill; opponents feared the project would remove an option for people in need of shelter.

In the end, when it came time to vote, three council members voted no: Paul Kashmann, Robin Kniech and Candi CdeBaca, who represents the region.

Kniech said she couldn’t find fault with the project, but instead objected based on the use of a TIF. She said it did not meet her standard for using the tool.

CdeBaca, whose district includes the All Inn, voted no due to their belief that the project was a “public funding mechanism used for private gain.”

“There doesn’t seem to be any substantial community benefit at a time like this,” she said.

Michael J. Birnbaum