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Gates project goes slower

Developer splits; first buildings delayed to 2011

By John Rebchook, Rocky Mountain News (Contact)

Published July 21, 2008 at 9:05 p.m.

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A light-rail train goes over a bridge by the former Gates Rubber plant in April. Commercial and residential redevelopment won't be visible there until at least 2011.

Photo by Ken Papaleo / The Rocky

A light-rail train goes over a bridge by the former Gates Rubber plant in April. Commercial and residential redevelopment won't be visible there until at least 2011.

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Thanks to the sluggish economy, you won't be seeing any new buildings at the $1 billion Gates Rubber redevelopment until 2011, a year later than planned.

In February, the Rocky Mountain News reported that the developer, an entity created by Chicago-based Joseph Freed, had split from the 50-acre project, which is owned and being cleaned up for contaminants by Cherokee Denver.

At that time, Cherokee President Ferd Belz said he was open to having the Joseph Freed group, called Santa Fe Denver 125 LLC, possibly play a smaller role at the Gates site, called Metropolitan Gardens.

But no more. "We have pretty much agreed to go our separate ways," Belz said.

Since the two groups have split, architects and general contractors are still owed $2.2 million, according to court records examined Monday. According to mechanic lien filings in U.S. District Court, among the prominent groups that have not been paid are PCL Construction and 4240 Architecture, headed by Denver architect Peter Dominick.

Mechanic liens are similar to involuntary mortgages slapped on property for unpaid bills. The liens may be foreclosed on to pay the amount owed.

4240 is owed $529,343 and PCL $299,650, according to documents. In addition, Design Workshop is owed $174,015, according to court documents.

Court documents say that Santa Fe Denver 125 contracted for more than $6 million in work, and has paid more than $4 million to subcontractors. It says Cherokee is responsible for half of the roughly $6.2 million. Cherokee's attorneys responded that is has "no duty" to Santa Fe Denver and said its claims are "frivolous, groundless and lack substantial justification."

The only announced retail tenant for the Gates project so far is Robert Redford's Sundance Cinema, and even that is in doubt.

"Technically, that LOI (letter of intent) was with Freed, and Freed is no longer here, so technically we no longer have a contract with Sundance," said Belz on Monday.

But he said he met recently with Sundance officials at the International Council of Shopping Centers in Las Vegas and he said Sundance is still open to coming to Metropolitan Gardens.

"They said they still like the site and to contact them when we're ready," Belz said.

Initially, Freed "was shooting" to have the first development open by the fall of 2010. Now it is likely to be the spring of 2011 before anything is built, Belz said. "We're looking at the next phase to be smaller, tighter and more office and less residential than Freed was planning."

Several retailers he met at ICSC said that in today's economic environment, they would not be ready to move forward until 2011, Belz said.

Former developer Freed planned a lot of residential, including condominiums, Belz said. Separately, Belz sold five acres to Trammell Crow Residential, which is building a luxury apartment complex on the south side of the property.

"Some people say we no longer even have a condo market," Belz said. "Two years ago, people wanted big projects. But now, there is no capital available to fund big, massive projects."

Belz said that while the starts of the building has "slipped a little," the project is not at a standstill. Cherokee still needs to clean pollution on the east side and has yet to start what could be a long process with the city of Denver on demolition of buildings.

"We don't even know yet if we're going to demolish all of the buildings," Belz said. "We would like to try to save the facades of some of them."

And Belz noted that the redevelopment of Gates has always been envisioned as a 10-year-plus project. Delays and setbacks are to be expected during various real estate and economic cycles.

"Because we're a little bit behind now doesn't mean that the whole thing won't be completed around the 10-year time frame," Belz said.

rebchookj@RockyMountainNews.com or 303-954-5207

Comments

  • July 22, 2008

    8:51 a.m.

    Suggest removal

    WarrenJimmyBuffett writes:

    "Because we're a little bit behind now doesn't mean that the whole thing won't be completed around the 10-year time frame," Belz said.

    Right. And it doesn't mean the project will start with the next cycle (in about 10 years), but it is likely.

  • July 22, 2008

    10:34 a.m.

    Suggest removal

    openmind writes:

    But but I thought the light rail was the key to Transit Oriented Development and going to be a boom to the economy? Whoops RTD was wrong again.

  • July 22, 2008

    10:48 a.m.

    Suggest removal

    italiaboy9 writes:

    For someone with the name openmind, you certainly know how to post very close minded remarks. nice job! It's amazing how many conservatives absolutely hate RTD and any thought of a rail system in this country. I truly hope gas goes up to $10 a gallon then you can all sit around and cry when you can't fill up your lexus!

  • July 22, 2008

    12:47 p.m.

    Suggest removal

    openmind writes:

    When gas hits $10.00 a gallon you'll be paying RTD $15.00 to ride the damn diesel train. You do realize some of the "light rail" trains will be diesel don't you?

  • July 22, 2008

    2:44 p.m.

    Suggest removal

    BMat writes:

    I think openmind has a good point.

    When they sold us a tax increase on the RTD Fastrax ballot they went to a lot of effort to identify the business opportunities along the rail lines. Office, retail, and residential they told us would all thrive next to public transport. Existing home values would increase and there would be more resources within walking distance of the RTD station.

    Now Fastrax has been slow-tracked and here we have a huge development right next to an already operating rail line constructed under the last RTD expansion along I-25. The partnership to build has broken up and they don't even know which buildings to knock over.

    Not exaclty part of RTD's vision is it?

  • July 23, 2008

    9:02 a.m.

    Suggest removal

    homeofficeguy writes:

    Don't you numnuts realize this has nothing to do with RTD but with the current economics of the housing market? The project will be built out eventually. Why put Millions of dollars into developing a project that will sit and not sell leaving the developer to carry a large nut on the project with a risk of then defaulting on his loans. Demand for housing whether located next to light rail or not is just not there to justify anything coming out of the ground at this time.

  • July 23, 2008

    2:51 p.m.

    Suggest removal

    ColoradoFan writes:

    Hey openmind (or is it closemind?), the regional trains will be diesel, all the light-rail trains are--and will be--electric. The regional trains haven't even been built yet as they're part of the fastracks plan. Get your facts straight. And spend a little more time communing with nature instead of fuming (pun intended) that the world doesn't revolve around you.

  • July 24, 2008

    1:01 p.m.

    Suggest removal

    Rookie writes:

    Thanks HomeOfficeGuy. To everyone else, the redevelopment of the Gates site is not an RTD project. The light-rail line that passes the site is not part of the FastTracks buildout. It was built as a part of the T-Rex project. You remember that one - the project that RTD brought in on time and on budget and with greater ridership than projected. Oh, they did that with the SW light-rail project too. And the transit-oriented development on that line (Hampden Station) is a rousing success. Folks, real estate development takes time. The fact that Cherokee is pushing back their timetables by one year is pretty insignificant. And why are you whining? This doesn't affect you at all. If anyone should be complaining, it's Ferd. As HOG (huh?!) said, he's carrying the loans for this project, not any of us.