The City of Denver intends to lease a 300-room hotel in northeast Denver to use as a homeless shelter, with an option to purchase the property for 60 percent more than it fetched a year ago.
A City Council committee was set to be briefed Wednesday on the tentative deal for the hotel at 4040 N. Quebec St., which currently operates as a Doubletree by Hilton. But the committee postponed the discussion a week after another agenda item took longer than expected.
Denver has shown an interest for years in housing the homeless in hotels, and that desire has increased under Mayor Mike Johnston, who assumed office in July and has vowed to house 1,000 people by the end of the year.
The 175,000-square-foot Doubletree building just south of Interstate 70 in the Central Park neighborhood has 300 hotel rooms as well as large conference rooms, a full kitchen, laundry facilities and outdoor pool. The city said it could fit 450 beds. Rooms for the middle of next week start at $109, according to Hilton’s website.
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The hotel property is owned by Denver Project Owner CP LLC, which paid $24.4 million in February 2022, records show. The owner lists a Boston address matching that of Pyramid Global Hospitality.
City documents show the city’s master lease for the property would be with 4040 Quebec LLC, described as a “nonprofit partner.” That entity is affiliated with Denver-based Rocky Mountain Communities, which owns and operates income-restricted housing in the region.
Mark Marshall, who took over as CEO of Rocky Mountain Communities this month, told BusinessDen that the organization will be buying the hotel property within the next month. He declined to specify the purchase price. The city’s master lease would begin at that time.
“We’re very supportive of the mayor’s initiative … We see an opportunity to participate,” Marshall said.
The deal calls for the city to pay $83,333 a month to lease the property for 12 months, with a possible extension for three additional months, documents show. That works out to $1.25 million over the 15 months.
The city also is poised to pay $10,000 to have an option to purchase the property. The option calls for the city to pay $39 million, although holding and carrying costs could bring the full price paid up to $43 million, documents show.
Rent paid by the city would be credited to the purchase price if the city exercises the option, documents show.
The city bought a 96-room motel at 12033 E. 38th Ave. in August for $9 million. Days later, the Denver Housing Authority paid $26 million for a 194-unit former Best Western at 4595 Quebec St. — not far from the Doubletree — so it could lease it to the city.
