Published in the print edition of YourHub/Denver Post for Arvada, Wheat Ridge, Westminster, Thursday, May 21, 2015
Hilton Hotel Scheme is a Bad Deal for Arvada Taxpayers
by Dave Chandler
There are four big reasons why the Arvada Urban Renewal Authority's (AURA) scheme to build a Hilton Hotel in Olde Town is a bad deal for this city's citizens.
First, there is the sweetheart land deal. Government-owned property that AURA has valued at $3.2 million is to be sold to the hotel developer for only $500,000 – an 85 percent discount! That means this deal is about politics, because this is surely not free enterprise.
Second, AURA gives the developer a tax kick-back (TIF) that shifts to the hotel the 2% lodging tax which should go to streets, parks, and other city services. AURA takes for itself property taxes that should go to schools. This is a subversion of the will of Arvada's citizens – no one likes to pay taxes, but we certainly want the taxes that are paid to go exactly for the things they are supposed to go to, not to subsidize a for-profit corporation.
Third, the hotel is going to charge a private tax. AURA estimates that the Hilton developer is short $5.5 million for the project. In the real world of free enterprise that would mean that the market is not ready for a venture like this. But here in Arvada, the government is distorting the market. To make the deal work, the developer gets a sweet land deal; a tax kick-back; and the hotel is going to levy a “property improvement fee” or “PIF” of 6% on all rooms, or as AURA, itself, puts it “effectively bringing the lodging tax to 8%.”
Finally, this government-Hilton partnership is anti-competitive. If in the near future a marketplace demand for lodging does arise and another hotel company wants to locate in Arvada within three miles of this project and wants some incentives, too (ie., equal treatment), then AURA has to pay up to $200,000 as a penalty – to Hilton! A great deal for Hilton, not so much for the Arvada taxpayer or a hotel competitor.
It might be nice if there were a family-friendly hotel in Arvada, but it ought to locate here because the marketplace demands it, because of free enterprise, and because a business is willing to take the risk – that is the American way. 'Insider' government deals like this are not an example of Arvada values; maybe it is time for a change at City Hall.