Denver says it needs more money to cover the expansion of the Denver Convention Center, which now is expected to cost $223 million.
One place to get it: tourists and hotels. City leaders are considering creating Colorado’s first “tourism improvement district,” which would allow the city to charge extra taxes and other fees to hotels.
The proposal would increase taxes on hotel bills by 1 percent, to 15.75 percent, for all Denver hotels with at least 50 rooms. This change would have to be approved by Denver City Council and also by half of the affected hotels.
The tax is expected to produce about $8.3 million per year, which would initially go toward funding a $223 million expansion of the Denver Convention Center, as well as marketing. Denver already plans to fund part of the project with other hospitality taxes.
The new hotel tax was proposed by the tourism bureau Visit Denver and by the Colorado Hotel and Lodging Association, according to city staff.
“My members believe so strongly that we need to get the convention center renovated properly,” said Amie Mayhew, president and CEO of the Colorado Hotel & Lodging Association, which includes many of the city’s largest hotels.
Why would they volunteer for new taxes? Conventions simply drive lots of hotel bookings, Mayhew said.
The expansion is proposed to include up to 80,000 square feet of new ballroom/meeting space; a 50,000 square foot terrace on the roof; and additional back-of-house space. They also want to upgrade the building’s wireless technology and other equipment.
The new space would be built off the center’s existing structure — a “vertical” rather than horizontal expansion.
A market study showed that the center is near capacity and should be able to continue attracting the same type of conventions.
“However, it was meeting space that’s multi-function … that was the deficiency they identified,” said project manager Adam Phipps.
More flexible space should allow the center to book more simultaneous conventions of various sizes, while currently a large group might take up the entire building, Mayhew said. A city presentation estimates the change could attract 25 additional conventions per year.
Without this new tax, it’s not clear where else the money for the convention center would come from. Earlier figures put the expansion cost at $104 million as a baseline, much less than current projections. However, city staff deny that was an “estimate” or a “budget,” instead describing it as a “starting point.”
The Denver City Council will consider the proposed new tax district ordinance in the months ahead. If approved, the new taxes would go for a vote before the hotels that would be paying extra. A total of 116 hotels currently would be affected, according to city staff. The new tax would have to be reapproved after 30 years.