APPENDIX E

Denver Union Station Case Study

Introduction

Appendix E, a companion to Chapter 7 and Chapter 8, and presents a case study of governance, partnerships, funding, and financing of Denver Union Station [Union Station TOD Project | RTD-Denver (https://www.rtd-denver.com/about-rtd/projects/denver-union-station)]. A transit and real estate project rolled into one, the success of Union Station derives from coordination and collaboration among numerous public and private stakeholders, combining federal funding and financing with private investment to bring the project to fruition. The project anchors the city of Denver and serves as an economic catalyst for the neighborhoods surrounding the project. RTD (Regional Transit District, Denver’s regional transit agency) has estimated that the redevelopment of Union Station spurred $3.5 billion in private development in the surrounding area, with an annual economic impact of $2 billion. Private development at the station and in the surrounding area includes 3,000 residential units, 1.9 million square feet of office space, 250,000 square feet of retail uses, and 750 hotel rooms.

Evolving Governance

The development of Denver Union Station provides an excellent case study of how governance can change over time. The city of Denver originally laid out the Denver Union Station Master Plan in 2004. A supplement to the original plan was adopted in 2008 and included more concrete plans for redevelopment, including the creation of the Denver Union Station Project Authority (DUSPA), a nonprofit, public-benefit corporation formed by the City and County of Denver to finance and implement the project. Partners in DUSPA include RTD, the City and County of Denver, the Colorado Department of Transportation, and the Denver Regional Council of Governments.

Project elements were transferred to RTD, which operates and maintains them as a complete transportation district supplemented by contracts for some mobility services. Continuum and East-West Development Corporation (a joint venture called Union Station Neighborhood Corporation) is the master developer for the TOD project.

Innovative Financing

One of the challenges for the project was the Great Recession, which hit just as DUSPA was formed in 2008. Because of the resulting difficult financial market conditions, the project turned to federal financing opportunities. DUSPA, the public-benefit corporation created to finance and implement the project, secured $300 million in TIFIA and RRIF funds. It was the first time that the U.S. DOT combined a TIFIA and RRIF loan for a single project. The project was able to

Table E-1. Denver Union Station financing.

secure these loans thanks to pledged revenue from two primary sources: the establishment of a 30-year TIF district surrounding the station, and funds from a voter-approved 0.4% sales tax increase dedicating revenues for public transit projects in Denver. Table E-1 summarizes the two financing agreements.

Federal Grants

The Denver Union Station project also benefited from various federal funding and grant programs, including FTA Section 5309 [now the Capital Investment Grants (CIG) program]. In addition, the CIG program provided $1 billion for the construction of RTD’s A, B, and G Line light-rail/commuter service, which all originate at Union Station.

Public–Private Partnerships

Two master developers were involved in the project, which is also unique. Union Station Neighborhood Company focused on development of the area immediately surrounding Union Station, with the 19 acres previously owned by RTD sold off and developed by private real estate developers. The Union Station Alliance focused on the renovation of the historic station building, investing $35 million to convert it into a hotel with several ground-floor retail and restaurant tenants in the Great Hall, nicknamed “Denver’s Living Room.” A 99-year developer lease also includes an agreement that the hotel operator will pay for the long-term maintenance of the station building.

Value Capture

As mentioned previously, the debt service resulting from the TIFIA and RRIF loans is covered by future tax revenues from induced development. Private development at the station and in the surrounding area includes 3,000 residential units, 1.9 million square feet of office space, 250,000 square feet of retail uses, and 750 hotel rooms.