Stanley sale closer to reality

A funding plan allowing the Colorado Education and Cultural Facilities Authority (CECFA) to issue $425 million in bonds and establish a subsidiary, SPACE, LLC (Stanley Partnership for Art Culture and Education) that will purchase the Stanley Hotel is coming to fruition.

It took approval in May by the state legislature and Gov. Jared Polis’s signature to allow CECFA to create the nonprofit SPACE that will manage the hotel and direct revenue from it toward the organization’s mission to generate long-term funding to support Colorado’s educational and cultural charities as well as public middle school arts education across the state.

Documents allowing the sale of those 35-year bonds have been approved and the bonds are expected to go on sale Monday, according to John Cullen, current owner of the Stanley Hotel who is selling the property to CECFA’s subsidiary, a transaction Cullen expects to be complete in the next four to five weeks. The bond sale is being managed by RBC, the Royal Bank of Canada, a global financial institution.

The property transfer will ignite a major transformation for the hotel, Cullen said Wednesday. “This is a big, fundamental shift,” he said, that will provide protection of the Stanley for the future and enhance the facility’s offerings to the state and the community. Initially, Cullen said the bond sale will provide $125 million for capital improvements of the Stanley property and provide $60 million in reserves for the next 35 years to sustain the property’s needs in the future.

First up on the construction docket will be building the Blumhouse Productions’ Stanley Film Center, a project that Cullen has eyed for almost a decade. “We have all the permits, and we’re further advanced on the drawings.” Cullen believes the film center can be ready for visitors in about two years.

“We’re encouraged by the success of this last weekend with Blumhouse Productions taking over the Stanley Hotel Lodge building, where it was sold out in less than an hour and a half. It’s really the proof for this whole concept for the underground museum. We’re going to have six permanent sets from their films.”

In order to obtain the permits, Cullen said it was important that that all town codes were followed, and no variance was ever sought. “In order to keep the height down, we’re digging 32 feet down into the ground,” he said. “Because most of the excavation on the site was completed during renovation of the carriage house five years ago, the ground is soft, decomposed granite.”

Also beginning at nearly the same time will be an expansion on the upper side of the hotel that includes adding 65 rooms. Cullen said, “it also puts in a massive amount of infrastructure, almost $22 million for the next generation of utilities – air conditioning, back of the house, kitchen – all the infrastructure that was, quite frankly, never put in by the prior owners, including me.”

Cullen believes the work will take about 26 months after SPACE takes over.

According to Mark Heller, executive director of CECFA, over this last year, CECFA has worked diligently with many partners to complete this  transaction, including: the Colorado Office of Economic Development and International Trade which administers the Regional Tourism Act program which provides incremental state sales tax revenue that will help pay for the bonds, the Colorado Film Commission, current owner/seller John Cullen, Blumhouse Productions, Sage Hospitality, investment bank RBC, attorneys at Sherman and Howard, Kutak Rock, Butler Snow, and Spencer Fane, Saunders Construction, and hospitality consultant RevPar International, and construction consultant 4Site Advisors. CECFA provides financing through the sale of low-interest tax-exempt bonds. In this case, CECFA will loan the proceeds of the bonds to SPACE at the low-interest rates. SPACE is solely responsible for repayment of the bonds; the bonds are not an obligation of the State of Colorado. CECFA is not a state agency and receives no state appropriations. Its operating expenses are paid from loan fees (initial and annual fees charged to SPACE), not from tax dollars.