Denver Convention Center Headquarters Hotel

Denver Convention Center Headquarters

$356,155,000
Denver Convention Center Authority
Convention Center Hotel Senior Revenue Refunding Bonds, Series 2006

 

$354,825,000
Denver Convention Center Authority
Convention Center Hotel Senior Revenue Refunding Bonds, Series 2003

The goal of the City and County of Denver in financing the hotel project was to implement a high grade financing structure. The 2003 Bonds were sold with “AAA“ insurance. To obtain bond insurance, the financing included an annual, subject to appropriation, payment from the City and County of Denver (City Payment). The annual City Payment was structured in such a manner than it would not have an impact on the City’s general fund. They were projected to be less than the tax revenue that the City collected from hotel’s operations (sales taxes, occupancy taxes and property taxes/PILOT payment).

In 2003, when the original Bonds were sold, the hospitality industry was at the low point experienced from 2001 through 2003 due to the economic recession and the impact of the events of September 11, 2001. As a result, the market required significant reserve fund levels including a $40.0 million “special“ reserve fund which was funded annually from the City Payment, to the extent it was not required to fund debt service shortfalls, over the first six years of operations. The “special“ reserve would be available to address uncertain market conditions and protect against a City non-appropriation of its annual City Payment.

For the 2006 refunding, Mr. Swerdling led renegotiations with the rating agencies and the bond insurer to restructure the original terms to provide substantial economic benefits to both the City and the Authority including:

  • A reduction in the “special“ reserve requirement from $40.0 million to $12.0 million and an increase and acceleration of the return of the City Payment back to the City, a $19.0 million benefit from 2006 to 2010
  • The Authority receives $535,000 annually from the release of the City Payment which may be used to fund capital expenditure shortfalls or at the Authority’s discretion, any purpose relating to the Bonds or the Hotel, a $7.0 million present value benefit
  • $900,000 in annual debt service savings