As Castle Rock Town Council continues to debate the proposed $250 million development known as Miller's Landing, a third-party review of the project has found elements of the plan to be aggressive and, overall, unpredictable.
But the development is also one with the capability to fill local market gaps and become a significant economic driver for Castle Rock, the report says.
Castle Rock retained Economic & Planning Systems, an economic consulting firm with offices in Denver, to conduct the study of the Miller's Landing proposal.
Miller's Landing is a 66-acre development that could bring 900,000 square feet of office and retail space west of Interstate 25 and Plum Creek Parkway. The flagship component to the design is a full-service hotel no smaller than 250 rooms with a 10,000-square-foot conference center.
The consulting firm points out that the desire for improvements to the property is apparent.
The project site is undeveloped and generating zero tax revenue for the town. It's also home to an old town landfill still containing solid waste.
The developers behind Miller's Landing are Citadel Development and Chicago-based P3 Advisors.
"I think the third-party report confirmed that Castle Rock now has a real opportunity to convert a public liability into an economic opportunity," Shawn Temple, a managing director at P3, said in an email.
The Castle Rock Urban Renewal Authority had declared the land blighted and has negotiated with numerous developers - prior to the Miller's Landing proposal - in attempts to revive the area.
Frank Gray, president of the Castle Rock Economic Development Council, said negotiations consistently fell through as developers struggled to budget for remediating the landfill, eventually walking away from the project.
"Cleaning up a dump represents a lot of risks," Gray said. "Once you open up you don't know how much is going to be there."
Unlike in the past, the developers are experienced in such remediation projects and have agreed to take on the $11 million task.
But the 29-page Economic & Planning Systems document notes there are more risks than a landfill remediation.
Miller's Landing would be unique to Castle Rock, the report says, meaning there is little to no historical data on which to predict how it might fare in the local market.
The firm researched historical development trends in Castle Rock, but also in Lone Tree, Longmont, Loveland and Parker to provide comparisons. It found that the developers for Miller's Landing put forth an "aggressive, although not completely unprecedented" timetable for when the project could begin generating revenue and cash flow.
"In terms of average rates, the development would generally have to capture many times more than the historic market average for retail and office," the report states.
The hotel size and scale is also a departure from the past. The consulting firm writes that, in the last 10 years, the largest hotel built in Castle Rock or the comparable cities is a 300-room Embassy Suite Hotel in Loveland with 40,000 square feet of conference space.
"The success of the development likely depends on the developer's ability to attract large hotel and office anchor tenants," the report says. "Without attracting such a large anchor tenant and relying instead on the historic trends in Castle Rock, the project will take longer to absorb."
The report echoed points made by District 4 Councilmember Jason Bower during previous council discussion. Bower had said he feared the development could eat away at business in the downtown district. Economic & Planning Systems described Castle Rock's retail market as "fairly saturated," mostly referencing the Outlets at Castle Rock and the still-developing Promenade at Castle Rock.
Miller's Landing would need to attract more entertainment and destination-style retail, making it all the more dependent on the developer's ability to secure the large hotel. When it comes to the hotel, representatives from P3 Advisors won't name names, but said they are in negotiations with a larger hotel than the development proposes.
Finally, the report found that the project is dependent on a $65 million public finance agreement with the town, which still needs final approval from council.
"It also made clear," Temple said of the report, "that while we are willing to raise the capital to make a significant private investment, some of the tax dollars generated on the site are needed to make it financially viable. We have been working with the town for a long time on this and we would be proud to realize our shared vision of success for Miller's Landing that brings thousands of new jobs and increased economic vitality to the community."
Risks aside, Miller's Landing is still an alluring development for council members who hope to attract primary employers through the office space, ditch the dump and bring a hotel to town with a conference center to rival those in Lone Tree or the Denver Tech Center.
A split town council has had two executive sessions concerning the development, with one lasting more than two hours. Members haven't commented publicly about the report. The executive sessions followed a postponed final reading of the public finance agreement.
The next town council meeting is April 18.