The developer who earlier this year pitched a 4- or 5-star hotel on the Dillon waterfront told the Dillon Town Council on Tuesday, Oct. 17, that he has scaled back that plan in response to feedback from council members and residents.

Developer Jake Porritt said he is no longer envisioning a hotel and indoor amphitheater but is instead proposing branded residences overlooking the lakefront, housing and retail sites in the town core, and workforce housing in the town’s commercial district.

“We were trying to find a way to do an elevated hotel in this town core. We researched what it would take, and when we found out all it was going to take, it was too much to scale,” Porritt said. “Given the feedback from the town, we’ve worked with town staff to put together a program that was more in line with the existing masterplan.”

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Rather than a 250-room hotel, the branded residences would consist of about 200 condominium units and would be operated by a company like Marriot, Hyatt or Hilton, Porritt said. Individual condo owners would own their units then be able to rent them out as a short-term rental through the company that operates the complex, he said.

More toward the town core, properties such as where Pug Ryan’s Brewery now stands, would be redeveloped to have retail on the first floor and four floors of residential space above, Porritt proposed.

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He noted that each proposed project would still have to go through the town’s usual planning process and that the exact details of designs, heights and how the buildings will be laid out will be negotiated along the way.

“We now know and feel comfortable saying to you that we can deliver this type of product,” Porritt said. “You guys can give us the feedback we need on style and design and so forth, but we can deliver this and the revenues that you see are realistic.”

Porritt first approached the town last year after his company, JGJP Dillon LLC, purchased the debt on the now-bankrupt Uptown 240 property, according to a staff memo included in the council’s agenda packet. He soon expressed a desire to participate in the redevelopment of other properties in town.

In February, the town council voted 5-2 to establish a service plan to begin the process of establishing metropolitan districts to help fund the redevelopment Porritt has called Triveni Square.

A metro district is a quasi-governmental unit that can be formed under Colorado state law. These districts have similarities to school, fire and water districts and allow developers who establish them to access certain financial tools to help fund the public infrastructure needed to support a project.

Developers establish metro districts in order to issue tax-exempt bonds, which are paid off over time with revenues generated by metro district property taxes and fees, according to the staff memo. Metro districts cannot fund private components of a development.

Through the metro districts, Porritt has proposed a Public Financing Agreement and a Redevelopment and Reimbursement Agreement with the town, which the council discussed Tuesday night.

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Under the terms of the Public Financing Agreement, the town would grant credits that essentially allow the developer to collect half of the town’s 2% sales tax, half the 6% lodging tax, and half the 5% short-term rental tax generated by properties in the metro districts. It would also rebate back to the developer half the 2% county sales tax generated by properties in the districts, according to the staff memo.

The public improvement fees will expire on a date that is still being negotiated but will be tied to the date that the bonds will be paid off, Town Attorney Nick Cotton-Baez said. The financing the developer receives from the public improvement fees must be spent on public improvements in the metro district, from streets, sidewalks and parks to utilities like water and sewer or demolition of existing structures, according to the memo.

Under the Redevelopment and Reimbursement Agreement, the town would grant the developer 100% of the property tax increment attributable to properties included in the metro districts until 2037, according to the memo. 

This means the agreement would create a baseline of the assessed value of the existing properties in the metro district. The town would receive property taxes based on that baseline, but as the developer puts up buildings that presumably increase the property values in the district, the developer would receive any property taxes generated in excess of that baseline. Again, the developer would be required to put these funds toward public infrastructure.

“One of the arguments for this kind of agreement is that absent town investment, development might not happen,” Cotton-Baez said Tuesday. “And that might be particularly true in the core of Dillon because it’s built out and we’re talking about redevelopment. It takes funds to tear down these buildings. It takes funds to lay out new infrastructure to support new development.”

Through the Public Financing Agreement, the town would make about $1 million a year and about $28 million over the course of 30 years, Cotton-Baez said. The town could go to the bond market and receive about $10 million up front, which could be spent on any town project and doesn’t necessarily have to be connected to the metro district, he said.

Porritt noted that while he cannot put money raised through the metro district directly toward his private developments, it allows him to take on “extraordinary” costs that he otherwise might not be able to, including buying adjacent properties to be redeveloped.

“The public finance money wouldn’t be used to pay for that. We’re paying for those costs,” Porritt said. “But because the public finance helps us carry the burden of the infrastructure and those other costs, it allows us to eat that expense that really wouldn’t be normally present in a development.”

Those public financing dollars will allow him, in cooperation with the town, to do things such as add additional architectural elements to the town core, Porritt said. He said, by assembling adjacent properties, he will be able to work with the town to rework the footprints of existing buildings and create cohesiveness in walkability.

The public financing will also help Porritt take on what he called “first-entry risk.” He said he is taking on an added expense to be the first to develop downtown Dillon that other developers who come in later will not face.

“Our hope is to create enough momentum that the rest of the town core can feed off of that and go forward from there,” Porritt said.

Mayor Carolyn Skowyra raised concerns about the public fianancing mechanisms, saying that most of Porritt’s “extraordinary costs to me seem to be coming from you’re trying to fit a square peg in a round hole. It’s zoned residential.”

Skowyra continued to call the proposed branded residential units a “hotel,” comparing it to developments in Vail. She raised concerns about the amount of workers required to run such an operation.

“Unless you’re going to build 100% workforce housing to cover this, you’re not helping the problem,” Skowyra said. “You’re making it a lot worse.”

Porritt pushed back on the description of the branded residential units as a hotel. He said this is one of the lowest-impact developments that he could think of and will not have room service or a lobby like a hotel.

Moreover, Porritt said that with the branded residential units offering short-term rentals in a concentrated section of town, more residential units currently operated as short-term rentals might open up elsewhere in town.

“I don’t buy that. I don’t buy that for a second,” Skowyra said. “I don’t buy it. If you add more you’re going to have more short-term rentals, and that’s exactly part of this financial scheme is that there is going to be more.”

But other town council members disagreed. Town council member Dana Christiansen said he could see something like branded residential units helping to shift the short-term rental market in town.

The town currently has about 300 short-term rentals, according to Dillon Finance Director Carri McDonnell. The proposed branded residential units would result in about 200 more short-term rentals.

“That’s got to have an impact on short-term rentals, right?” Christiansen said. “Because right now the last three properties on my street were bought by investors and turned into short-term rentals. That’s killing the neighborhoods. So we need something like this to offset that.”