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Developer's woes vex Fitzsimons - Criticized by landowners, plaza plan on hold as Aurora looks at financial troubles By
Alicia Caldwell
2/9/04 As they worked to redevelop the Fitzsimons area, Aurora officials last fall launched exclusive negotiations with a team assembled by a developer who has been involved in significant financial problems. Daniel J. Yacovetta until recently headed Denver Holdings Inc., which in May landed in bankruptcy court, records show. The company faces $2.3 million in claims but has assets of only $75,000 and interests in other businesses of undefined value, records show. Nine unpaid judgments against Yacovetta or Denver Holdings totaling more than $500,000 also are detailed in court records. On hearing of his financial trouble, Aurora officials and Yacovetta's development partner said Friday that they had not fully checked his background. They put the planned development for a plaza featuring a grocery store, restaurants and small-scale retail "on hold" until they could investigate.
Property owners in the 17-acre urban renewal district bordering the Fitzsimons medical campus have complained that Yacovetta was trying to buy their properties at prices far below market value, offering unacceptable terms and pressuring them to sell. One property owner said Yacovetta threatened him with eminent domain, an allegation Yacovetta denied. In an interview, Yacovetta said he is offering fair market value for properties and dealing with property owners professionally. He acknowledged the pending bankruptcy against Denver Holdings, the company he had been president of until August, and the judgments against him and Denver Holdings. But he said they are irrelevant to the Aurora project. "I'm doing this as an individual," he said. "I'm trying to make deals. That's all I'm doing." Several property owners in the district said they were angered by the deals he is trying to make. John Dare, 63, who owns an auto repair service, said Yacovetta has offered him only 40 percent of what it would cost to buy another property and move. Dare also said he resents how he is being treated. "He walked up and sort of tossed his card down and started talking about it in front of my customers and employees," said Dare, who has owned Fenimore Auto Service for 30 years. "What he's said is that we'd better sign or he's going to take (the property) away." Yacovetta had been a partner with grocery plaza developer Regency Centers. James Buis, managing director of Regency Centers, said Friday that Yacovetta was "putting together the land" for the deal but declined to be more specific about the nature of Yacovetta's participation in the project. Buis said company officials were concerned about what they were hearing about Yacovetta's finances, and Regency has "pulled out of the project until we verify this." In May, three unsecured creditors of Denver Holdings filed a court petition to have the company forced into a Chapter 7 bankruptcy, records show. The company's officers were listed as having been Daniel J. Yacovetta, president, and Shirley Yacovetta, vice president. The Yacovettas' relationship was not clear. The case is pending. Dianne Truwe, Aurora's director of development services, said she knew about the bankruptcy case but thought Yacovetta's financially strong development partners would make the project work. Besides, she said, Yacovetta was the only potential developer still interested at the end of the selection process. And when he brought in financial heavyweight Regency Centers, the city was "very pleased," she added. But she said she didn't know about the other judgments against Yacovetta or his company and that they, combined with the concerns of property owners, would merit investigation. On the recommendation of city staffers, Aurora's City Council decided in an October study session to work exclusively to form a deal with a group put together by Yacovetta. Nadine Caldwell, mayor pro tem, said she hadn't known of the financial problems of Yacovetta or Denver Holdings when the issue came before council members and found them "very worrisome." Recently, Aurora city officials have begun speaking publicly about the difficulties they would face in their Fitzsimons redevelopment plans if state legislators pass pending bills that would sharply curb their ability to use eminent domain. Amid concern about local governments abusing eminent domain, two state representatives have introduced bills limiting how governments can forcibly buy land for urban renewal projects. Governments increasingly have condemned homes or businesses and have given or sold them to high-volume retailers that bring in significant sales-tax revenues to cash- strapped cities. Aurora officials are trying to leverage an expected $4.3 billion investment in the transformation of the former Army medical hospital into a medical campus. Without the power of eminent domain, Truwe said, redevelopment of the surrounding residential and business areas "won't happen." "There won't be a revitalization of the area," she said, adding that the economics of deal aren't attractive to developers without government help. The city estimates it will cost $18 million to assemble the 34 properties that Yacovetta is attempting to buy, Truwe said. But those same estimates show that a developer would be able to afford to pay only $5 million to make the project financially feasible, she said. "How can you ever get a developer to go out there and assemble that when they're $13 million in the hole before they even begin construction?" Truwe said. The city can help make it happen, she said, by using tax money to subsidize the project and employing the power of eminent domain. The process began with a call for proposals in November 2002 and initially drew five developers. "(Yacovetta) was the only one who remained interested in proceeding with the project," Truwe said. Truwe said city staffers "had a conversation" about the bankruptcy. Then Yacovetta brought Regency Centers to the table, and the financial strength of the company assuaged their concerns, she said. Regency, according to filings with the U.S. Securities and Exchange Commission, is a national owner, operator and developer of neighborhood-based retail centers. As of Dec. 31, the SEC filing states, Regency owned 265 retail centers, including those held in joint ventures, and had assets of $3.4 billion. City memos say Yacovetta has a 40-year record of local development, including recent grocery plaza projects in Arvada, Thornton and Northglenn. However, financial trouble involving his or Denver Holdings' interest in one of those projects has been detailed in a lawsuit that resulted in an unpaid judgment. In a lawsuit filed in August 2002, a pair of investors accused Yacovetta and Denver Holdings of theft, fraud and misrepresenting Denver Holdings' interest in a grocery shopping plaza at West 64th Avenue and Indiana Street in Arvada to make it seem as if the company owned more of the plaza than it did, records show. In court documents, Yacovetta and Denver Holdings denied the allegations but ended up settling the lawsuit for more than $183,000, an award that records show remains unpaid. Yacovetta said the legal trouble is the result of actions by others and that he's paying the price for their mistakes. "I'm suffering the consequences for other people right now," he said. He said he is a partner in the Fitzsimons venture but that Regency is the money source in the deal. Yacovetta said he has had access to city appraisals of the properties and has made fair offers. James Gray, co-owner of a fire sprinkler design and installation business, disagrees. He looked at a contract Yacovetta left at his business and threw it in a drawer. It was, Gray thought, a low-ball offer for his property. And not only that, but the offer had tucked into it some objectionable details, he said. Gray said he was to pay a 3 percent real estate fee and his own moving expenses and that the buyer would have 18 months to close the sale. "It was ridiculous," Gray said. Buzz Kilker, 57, who owns a body shop in the urban renewal district, said he gets no information from the city and different stories from Yacovetta about the phase of the project that's most important to him - the purchase part. Not only was the $225,000 offer for his 3,400-square-foot building on three-fourths of an acre far too low, he said, but he doesn't appreciate how he is being treated, he said. "He walks right onto my property and right in the back like he already owns the place," Kilker said. The property, he said, is supposed to be his retirement nest egg. And while he hasn't yet consulted a lawyer, he said he plans to hold firm and fight for what he considers an equitable offer. "All we want is to be treated fairly," Kilker said. "All those people, if this was their property, they'd feel the same way." Alicia Caldwell can be reached at acaldwell@denverpost.com or 303-278-3216.
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