Walter Isenberg, CEO of Sage Hospitality, is pushing to transform the historic Barth Hotel in downtown Denver back into a hotel after it has been vacant for a year.
The Barth Hotel, located at the intersection of 17th and Blake streets, was constructed in the 1880s and functioned as a hotel for nearly a century before being converted to income-restricted housing for seniors around 1980.
However, the building’s deteriorating condition led to the residents’ relocation last year, prompting Isenberg to explore its potential as a boutique hotel.
Isenberg currently holds a purchase contract for the property, but the transition from housing back to a hotel poses challenges.
The city of Denver imposed covenants that restrict the use of the Barth Hotel exclusively to senior housing, leading Isenberg to request the city relocate these units to another property.
“The city needs to be open-minded,” Isenberg stated in an interview with BusinessDen, underscoring the importance of dialogue in this situation.
His request has raised concerns among some members of the Denver City Council, particularly Councilwoman Amanda Sandoval, who emphasized the significance of the covenants in preserving affordable housing.
Sandoval remarked, “How do we insert ourselves to make sure that we’re keeping those covenants? The Barth Hotel has provided housing to seniors in that neighborhood for as long as I’ve been alive. It’s weighing heavily on my mind.”
The Barth Hotel is currently owned by a nonprofit organization, Senior Housing Options.
Over the years, the area, just two blocks from Union Station, was a vibrant community hub with seniors often seen enjoying the benches outside the building.
Unfortunately, the property has fallen into disrepair, with the city previously extending loans to Senior Housing Options, including a $200,000 loan in 2003 and an additional $162,000 in 2020 due to issues like boiler failures.
As a result of these loans, a new 60-year covenant was established, ensuring the building remains affordable housing until 2080.
Last October, the city notified Senior Housing Options that the Barth was “temporarily out of compliance” due to its poor condition, particularly regarding a malfunctioning elevator.
Rather than undertake repairs, Senior Housing Options opted to vacate the building, with residents completely moving out by January.
Shortly thereafter, the nonprofit listed the Barth for sale at $2.5 million, while the property requires an estimated $10 million to $12 million in renovations.
Dorit Fischer, a broker representing the listing, called it a “gorgeous asset” that needs significant interior improvements to reach its full potential.
Sue Powers, from a Denver development firm, Urban Ventures, noticed the listing and reached out to a partner organization, Eaton Senior Communities, as they had aspirations to collaborate on a project.
Eaton Senior Communities assessed the potential to purchase and renovate the Barth, intending to create 50 housing units with assistance from various funding sources, including help from the city’s housing department, the Downtown Development Authority, and tax credits.
“This would’ve been a $22 million project,” claimed Diana Delgado, Eaton’s CEO.
Eaton Senior Communities went under contract to acquire the property on June 5 and began pursuing financing for the proposed renovation project.
However, this situation became more complicated due to a right of first refusal that was attached to the property when Senior Housing Options purchased it.
This right allowed Ralph Riggs, the previous owner, a chance to match any offers made if SHO decided to sell.
After being assigned to a different entity, an attorney from Oxford 2005 LLLP, which Isenberg leads, indicated that they were interested in purchasing the Barth under the condition that the covenants would be altered.
The city learned of this assertion, resulting in heightened unease among council members regarding the possible loss of crucial affordable housing units.
Councilwoman Sarah Parady expressed her apprehension to BusinessDen, stating, “Those are incredibly valuable to us, so I fundamentally was very concerned about losing covenant-restricted units, and especially the Barth in particular.”
In late June, Isenberg’s team formally notified the city of their intent to exercise the right of first refusal, leading to the termination of Eaton’s contract in July.
During discussions at a city meeting earlier this month, council members inquired about the implications of the right of first refusal and were informed that currently, there is no existing mechanism to alter or move the covenants.
Jamie Rife, the executive director of the Department of Housing Stability, stated, “There is not a process, or a way to remove a covenant or transfer a covenant.”
Isenberg responded to these concerns, challenging the notion that such a move was unprecedented, asserting that policies evolve over time.
“It’s not even a law. It’s a policy. People change policies all the time,” he commented.
He believes that a negotiation could benefit both the city and his plans for the Barth.
Highlighting the city’s ongoing budget challenges, he suggested converting the property into a hotel would generate much-needed revenue in the form of sales tax, lodger tax, and property tax.
Isenberg’s company has a notable portfolio in the Denver area, including well-regarded hotels like The Crawford within Union Station and The Maven in Dairy Block.
He emphasized that unlike Eaton’s proposal, which relies on taxpayer-funded programs, his redevelopment plan does not require aid from the Downtown Development Authority or low-income tax credits.
“I’m willing to pay more,” Isenberg noted, around the $2.5 million offer he matched through his right of first refusal, suggesting the covenants’ modification could result in financial benefits for Senior Housing Options, which is facing severe financial difficulties.
As of the latest tax filings in 2023, SHO reported a net income of $1.8 million, while experiencing a loss of $223,000 in 2022.
Isenberg envisions that moving the covenants as he suggested would not inherently diminish the availability of low-income units.
Although he has not designated a specific property where the units could be relocated, he mentioned discussions about potential sites downtown to accommodate affordable housing.
One option discussed was the Symes building at 820 16th Street, which is poised to undergo a conversion into 116 market-rate apartments and is seeking financial support from the Downtown Development Authority.
Isenberg articulated that the current designation for senior housing might not be the most suitable use for the Barth Hotel, given its state.
He underlined, “This building is worth less than zero as low-income housing,” thereby emphasizing the urgent need for its rebirth as a hotel.
Meanwhile, Councilwoman Parady stressed the importance of covenants in creating stability within neighborhoods and voiced her concern about simply moving them without careful consideration.
She acknowledged the city’s commitment to enforcing these covenants and expressed uncertainty about future actions needed to uphold them.
Isenberg’s attorney, Wendy Harring, raised legal questions regarding the creation and enforcement of the covenants, arguing that the city placed them without proper consent from Oxford 2005, threatening possible litigation to protect their interests.
Isenberg reiterated that the terms and conditions surrounding the right of first refusal should validate the legitimacy of his claims.
Despite the complexities surrounding the issue, Isenberg appeared optimistic about finding a resolution that aligns with both city needs and his vision for the Barth Hotel.
“I’m very optimistic that we will be successful,” he stated, reinforcing his commitment to breathing new life into the historic property.
image source from：businessden
