The Denver City Council has approved a multi-million dollar, 10-year deal to rent out another floor of The Denver Post's old downtown headquarters.
Meanwhile, the newspaper is preparing for significant layoffs, and two Denver City Council members voted in protest against the deal. The deal was approved 7-5 on Monday night by the council.
The new deal:
The city of Denver already subleases about 92,000 square feet of the eleven-floor building near Civic Center. The new lease will allow the city to add the ninth floor, an increase of about 26,000 square feet, for at least ten years, at a rate of about $28 per square foot, plus other expenses.
That will bring the city's payments to DP Media Network LLC from $21.7 to $31.3 million over the term of the lease. (The lease runs different lengths for different floors.)
The city plans to relocate its economic development office, public health department, and parks and recreation department to 101 W. Colfax Avenue.
The ninth floor at one time was occupied by Denver Post employees, according to editor Lee Ann Colacioppo. However, it was more recently occupied by a different tenant that had left the building, according to city staff.
Still, the idea drew a protest vote from Councilman Kevin Flynn, a former reporter at the Post's late rival, The Rocky Mountain News.
"I just couldn’t vote yes to pay $9 million-plus to the parent company of the Denver Post after they laid off 30 journalists in this town, one third of their staff," he said at a council meeting on Monday night.
Other council members questioned the expense.
"I just don’t think it makes sense to spend this much money on downtown real estate when we could be spending it elsewhere," said Councilwoman At-large Debbie Ortega.
Council President Albus Brooks agreed that the city needs a master plan for workforce expansion, and said he was sympathetic to the Post's employees, but he voted for the deal.
"Unfortunately, we have the issue of responding to a budget that we just approved," he said. "If we stop those services because of this issue, I think it’s going to come back on us."
The building is owned by Kayan LLC, a company linked to American Properties Inc., a privately held company in New York City, according to the Colorado Real Estate Journal. We don't know whether DP Media Network LLC will make a profit by subleasing the space, as the details of that original lease are not public.
Most of the Post's newsroom, meanwhile, has moved to the site of its printing facility in neighboring Adams County, where reporters work in a long room alongside advertising staff.
Executives for the paper's owner, Digital First Media, have retained their offices on the top floor of the old building. DFM's CFO didn't respond to request for comment.
What's next for the Post's journalists:
At the time, some of the newspaper's staff said that the move could be a relatively good thing.
"This sure beats getting laid off, or more buyouts … and I’d rather have to move than have this staff take any more hits,” said Kieran Nicholson, the reporter who represents the newsroom in the Denver Newspaper Guild, in an interview last year.
Morale had just started to recover after the move before the latest news hit, according to Nicholson. Colacioppo last week announced that the paper had been ordered to cut 30 of less than 100 people in its newsroom.
"They actually did a nice job on the (new) office. The mission’s the same, the job is the same. We’re professionals. We got to work," Nicholson said. "Things were going to be OK. And then, wham, corporate pulled it out from under our feet — it’s crushing."
The newspaper operates under rules that generally cause the most recently hired people to be laid off first. None of the more senior staff have volunteered to leave, which means the cut could heavily impact younger and newer people in the organization.
"If you’re a new hire, at this point in time, it’s pretty nerve-wracking. More than likely, you’ll wind up on that list," Nicholson said today.
More details are expected on Wednesday, with layoffs effective as soon as April 9.
The business has declined to provide any severance package beyond what's required by contract, Nicholson said.
"In the past … we would bargain with them, and they would bargain with us — and the layoff would become more of a buyout," Nicholson said. Not so in this case, he added.
Colacioppo did not know whether any of the revenue from the new sublease would fund the operations of the newspaper.
The Denver Post is owned by Digital First Media, the second-largest newspaper company by circulation in the country. Digital First is controlled by Alden Global Capital, a New York City-based hedge fund that specializes in distressed businesses.
In an ongoing lawsuit, an investment group alleged that Alden took profits from DFM properties and moved them into "poorly-performing investments," according to news columnist Ken Doctor.
DFM representatives didn't immediately respond to questions on the new sublease.
