A new lawsuit aims to put the Park Hill Golf Club in the hands of a for-profit company

Denver city officials wanted to buy the land and open it up for use as parkland and development.

(Kevin J. Beaty/Denverite)

staff photo

A proposal to replace a Denver golf course with affordable housing and other new development faces a major new challenge.

Arcis Golf, the company that currently operates the Park Hill Golf Club, has filed a lawsuit. If it succeeds, it would force the club’s owner to sell the land to Arcis for $20.5 million.

That’s a big deal because it could derail the city of Denver’s plan for the property. The city previously negotiated a potential deal to buy the 155-acre property from its current owner, the nonprofit Clayton Early Learning, for $20.5 million.

Denver city officials wanted to buy the land and open it up for use as parkland and development.

Here’s where it gets devilishly tricky, though. Arcis is leasing the land from Clayton right now, and it has the right to keep that lease going for another 10 years.

Most importantly, that lease contains a “right of first refusal.” If any other party offers to buy the land, Arcis has the right to match the offer. So, the golf company’s lawsuit says that it should be allowed to buy the course for the same $20.5 million sum that Clayton and the city discussed.

However, the defendants may have some wiggle room.

The lease defines a “bona fide offer” as one that is in writing and that would constitute a “legal, valid and binding obligation of the purchaser” if it’s accepted by Clayton, according to a copy provided to Denverite.

So, yes, city staffers negotiated and talked publicly about a deal that would involve Denver paying $20.5 million for the property. However, that deal would have required the approval of the Denver City Council — and that hasn’t happened.

In short, Clayton could argue that the deal was not binding, and therefore didn’t activate the right of first refusal. The nonprofit’s president, Charlotte Brantley, has already made a similar argument to the press. Maybe that will be enough to win the case — although Arcis will certainly have its own counter-arguments, too.

Double however: Even if the lawsuit fails, Arcis could still disrupt the deal.

At some point, the city has to make a “bona fide offer” if it wants to buy the land.

When that happens, Arcis could get the right of first refusal anyway. As long as they’re willing to match the city’s offer, they potentially could get the land.

The question is whether it will be worth it to Arcis. Paying $20.5 million for a huge chunk of central Denver might seem pretty lucrative.

Triple however: The city has its own trump card.

There are city restrictions that say the land can’t be developed. Only the Denver City Council can change that. Those restrictions would significantly limit developers’ interest, and, therefore, the value of the land.

So, that leaves Arcis with a few options. They could keep running it as a golf course. That may or may not be worth $20.5 million. (Clayton’s executive has claimed the golf company is already losing money on the course.)

Arcis also could try to turn around and resell the land to the city for a higher price. Basically, the company has the legal power to insert itself into the middle of a complicated, important real-estate deal — and that’s just what it’s trying to do.

What’s next?

The city is still pursuing at least part of the land, with plans to use about 30 acres of the club as part of its stormwater control system.

Earlier this year, the council approved a bill to allow the city to condemn part of the golf course and use it for flood control. The entire course would be closed for construction from January of 2019 to March of 2020.

Clayton, meanwhile, has said it needs the money to shore up its finances and ensure it can continue to serve children.

Oh. One more thing.

Arcis is owned by Arcis Equity Partners. Their financial backer is Fortress Investment Group, according to the New York Times. Fortress manages about $46 billion of assets, per its website.

In short, they probably have the money to stay in this fight.