DENVER - As Denver finishes building the nation's newest airport, city officials face the equally gargantuan task of redeveloping the eight-square-mile area that is now Stapleton International Airport.

Even though Stapleton will not close until Denver International Airport opens in October 1993, city officials and others are developing a long-term project to convert the 4,300-acre site to a variety of uses. In the process, they hope to generate up to $75 million to help retire debt on the new airport.

Officials say the project's vast scope and the overbuilding of the 1980s mean it will take decades for the Stapleton site to be redeveloped. Another factor that could slow the project is competition from nearby Lowry Air Force Base, which is beginning to close.

"You can't take 7.5 miles of property and 6 million square feet of building space and dump it into the market and expect it to be absorbed," said Tom Gougeon, director of the Stapleton Redevelopment Foundation, a private group working with Denver on the project. "That is true even without Lowry in the picture."

A similar project, the city's Tech Center, is only one-fourth developed after 25 years. But the center, which includes facilities for education and office complexes, is still considered very successful.

The task of turning an operating airport that is geographically larger than downtown Denver into an area that would ideally include commercial, industrial, and residential development is unprecedented.

Officials see the project as an opportunity for the landlocked city to grow, but say it will probably require millions of dollars of infrastructure investment and inducements to attract users.

Initially, city officials are focusing on leasing existing facilities while they shape a long-term plan.

For instance, Denver is among several cities bidding to convince the U.S. Defense Department to consolidate one of its accounting agencies into about one million square feet of terminal space at Stapleton. The project could mean up to 7,000 jobs.

The city is also discussing with United Airlines the possibility of expanding its existing ground operations, including a new reservations center at Stapleton.

Finally, officials will study the possibility of making the existing airport a central hub on a proposed rail line that would link downtown with the new airport. This project could be developed with Union Pacific Railroad.

"I think it is important that we get the Department of Defense and United [Airlines] in there," said Mike Dino, assistant to Mayor Wellington Webb. "The key is to show other entities that Stapleton is a viable place to locate."

Gougeon said such a first step is critical because most Coloradans cannot remember the days a half-century ago when Stapleton was farmland along the Front Range of the Rocky Mountains.

"It's hard to see it as anything but an airfield," he said.

Plans to redevelop Stapleton got a major boost after the Federal Aviation Administration agreed over a year ago to waive requirements that parts of the airport built with federal grants be reverted to federal ownership. Without that concession, the agency could have controlled a patchwork of land equal to about one-third of the airport.

For investors in Denver Airport bonds, the conversion of Stapleton will ultimately mean additional cash to help the city retire its $3 billion of debt on the new project.

When the city last sold construction bonds this fall, investors were told that as much as $75 million in net proceeds from the redevelopment of Stapleton could be received between 1995 and 2000 to help retire variable-rate subordinate bonds.

But no one interviewed this week could say when those millions might materialize. Dino, the mayor's aide, said that rents on buildings in the early years could yield cash flow that would help retire bonds for Denver International Airport. However, he could not estimate how much might be available or when.

He is not alone. "I'm sure it will make some contribution to debt retirement, but when it will is something I can't predict," said Gougeon, a top aide in the administration of the former mayor, Federico Pena. Besides, he added, "I don't think any investor bought these bonds with [redevelopment of Stapleton] as a major consideration."

Airport officials say they have always taken a very conservative view of when the redevelopment might produce revenues.

Gennifer Sussman, finance director for Denver International Airport, said that little revenue was expected through fiscal 1997 and that bond payments are not threatened if the Stapleton project does not live up to expectations.

"I anticipate we will be covered," she said.

Wall Street analysts say the redevelopment project has little implication for the new airport bonds, which are rated Conditional Baal by Moody's Investors Service and BBB by Fitch Investors Service and Standard & Poor's Corp.

"In the long term, it probably has more implication for the city's credit," said Adam Whiteman, assistant vice president and supervisor of Rocky Mountain ratings at Moody's. "There's a potential for an upside on the [general obligation bonds] if this works out."

For now, project officials, rating analysts, and bond investors are more focused on completing the new airport in 10 months. Parts of the nation's largest public works project are behind schedule, but that overall "we're really just about on schedule," Sussman said.

With an estimated $2.3 billion of the project under contract, Denver expects to contract the remaining $400 million of the construction budget in the coming months. The city estimates it is spending $130 million a month on the project.

Despite heavy snows, work crews this week were busy finishing work inside Concourse C, the smallest and first of three at the new airport, while major exterior work was coming along on other parts of the project.

While the airport expects to open with two major carriers operating hubs, the future is still murky. With Continental Airlines preparing to emerge from Chapter 11 bankruptcy protection, the airline has still not detailed the level of its operations out of Concourse A.

At the same time, city officials say Chicago-based United has said it expects to increase its traffic about 12% above 1992 levels as it moves from 30 gates at Stapleton to 42 gates on Concourse B at the new airport.

A United spokesman declined to comment on future operations at Denver, but Sussman said, "What they are clearly doing in their planning is gearing up for the new airport."

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