Alterra's move to former Denver Post Building could face costly hurdle, letter warns of ski company lease obligations

Alterra Mountain Company's planned move into the former Denver Post building downtown could be more complicated than city officials have indicated, with the company's current landlord warning that the relocation could trigger millions of dollars in additional financial obligations.

In a Sept. 21 letter, obtained by CBS Colorado and addressed to Alterra's attorneys and copied to Denver Mayor Mike Johnston, the landlord's attorney outlined what he described as the company's continuing contractual obligations at Zeppelin Station in the River North Art District.

The mayor's office, however, says Alterra was already planning to leave its existing location and that Denver's involvement was aimed at keeping the company from leaving Colorado.

"Alterra was leaving that location, plain and simple, and we kept them from leaving the state altogether," said Jon Ewing, Johnston's press secretary. "Same thing we've said time and again, this was about keeping a major employer in Denver and in Colorado. Only reason either Denver or the state got involved", wrote Ewing.

The Sept. 21 letter, written by attorney Timothy Gordon on behalf of Alterra's current landlord,  says Alterra remains bound by a lease that does not expire until May 31, 2029, despite its publicly announced plans to relocate its headquarters to the city-owned building at 101 West Colfax Avenue.

"Tenant is obligated to pay Base Rent and Additional Rent throughout the entire term," Gordon wrote.

The letter says Alterra currently leases approximately 41,000 square feet at Zeppelin Station in RiNo, 3501 Wazee Street, and is responsible for base rent of approximately $133,227 per month, plus its share of building operating expenses.

Gordon specifically warned that Alterra's rent obligations do not end simply because the company moves out.

"The Lease requires rent to be paid 'absolutely and without any abatement, offset, counterclaim, deduction, or setoff whatsoever,'" the letter states.

The landlord acknowledges that Alterra has an early termination option, but says exercising it would require at least 12 months' advance written notice, that the company cannot be in default,  and that it must make a substantial termination payment.

Using a hypothetical Jan. 1, 2027, termination notice, the landlord estimates Alterra would owe approximately $1.5 million or more in termination fees, including unamortized tenant improvements, brokerage commissions, and four months of rent.

That would be on top of approximately $1.6 million or more in rent during the required 12-month notice period.

The combined financial obligation under that hypothetical scenario would exceed $3 million, according to the landlord's calculations. 

The landlord also raises questions about Alterra's ability to sublease its existing office space. It says the company cannot sublease any portion of its Zeppelin Station premises without the landlord's prior written approval. The landlord says no such approval has been requested or granted.

The letter warns that any attempt by Alterra to stop paying rent or abandon the premises without resolving its contractual obligations would be vigorously contested.

CBS Colorado shared the letter with a spokesperson for Alterra, but she did not provide any comment or response.

In a section specifically addressed to Denver officials, the landlord makes clear that it wants the city to understand the potential implications of the relocation.

"The City should be aware that Tenant is subject to a binding lease at Zeppelin Station that does not expire until May 31, 2029," Gordon wrote. "A relocation that disregards these contractual obligations could give rise to substantial claims by Landlord."

The letter adds that all parties involved in facilitating Alterra's relocation should understand the existing obligations before approving incentives or otherwise encouraging conduct that could result in a breach of contract.

In September, Johnston and Gov. Jared Polis announced that Alterra, the company behind the Ikon Pass and several Colorado ski resorts, would relocate its headquarters to 101 West Colfax. The move was intended to keep the company in Colorado after it had considered relocating to Salt Lake City.

Under the proposed agreement, Alterra would lease approximately 64,654 square feet in the city-owned building for 12 years. The city and state would provide millions in incentives.

The potential dispute with Alterra's current landlord raises questions about whether the company's departure from Zeppelin Station could involve additional costs beyond those already contemplated in the city's proposed agreement.

Gordon's letter does not assert that Alterra has already breached its lease. Instead, it puts the company and city officials on notice that the landlord intends to enforce its contractual rights.

The Denver City Council is expected to consider the city lease with Alterra at its Nov. 9 meeting.