Denver couple stopped from building family home amidst landmark dispute, potentially out millions

A Denver couple is trying to move forward with plans to tear down and rebuild a home they purchased earlier this year. But some people in the Washington Park neighborhood where it's located believe the current house has historical significance and should be preserved.

It's one of the most desirable lots in all of Denver. Tony and Robin Kohake's plan was to build their family's dream home to raise their four kids in. But, shortly after, that dream -- and millions of dollars -- are potentially squashed. The fate of the home is now in the hands of Denver's Landmark Preservation commission.

"This floor is growing some of the mold spores coming in from the roof," said Tony Kohake, as he and his wife Robin showed CBS Colorado the interior of the home. "They said the mold levels are like 15 times what is livable."

A damaged roof has led to mold growth and squatters have torn apart walls.

"Every aspect of the house is end of life, you know, electrical, HVAC, everything," said Tony.

That's just some of the reasons the Kohake's planned to tear it down and rebuild.

"We finished our architectural plans in May, and then contacted a builder, and they submitted an application for a demo permit," said Robin Kohake.

From there they say they were notified someone had submitted a notice of intent to designate it as a landmark. Meaning, the Kohake's can't begin construction and instead were forced into mandatory mediation.

"We'd never heard of this process, and unfortunately, there was nothing disclosed on the sale about it," said Tony. "We found out that the previous owner had gone through this process. We would have never bought the property if it would have been disclosed."

In Denver, anyone can place an application on someone's else's property if it meets certain requirements such as history and architecture. A landmark preservation public hearing to discuss whether they'll approve it -- therefore protecting the home from ever being demolished -- is set for Tuesday, Sept. 16 at 1 p.m.

"I don't think we've had one non-sleepless night since this process started," said Tony.

In the meantime, the Kohake's have opted to put the house up for sale for $3.1 million, the amount they've poured into the purchase and ensuing process.

"It'd be a break-even point," said Robin.

The hope is to find a potential buyer who might want to restore it, but there's a glaring problem. According to the county assessor's website, the home itself is only worth $1,000.

"The rest of the value is in the land, and that's what we thought we paid for," said Tony.

The 37-page application details reasons why the home should be preserved and reasons it qualifies. It states: "The house has been home to generations of prominent Denverites who have had notable influence on culture and development." It also states it "possesses distinctive visible characteristics of the Queen Anne style," and that "physical attributes make the house a recognizable and defining feature of the East Washington Park neighborhood."

"It's not a good example of a Queen Anne anymore because of all these modifications," says Tony who says the home has a significant number of modifications including additions built by a previous owner and a stucco exterior.

While a judge and state legislators have lived here, another previous owner, CBS Colorado found, was a known member of the Ku Klux Klan. Membership ledgers uploaded by History Colorado clearly show his name and the home's address.

"It's something you wouldn't wish on anybody," said Robin.

The Kohakes also say they've had issues with squatters, including one that would not leave until police arrested him. They later found he was a convicted felon, living right across the street from the school next door.

The application will be discussed during Tuesday's public hearing. From there the commission will decide whether to send it to city council for a vote.