GLENDALE — Five property owners, each with a single square foot of land in their possession, are having an outsized influence over development in the city, according to a lawsuit challenging the arrangement.

Summit Hospitality LLC, owner of the 121-room Staybridge Suites hotel on East Virginia Avenue, contends that Glendale stacked the election deck to push through a proposed $150 million dining and entertainment complex on the banks of Cherry Creek.

Summit claims that Glendale used the property owners — each of whom has a piece of land about the size of a small pizza box on the edge of a public park — as “carefully chosen agents” to ensure a 7-3 victory in an Aug. 4 election.

That election established a Downtown Development Authority, which under state law can levy taxes and issue bonds to finance downtown improvements.

The authority aims to create the Glendale 180 complex, and the city would need those five property owners to win another crucial election in November. That’s a proposed $200 million bond issue that would help finance infrastructure for Glendale 180.

In Summit’s lawsuit last month, the hotel chain claims that the five parcel owners “are not qualified electors” because their tiny land holdings are essentially useless. None of the property owners are residents, and two work for the city.

The five plots of land are on a grassy sidewalk median on South Cherry Street, a situation the hotel chain describes in its lawsuit as a “subterfuge of property ownership.”

City officials call the hotel chain’s lawsuit frivolous. The city on Thursday entered a motion to dismiss the complaint.

City attorney Jeffrey Springer said the 14.3-acre development authority was established with the guidance of third-party legal counsel and that there was “nothing unusual or untoward about it.”

Summit claims that by state statute the city should have had only one vote in the August election. The ballots of Summit and another business operating in the district, both of which voted against formation of the DDA, were canceled out unfairly by the additional landholder votes, it states.

“Summit is the only tax-paying entity left in the entire district,” said Tim Flanagan, an attorney representing the hotel chain.

Summit says the city violated the Taxpayer’s Bill of Rights, or TABOR, by creating voters to “outnumber the taxpayers” in the DDA zone. It wants the DDA declared null and void.

Multiple calls to Summit’s headquarters in Austin, Texas, went unreturned. The chain owns 90 hotels in 21 states.

“Gun to the head”

Glendale deputy city manager Chuck Line said the five property owners acquired their parcels from the city three years ago, when Glendale established metro districts for its long-sought downtown development, then known as Riverwalk.

The creation of small landholders is a common mechanism by which to form metro districts in Colorado and meet the ownership requirements laid out in state law, according to Ann Terry, executive director of the Special District Association of Colorado.

Terry said it appears Glendale’s metro districts were set up properly and in accordance with state law.

The city didn’t have a choice but to send those property owners ballots in August when the election for the DDA took place, Line said. The city also sent three ballots to registered voters living in Staybridge Suites, but those ballots were never cast, he said.

Untenable position

He called Summit’s position a “little disingenuous,” given that 71 percent of the land in DDA is owned by the city.

“They own 23 percent of the land in the DDA, but they want 66 percent of the vote,” Line said. “From a fairness point of view, the votes that were cast are pretty proportional.”

Mayor Mike Dunafon was more blunt, calling Summit’s lawsuit “nothing but a gun to the head of the taxpayers.”

He said the hotel chain has made it clear it wants to sell and is using the DDA election as a way to extract a higher price for its land.

“This is about how much money they can get for their property,” the mayor said. “The lawsuit is not about fairness, it’s about money. It’s a game.”

Line further pointed out that when Summit bought the hotel from the previous owner several years ago, it was aware that the plans for Glendale’s envisioned downtown dining and entertainment complex did not include a hotel where the Staybridge is now.

Flanagan, however, insists the hotel property is not for sale. He suggested that Summit has been put in an untenable position by the city, which has eminent domain power to acquire the property in its urban renewal district.

“Summit is located in an area that the city has declared blighted, which is the first step in an urban renewal condemnation process,” Flanagan said. “This action would be a step in protecting our property.”

Previous disputes

Summit’s lawsuit is not the first dispute to arise over Glendale 180, a 270,000-square-foot commercial undertaking that would boast 25 bars and restaurants, including a “common consumption” area where adults can carry around to-go alcoholic drinks.

In May, owners of Authentic Persian & Oriental Rugs packed a Glendale City Council meeting with protesters who decried a possible condemnation by the city of 6 acres at the project’s west end.

The property owners, the Kholgy family, rejected a July offer by the city to purchase their land for $11 million.

Glendale later publicly stated that it would not use eminent domain to acquire the property, instead choosing to move ahead with Glendale 180 on a smaller footprint.

But Summit Hospitality states in its lawsuit that by leaving the Kholgy property out of the project, the city was able to “gerrymander” a smaller downtown development zone in which it could “minimize opposition by taxpaying property owners.”

John Aguilar: 303-954-1695, jaguilar@denverpost.com or @abuvthefold