But should the city be in the hotel business?

That was the subject of a recent debate between City Council President Cathy Reynolds and Dave Kopel, research director of the Independence Institute, a public policy research organization in Golden, Co. Kopel also is an associate policy analyst with the Cato Institute in Washington, D.C. and a columnist for the Rocky Mountain News and the Denver Post.

Reynolds says the city doesn't want to own a hotel, but it has no choice. She says that the private market simply doesn't exist to finance a convention center hotel. She notes the city, through the corporation it creates, can float bonds with a 5.5% rate, while it would cost a private developer 9.5%.

Also, private investors demand a 25% to 30% return on their equity, which the city doesn't need, she notes.

The hotel will generate more than 10 times as many new room nights for downtown than the expanded convention center would do alone, she told a group of about 90-civic leaders attending the City Club meeting at the Brown Palace hotel.

Kopel, however, started with a more esoteric, fundamental problem with the hotel.He says cities should not be getting involved with private enterprises such as owning a hotel. He claims that it violates the spirit of both the U.S. Constitution and the Colorado Constitution.

Also, while technically if the hotel fails, the only recourse of bondholders would be to go after the hotel, so there is no risk to the city's general revenue.But Kopel says that is just smoke and mirrors. The truth is, he claims, that if the hotel does not perform well enough to pay off its debt, the city will bail out the hotel rather than risk having its bond rating lowered.

Several people in the audience questioned whether the city should be undertaking a project that the free market finds too risky.