The 17th street types climbed the stairs of Jennifer Jasinski’s new hotspot Euclid Hall Bar and Kitchen one evening a couple of months ago. The event was the fifth anniversary of St. Charles Capital, a Denver boutique investment banking firm whose partners have been central to Colorado’s financial community for years. • The guests munched on oysters on the half shell and Chateaubriand; St. Charles—whose clients are in banking, health care, technology, and manufacturing—was generous, but not conspicuously so. “Managing director Wes Brown told me he thought it had been awhile since anyone had thrown a party in this town,” one attendee said.–David Milstead

With good reason. Colorado went through a wrenching economic downturn from 2002 to 2003 that was more pronounced than the national recession. We had just bounced back, it seemed, when we found ourselves down and out, yet again, with the Great Recession of the past couple of years.

5280 January 2011
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For now, there are signs that, like five years ago, we will climb out more slowly than other parts of the country. Even as economists have pronounced the national recession over, Denver and Colorado are still losing jobs, albeit at a slower pace than before. And Coloradans’ personal income fell in 2009 for the first time since the Great Depression. “We just have not come back out of the hole we’d been in,” says Patty Silverstein, chief economist at Development Research Partners Inc.

And then there is real estate. Although Denver and Colorado have avoided some of the horror stories of Western neighbors Las Vegas and Phoenix, the foreclosure phenomenon that wracked Denver’s poor communities and the outlying suburbs two years ago has now been infecting more established urban neighborhoods. Scores of Denver homeowners find they can’t sell their current homes for enough to avoid cutting into equity and sometimes even have to bring money to their closings.

Amy Shonstrom, a Realtor with Perry & Co. who focuses on real estate in central Denver, estimates she’ll end 2010 doing 11 percent fewer deals than in 2009—and 30 percent fewer than she closed in her peak year of 2007. She remains hopeful, however, that the Federal Reserve’s continued attempts to stoke the economy “will give people optimism. We’ve got to change the attitude, especially with the [record-low] interest rates.” After all, the economy is the product of attitude, of billions of actions by millions of people who buy, sell, and transact. If more people believe things will get better, and then act on that belief, the more likely things will actually get better.

The St. Charles Capital party may have been the first in recent memory for the 17th Street bankers, but more broadly, among Denver’s entrepreneurs—the businessmen and women who are starting new ventures and seeking ways to celebrate it—well, the grand opening party feels like it’s right around the corner.

“In my universe, there’s absolutely an uptick in the economy,” says Wendy Aiello, Denver’s doyenne of such celebrations, who estimates she’s seen a 27 percent increase in events in the fourth quarter of 2010 compared to the same quarter of 2009. “You should always use public relations and marketing agencies as your measuring stick, because we’re the first to see it on the way up, and the first to see it on the way down.” Silverstein adds that the renewable energy and bioscience sectors, while small in Colorado, have been expanding, and health care never seems to shrink.

It is these success stories that are providing hope that better times lie ahead. Entrepreneurs have to be an optimistic lot—nobody succeeds in business expecting to fail—and most of this activity must be born of the hope that things simply have to be getting better. And, in many ways, they are, given how far the national economy fell. But it’s still a long way back to normal. —David Milstead

Is Boulder the Silicon Valley of the Rockies?

by Cheryl Meyers

For tech entrepreneur Kimbal Musk—who made his way to the foothills after stops in California and New York—the People’s Republic is even better.

Kimbal Musk is one of those everything-he-touches-turns-to-gold kinds of guys. You may know Musk as the founder of Boulder’s eco-bistro the Kitchen, but opening acclaimed restaurants is Musk’s second act. Before Boulder, he was a Silicon Valley success story—he sold his first company, Zip2, to Compaq in 1999 (yep, right at the height of the Web 1.0 boom). Shortly thereafter, he became an angel investor for PayPal—you do the math—and today he sits on electric roadster manufacturer Tesla Motors’ board of directors.

After his tech windfall, Musk studied at the French Cul-inary Institute in New York, and not long after 9/11 he moved his family to Boulder to settle down and cook. What he didn’t expect to find was a thriving tech scene. “Boulder is the up-and-coming tech community in the country. Keep a lookout,” Musk wrote in 2009 in the Huffington Post. In fact, Boulder inspired him to launch a company, OneRiot, that delivers relevant, real-time ad content to the Twitter and Facebook communities. We caught up with Musk to chat about Boulder’s thriving tech scene.

What makes Boulder such a great incubator for tech startups? Boulder’s strength is its community. The startup community is very tight and supportive. From TechStars [a mentorship and seed money program for startups] to investors like Brad Feld [venture capitalist and big man on campus], Boulder is an amazing place to find the peers and financing you need to build a great company.

You lived and worked in Palo Alto, California, the heart of Silicon Valley. How does Boulder compare? Boulder is a community of peers that are working hard and are hypercompetitive. But it is also a place where everyone wants you to succeed—you’re not just rooting for your own company, but also for Boulder itself. Palo Alto is the epicenter of the technology business, but it is much more mercenary in its culture. Employees will hop from company to company at a whim. In Boulder, your employees and teammates are in it for the long haul.

You once wrote of Boulder, “We take Silicon Valley to school.” How so? I think Boulder is what Silicon Valley wishes it could be in many ways. The entrepreneurial spirit in Boulder is raw and honest, and the community is rooting for you. I love Silicon Valley and am involved in many companies there, but my first choice to start a company would be Boulder every time. A great example is TechStars, which was founded in Boulder and has now been replicated around the country. Other communities want what we have.

What is your advice to a young tech entrepreneur looking to start a company in Boulder? Start by taking a serious look at TechStars. It’s an amazing environment to test your ideas, connect and learn from peers, and get invaluable mentoring from the Boulder tech community. If you are a serial entrepreneur, Boulder has everything you need from employees to financing. It’s all already here. Just get started.

Smack in the Middle

by Jennie Dorris

What it’s like to be middle class in the Mile High City circa 2011.

My new husband and I recently combined finances. He bought a six-pack of Tecate; I gathered our paperwork and a laptop; and we sat down to figure things out. After we calculated how to pay off his credit card and combine our savings into shared checking and savings accounts, we each cracked open a new beer and stared in shock at our final budget.

We were, and are, much to our surprise, upper middle class. Nationally, the middle class is defined as households that earn $25,000 to $80,000 (which makes for a pretty plump middle). Colorado’s median household income is $58,321. We earn about $75,000 or a little more, depending on how freelance projects add up. But upper middle class feels a lot different than we thought it would.

Working my way up as an artist—I am a professional musician and college professor—I used to budget for a little more than $1,000 a month. Although that’s well below “middle class,” it was above the poverty line, which is $10,830 a year for individuals. Back then, I went Dumpster diving for my furniture. I drove an old car that didn’t start in the heat of summer. I worked 16-hour days and countless hours at unpaid internships. I went out with friends and kept my bar tab low by drinking dollar PBRs. But I didn’t have savings, health insurance, a 401(k)—or a very well-stocked pantry. (I had to eat bean sandwiches for a week once because I was between paychecks and only had a loaf of bread and a jar of black beans in the house.) After a car accident, I thought my life was over—not because I was injured, but because I was hit by an uninsured driver and I couldn’t afford to repair my ride.

When my husband and I were dating, I lived in a 400-square-foot alley house, and he lived in a small two-bedroom rental with a roommate. He had an old Chevy Blazer with an engine that had just seized. I had a decade-old Subaru with a primered hood and a horn that didn’t work. But he was climbing the ladder in journalism, and I was starting to make it as a musician. Slowly, surely, our incomes went up.

But, from a practical standpoint, not much was changing for us. When his roommate moved away, I moved into his apartment. We still live there and pay the bargain-basement price of $600 a month in one of Denver’s best neighborhoods. We got the bulk of our furniture from a yard sale across the street. The rest we found sitting outside a Dumpster near DU. We have no intention of moving to a better space, and, right now, we can’t afford to buy new furniture.

So, after essentially tripling our combined income, why haven’t things changed more? Although we make 75 grand a year, we still can’t afford that cute Victorian down the street, we can’t afford to work shorter days, and we are just starting to save for a new car. But we do have health insurance, emergency savings, and AAA coverage. Being middle class, I’ve learned, means a car accident or a broken bone won’t break us. It means we still lay awake worrying about our careers, but not our bills. And it means that we still drink cheap PBRs, but that we haven’t had bean sandwiches for dinner in a very long time.

Test Your Financial Literacy

by Joe Lindsey

We’re all trying to be smarter about our money. How does your financial IQ add up?

    You can request a free credit report from the three independent credit reporting agencies (Equifax, Transunion, Experian):

  • A) Once a year
  • B) Once every three years
  • C) Once every three years per agency (i.e., one per year, but not from the same agency)
  • D) Never
    You have loans to pay off. Assuming you are making the minimum payments on all of them, which do you try to pay off the fastest?

  • A) $4,000 left on a car loan at 6 percent
  • B) $150,000 mortgage at 5.5 percent
  • C) $20,000 student loan at 4.5 percent
  • D) $6,000 credit card balance at 12 percent
    You have a fixed-rate mortgage and are looking to refinance. The time is right for a refi when:

  • A) Interest rates drop two points from your current rate
  • B) You can recoup your closing costs in 12 to 18 months
  • C) You’ll save more than $100 on your monthly payment
    You just bought a house and get a flyer in the mail offering to enroll you in a twice-monthly payment program, which purportedly saves you a good chunk of interest. You should enroll.

  • True: Compound interest is what kills you on a mortgage loan, and biweekly payments cut that in half
  • False: The way most of these plans are structured, you don’t see any interest savings
    You have two credit cards, one with a $1,500 balance at 12 percent and one with a $3,000 balance at 14 percent. You get a solicitation for a balance transfer to a new card at a 4.99 percent introductory interest rate. Consolidating the balances on both cards to the new one is a good idea.

  • True: The lower interest rate on the new card will save you hundreds in interest in a year
  • False: The low rate is just a teaser and will reset higher than your existing cards
  • It Depends: The issue isn’t the old rate or the new rate, but rather how quickly you can pay off the balance
    In your auto insurance policy, which provision pays damages to your own car when you’re in an accident?

  • A) Comprehensive
  • B) Liability
  • C) Term
  • D) Collision
    You should get a life insurance policy if:

  • A) You own property
  • B) You have family who rely on your income and cannot replace it
  • C) You have a pet
  • D) You don’t have a will
    Your credit card was stolen and someone racked up a number of charges. How much are you liable for?

  • A) $0
  • B) $50
  • C) $500
  • D) As much as the thief charges
  • E) It depends on when you report it
    Your debit card was stolen and someone went on a shopping spree. How much are you liable for?

  • A) $0
  • B) $50
  • C) $500
  • D) As much as the thief charges
  • E) It depends on when you report it
    If you have negative information on your credit report, how long does it stay there?

  • A) A year
  • B) A minimum of three years
  • C) A minimum of seven years
  • D) Forever

ANSWER KEY

1. A—You have the right to a free credit report yearly from each agency.

2. D—Did you pick the loan with the lowest balance? Most people do. But higher interest rates cost you proportionately more no matter the balance. If you pay extra on the credit card balance versus, say, the car loan, the 6 percent difference is like getting a guaranteed 6 percent return on an investment.

3. B—Some part of any refi savings is resetting the loan term to 30 years. So focus on the fixed, nondeductible cost: closing. If the savings on the monthly payment over a 12- to 18-month time frame exceeds the closing costs, go for it. Why that time frame? It’s risky to plan major life decisions further out than that; a job loss or change in family size could force a move, and then you’ve lost money.

4. False—Most biweekly payment programs still make the loan payment to your lender monthly. Any interest savings for you comes in the two extra payments a year. And, most programs have sign-up fees. If you’re in a position to pay extra on your mortgage, pay more on the principal each month, which does affect interest savings.

5. It Depends—Always read the fine print: When does that teaser rate reset? What happens if you still have a balance then? Before switching, take a full accounting of any rate changes or fees on the new account versus the old ones, and be honest about your ability to pay off the balance before the rate resets.

6. D—Collision covers your car if you, say, back into a concrete column in a parking garage. On older cars, it doesn’t make sense because the payout covers only the value of the car, no matter the damage. So once the policy premiums per year exceed the maximum payout, drop collision coverage.

7. B—Life insurance is meant to provide funds for your spouse and dependents that your income normally would. If you have no immediate family, a small policy to cover funeral costs may be helpful, but the best thing you can do for your financial planning would be to have a will on file and durable powers of attorney.

8. B—By federal law, your liability on a lost or stolen card number is limited to $50.

9. E—Debit cards have different protections, and your liability depends on how quickly you report the loss or theft to your card’s issuer. If you report it before the card is used you’re liable for $50 or less; within two days, you’re liable for up to $500. After 60 days, you’re on the hook for the full balance.

10. C—Missed payments, so-called charge-offs (when a creditor lists a debt as uncollectable), and even foreclosures stay on your credit report for at least seven years, according to regulations under the Fair Credit Reporting Act. But some negative information stays longer: Bankruptcies are listed for 10 years and unpaid tax liens for seven or more years.

My Own Private Firefighter

by Joe Lindsey

Boulder’s historic Fourmile Canyon blaze raised a difficult question: Should anyone be able to contract personal firefighters?

In the hours after the Fourmile fire blew up in Boulder County, but before it destroyed 157 homes and became the most expensive wildfire in state history, trucks filled with firefighters streamed up the foothills to the blaze perimeter. Most were local or federal firefighting outfits, but a small group of 13 firefighters, in five engines, had a special mission: to protect specific homes from the conflagration.

The firefighters were contractors for Chubb Group of Insurance Companies wildfire defense service and were headed to the homes of policyholders who had opted into wildfire coverage. During the Fourmile blaze, three Chubb policyholders lost their homes, but the homes of another 10 were saved. These private firefighters shut windows to keep flying embers out and managed small flareups on the properties.

Reactions to the hired guns, not surprisingly, broke down two ways: People who said I wish I could have had that, and, people who wondered Who do these people think they are? “When I first heard about it, I thought, ‘No way; that’s impossible,’?” says Pat Minniear, a 22-year resident of Four Mile Canyon, who lost his home in the blaze. “The fire was happening on so many fronts that it needed as much help (to fight it) as possible,” he says. “If you come into a fire zone with that many structures threatened and you’re that good at your job, you should help the entire effort.”

Chubb’s firefighters—hired via a contracted company named Wildfire Defense Systems Inc.—can be made available to join the general effort. But, says WDS president David Torgerson, contract services like his are only called in as a last resort, after all public resources are used first. “We’re adding resources,” he says, “not taking them away.”

“I hold nothing against Chubb,” says Four Mile volunteer fire chief Bret Gibson. “Their contractors were respectful and integrated well with the public firefighting effort.”

In fact, Wildfire Defense Systems firefighters likely helped out the community more than it knows by saving those 10 homes. The local mountain fire districts are staffed by volunteers, with shoestring budgets funded by property taxes—the same taxes that normally come from homes now burned to the ground. “We have roughly a 50-percent reduction in value in those three districts,” says Boulder County assessor Jerry Roberts. That means a massive reduction in revenue for 2011.

Donations from a benefit concert and successful mill levy ballot issues will offset much of the hit for 2011. But some of the burned properties won’t contribute significant property taxes for years to come, drawing out the pain for fire protection districts. In a twist, the homes that Chubb’s firefighters saved will contribute to the area’s coffers.

Although the Four Mile Fire Department must replace nearly $500,000 in destroyed equipment, including a firehouse and one of its seven engines, Gibson believes his fire department is in decent shape for 2011. It’s the years after—when residents rebuild, but tax revenues still languish—that have him concerned about his 45-member volunteer department’s ability to respond to another major fire.

Chubb’s firefighters will be there to defend their clients’ homes, and Chubb’s impressive save rate will likely attract more policyholders, which may help preserve even more homes the next time around. But while Gibson is thankful for the help, the privatization of protection concerns him. “In the early days of this country, private fire companies would respond to a house fire and bid to put it out,” he says. “And sometimes they’d put in their own hydrant, which the other companies couldn’t use, of course. I wonder if maybe we’re not going backward a little bit.”

Definitely, Maybe

by Luc Hatlestad

After a few down years, a prominent Cherry Creek developer sees rays of hope in 2011.

When Western Development Group unveiled its NorthCreek complex in 2008, it epitomized high-end, mixed-use new urbanism. Then came the recession. As 2011 dawns, the Cherry Creek North outpost has sold most of its tower residences (which primarily range from the low $1 millions to high $4 millions) but still hasn’t sold any of its super-swanky flats or brownstones (low $2 millions to middle $3 millions). Even so, WDG partner David Steel sees reasons to be “cautiously optimistic” in the coming year.

What have you been working on lately? We’ve gotten some action in properties that have been on hold for future development, which is very encouraging. Retailers have been moving into Cherry Creek North or moving within the neighborhood to improve their location or better their rent.

Have you been able to refill the vacant spaces? Some of them. We own a half-block on the east side of Columbine Street between Second and Third avenues. The rents are cheaper there because when we redevelop the site—about two years from now—we want everyone to leave at the same time. We’re going to do another mixed-use project there, but we’d like to sell more units at NorthCreek before we start, because we don’t want to be competing against ourselves.

Are you buying other properties in the area? We’ve discussed sales with other owners around the neighborhood, but a lot of them still think their properties are as valuable as they were in 2006 or 2007. That’s not the reality today, but we’ll continue to talk because we think that long-term, Cherry Creek North is a very good place to be.

So what’s your outlook for 2011? We’ve been looking around the Front Range—particularly in Boulder—and have been steering clear of the mountain properties; we’re open to a lot of different things. I think we’ll see a modest upturn. We’re always the half-full kind of guys.