WAREHOUSE SPACE FOR GROWING MEDICAL MARIJUANA MAY SPARK BATTLE OVER
NEIGHBORHOODS' FUTURE

Developers and neighborhood leaders in Denver fear the push for
warehouse space for medical-marijuana growing operations will stall
efforts to turn industrial areas into trendy, urban art districts with lofts.

They say the surge in grow operations will reverse a decade of work
aimed at transforming blighted areas into walkable pockets of new
urbanism, such as the emerging arts district surrounding Brighton
Boulevard north of downtown.

Instead of lofts, coffee shops and art studios, they predict the grow
operations will create a situation where drab warehouses protected by
rusty barbed wire end up as king of the city block.

But medical-marijuana proponents fear new proposed regulations will
stifle an emerging economic power they say is propping up an ailing
real estate industry.

Denver City Council members are divided on what to do. Councilwoman
Judy Montero wants her colleagues on the council to rescind a surge
in agricultural husbandry permits that the city issued for grow
operations. She also is pushing for new regulations on the growers.

"This is going to be a huge, huge fight, a clash of the titans
fight," Montero predicted.

"We are at a tactical turning point for the futures of these
neighborhoods," she said. "They are doing their best to turn around,
to get the community that they want, to get something that is not
hard-core industrial."

On the other side, Council President Chris Nevitt and Councilman
Charlie Brown view Montero's proposal as a major intrusion into
private-property rights. Nevitt also is worried about setting a
precedent that could harm new warehouse marijuana grow operations
popping up in his council district in south Denver.

"I'm looking at these things as an economic development engine at a
time when most businesses are flat-lining," Nevitt said.

The council likely will tackle Montero's proposals in committee as
early as next month.

"The issue is simple," Brown said. "Are we going to end up zoning
someone out of business who has invested, in some instances, hundreds
of thousands of dollars?"

Mickey and Kyle Zeppelin, a father-son development team, view the
warehouses that house the new grow operations as a potential blight.
They fear the grow operations will harm their Taxi development along
the Platte River, where they transformed land surrounding a
once-shuttered taxi dispatch center into an urban oasis of eclectic
shops, technology firms and residential lofts.

In a letter to the council, Curt LeRossignol defended his River North
Properties five-year lease that provided warehouse space along
Brighton Boulevard to a cooperative of marijuana grow operators. He
told the council the total rent payments of $48,750 each month allows
River North to weather the economic downturn that he said stalled the
firm's plans for an upscale condo development.

"As we all know, in these tough times, we've all been enduring. It
takes money to make the wheel spin and see improvements happen,"
LeRossignol said in the letter. He did not return telephone messages
seeking comment.

The push for warehouse space for grow facilities is fueled, in part,
by a new state law that requires medical-marijuana dispensaries to
grow 70 percent of the product they sell.

City officials say a preliminary review shows that in 2009, the city
issued about 10 agricultural husbandry permits. By Oct. 27 of this
year, the city had issued at least 250 permits, with the surge
occurring mostly in June and July after the new law took effect.

Such permits are allowed only in areas zoned for industrial uses.
With industrial areas shrinking in Denver, the medical-marijuana
industry ended up also seeking permits for areas targeted by city
planners and neighborhood activists for transition from straight
industrial uses to mixed-use areas where new residential, retail and
office space is going up next to auto body shops.

An overhaul to the city's zoning laws, approved by the council at the
end of June, was intended to clarify the future land use for those
areas. That overhaul rezoned large swaths of land in the city to
encourage such mixed-use development.

When it passed the zoning overhaul, the council also passed a six-
month transition that allowed developers to pursue new development
under both the old zoning categories as well as the new ones until
the end of this year.

Montero said the large-scale grow operations are inconsistent with
the new land-use laws that the council approved. She said the
marijuana growers should have known they were taking a risk when they
moved into areas where residences are going up.

Nevitt, though, said the grow operations are less intrusive than
other industrial operators in the areas drawing Montero's concern.

He added that the state law requiring dispensaries to grow 70 percent
of their own marijuana means the city needs to support a robust
network of grow facilities.

"If you said every restaurant had to grow its own food, and then you
said you couldn't grow any food in Denver, you would kill all our
restaurants," Nevitt said.