Mayor Mike Johnston’s first major initiative to revitalize downtown Denver faces an expedited timeline.
The Downtown Development Authority — a financing tool created to fund Union Station’s 2014 redevelopment with future tax revenues the project was expected to generate — is nearly done paying off the transit hub project’s debts and will soon cease to have a reason to exist.
The city has until December before the loans are paid off to ensure the $40 million in annual tax money already generated since its inception will still be available to invest, Denver Principal City Planner David Gaspers told an advisory board on Wednesday.
The mayor announced in May his vision is not only to preserve the authority but to vastly expand it to cover the rest of downtown , instead of just Union Station and the blocks around it.
The expansion of the authority is expected to create a $570 million pot of money to invest in development and improvement projects over the next decade for Denver’s struggling urban center, according to city projections.
Last week, the proposal passed its first important hurdle, as the City Council approved a ballot measure to let residents, property owners and businesses within its current boundaries vote on the expansion in November.
The expansion itself would not raise taxes in the area, according to the city. A different proposal from the mayor to increase sales taxes, which estimates say would raise $100 million to fund affordable housing, would do that if approved by voters .
But the city still needs to finalize a plan of development, a legal document guiding how the money should be spent, and put together a formal agreement between the city and the authority on how it’ll operate.
The proposed plan details extensive uses for the money, such as converting downtown’s empty office buildings into housing, improving or creating more public spaces, transportation infrastructure projects and supporting art and cultural institutions.
When the drafted plan created by the city and approved by the authority’s leaders went before the Denver Planning Board — a volunteer group that advises the mayor and City Council on zoning and land use issues — its 11 members spent more than three hours deliberating on a conundrum.
How do they recommend changes to a massive plan made under hastened circumstances without jeopardizing the opportunity to raise hundreds of millions of dollars to help downtown Denver, which officials and others say is in dire need of intervention?
The city is facing a tight deadline, Gaspers told the planning board.
The plan of development is a document required by state law to set guidelines on how a downtown authority should spend its money.
If the authority doesn’t adjust the current plan drafted in 2008 before it pays off the Union Station loans to expand how money would be used, Gaspers said, the $40 million in annual tax revenues already generated would be lost for good.
In short, the deadline is Dec. 1.
The process of creating a plan typically takes about a year or more, Gaspers said.
But under Denver’s expedited process, he said the city had to create a draft in approximately three months so it can be finalized with the City Council’s approval before Nov. 4, a day before about 2,500 eligible voters will decide on whether to expand the authority's boundaries or not.
Between May and August, city workers hosted a dozen meetings with business chambers, neighborhood organizations and community stakeholders and conducted an online survey on what city residents want from a future downtown that garnered more than 1,700 responses.
“Everything has been accelerated just to get to this timeframe,” Gaspers said.
Planning board members expressed several concerns about the plan — from how quickly it was created to whether it adequately addressed how to spend the money in an efficient manner and if it had enough safeguards to prevent politicizing of development projects.
But there was one thing all the board members agreed on: Downtown can’t afford to lose the money.
“Our fear is that if our recommendations go to the City Council,” board member Rachel Marion said at the meeting, “we don't want to blow this up.”
Any changes to the amended plan would have to be approved by the authority, discussed by the planning board and passed by the City Council.
If councilmembers want changes to the plan based on the planning board’s recommendations, it would have to go back to the authority and the process to approve it would start again.
There’s not much time to make edits to the plan so it can be finalized ahead of the deadline.
The document can still be adjusted after it’s finalized. The draft under discussion is a heavy modification of the original 2008 plan.
But there's also the risk it might not come back to the planning board's table for years.
Still, board Vice Chairman Fred Glick said it is clear they have opinions on the draft and it is their obligation to advise the city on where they stand.
“I think we need to put them out there with the understanding that they may or may not act upon them in this initial round,” Glick said.
In the end, they decided to put forth a list of recommendations on changes they’d like to see in either the current draft or to be considered in future changes, on the condition it doesn’t interfere with the plan getting passed.
How might the money be spent?
The mayor, who took office more than a year ago, inherited a downtown dealing with rising office vacancies, struggling retail businesses, a massive renovation project of the 16th Street Mall disrupting the central business district and homeless encampments.
It also saw several high-profile shootings.
Johnston made it one of his 2024 priorities to improve the economic center of the region.
The city commissioned an economic study in March that found many parts of downtown meet the criteria to be considered “blighted” — especially in Upper Downtown, where most office buildings are concentrated.
Clusters along the 16th Street Mall are considered unsanitary and unsafe due to a high number of assaults, public drug use and biohazards, a study done by consulting firm StreetSense found.
Denver’s two street grids along the South Platte River and Cherry Creek that meet in downtown also contribute to less mobility and create “unusual lots and intersections,” according to the study.
The DDA’s latest draft plan proposes five key areas of investment to reverse the area's trends: new development and adaptive reuse, economic opportunity and job growth, parks and public spaces, arts and cultural activations, and transportation.
The document does not name any specific projects to put money into, but rather is a framework for the authority to follow in approving what applications can get money.
It does cite examples, such as converting empty office buildings, building more housing, adding childcare amenities to retain employees and residents in the area, creating new parks and playgrounds, and planting trees to have more shade on sidewalks.
Applications for the money are expected to open in 2025, if the expansion is approved by voters.
Private developers and city agencies can both apply for the money, said Adeeb Khan, Denver’s executive director of economic development.
Worries over how the money will go out
The draft plan outlines that the city’s finance manager and economic development director would have the final say on which applications get money. The authority board will act as advisers.
This arrangement rang alarm bells for some planning board members.
“If everything's turned over to the city manager of finance and these other city departments, I feel like there's the potential for a conflict of interest there,” board member Mary Coddington said at Wednesday's meeting.
The board noted it seems easy for the city to use the tax-increment financing funds to pay for basic city needs outside of the city’s budget.
Khan told the planning board that the city’s finance department won’t apply for the authority’s funds to avoid conflicts of interest. The document also outlines the city setting a list of criteria for projects to show they’ll provide an economic impact for downtown.
One new bike lane may not be sufficient for funding, he said, unless it can prove to be economically transformative for the region.
“That's how things will be measured,” Khan said. “In terms of 'What is this going to do for the economy downtown?' 'What is this going to do to generate revenue?' 'What is this going to do to increase the foot traffic that we have downtown?'”
Glick said he is worried the city’s influence would slow getting dollars spent and Marion said she wants to see some funds allocated for staffing of the authority not employed by the city to handle the requests.
“I know often dealing with the city can be time consuming,” Glick said. He then asked, “Does planting it within the city change and make it harder for us to get those dollars deployed?”
The city’s economic development director said the intention is to keep the process streamlined since any funding over $500,000 would require Khan’s department’s evaluation to go before the City Council regardless.
Councilmember Chris Hinds likened the system to how the city has divvied up more than $300 million in federal pandemic money from the American Rescue Plan Act, with the City Council requiring a strategy before approving any large grants.
“Want to make sure that at least we're in the car, if not at the driver's seat, on how those funds are allocated,” Hinds said.
After hours of discussion, the planning board voted to recommend approval of the draft plan of development to the City Council.
In their list of changes they’d like to eventually see, the board members mentioned excluding language on who will evaluate and select projects, a plan for how the authority’s funds could be used to have adequate resources to accelerate the deployment of nearly a half-a-billion dollars, and clarify that city applications should go under the same criteria and processes as those from private entities.
The board decided to send the recommendations on Wednesday, instead of waiting two weeks until its next meeting, to send the message to city leaders that it needs to be approved swiftly.
“This should be the question: 'Can you live with this?’ " Glick said. “Not 'Is it perfect?' Can everybody live with it?”
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