The Downtown Development Authority’s real estate buys won’t just cost the purchase price.
They will also remove the properties — most notably, the Denver Pavilions mall — from the city’s property tax rolls, eliminating more than $2 million that helped finance local schools and municipal services this year.
The DDA, which is tasked with revitalizing downtown, is independent of Denver but operates with city oversight. And it is exempt from paying property taxes, according to Laura Swartz, a spokeswoman for the city’s finance department.
Last fall, voters expanded the boundaries of the DDA, which previously had included only an area around Union Station and the Market Station project, which replaced a Regional Transportation District bus station. They also authorized $475 million in bonds to pay for projects seen as transforming a downtown with high vacancy rates after the pandemic and years of construction on the 16th Street Mall.
Last week, the DDA board voted to pay $37 million for the Pavilions, the struggling downtown mall owned by Denver-based Gart Properties.
And in July, the board agreed to spend $23 million for two parking lots behind the mall along 15th Street from Brookfield Properties, the New York-based real estate giant.
The City Council still needs to approve both purchases.
This year, Denver Pavilions had a property tax bill of nearly $1.7 million, not counting an additional $95,000 that city records describe as “liens/fees.”
And Denver levied property taxes of about $475,000 against Brookfield for the two parking lots, records show.
Denver Public Schools receives about two-thirds of property taxes collected in Denver, Swartz said. The city receives the remaining third.
Denver Chief Projects Officer Bill Mosher has said that the DDA opted to buy the Pavilions rather than see it go back to a lender after Gart defaulted on an $85 million loan.
Lenders who take ownership of properties are still responsible for paying property taxes. For example, the Denver Energy Center, a two-tower office complex in downtown Denver, has been owned by JPMorgan Chase since 2022 and had a $2.2 million tax bill this year, records show. Chase is under contract to sell the property to a developer this month.
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