Mayor Mike Johnston’s administration on Thursday announced the expansion of the Downtown Development Authority to allow the city to invest up to $500 million in the area, which has been struggling to attract visitors since the pandemic hit.

Standing outside Union Station, Johnston said increasing the area of the taxing authority that was created for the city’s iconic transit hub would open up more money for projects in the heart of Denver. It’s the first major step the mayor is taking this year to address his 2024 goal of creating a “vibrant” downtown. 

The expansion would also keep the authority alive, since it is close to paying off the bonds for the project it was originally created for.

Currently, the Downtown Development Authority covers Union Station and the blocks around it. The expansion would nearly triple the geographic area to cover most of downtown from Colfax Avenue, Grant Street, Speer Boulevard and 20th Street.

Downtown’s struggles began when office workers deserted the city center during pandemic shutdowns and the area saw a rise in homelessness, drug addiction, crime, and businesses leaving, Johnston said.

To get out of the “doom loop” many other cities in the U.S. are experiencing, the mayor said the city needs a “uniquely Denver solution.”

“If we successfully activate that tool,” Johnston said, “that will allow us to invest more than $500 million into the investment in downtown.”

The expansion first needs to be approved by the Denver City Council, which is expected to decide whether to expand the authority in the fall. If the authority were expanded, the city could begin financing projects by the start of 2025.

“We know that’s possible. We’ve already seen it happen right here on this block,” Johnston added. “This is now our opportunity to take that vision and extend it to all of downtown.”

Creating a vibrant, safe and affordable city — specifically downtown — is one of the mayor’s top goals in 2024 and which also includes tackling homelessness, violent crime and affordable housing.

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Johnston previously has said that downtown is in an “existential fight” for its identity and he told development and housing professionals at a real estate conference in March that the next year-and-a-half will be a critical time to renew downtown’s vibrancy.

To save the Central Business District, he said the area needs to become a “Central Neighborhood District,” where it would rely less on catering to office workers and more on being a place people live, work and visit.

The city has been experimenting with adaptable reuse, a pilot program in upper downtown and East Colfax Avenue to convert old office buildings into housing. That presents a complicated set of problems, as standard office buildings have inconvenient floor plans for housing. For example, many housing units might not have windows or get daylight. Not only that, converting buildings is expensive and developers are hesitant to do so without subsidies.

Johnston said some of the authority’s funding could go toward converting unused office buildings, adding more affordable housing, beautifying more public spaces and investing in childcare services for parents working downtown.

The Downtown Development Authority funds projects through tax increment financing or “TIF,” which means it collects sales and property taxes within the area to invest in infrastructure improvements. The idea is to generate a steady stream of revenue that would be used to borrow money for projects.  

The authority was created in 2008 to finance the renovation of Union Station in time for its centennial anniversary in 2014. The transit hub project cost nearly $500 million in federal loans that the TIF was used to pay back. Union Station is currently undergoing a lighter renovation, including expanding the Crawford Hotel lobby and adding more modern light fixtures.

Regional Transportation District board member Doug Tisdale said the authority’s expansion is necessary to keep it alive, as the bonds from Union Station investments are set to be paid off as soon as next year.

“At that point, we wouldn’t have a particular reason to exist,” Tisdale said. “The mayor saw this as a tool that was so impactful and so successful. Let’s carry it forward and expand the footprint of the DDA.”

The authority would take on more debt with bonds to finance downtown projects including around the 16th Street Mall, Tisdale said, and pay it off with taxes generated in the area.

The city will begin this spring with getting public input from residents, businesses and developers on what projects they want to see funded through the authority. If the City Council approves the expansion, applications for projects are set to go out at the end of this year or the beginning of 2025. 

Downtown Denver Partnership CEO Kourtny Garrett said the expansion could be a “historic” moment for the city’s core — now that it has a new way to finance needed upgrades.

“Now, as we expand its application throughout other areas of vulnerability, particularly since the pandemic,” Garrett said, “we see this as truly a transformative moment for our city.”