Thanks for joining us for this weekly joint meeting of the Mayor and Denver City Council.

Follow along as the mayor and city council members hear updates from city agencies and projects, discuss important city matters, and hear about what's happening across the Mile High City.

Huh?

Yeah, that's right.

So I currently have like I just got the one.

It's only related to my purpose.

I have what we'll be with different options.

I'll send you our two.

Good morning, great to see you all.

Welcome to Mayor Council.

Thank you for joining us.

Chris.

We will start with introductions with the distinguished gentlelady to my right.

We will begin.

I can never take Cashman's spot.

Sitting in the seat, that's all.

Uh good morning, everybody.

Sadena Gonzalez Carez, one of the council members at large.

Good morning, I mean, I'm sorry, District Five.

Good morning, Darren Watson, fine district nine.

Good morning, Diana Romero Campbell, Southeast Denver District Four.

Jamie Torres, West Denver District Three.

Uh, great.

Thank you all so much for being here.

We have both the general session agenda to talk about the downtown development authority.

We have an executive session, but we will start with any announcements that members have for colleagues or the listening public.

Council of Beatrice.

Um, I would like to share we're celebrating Halloween all weekend in district seven.

We have the Halloween parade on this Saturday, the twenty fifth at six PM, rain or shine.

It goes from Sixth Avenue to Alameda on South Broadway.

We also have Athmar Park Rec Center is having a carnival craze candy giveaway on Sunday.

And I also wanted to share that local artist, Bethel Moncardine is having an event in the Fine District Nine, uh, for the Day of the Dead, and that will be at the National Western Complex.

And that will be on Sunday as well.

And on Sunday, the South Pearl Street is having a little kiddies um candy giveaway, not kitties, but kids.

Other announcements, thank you, Councilman Hines.

Um, this week is uh the governor's conference.

GovCon is in Colorado Springs.

I'll be there uh representing the Sasquatch and Quincenten Centennial Commission.

Um, if uh just rolls off your tongue.

So at this point, um, I think it's uh part of the quiz, you know, to become a commissioner, you have to have it roll off your tongue.

But uh uh yeah, so if um if any of you were going to GovCon, uh please I'd love the opportunity to uh share with you about the 250 uh 250th anniversary of America, 150th anniversary of Colorado, and I'll be there at several um uh 250 150 commission.

We'll have several panels, and I'll be uh leading one on Friday morning.

Great.

Thank you for representing us.

The other announcements, Councilman, Zalsky Terris.

Thank you, uh Mr.

Mayor.

Um so I announced this last night, and since uh my partner in Krem is not here, he usually does the lovely intro.

But um myself and Councilman Cashman have been working on um the effort around our um our uh neighborhood organizations, our registered neighborhood organizations, and and what we've been doing is reaching out to community members via like going to different events or have staff have been to over 40 events over the summer.

We've held four um uh in-person uh meetings in the kind of different quadrants of the city, and then we have one final um neighborhood engagement workshop.

That's what we've been calling them that will be taking place virtually.

So it's our kind of last big push here to continue to get uh feedback.

We've gotten over eleven hundred um survey responses on our survey that we've done since the beginning of the summer.

And so this uh next week, October 29th, 6 to 8 p.m.

If you go to uh our Denvergov.org and go to your city your voice.

Um, there is a link there to register for the virtual meeting.

Thank you.

Thank you so much.

Any other announcements?

Yes, President Pro Tem.

I'll do it because we were just full in it last night.

Um, happy birthday to presidents and the not yet officially.

It's her birthday week uh on Thursday.

Um but we also have Councilman Cashman that was celebrating a birthday.

I walked in.

Why did I say cashman?

Yeah, but I think it has a we've also had uh councilwoman out there, your daughter, everybody seems to be.

October is the best one.

And you do you have a birthday in October?

You're in November.

November.

So Jim wanted to again.

Thank you.

And I said Sawyer, yeah.

So your daughter, yeah.

On the 23rd, same with my of October.

Yeah, on Thursday, same.

Do join party planning.

To have a 17-year-old, but somehow I have a 17-year-old.

I have two 18-year-olds who just got their ballots.

Oh wow.

Shocking for the first time.

I was like, why do we have so many ballots?

We have to show them to the routine.

Uh okay.

Uh other announcements.

Wonderful.

Uh, on our session today, we're delighted to have Bill Mosier here, uh, Chief Projects Officer who's also leading uh the work around the downtown development authority, grateful obviously for Madam President who's both on that board as well as uh in her council role, and so we have multiple experts who are before us, but Bill, I know you've done individual briefings with the council members, but thank you for being here to walk us through some of the upcoming proposals we're excited about with the DDA.

Sure, thank you.

And uh, already met with some of you and have uh the rest of you on our schedule.

This is the presentation we've been walking through, so I'm just gonna go through this very quickly to leave some time for questions.

There's no remote, so I'll just go like this when it's a slide change.

But as you all know, uh the work of the DDA is managed by the plan of development that city council has adopted.

Uh, this is for the expenditure of tax increment funds that are limited to the uh downtown area.

So they're a special source of funds that can only be applied to uh projects within that uh within that boundary.

Um I've gone through with all of you multiple times our priorities, and this is really where the DDA has been focused.

Uh this project that we're talking about today, which will be Denver Pavilions, addresses all three of these.

One is 16th Street, the other is uh low occupancy building, and thirdly, and probably most importantly it's activating the ground floor and particularly activating 16th Street.

So this has been guiding uh our investment today.

Uh, this is the boundary of the DDA.

Uh it is expanded into upper downtown as noted.

Uh we've approved the DDA has approved 11 projects.

All of these projects are coming to you in some form, both in as inclusion uh to include them in the district, uh, but also uh for actual approval of the different projects, and they're all at various stages.

Uh as you know, last night you dealt with subject center, McNichols, and Skyline Park, and so those contracts will be coming to you through the parks department.

Pavilions is the latest one that we're bringing to you over the coming weeks.

We're through all the process coming to the last step, which is city council approval.

So you'll be getting this in the next uh four to six weeks.

Skipping two slides.

Um this is the Denver Pavilions in yellow.

Uh the two Brookfield lots that the DEA approved a couple months ago are in red.

Uh as noted on this slide, Denver Pavilions is about 350,000 square feet of retail.

Uh it's about 60 percent.

This says 68 percent leased.

We actually have one tenant who's moved out that is still paying for it, so that's the 68% lease, but we consider it 61% occupied, so about 40% vacancy.

Uh we have about 25 tenants uh there and about 800 parking spaces are underground.

And then uh as you know, on the red Brookfield lots, there's uh 33,000 square feet each, about 100 parking spaces each, and Brookfield controls two-thirds of the parking revenue from the garage, which is uh a key for us in acquiring the Brookfield lots so that those can be redeveloped, and those can be developed according to B4 zoning as office, retail, residential, or hotel.

And so we'll be pursuing those with the private sector coming up.

So about a thousand parking spaces all together.

So the next slide uh really defines the existing conditions that we found uh in talking about uh pavilions.

One is as mentioned 40% occupants or 40% vacancy.

Pavilions has really been impacted by two things over the last five years, and I have said it publicly and I'll say it here.

Uh, kudos to both the ownership group and to the tenants for hanging in there because they've gone through COVID and now 16th Street construction, and we still have 60 percent of the tenants uh there hanging in every day, and now 16th Street is open, so they're starting to see some increase in business.

We have not seen a particular increase in the employment uh traffic in uh pavilions.

Right now, there's probably on any given day 40 percent uh work from home, and so that market has been suffering.

So I really define pavilions in three ways.

One is the convention center and the hospitality um hotels, uh, that is really what's put pavilions that has saved pavilions, and most of the tenants are very um reliant on the convention center and on the hospitality business.

There we've really been hurt by the lack of employment in the area, particularly in upper downtown, so that's hurt, and then there's a lack of uh nearby housing.

So, for the most part, pavilions is reliant on the metro area residents, not so much on the downtown area residents.

So, as we dived into pavilions, uh which the DDA has done really since it started at the beginning of this year.

Looking at projects, we had the threat of a lender takeover.

Uh, there's been no uh loan payments uh since mid-summer.

Uh there's an 85 million dollar loan outstanding.

We reached agreement uh just very recently to buy pavilions for 37 million dollars on an 85 million dollar loan from the lender.

Uh so uh we are part of the reason of the DDA doing this is to avoid the bank-owned optics of another property going into receivership on uh 16th Street, and also the uncertainty that that would give us for the next year or plus as to what would happen to a key asset on 16th Street.

So the acquisition price is mentioned is 37 million.

We are asking city council for approval up to 45 million dollars, and that's to allow for a hold period.

Uh hopefully we don't need it for three or four years, but we would have the ability to uh do any leasehold improvements if a new tenant came along that we wanted in 16th Street while we're in this period of time.

Uh it also allows for some money to be spent on deferred maintenance, particularly in the parking garage, but we also need to get a handle on what the impact of energized Denver is on this property before it goes back to the private sector.

Um, so and we also have cash flow.

So between positive cash flow from pavilions, uh positive cash flow from the parking lots, and this eight million dollars of uh additional potential funds.

We can uh invest in the project and move the project forward over the coming years.

Uh so that's uh the reason for that.

If it if we go over $37 million, we need to go to the DDA board for approval to spend that money.

If we go over 45 million dollars, we'd need to come back to city council.

Next slide.

Uh, just spend a minute on our next steps, uh, and I'll summarize these.

We've gone into more detail in our briefings, but by year end, we want to close.

That's job one.

Well, we need city council approval by year end.

We then need to close by year end, and we hope to have a process uh defined for soliciting uh community ideas and expertise both in the retail architectural and development realm uh for what our next steps would be.

And the goal would be that by the first part of next year that we would start managing some of these short-term uh capital improvements.

We would retain new marketing and leasing uh efforts, and we'd uh certainly maintain positive cash flow.

We've got a couple of tenants that we need to go deal with uh to have them retain.

So the goal would be within a year, less than a year, that we would have two to three different community ideas using uh design and retail expertise for what the redevelopment of pavilions and the lots could be in conjunction with each other, and to hopefully within less than a year, issue an RFP for developers to come in and uh and hopefully buy uh the two full blocks.

Uh that will be dependent on interest rates and the market rate, obviously, uh the market situation, but that's the goal is uh to to within a year be um starting to deal with uh who the new ownership group of pavilions and the two lots would be.

The next slide is just the basic acquisition plan.

I'm sorry, you can go to the next slide that I just outlined.

Uh so retaining a new leasing team, uh, maintaining the momentum of 16th, pursue critical maintenance, including garage repairs, and execute on any tenant renewals that are immediate.

And if any new retail or restaurant uses come up, we'll have the funds to actually lease it.

Uh we envision implementing a holistic parking plan for the two blocks and just basically re envisioning pavilions and offer the two lots plus pavilions for uh resale to the private marketplace.

We have gone through uh as the DDA board does on every project, making sure that we meet the plan of development.

So the next slide uh gives you the check marks of the various categories that pavilions meet.

Uh and then lastly, on the next slide, uh what's your next steps are?

So we'll be coming to you with inclusion.

Uh the committee has already approved the inclusion of the two Brookfield lots.

We'll be coming to Biz Finance for that inclusion process in the coming weeks for pavilions, and then we'll be bringing an intergovernmental agreement to you for 45 million dollars to transfer the DDA funds uh to DDA so that the acquisition of pavilions can occur.

So with that, I'd be happy to take any questions.

Thank you so much, Mr.

Mosier.

I have councilwoman Torres and then Soya and then Alvidres all in the queue.

Councilman Torres, you want to start?

Thank you, Mr.

Mayor.

Um, did we get it appraised?

We do not have an appraisal.

Uh the acquisition price is based on the bank's book value, which they went through a very lengthy process uh to determine that uh value, and so we're relying on that.

We are buying it for the bank's book value.

Okay, 37.37 million.

Valuation six years ago was 140 million.

So it was financed for 140 million in night in 2026.

Okay.

Um annual maintenance and all rolls into, I think, just like the district owns it.

Yes.

The DDA will own it.

The DDA will own it.

They will also be in charge of the of any of the maintenance procedures and things like that.

And we are retaining the existing crew, there's existing staff there, and some people will return the group that are on staff to manage uh the parking garage, to manage the elevator systems, to to take care of tenant requirements, uh, and that cash flow is accounted for in the in the budget.

Okay.

Um the process for lot development.

How will the DDA undertake that?

Well, the hope is that we would offer pavilions with some general guidelines for what the community would like to see pavilions to be, and the two lots, and I think uh we won't specify what the development has to be per se, but it obviously I doubt it will be office, but it could be office.

Block 162 is right next door.

Uh, but certainly hotel and residential are potential.

It has P4 zoning, so it has great zoning associated with it.

The ideal situation would be to sell the two lots and pavilions to one developer to do a mixed use uh redevelopment that would literally be worth hundreds of millions of dollars to the city from a tax base standpoint.

But if somebody wants to buy pavilions separately and then buy uh there's two other buyers for the two lots, we could also have three different uh buyers.

And any revenue would go back to the DDA, and then the money would go back to the DDA, which would end up back in the city.

Okay, thank you.

Uh just one thing to add to that, uh, Council Torres.

Because one of the things that I found exciting about this opportunity is when we looked at some of the challenges that the pavilions currently face, it's around activating the second and third floor retail in that site, and so one of the reasons why we didn't want to leave it as is because when you have an out of state private realtor that owns it, there are a couple things that could have, as vacancies go down, they could have boarded it up and just taken the losses and not care because they had other assets, or if you just try to bring in cash flow, you put a bunch of 7-Elevens on the ground for things that are high revenue generations but are not the look and feel you might want for a place like the pavilions.

But the real opportunity was if you could link the two pieces of property, the lots on the back and the pavilions, which for 25 years, many folks in town have been trying to acquire both of those and couldn't.

Our ability to develop both means we can go out to the market and say, give us a pitch for what you would do with these four square blocks together.

And the ability to build either a hotel on the back or an apartment building would mean the second and third floor of that apartment building or hotel would empty right into the back of the pavilions, and so then it's almost like a hotel in Vegas where the second floor you walk through and you then you all of a sudden hit a shopping mall.

That means you can activate pavilions from both sides as opposed to having just the I mean, one through 16th come up to the second floor and through.

So I think our hope is that DDA will put out uh RFPs for developers to pitch ideas for what they'd like to see, and we anticipate there being three or four options we could share with the public to all say here are different dreams for what could happen at this site.

What are people excited about or not excited about?

So I think there'll be uh chance for I think public visibility and input on that as we get ideas.

I have council, and then I'll be dressed and hot.

Thanks.

My questions were covered.

I wanted to just make clear the city is not buying this asset.

The DDA that is doing this, but correct city council authority is required just like as if it was a Dura property or something like that because of our partnership with the DDA.

Correct.

Thank you.

The DA requires it to own it in the DDA's name with DDA funds, but all projects, regardless.

Well, any project over $500,000 is approved by city council.

Really appreciate that.

Just wanted to be very clear about that because I've seen some misinformation out there, and so thanks for that.

Thank you for that clarification.

Uh Council Mel Vidres.

Thank you.

Um you mentioned the 37 million, but then like a 70 million dollar figure.

What was the 70 million dollar?

No, the 37 million dollars is the acquisition price.

It was due to the bank.

So the bank's obviously taking about 42% of its money.

Okay.

Uh and then 45 million dollars is the um amount we're asking city council approval.

So we'll have about $8 million potential to uh tackle any problems that come up over the next few years.

And we've budgeted for a longer hold than we want to hold.

We don't want to do something and end up have the market fall apart, and then we don't have the funds to take care of it.

So we're we want to get rid of it in the short term, but we can maintain it in the midterm.

So you're planning in case it doesn't sell immediately.

Okay, um, who will be the operator for the leases and for managing the building?

Well, DDA will be responsible for owning it and managing it.

Uh right now we would contract with the existing property management company that's on site, which is Guard Properties, has people there.

We will we will add to the leasing term.

But this will not be a city responsibility.

That would be a DDA responsibility.

BDA will be the DA will be the owner and lease the same thing.

Okay, and maintain the facility.

For the tax portion, I know that you all have talked about being willing to pay the property taxes.

Are you paying them per the mill to the different entities?

Like the portion that goes to Denver Public Schools will continue to go to Denver Public Schools.

We are um we are being assessed currently by the assessor's office, and we will pay our taxes.

And the tenants are required to pay taxes through their leases, and so uh we did not want to give the tenants any kind of a tax break over any other tenant on 16th Street.

So we'll continue to pay the taxes.

And that will be as long as the DDDA owns it, they will continue to pay taxes per the assessment and the bills as they need to be.

Okay, um, and that we will we will see that in writing, right?

It is in it will be in the IGA for pavilions.

Um the current tenants are they continuing their leases?

Yes.

Okay, if we could have the details of what those leases are when they expire, that would be helpful.

Yes, we have a we have a rent roll that is part of the it's actually an attachment to the purchase and sale agreement, so that will be attached to the IGA that you'll see.

Great, and that will have the cash flow statement as well.

It will not have cash flows.

We're not releasing the terms of the lease.

We're we're releasing the well, we're releasing the terms, the names and terms, and in other words, when the leases expire, we're not releasing their rental rates.

Um, as part of the PSA.

What about our costs?

Uh we have a five-year uh expenditure plan.

And we will see that expensive.

And we can.

And it's a it's what that plan is is the anticipated uh cost of various deferred maintenance if we choose to do that.

And for instance, the parking, there are parking repairs that are needed.

Um we include those parking repairs over a year time period, which would have greater impact on the parking garage, or we could do those over four years.

We've allocated it for two years, but but the current plan is to do it over four years so that we maintain the number of parking spaces at a maximum, but we'll be evaluating those as we go for it.

And what is the what is what is the financing source?

I know we're using DDA funds.

Are those funds that we got in advance for bonding them out, or those will be subject to financing of the tax increment from the DDA?

Okay, and so we will be you will be approving that financing in the coming weeks.

Okay, and we do we have the details of that financing?

Uh I don't know where that is at in your process.

It's about 160 million dollars of financing from so and we will pay up front, we won't be making payments to the cash okay at closing.

Um what other due diligence did we do on the facility itself?

We've had uh we've hired an analyst who has gone through uh there's technical called Argus runs, which are all the financial um details of all the leases and when payments are made and what the net nets are, and what so we've gone through all of that and we're going through uh three different due diligence efforts right now.

Uh prior to closing.

Well, actually, four.

We're doing surveys of both properties.

We're doing title commitment reviews of both properties, we're doing phase one environmental of both properties, and we're doing a building condition survey of pavilions.

There is a building condition survey that's a couple years old that we've uh that we have knowledge of, and so we're following up on that, and that's um basically deferred maintenance of roof parking, uh conveyance, meaning elevators and escalators, uh heating and cooling systems, that's okay.

Great.

So I have thank you.

Uh Councilman Heights.

Thank you, Mayor.

Um, thank you for the presentation.

Also, the briefing before, um, as the mayor had mentioned about floors two and three, the elevators are antiquated, crummy, they're slow, so um, there's an extra deterrent for people who don't want to use the stairs or can't use the stairs uh to get to the second and third floors.

So um can you talk a little bit about um the service parking lots and their relationship to uh pavilions itself, particularly the parking spaces uh beneath the pavilions?

The parking spaces, two levels beneath pavilions, 800 spaces.

The parking on the surface lots is 200 spaces, so there's a thousand parking spaces, it's all operated by the same parking enterprise, and all the revenue is pooled, and then two-thirds of that revenue goes to the Brookfield ownership group.

So that will go into the DDA once we buy the Brookfield bots, but that's part of the problem so far, just buying the Brookfield lights or just buying the pavilions is that um the there's a real co-mingling relationship between the pavilions and parking lots, and that's how we're able to do something that other folks have not been able to do in the overall effort to repeat what the mayor said is with the acquisition of the two lots and pavilions, the DDA will control two full city blocks, and the goal would be to redevelop those in concert with each other.

You're exactly right, councilman's the earlier portfolio of projects that DDA brought forward included the Brookfield lots as the first step.

Once we acquired those lots, we then had two-thirds of the parking revenue that shared beneath pavilions and rookfields.

So we were the natural partner to be able to do both, but that unity of those two properties is what makes the opportunities really exciting.

The last question um uh let's say we purchase it for 37 million, it's um valued at something higher than 37 million.

We don't know because we don't have a um uh you know valuation just yet or an appraisal.

Um, let's say we buy it for 37 million and it's valued something higher.

We would sell it at the appraised value.

Um I'm assuming not at the I think the DDA will sell it for the highest price it can get to meet the plan that we want to achieve, and uh so that those sorry, you're right.

We as in the DDA, not we as in the city.

So thank you for the uh correction.

Um the um uh those additional funds, let's say, so for 38 million, go back to the DDAs.

We could theoretically get additional money to reinvest in other products.

Is that right?

Yeah, I think we believe in our downtown getting better.

We should hopefully improve the financial position of the DDA at the end of the day.

And as you noted, Councilman, that allows you to extend the timeline of investments you could keep making in downtown by having these some of these dollars be revolving almost like revolving loan funding.

Uh, next up we have Councilman Perry.

I'm actually okay because Councilman Balvedra's got me.

So, thank you.

Last question.

Um, yes.

Uh, as far as the insurance goes, I know the city typically self-insures.

Will this be a self-insurance?

Okay.

So it won't be outside insurance, correct?

Okay, we're working with city risk management on that.

Any other questions for Mr.

Mosier while he's here?

Thank you.

All three very quick.

Councilman Watson.

I don't have a question.

I just want to say, you know, thank you, Bill and your team for.

I think I had three briefings on this, and um, really providing clarity on what I think is like uh an important opportunity for the DDDA to demonstrate um the commit to the upper part of downtown.

And so um you answered my questions in those multiple, multiple meetings we held.

Um, and I appreciate the thoughtfulness of the two lots as well as the Denver Pavilion and the piece that we're discussing on parking, which is one of the primary sources of revenue that can be long term for the DDA and paying back for delay maintenance.

So uh appreciate that uh site and appreciate uh the time your your team spent.

Thank you.

Thank you, Ms.

Mayor.

Council President.

Okay, so I'll do it.

Uh DDA board member.

Thank you, Bill, and the team.

They've been wonderful to work with.

I've asked lots of the same questions that you all have.

Um just want to say that and also thank this body for adding two more voices to the DDA.

So it was me and um three other men, four men, and now it's me and two other women and four men.

And there one is a resident of Downtown Number.

She lives in downtown number.

And one is a business small business owner.

And so it will be great to have a varying voices on the board now.

And so just want to say that I think moving forward, we're gonna you're gonna see um a different type of robust conversations, and I think that that lived experience of having someone and the two women are women of color, um, having them be part of the board will make um a big difference moving forward, and just as Councilwoman Sawyer said, this is not the city.

We will get into, I don't know if you mentioned it, Bill, but we'll get into a MO IGA or MOU and IGA, and so it's separate funds, and the success of these projects, those ones listed, will mean the success of the DDA, similar to when everyone said we couldn't invest in Union Station and it wasn't going to work, and we were able to pay that off 15 years in advance, which got us to this position right now.

We um I keep going back to that um reality that everyone said that union station wasn't gonna work, and it did, and it we're here now, and then also I keep going back to the amended plan that we all passed in December, and I keep reminding my colleagues we have to keep going back to that plan.

I think every meeting I bring up that plan, and I say that's because that is the authority that was given to the DDA members, and we have to do our best to stick within that criteria because we passed that criteria.

Um, so it's interesting wearing both hats, but I do think that um this was a great investment.

It's gonna be a lot of work.

Um, but thank you all.

And if you have any questions for me individually, I'm happy to take those on as well.

Thank you.

Thank you.

Thank you, Council President.

Uh, thank you so much, Bill.

Great to see you.

Appreciate all your help.

Um, all right, that is our only general session event.

Thank you all so much for joining.

I will now entertain a motion to move us into an executive session pursuant to DRMC 234A, sections 346 and 7 for the purpose of receiving legal advice discussing the potential settlement of pending litigation against the city and discussion of the acquisition sale or use of real estate by the city.

All those in favor?

Any opposed?

Great.

We will enter executive session.