Downtown tax district plans to buy Denver Pavilions mall under $37 million deal

The Denver Pavilions open-air mall would be purchased by a special city taxing district charged with helping revive downtown under a $37 million deal announced Tuesday by city leaders.

The property, which opened in 1998 on two blocks along the 16th Street mall and was valued at $140 million a decade ago, had a major loan set to come due in July as downtown’s retail market has struggled.

The proposed acquisition of the property, which is owned by Gart Properties, was announced at an afternoon news conference at 16th and Glenarm Place attended by Mayor Mike Johnston, Downtown Development Authority board chair Doug Tisdale and City Council President Amanda Sandoval. The long-term plan is to come up with a mixed-use redevelopment vision for the site and sell the Pavilions to a buyer that will implement it.

“This allows us to be specific about the user experience on this site,” Johnston said of the impact of the district’s purchase.

Officials said they hoped to step in before the mall’s buildings could deteriorate, and they said the larger site — which includes two surface parking lots toward 15th Street — offers redevelopment potential for condos, other housing or a hotel. But the mall will keep its current tenants, which include Maggiano’s Little Italy, a Regal movie theater, an H&M store and a Lucky Strike bowling alley.

The council will have the final say on the deal, a process that’s likely to take two to three months, officials said. The agreement was approved by the DDA’s board Tuesday afternoon. Officials said that in addition to the purchase price, the DDA could spend up to $8 million on property improvements, leasing and redevelopment planning.

As of March, BusinessDen reported, the Pavilions’ spaces were 73% leased, with notable vacancies.

The authority oversees a voter-approved tax district that uses a portion of tax revenue generated downtown to support projects that benefit the area. Last year, downtown-area voters approved an expansion of the district’s boundaries and gave approval for the authority to take on up to $570 million in new debt to pay for revitalization efforts.

The district’s setup means that the city can buy the Pavilions without tapping its general fund — which has been cut amid a budget crisis — or “burdening our taxpayers,” Tisdale said.