The city of Denver plans to buy a former Colorado state office in Capitol Hill for $4.5 million and use the property for affordable housing.
The building at 251 E. 12th Ave. has been vacant for several years after the state downsized its office space for the department. The building once hosted part of the Colorado Department of Labor and Employment.
City officials say they have a deal prepared to buy the property from the state. But they haven’t decided exactly how to use the building. The deal requires approval from the Denver City Council.
“We're working through whether we would do a ground lease, or actually sell it to a partner to own with a covenant on it,” said Lisa Lumley, the city’s director of real estate, during a Denver City Council committee meeting.
The committee members delayed approval of the purchase, saying they wanted more information.
What would happen to the building?
The building could be converted to residential, expanded or demolished, she said.
The money would come from the Vibrant Denver bond package — and it’s an early look at how the city could use voter-approved funding to build affordable housing.
Vibrant Denver included $45 million of debt-funded cash to invest in land, buildings and more for affordable housing and to reduce displacement of Denver residents.
Molly Scarbrough, who manages the bond program, said the office conversion will be one of five to seven investments in property purchases and site improvements.
The first investment will be taking an old Colorado Department of Labor and Employment office into affordable housing.
The building was valued at $18.1 million in late 2025. City officials didn’t say how they reached the proposed $4.5 million purchase price.
City officials say the building is in an attractive location — it's centrally located to several public transit options, including the future Colfax Bus Rapid Transit line, public resources and is in a part of town that hasn’t seen new affordable housing units since before 2020.
The land was selected by a committee that includes mayoral staff, department heads and other city officials. Sites selected for the bond have to meet certain criteria, like proximity to major city infrastructure.
The proposal was delayed by city council members.
Ultimately, the council’s finance and business committee voted to postpone its initial vote until May.
Some council members said the city’s process to identify the land for purchase wasn’t transparent. Some questioned why the city created a new committee for the bond’s housing spending without including any council members. Councilmember Stacie Gilmore made the motion to postpone, saying that she was not briefed by city staff.
“I would like to also know what the plan is and I can't trust the mayor's administration to make those decisions and then trickle it down to the council president and the two at-large members,” she said.
While Councilmember Chris Hinds, who represents Capitol Hill, said he felt like he was looped in appropriately, he supported the call for the housing bond committee to include council members and joined the vote to postpone the proposal.
