Denver Plans to Convert Former State Office into Affordable Housing

City Council delays $4.5M deal, seeking more details on the proposed redevelopment.

Apr. 14, 2026 at 10:41pm

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A nostalgic, cinematic painting of an old, two-story office building in Denver, with warm sunlight streaming through the windows and deep shadows across the facade, evoking a sense of urban solitude and the potential for revitalization.The proposed redevelopment of a former state office building in Denver's Capitol Hill aims to create new affordable housing units in a centrally located neighborhood.Denver Today

The city of Denver is looking to purchase a former Colorado Department of Labor and Employment office building in Capitol Hill for $4.5 million and convert it into affordable housing. The deal requires approval from the Denver City Council, which has delayed the initial vote as some members seek more information on the city's plans for the property.

Why it matters

This proposed redevelopment is an early example of how Denver plans to utilize voter-approved Vibrant Denver bond funding to invest in land and buildings for affordable housing. The centrally located former state office building presents an opportunity to create new affordable units in a neighborhood that has seen limited new housing since before 2020.

The details

The building at 251 E. 12th Ave. has been vacant for several years after the state downsized its office space. 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, whether through a ground lease or selling it to a partner with affordability covenants. The $4.5 million purchase price was not explained, as the building was valued at $18.1 million in late 2025.

  • The Denver City Council committee delayed approval of the purchase in April 2026, saying they wanted more information.
  • The council's finance and business committee voted to postpone the initial vote until May 2026.

The players

Lisa Lumley

The city's director of real estate.

Molly Scarbrough

Manages the Vibrant Denver bond program.

Stacie Gilmore

A Denver City Council member who made the motion to postpone the vote.

Chris Hinds

The Denver City Council member representing Capitol Hill, who supported postponing the vote.

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What they’re saying

“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.”

— Lisa Lumley, City's director of real estate

“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.”

— Stacie Gilmore, Denver City Council member

What’s next

The Denver City Council's finance and business committee will revisit the proposed $4.5 million purchase of the former state office building in May 2026.

The takeaway

This proposed affordable housing redevelopment highlights the city's efforts to leverage voter-approved bond funding to address the need for more affordable units, particularly in central neighborhoods that have seen limited new housing in recent years. However, the delay in approving the deal suggests the city may need to improve transparency and communication with the City Council on how it is identifying and selecting properties for these types of investments.