Denver budget woes deepen as major leaseholder stops paying $650,000 in monthly rent

The city of Denver's largest tenant, the leaseholder for the Denver Post building at 101 West Colfax Avenue, stopped making its monthly $650,000 rent payments to the city in August. And with late charges, the leaseholder is now about $2 million behind in rent, according to an exclusive CBS News Colorado investigation.

"It is a large amount of income for the city, and if we cannot recover that, we will have to turn around and find more budget cuts," said Denver City Councilwoman Sarah Parady.

The city of Denver bought the Denver Post building in early 2024 for $88.5 million, saying the 303,000 square foot building would eventually be needed to house Denver's court system. The Denver City Council approved the purchase by a 9-4 vote but several council members were skeptical of the price the city was paying, the timing of the purchase and the need for the building.

Lisa Lumley, Denver's Director of Real Estate, told council members the deal would be revenue neutral as the monthly $650,000 payments from the master leaseholder, DP Media Network LLC, would cover the city's financing charges.

But in August, the leaseholder, DP Media Network LLC, stopped making its monthly rent payments, according to a notice of default obtained by CBS News. For August, September and October, it has not only not paid rent but has also accrued late charges of $32,477.51 for each month, bringing the total amount owed to just over $2 million in unpaid rent and late fees.

The city was banking on nearly $8 million in rent from the building this year.

CBS News emailed four lawyers representing DP Media Network seeking an explanation of why the lease payments stopped. None of them responded.

Jon Ewing, a spokesperson for Mayor Mike Johnston, responded to the CBS News Colorado investigation with a written statement. "Denver pays its debts on time and DP Media Network should do the same," wrote Ewing. "We are working with the tenant to restart payments and intend to recover every penny we are owed."

Laura Swartz, Communications Director for Denver's Department of Finance, said there had been no written communication between the city and the master leaseholder beyond the default notice issued Aug. 25. "We don't typically decline interviews, but in this case we need to," wrote Swartz. "The City's goal is to see a positive outcome from this situation, for which legal discussions are underway."

Denver City Council members said while they have been in the throes of budget cutting for months, the mayor's office never informed them of the significant revenue loss. Parady said she only learned of what was going on from the CBS News Colorado Investigation.

"If you're asking if I think city council should be aware of an income stream of $700,000 a month that stops coming in during a time of budget crisis when we just laid off $10 million worth of employees, the answer is 'yes,' I absolutely think I should get that information from internal not from a reporter on the outside," said Parady.

Another council member, Kevin Flynn, said he too "didn't know anything about it" until he heard from CBS News Colorado.

"Before you told me about it I wasn't aware the lease payments weren't being made," said Flynn.

He voted in favor of the building purchase saying, "It looked like a very good deal as long as the payments are being made."

Flynn called the loss of monthly revenue for the city "pretty substantial because its a large amount of money."

"I have to say, I wish I had known by now," he said.

With the city facing a $200 million budget shortfall in 2026, Parady noted: "The loss of that amount of money is something we would have to account for one for one by cutting something else -- personnel, contracts or services. I would say it's upsetting."

She said she now wonders what kind of due diligence the city did regarding the master leaseholder for the Denver Post building and "wonders about warning signals" and if they are "a bad player."

Making the situation even more unusual, the city of Denver actually leases space in the building it owns, and is paying DP Media Network LLC, the master leaseholder, almost $166,000 every month for that space.

"The city is fulfilling its contractual obligations for this lease as we are required to," wrote Swartz. "This is part of the reason why we are currently working this as a legal matter with the tenant, and will not have more to share until this is resolved."