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Denver's Government Is Growing — Some Parts of It Faster Than OthersEXPAND
Jay Vollmar

Denver's Government Is Growing — Some Parts of It Faster Than Others

In March, the City and County of Denver launched its first-ever Office of Storytelling, led by Chief Storyteller Rowena Alegria, a former Denver Post journalist and longtime adviser to Mayor Michael Hancock. Modeled after a similar program created by the City of Detroit, Alegria and her team are charged with telling the city’s story through projects like I Am Denver, a multimedia series that “captures Denver’s yesterday and today for tomorrow,” according to a press release announcing the initiative.

The Office of Storytelling is just one of at least a dozen new city agencies and offices established or proposed by Hancock during his two terms as mayor.

Typically, these offices are unveiled in headline-grabbing announcements that promise strong, decisive action on high-profile issues. Shortly before Hancock launched his 2015 re-election bid, the mayor held a press conference at City Hall to announce the Office of Behavioral Health Strategies, an agency that he said would help Denver “lead the way” in tackling issues of mental health and substance abuse. A year later, his administration announced the Office of Housing and Opportunities for People Everywhere, which it said would “craft a coordinated and comprehensive strategic road map” to address homelessness and affordable-housing issues.

But while city government has expanded rapidly in recent years — the number of municipal employees has grown by over 20 percent since Hancock took office in 2011 — some of these newly established offices have languished without sufficient staff or resources to carry out their missions. Many of them have been quickly absorbed by previously existing departments; barely a year after it was established, the three-person Office of HOPE was reorganized under the Department of Economic Development and Opportunity (DEDO), and its director, Erik Soliván, abruptly resigned.

These new entities employ about forty full-time employees, a small fraction of the nearly 2,000 workers added to the city’s payroll in the past eight years. Much of the growth in the size of city government over that time period has been driven by staffing increases in long-established, little-understood departments like DEDO and the Department of Community Planning and Development. Both offices have grown by more than 80 percent during Hancock’s two terms, while General Administration, which includes the mayor’s office and the city attorney, has grown by 48 percent, and the Department of Public Works has grown by more than half.

Over the past several years, the city’s hiring spree has seen it gradually outgrow its environs at City Hall and the Wellington E. Webb Municipal Building. All or part of at least seven agencies have moved across the street to the old Denver Post Building at 101 West Colfax Avenue, where the city now leases more than 120,000 square feet of office space on four different floors; most of the paper’s staff has been relocated to its printing plant in Adams County.

The city’s expansion is far from over. Hancock’s 2019 budget, released last year, called for the hiring of another 260 full-time employees spread across Denver’s eleven cabinet-level departments. And in the run-up to May 7 municipal election, the mayor is again proposing the creation of several new offices, including a Department of Transportation and Infrastructure that would replace and significantly expand Public Works. (Voters would have to approve that plan, first floated by Hancock in 2017, through a charter amendment on the November ballot.)

Overall, the City of Denver now spends nearly $1 billion annually on salaries alone, up from $600 million just eight years ago. While conservatives might decry the city’s ballooning payroll as big-government bureaucracy run amok, city officials, for their part, defend the staffing increases as necessary to keep pace with Denver’s rapid growth. The population, after all, has grown by about 15 percent since Hancock took office; some 100,000 new Denverites means that city government has that many more permits to issue, more inspections to make, more fees to collect, more waste to manage.

The truth, perhaps, is more nuanced than either of those arguments. Over the past eight years, Hancock has used his considerable power as mayor — and the considerable new revenues that have poured into city coffers thanks to Denver’s booming economy — to grow and reshape the vast bureaucracy underneath him. The municipal government that has evolved and expanded under his leadership is a reflection of his vision for the City of Denver.

“The current $2.1 billion operating budget is a direct reflection of the city’s values,” says Theresa Marchetta, a spokeswoman for the mayor’s office. “Since 2011, the mayor has made significant agency investments to enhance city services and continue to meet the demands of our growing community.”

But not everyone shares Hancock’s vision. After cruising to re-election four years ago, the mayor now faces three major challengers in his campaign for a third term: community activist Lisa Calderón, former state senator Penfield Tate and former RiNo Art District president Jamie Giellis. Though they have their differences, all three challengers have made essentially the same argument in their bids to unseat Hancock: The prosperity that Denver has enjoyed over the past eight years hasn’t been equitable.

Developers and big business have thrived, they say, while low- and middle-income Denverites have struggled. City blocks and whole neighborhoods have been redeveloped while longtime residents have been displaced. Tech and other booming sectors have added thousands of white-collar jobs while many other workers have been left behind.

An analysis of ten years of budgets, audit reports, payroll data and other city documents shows how Denver’s 12,000-strong municipal workforce has evolved under Hancock — and it shows that some of these concerns are valid.

As some departments have expanded rapidly, others have struggled to fulfill their responsibilities without sufficient resources — including agencies that provide critical services to people in need, or are charged with crucial strategic planning for challenges like climate change. Agencies like Denver’s Road Home, which provides services to people experiencing homelessness, and the environmentally focused Office of Sustainability have both been identified by city audit reports as lacking the staff or resources they need to fulfill their mission.

Some city departments and agencies have more than doubled in size under Hancock. But others have languished without sufficient staff or resources.EXPAND
Some city departments and agencies have more than doubled in size under Hancock. But others have languished without sufficient staff or resources.
Denver Department of Finance

The two departments that have grown the fastest under Hancock’s administration are, perhaps unsurprisingly, offices dedicated to facilitating the growth of the city itself.

The Department of Economic Development and Opportunity, formerly known as the Office of Economic Development, has more than doubled in size since 2013. Its general-fund budget has nearly tripled over that period, which department spokesman Derek Woodbury says has helped offset the loss of federal grant money that had previously funded some of its services.

“These local funds have played a key role in preventing us from lowering our delivery of services,” says Woodbury. “Additionally, the growth in local funding has allowed DEDO to address changes in Denver’s community needs and issues.”

Many of the department’s new hires have been made by its Business Development Division, which has grown from just two employees as recently as 2013 to fourteen today. Last year, city budget documents show, the division hired four full-time representatives “to develop, retain, and expand key business clusters such as technology, healthcare, construction, and energy.” The division’s growth has also been driven in part, Woodbury says, by a new focus on international trade and foreign investment opportunities.

Since 2012, DEDO, often working in conjunction with regional and state economic-development agencies, has awarded nearly $20 million in incentives to businesses like VF Corporation, DaVita and United Airlines, helping to attract dozens of corporate headquarters and other major projects to Denver. The department was heavily involved in the city’s unsuccessful efforts to land Amazon’s HQ2 project, working with state officials to offer a package that would have reportedly amounted to hundreds of millions of dollars in tax credits and other incentives.

Such eco-devo efforts have long had their critics. “Economic development incentives are widely used yet remain highly controversial,” wrote a team of economists in a 2018 paper for the Upjohn Institute of Employment Research. Across the country, state and local governments award an estimated $45 billion in business incentives every year, but studies have shown that these programs mostly benefit large corporations and do little to boost job growth on their own.

The city seeks to allay such concerns by requiring companies to meet specific performance targets before incentives are fully paid out. And as DEDO’s recent rebranding suggests, its purview has widened under Hancock to include an emphasis on economic mobility and affordable housing alongside traditional business-development functions. Following the Office of HOPE’s move to DEDO last year, the city hired a Chief Housing Officer to oversee the department’s efforts, which have been funded in part by Denver’s first-ever dedicated affordable-housing fund.

“Through the Affordable Housing Fund, we are able to greatly expand our approach in tackling Denver’s affordability challenges,” says Woodbury. “This includes additional funds to invest in the creation and preservation of affordable-housing units, as well as the development of new programs that provide housing stability and promote equitable and accessible housing options.”

DEDO’s affordable-housing efforts, however, have been plagued by problems. During a review conducted by the department last year, city officials discovered that hundreds of homes sold by the city through an affordable home-buying program had been sold to buyers who made too much money to qualify for the program. Another housing initiative, the Lower Income Voucher Equity program, was launched in 2017 and touted as an innovative solution that would help hundreds of families afford their rent — but the program is currently serving only three households, Stateline reported earlier this month.

In a report released in December, Denver Auditor Timothy O’Brien panned the city’s affordable-housing efforts, detailing a long list of problems in DEDO’s processes for promoting affordability, including issues caused by staffing shortages.

O’Brien’s office has conducted dozens of audits of city agencies and other governmental entities during Hancock’s tenure — and some of these reports have prompted more corrective action than others. In 2017, an audit of the Department of Community Planning and Development, which oversees the permitting of virtually all new construction within the city, found inefficiencies in the department’s systems for processing building permits.
“Imbalances in staff training and long wait times are holding up the business of growing and developing the city of Denver,” O’Brien said in a statement at the time. The city moved quickly to address the report’s recommendations, implementing an e-filing system and other measures to bring plan review and in-person wait times down. Customer-satisfaction ratings have improved from around 40 percent to 96 percent, according to department spokeswoman Laura Swartz.

That improvement was made possible, in part, by rapid staffing increases in the department’s Development Services Division. Community Planning and Development has swelled from 162 full-time employees as recently as 2013 to nearly 300 today, while its budget has more than doubled.

“Denver has grown and changed a lot over the past decade, and Community Planning and Development has had to grow along with it,” says Swartz. “As the city recovered from the recession, we scaled up to meet Denver’s new needs — namely, a construction boom that necessitated more plan reviewers, city planners and inspectors, and the need to ensure new development was occurring in line with the community’s vision for their neighborhoods.”

In 2011, CPD issued 51,549 construction permits, according to data provided by the department; over the past four years, that figure has averaged nearly 71,000 permits annually. While many of those permits represent small projects like home renovations, Denver’s construction boom has meant CPD is processing a growing number of complex, costly developments; the value of all construction permitted by the department in 2018 was nearly $4.2 billion, more than triple the figure from 2011.

But while shortages and inefficiencies in some city agencies have been quickly addressed, others have been neglected in spite of years of requests and warnings that critical services were going overlooked or underfunded.

In April, an audit report released by O’Brien faulted the city’s approach to issues of housing and homelessness, finding that its homeless-services agency, Denver’s Road Home, “lacks the staff resources necessary to carry out its role.” Without the necessary staff, the audit found, the agency was unable to plan strategically and develop effective policies.

It was the second time in four years that O’Brien had identified the need for more resources to be invested in Denver’s Road Home. In a 2015 audit of the agency, his office found that a “lack of data analysis and meaningful reporting affects DRH’s ability to strategically allocate its resources.”

Denver’s Road Home shrunk from nine employees in 2014 to seven in 2018, leaving a staff of six full-time employees and one intern to cope with “a large scope of responsibilities, ranging from administrative duties and contract management to responding to media and data requests,” the 2019 audit found. The agency requested additional staff in its 2017 and 2019 budget requests, but both requests were denied.

Similar problems have plagued the city’s efforts to tackle issues of climate change and sustainability. The Office of Sustainability was launched in 2012, one of the first new agencies created by Hancock, alongside a set of twelve sustainability goals that included improving air quality, encouraging the use of public transit and lowering citywide greenhouse gas emissions.

“These bold goals provide a road map to our residents, city agencies and businesses on how we can work together to enhance our quality of life today and in the future by preserving our resources,” Hancock said at the time. He appointed Jerry Tinianow to lead the Office of Sustainability, which was tasked with coordinating with other city offices to help meet the 2020 targets.

But seven years later, Tinianow remains the office’s only full-time, permanent employee, and Denver is struggling to make progress on its sustainability goals — an outcome that O’Brien, in a 2016 audit, blamed on a lack of city investment in the office.

“The Office of Sustainability does not have sufficient authority or resources to ensure that the City’s 2020 Sustainability Goals are achieved,” the audit report read. In a follow-up report a year later, O’Brien’s team wrote that some of its recommendations hadn’t been adequately addressed, and “the risk associated with our initial findings has not been fully mitigated.”

The most recent available progress report shows that the city is on track to meet only two out of its twelve 2020 sustainability goals. On key targets including the city’s composting and recycling rate, fossil fuel consumption, attaining federal air-quality standards, use of public transit and more, it’s nowhere close.

As a result, less than a year after the administration’s latest “Climate Action Plan” was released, the city appears on track to fall short of its first major target: to reduce total greenhouse gas emissions to 15 percent below 2005 levels by the end of next year. Barring a sharp, sudden decline in emissions starting this year, the city won’t meet that goal.

Marchetta says that the 2020 goals were always meant to be aggressive.

“[The mayor] asked that the goals be aspirational and ambitious so that we could push both our agencies and our community to reach for and do more,” says Marchetta. “We knew that the goals would require significant effort to affect the meaningful change we were striving for, but the Mayor wanted us to push, not just posture.”

A booming economy and soaring property values have added nearly a billion dollars in new revenue to Denver’s budget in just the last eight years.EXPAND
A booming economy and soaring property values have added nearly a billion dollars in new revenue to Denver’s budget in just the last eight years.
Denver Department of Finance

As the mayoral election approaches, Hancock has doubled down on the expansion of city government — or at least the appearance of it. In mid-April, just one day after the release of O’Brien’s latest audit of the city’s homeless services, he proposed the creation of a new Department of Housing and Homelessness. The new, independent department would bring together the services provided by Denver's Road Home and the Office of HOPE, which Hancock called an “important experiment.”

“The process for creating a formal housing and homelessness department began in 2017 with the [Office of HOPE],” Marchetta says. The office was “a key step in identifying the elements for addressing the pipeline of housing need and affordability — linking everything from homelessness, transitional housing, affordable housing, and workforce development.”

Coming just two weeks after his pitch for a new transportation department, Hancock’s proposal drew criticism from his opponents, who argue that these campaign-season announcements are meant to paper over the administration’s lack of progress on housing, transit, sustainability and more over the last eight years.

“Given the track record of dysfunction and under-resourcing of initiatives over the past eight years,” said Calderón in a statement on the proposal, “the mayor’s announcement of yet another initiative, this time a new housing department — during his re-election bid — does not inspire much confidence.”

In his bid for a third term, Hancock is running to lead a city much bigger than the one he took over eight years ago — in population, in the size of its municipal workforce, and, above all, in its spending power. The city’s annual expenditures when Hancock took office in 2011 totaled about $1.3 billion; eight years later, thanks to soaring receipts from property and sales taxes, the mayor is likely to have well over $2.2 billion to work with in the city’s next budget, due this summer.

That’s roughly a two-thirds increase in city spending in Hancock’s two terms as mayor — nearly a billion dollars in new revenue to be reinvested in the city every year. His re-election hopes may hinge on whether or not Denver voters feel like they’re getting two-thirds more out of their city government than they were eight years ago.

And that, in turn, may depend heavily on who the voter is — a developer, or a renter? An environmentalist, or an oil and gas executive? Someone looking for a new corporate headquarters, or someone looking for a roof over their head? In a fast-growing, fast-changing Denver, some residents have more reason than others to believe their government is working for them.

Update, April 30: This story has been updated to reflect the fact that the proposed Department of Housing and Homelessness would be a new, independent agency.

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