The driver left the car near an entrance leading to police headquarters and fled carrying a duffel bag, said city spokeswoman Maria VanderKolk.
Video from television helicopters showed two remote-controlled bomb squad robots and someone in a hazardous-materials suit beside an older-model brown sedan.
Bomb squad members could be seen opening the hood, hatchback and all of the doors of the vehicle and attaching a pulley system in an attempt to lift the propane tank out of the car.
VanderKolk said the Jefferson County bomb squad was treating the situation "very, very seriously." She said she did not know whether the car contained other devices or wires.
VanderKolk said the car was discovered shortly before 7 a.m., when only a handful of people were in City Hall, mostly in the police offices. She did not know how many people were evacuated.
Postmaster Vince Fresquez said 70 workers were evacuated from the post office.
The driver of the vehicle was at large, VanderKolk said.
No homes were evacuated, but nearby residents were alerted by phone, police spokeswoman Susan Medina said.