This story has been updated to clarify that the project will generate $11 million in tax revenues eligible for use on public improvements. 

Plans for a new 27-story skyscraper downtown took a step forward Wednesday with a nod from the Colorado Springs Planning Commission to seek urban renewal designation.

The O’Neil Group, a local private equity group, and VeLa Development Partners, a Kansas City, Mo., high-rise, multifamily developer, have proposed a 300-foot-tall building near the intersection of Sahwatch and Costilla streets that has already been controversial. Over the summer, it triggered a call from residents for the Colorado Springs City Council to put a question on the November ballot to limit heights downtown.

The council decided not to put a question on the ballot that would have limited building heights to 248 feet. The tallest tower downtown currently is the 247-foot, 16-story Wells Fargo Tower.

The Planning Commission was not reviewing specific designs for the tower Wednesday. Instead, the commission was determining whether the project was in line with the city’s master plan. The vote was needed ahead of a City Council decision on whether the property should qualify as blighted and receive an urban renewal designation. The designation would allow developers to use tens of millions in future tax revenue from the building to pay off a portion of the construction costs.

Only three commissioners on the nine-member board said they felt the tower was not in line with the city’s master plan, while others felt it would add to downtown’s vibrancy.

Chairwoman Andrea Slattery said she thought the planned 400-unit tower would encourage people to live downtown and ensure that teenagers will be able to safely visit downtown.

“They can go and walk around downtown and they can be safe,” she said.

Commissioner Marty Rickett, who was among the opponents, said the City Council told residents that a conversation about height limits could happen next year — potentially after decisions about the skyscraper have already been made.

“I would ask the citizens to take a closer look at this,” he said.

A few residents spoke against the property’s designation as an urban renewal site based on blight and expressed skepticism about how future tax revenues could be used.

The urban renewal designation would allow increased property and sales tax revenues generated by the new project — known as tax-increment financing or TIF — to be used to help fund the project.

The plans show that the project has $23 million in public improvements that would be eligible for property tax funding. Some of those costs include $17 million in parking, $3.7 million for affordable units and $1.5 million in façade and art costs.

The project is expected to generate $11 million in taxes over about 25 years that would be eligible to pay back public improvements, a presentation to the Urban Renewal Authority said.

Jariah Walker, executive director of the Colorado Springs Urban Renewal Authority, pitched the need for the urban renewal designation to help finance the project, noting that if it doesn’t get built the future tax revenues don’t exist.

“We are dead in the water without that piece,” he said of the urban renewal designation.