A project that could transform the small town of Calhan cleared another hurdle Monday night, but the town is still a long way from making the final decision.

The Calhan board of trustees has finalized an agreement with a developer to cover the costs of an annexation impact report, which will show how adding more than 475 single-family homes to the town will change demands on water and transportation infrastructure.

Calhan’s population at the 2020 census was only 762, down from 896 in 2000. The town is historically known for ranching and was once a railroad stop. About 45 minutes away from downtown Colorado Springs, Calhan hosts the annual El Paso County Fair.

The project, called the North Tree Annexation, would occupy 96 acres on the northwest border of the Eastern Plains town, which spans only 530 acres. In documents submitted to El Paso County, developers claim North Tree had “multiple beneficial purposes,” including boosting the declining population, supporting schools and businesses and providing open spaces.

The annexation request came from Smith Land Development and Company LLC last summer. Senior Manager William Vandergriff attended the meeting Monday and agreed to the trustees’ stipulations.

The annexation impact report is a major step for the town. Its results could factor into future negotiations about how the developers will cover impacts to Calhan’s infrastructure and services. Some parts of the town’s code might also need updating.

The trustees discussed how the town’s current water requirements might need bolstering. Town Clerk Cindy Tompkins said at the meeting that Calhan currently requires “adequate” water for new developments.

“Which says nothing,” she added.

The engineering firm selected to create the report, Moore Engineering, Inc., is based in North Dakota but has locations in Minnesota and Colorado. Tompkins said that Calhan had worked with the firm before on other projects.

According to a Scope of Services submitted to the town in March, Moore will be evaluating Calhan’s existing infrastructure against projected growth. The report will include phased capital improvement recommendations and cost estimates.

“This effort will position the Town to manage growth while maintaining reliable infrastructure and protecting public investment,” the document read.

The agreement signed between the town and North Tree developers ensures that the developers will cover the cost of the impact report, but it does not bind the town to any decision on the annexation itself.

That decision could come months later after more meetings, negotiations and public comment.