Developers are seeking an urban renewal designation to assist with project funding

An affordable senior housing project planned for southeast Colorado Springs moved a step closer last week to receiving urban renewal designation.

Denver-based developer Arrowleaf Development LLC plans to build 157 affordable senior housing units and a senior center near the intersection of Zebulon Drive and Chelton Road, just west of South Academy Boulevard.

At its regular board meeting on Wednesday, the Urban Renewal Authority accepted a conditions study of the vacant, roughly 3.6-acre property that it determined is blighted. The board also accepted a draft plan and a third-party financial review for the Sugarbowl Grove project.

The actions are among several requisite steps before Arrowleaf can secure urban renewal designation for the property.

Earning this designation will create a key financing tool to help fund the two-phase project over 25 years, said Sarah Dunmire, vice president of consulting firm Economic & Planning Systems, Inc. Future property and sales tax revenues generated by development can be used to finance parts of the project, a funding mechanism called tax increment financing (TIF).

“This affordable housing project is targeted at people who are making roughly half of the area median income, and there is a critical shortage of this type of housing (in Colorado Springs). We’re eager to bring more (affordable units online) for seniors, who are a growing population and increasingly cost-burdened,” Carl Szanton, managing partner with Arrowleaf, told The Gazette.

In the first phase of construction, Arrowleaf will build 110 units consisting of 88 one-bedroom apartments and 22 two-bedroom units, with average rents of $1,120 a month.

All the units will be leased to renters who earn 60% of the area’s median household income or below, Dunmire told the Urban Renewal Authority.

The first phase also includes construction of a 5,145-square-foot senior center that will be operated by Silver Key Senior Services, a local nonprofit that provides programs and assistance to seniors. Silver Key, whose headquarters are roughly 1 mile northeast of the site, will lease the space for 17 years.

The senior center, which will offer a variety of programming, was an important aspect of the project whose goal is to “build housing to specifically provide seniors the resources they need to live socially independent lives,” Szanton said.

Rent for the senior center is tied to a loan from the Colorado Housing and Financing Authority that will cover a portion of its construction costs, Dunmire said. After the loan is repaid, the developer will sell the space to Silver Key for $1.

Other eligible improvements include construction of Sugarbowl Drive; right-of-way improvements on Delta Drive; sidewalks, curbs and gutters; stormwater, drainage and utility infrastructure; walking trails that will connect to a Walmart Neighborhood Market to the north; landscaping and public art.

Forty-seven more units are planned for construction in the second phase. Thirty-eight one-bedroom and nine two-bedroom units will all be leased to seniors earning 50% or less of the area median income. Average rents for these units are expected to be about $917 per month, Dunmire said.

Arrowleaf is preparing to submit an application to the Colorado Housing and Finance Authority for low-income housing tax credits that will also help fund both phases of construction, Szanton said.

The project, with costs estimated at $38.7 million for the first phase alone, hinges upon receiving those tax credits, he said. It won’t move forward if the application is denied.

Most of the funding is planned to be covered by federal, state and local sources, Dunmire said. But without additional monies generated through tax increment financing, developers face a cash deficit of about $1.1 million in the first phase.

It is too early to provide detailed financial information for the second phase of development, she said.

When the first phase of construction is complete, Sugarbowl Grove’s net operating income is expected to be $519,000 a year.

The City Council must give final approval of the urban renewal designation for the property.