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Southeast Colorado Springs passed over for economic incentives

Ripe for renewal


A vacant former Sam’s Club lies within a federal Opportunity Zone, making it a potential draw for investors seeking tax breaks. - FAITH MILLER
  • Faith Miller
  • A vacant former Sam’s Club lies within a federal Opportunity Zone, making it a potential draw for investors seeking tax breaks.

Among its dozen or so urban renewal areas, Colorado Springs can count the Gold Hill Mesa development on the Westside, the U.S. Olympic Museum and Hall of Fame downtown, and the Air Force Academy Visitors Center, planned for the city’s north end.

Urban renewal projects — public-private partnerships designated by the Colorado Springs Urban Renewal Authority and City Council — drive redevelopment and investment through a unique funding mechanism.

One place officials still haven’t approved an urban renewal area to boost economic development? Southeast Colorado Springs.

To Councilor Yolanda Avila, who represents the Southeast, that just doesn’t add up.

She suspects negative stereotypes are part of the reason: “I’ve met people that have recently moved into the area and say they love it, but that they had been told by their friends or families not to move in Southeast.”

The same, Avila believes, could be true for investors and developers who avoid the Southeast because of its reputation as a low-income, high-crime area.

But Avila, along with a growing number of Southeast community leaders, believes the area deserves the same opportunities for economic growth as other parts of the city that already have urban renewal projects. While officials don’t have a project pinned down, they say it could be on the horizon — given the right combination of factors at the right time.

That time is now, some community advocates say.

By providing tax breaks and other incentives, the “urban renewal” label is meant to motivate investors who might be otherwise skeptical about pouring money into communities that could use a boost.

Urban renewal designations are supposed to combat the spread of blight while revitalizing an area with new development ­— at least according to state law.

The state defines a “blighted area” eligible for urban renewal as one that features at least four characteristics from a long list. A few examples include: “slum, deteriorated, or deteriorating structures”; “predominance of defective or inadequate street layout”; “unsanitary or unsafe conditions”; and “the existence of conditions that endanger life or property by fire or other causes.”

So why has the Southeast been ignored while areas like the Air Force Academy (where the site is “pristine,” to quote Avila) win economic incentives?
Jariah Walker, executive director of the Colorado Springs Urban Renewal Authority, says that despite growing interest around urban renewal in the Southeast — and his board’s work to attract potential investors and developers — certain obstacles have thus far made awarding the designation impossible.

One example is the Mission Trace Shopping Center, where a community hub is planned for a largely empty commercial complex at Hancock Expressway and South Academy Boulevard.

The project — which has secured $1 million from the Colorado Health Foundation — could involve housing, transportation, shopping, community activities and opportunities for physical activity.

But while there’s been interest in designating the shopping center as an urban renewal area, Walker says, logistics would get in the way.

The problem: All of the property owners in a proposed urban renewal area must agree that the area is blighted before such a project can go forward.

“There is an owner who has the majority of property in [Mission Trace], who has always been interested in doing something,” Walker says. “However, there are still some parcels that are owned by out-of-state owners.”

If those owners are unwilling to sell, the city would have to decide whether to seize the property through eminent domain (not the most attractive choice) or pay an “unrealistic price” for their property.

In the Southeast, Walker says, “you have a lot of absentee owners who don’t live here, who have properties ... that are just deteriorating.”

That doesn’t mean the community hub, headed by the Solid Rock Community Development Corp., won’t be built. It just means the shopping center housing the project probably won’t get an urban renewal designation — and therefore wouldn’t be eligible for the associated tax incentives.

Such incentives can quickly add up. The development team on the AFA Visitors Center urban renewal project, for example, will avoid paying an estimated $23.5 million in sales taxes, thanks to Tax Increment Financing, or TIF. The tool allows developers to keep tax revenue above a certain base threshold for up to 25 years, investing that money into project infrastructure, rather than the city tax coffers.

Another reason the Southeast still hasn’t had a URA: Investors may be wary about tapping into an area where household incomes are lower than in other parts of the city, Walker says.

Retailers will “draw a circle around an area, and they want to know what incomes are here, who’s going to support this business,” he says, adding that the arrival of online shopping makes stores and restaurants more cautious than ever about where they choose to rent space.

Before a project can get urban renewal designation, a developer must come forward with a viable proposal and detailed funding plan. So far, Walker says, that hasn’t happened in the Southeast.

But local leaders agree that the Southeast is changing — and the time is ripe for revitalization.
“I absolutely believe the city should invest increased time and effort that results in an urban renewal area for Southeast Colorado Springs,” says El Paso County Commissioner Longinos Gonzalez. “The Southeast is a great place to do business. It’s got a large pool of work-minded individuals. It’s rich in diversity and culture. ... We’ve got lots of mom-and-pop stores, and we have untapped potential for growth.”

Gonzalez, whose 4th District includes the area, says the Urban Renewal Authority, city and county should work to attract investors to the Southeast and advertise its potential. Meanwhile, he adds, residents should keep telling the mayor and City Council to support an urban renewal project.

“I have gotten feedback from residents of the Southeast — you know, they’ve come to me many times over the last couple of years asking for investment and redevelopment. And they sometimes feel that they’re being forgotten,” Gonzalez says, adding that he’s “optimistic” Walker and the URA are working hard to find an eligible project.

Areas called Opportunity Zones, created through the Tax Cuts and Jobs Act of 2017, could also help pave the way for urban renewal in the Southeast. Investors who help fund projects in such zones, located in low-income and high-poverty areas, can defer and potentially reduce taxes on capital gains.

The Southeast has one such tract near the Mission Trace Shopping Center — it’s bordered by South Academy Boulevard to the east, Interstate 25 to the west and Hancock Expressway to the north. It stretches south toward Fountain. Another encompasses the Cimarron Hills area surrounding the Colorado Springs Airport.

The Pikes Peak region includes eight federally designated Opportunity Zones. - CITY OF COLORADO SPRINGS
  • City of Colorado Springs
  • The Pikes Peak region includes eight federally designated Opportunity Zones.

A third tract includes the former Sam’s Club (now a vacant retail space), bordered by Sand Creek to the east, South Academy to the west, Airport Road to the north and Fountain Boulevard to the south. Avila sees that location as the perfect site for an urban renewal project.

“I think it would be nice as a recreational place where people can gather,” she says. “Maybe a small park with an amphitheater, some affordable housing around that, restaurants. ... When I go door-to-door, people say, ‘There’s nowhere to take my teenage kids.’ If they want to take them to a theater, they want to take them skating, they’ve got to get all the way up north.”

Walker pointed out that an urban renewal project in the Southeast could bring people from across the city.

“Sometimes when you get these projects, you create a destination for other people to come experience that side of town,” he says. “I think there are people that live as far as Monument, that are going to check out Ivywild School.” By that, he was referring to a former elementary school south of downtown that was repurposed into a restaurant, retail and event space as an urban renewal project.

“I would love to have a project on the Southeast side,” Walker says, “that would draw people over to the Southeast.”

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