The City Council on Tuesday declared a small portion of undeveloped land southeast of downtown Colorado Springs as blighted, a move that will help fund the construction of nearly 400 new affordable apartments in the Lowell neighborhood.

The council voted 8-1, with Councilman Dave Donelson opposed, to establish the Bristow-Lowell urban renewal district, roughly 6 acres east of South Nevada Avenue, along both sides of East Las Animas Street and stretching south of East Fountain Boulevard. 

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The designation allows developer Toby Gannett to use future tax revenue generated by the project to pay back bonds used to fund construction of the affordable apartments, as well as other improvements like sidewalks, landscaping, a dog park, pickleball courts and more. Tuesday’s vote also granted developers 100% of the city’s future property tax revenues on the parcels over the next 25 years to help finance the project. 

The area is expected to generate $5.3 million in future tax revenues over the next 25 years that can be used to pay down the developer’s debt.

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Draper Commons offers a unique blend of housing to various income levels, Gannett previously said. Originally envisioned as a senior housing development, it opened up to all who can qualify with low income at the recommendation of the Quad Innovation Partnership. The partnership included students at the University of Colorado Colorado Springs, Colorado College, Pikes Peak State College and the Air Force Academy to meet the needs of the area.

Sumner House, the first completed building of the project, opened in July. It serves lower-income residents that make 30%-60% of area median income, or between $31,200-$62,400 a year, according to the U.S. Department of Housing and Urban Development.

The next two phases will be built under the new urban renewal designation and are planned to have 390 units — studios, one- and two-bedroom apartments — catering to higher-income brackets. Rents will start at $1,274 a month for a studio for those earning 70% of the area median income, a City Council presentation shows. Most of the units, 299, will serve those earning 100% of the area median income, or $104,000 for a family of four.

Councilman Mike O’Malley questioned why the city should agree to dedicate 100% of its future property tax revenues to the project. Officials are working to pass a balanced 2025 budget that proposes keeping cuts in place that were made for 2024 and spending $6.5 million of the city’s reserves next year, he said.

“We need money to run the city, so why are we giving it away?” O’Malley said.

Colorado Springs currently receives about $2,500 a year in property taxes from the six undeveloped parcels. When the apartments are built, the value of the property is expected to increase exponentially, up to roughly $37,600 a year by 2048. The city could use the higher property tax revenues over the next 25 years to reinvest in the project. 

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After the 25-year urban-renewal plan period, the city is projected to bring in about $42,400 annually in property taxes at the site.

Councilman Brian Risley rephrased O’Malley’s concern: “Are we as the city giving away revenue or tax dollars that we would have otherwise normally captured? I think the answer is no, and on top of that, we’re actually going to be gaining some tax revenue as a result.”

Colorado Springs Urban Renewal Authority Executive Director Jariah Walker said Tuesday that construction of the new affordable apartments cannot occur without the urban-renewal designation and 100% of future property tax revenues.

“This isn’t money coming out of the city coffers. The money doesn’t exist. The developer has to actually build this for it to generate anything to begin with, and obviously, that’s further down the line,” Walker said.

As well as increased property tax revenues, he added that the apartments will attract new residents to Colorado Springs who will buy goods and services in the nearby downtown urban core and elsewhere in the city, increasing sales tax revenues.

The project will also provide “needed” affordable units in Colorado Springs, Walker said.