The Littleton City Council on Tuesday approved a $1 million funding request to support construction of a new affordable housing development known as the Starlight Apartments.

The council authorized the contribution from the city’s Affordable Housing Fund for the project, which collects fees from housing developments that opt out of building affordable units under the city’s code. 

The Starlight, developed by South Metro Housing Options (SMHO) at the corner of West Littleton Boulevard and South Delaware Street, will include 72 units serving residents earning between 30% and 70% of the area median income. 

Plans call for a mix of 11 studio apartments, 46 one-bedroom units and 15 two-bedroom units. Eight units will be set aside for youth aging out of foster care through a partnership with Court Appointed Special Advocates.

The city’s contribution is intended to help close a projected $3.5 million funding gap driven by rising construction costs and uncertainty in other funding streams, officials said. The project carries an estimated cost of about $32.2 million. 

“SMHO anticipates closing this gap through grants from the city of Littleton, Colorado Division of Housing, Arapahoe County, and deferring developer fees,” SMHO Executive Director Corey Reitz wrote in a letter to the city. 

SMHO officials said the property will include a 40-year affordability commitment and provide resident services, including job training, financial literacy programs and access to medical and mental health resources.

Construction is expected to begin in early 2027, with completion targeted for summer 2028.

At a May council study session, officials raised concerns about long-term sustainability of the Affordable Housing Fund as fewer developers opt to pay fees and instead build affordable units on site. Officials acknowledged that while the city collects less revenue, the policy is working as more affordable housing units get built. 

In addition to the funding approval, the council authorized $3,162,447 of Littleton’s 2026 private activity bond allocation to SMHO. The bonds can be used to secure lower interest rates for project financing but do not represent a direct financial liability for the city, officials said.