A controversial proposed 36-story, 400-foot-tall apartment tower proposed for downtown Colorado Springs has shrunk in size to 27 stories and 300 feet, its developer says.
The reduced height, however, isn’t a concession to community members who’ve complained the project would disrupt mountain views or be out of place with downtown’s skyline, where the Wells Fargo Tower is the city’s tallest building at 16 stories and 248 feet, said Andy Merritt, chief strategy officer for the Springs-based O’Neil Group.
Instead, the apartment building’s redesign primarily came about because of funding concerns, he said.
In effect, The O’Neil Group and VeLa Development Partners, a multifamily developer that’s partnering on the project, faced the likelihood that they couldn’t raise capital in a timely manner to finance the project’s original $240 million estimated cost, Merritt said.
And timing would be key, he said. A drawn-out process to raise funding risked the possibility that construction materials and other costs would rise and undermine the project’s economics, he said.
“The capital markets for real estate are just getting tighter and tighter every month basically in this country,” Merritt said. “It’s just getting harder to fund projects right now.”
As a result, The O’Neil Group and VeLa Development scaled back the apartment building to 27 stories and 300 feet, which brought down its price tag to an easier-to-finance $202 million.
“We reconfigured the project to match what we believe we can finance, and then to deliver a product that achieves a number of different ends,” Merritt said.
Merritt and Julie Brooks, The O’Neil Group’s vice president of construction and property management, spelled out changes in the apartment tower’s height and design during a meeting Wednesday of the Colorado Springs Urban Renewal Authority and in interviews afterward.
The O’Neil Group and VeLa Development are seeking an urban renewal designation that would allow future property and sales tax revenues generated by the new project — a tool known as tax-increment financing — to be used to help fund a portion of its costs. Without that financial help, O’Neil and VeLa have said the project wouldn’t be financially feasible.
The companies proposed the apartment building in November and have since been working their way through the urban renewal process. The City Council ultimately must approve the urban renewal designation and the use of public funding.
As proposed, the apartment tower would be built on the southwest corner of a block bounded by Sahwatch and Costilla streets and Cascade and Vermijo avenues in southwest downtown.
O’Neil and VeLa have said the project, with spectacular views and amenities such as a fitness center, conference room and outdoor pool, would appeal to young professionals accustomed to high-rise living in other cities.
The O’Neil-VeLa apartment building also would join several other multifamily projects that have opened in downtown in recent years or are under construction by developers who want to appeal to renters who desire an urban lifestyle — the ability to walk or ride a bike to downtown’s restaurants, bars, nightclubs and entertainment venues.
The new building height isn’t the first time the project has changed. The O’Neil Group, which owns the building where The Gazette has its offices, originally proposed a 25-story apartment building on the same site in 2021, though that version of the project never moved forward.
In addition to the latest change from 36 stories to 27, O’Neil and VeLa have altered other project details, according to Merritt and a presentation made to the Urban Renewal Authority. Those changes include:
• The number of apartments will fall to 404 from 497 when the project was proposed in November, and consist of a mix of 160 studios, along with 106 one-bedroom, 132 two-bedroom and six three-bedroom units.
• Studio rents would range from $1,705 a month to $2,027; one-bedroom costs would run from $2,595 to $2,905; and two-bedroom units would go for $3,582 to $4,863. The half-dozen three-bedroom units would rent for $6,335 a month — down from the jaw-dropping $9,810 a month shown in the November proposal. While apartments will rent at market rates, about 40 units or 10% of the project’s total will be set aside as “attainable” housing for residents earning at or below the area’s median income.
• Ground-floor retail space would increase to 7,900 square feet from 7,000.
• A four-level parking garage underneath the building’s multiple floors of apartments will have 476 spaces, down from the original 489 stalls because of fewer units in the building. Roughly 48, or 10%, of the garage’s parking spaces will be available for public use.
• The building plan now sports a glass exterior, making it more eye-catching and reflective of the mountains and other surroundings.
• And the building’s name will change to One VeLa from VeLa Peakview.
At Wednesday’s Urban Renewal Authority meeting, the panel moved the project forward by approving a consultant’s report that found the apartment building site was blighted under provisions of the state’s urban renewal law — a necessary step for the area to receive an urban renewal designation. The blight report reaffirmed a similar finding after the 25-story building was proposed in 2021.
The Urban Renewal Authority also approved a consultant’s report that spelled out project details and goals.
And, the panel OK’d the consultant’s financial analysis, which estimated nearly $23 million of the apartment building’s costs would be eligible for funding via future property and sales tax revenues generated by the project. The biggest item on that list of building costs that could be funded by public dollars: $16.9 million for the parking garage, the consultant’s report showed.
Securing the use of those millions in future tax dollars to help fund the project is crucial, because it will help persuade investors to put up money for the project, Merritt said.
In addition to the City Council’s final say on the urban renewal designation, O’Neil and VeLa must formally submit their project to city planners for review. That submission could be made soon, Merritt and Brooks said.
If they secure various regulatory approvals and in a best-case scenario, O’Neil and VeLa hope to break ground on the apartment building in the second quarter of 2025, which would mean completion in late 2027, Merritt and Brooks said. That’s roughly a year behind the companies’ original timetable.
The news that the building height was reduced to 27 stories appeared to draw shoulder shrugs Wednesday from Urban Renewal Authority members, some of whom questioned how many local residents truly objected to the original 36 stories in the first place and whether the project would block mountain views or alter the downtown skyline.
Some of the project’s opponents had mounted an online petition drive over the past several weeks that urged the City Council to put a downtown height restriction measure on the November ballot. On Monday, however, the council rejected the idea.