construction

Blue Dot starts a new trend

This rendition shows the 33-unit apartment building now being built at 412 S. Nevada Ave.
This rendition shows the 33-unit apartment building now being built at 412 S. Nevada Ave.

This rendition shows the 33-unit apartment building now being built at 412 S. Nevada Ave.

“Why are we going ahead?” asked Darsey Nicklasson. “Because Colorado Springs needs this.”

In a letter explaining their decision to go ahead with their long-planned, 33-unit Blue Dot apartment development on South Nevada Avenue, Nicklasson and partner Kathy Loo made their point in a single sentence.

“We will continue to be a very active part of the infill discussion,” they wrote, “but we are tired of just talking, and it’s time to get started.”

Nicklasson and Loo hosted a formal groundbreaking ceremony at the 412 S. Nevada site on Thursday afternoon. Former Mayor Mary Lou Makepeace spoke, followed by a post-shovel celebration next door at Iron Bird Brewing Company.

For Nicklasson and Loo, it has been a long, strange trip — and it’s not over. After the Colorado Springs City Council refused to suspend or eliminate downtown residential development park fees, it looked as if the project would be deferred for another year — or simply abandoned.

Nicklasson had made a powerful case to Council for the elimination of the fees. At $1,264 per unit, Blue Dot will be assessed $41,712.

The ordinance, originally written in 1973, was intended to protect residents of the city core from being required to fund land acquisition and development of suburban parks.

“Park fees are restricted for the purchase of new park land through capital investment,” according to a 2014 study by the Downtown Partnership. “This is not substantially applicable to downtown, as it is an urban development with existing parks needing maintenance funds.”

There are currently 1,493 residents within the boundaries of the Downtown Development Authority. Additional residents would support existing retail uses, bring new businesses to downtown and boost city tax revenues.

“There are over 230 developable lots in downtown, and many more properties poised for redevelopment,” the Partnership study asserts. “Of these 230 lots, just over 20 percent are considered ‘blighted,’ nearly 50 percent are currently used as parking lots, and nearly 30 percent are vacant parcels or buildings.”

Downtown stagnates, suburbia booms

In the four decades since the park fee ordinance was enacted, the city’s population has increased from 135,060 to 416,427. During that period, downtown actually has lost residents.

Many factors contributed to suburban growth and core stagnation, but the bottom line was … the bottom line.

Greenfield development is cheaper, faster, less uncertain and far easier to finance than development in the urban core. Typically, large developers purchase an undeveloped tract of land on the urban fringe, annex it to the city if necessary, and subdivide. 

Creating a special improvement district enables the developer to build necessary infrastructure at essentially no cost. Bonds are issued by the district, supported by a property tax on land within the new district. If the development builds out as planned, the developer’s obligation is passed on to the new owners of commercial, industrial and residential properties in the district. 

The happy developer exits the project, banks his/her profit and moves on to the next deal. 

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“We MUST make it easier and less costly for people to invest in our (downtown) community.”

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Building an apartment complex within such a development is comparatively easy. The developer already has gone through the process of master-planning and zoning the vacant land, utilities and other infrastructure are in place and lots are appropriately sized and located.

There are no neighbors to object to the project, no complex negotiations with code enforcement and Regional Building, no aging and/or inadequate infrastructure to rebuild, no zoning issues, no issues around crime, homelessness or neighborhood blight.

Those factors increase costs, both directly and indirectly. The Downtown Partnership estimates direct costs are at least 25 percent higher for downtown redevelopment projects, and indirect costs are also significant. Potential downtown developers must be determined, tenacious, able to assemble a site, rezone it if necessary, find affordable financing and have plenty of time to spare.

The process

Given the apparent abundance of redevelopable sites in the area, Nicklasson’s search for a suitable site in south-central downtown should have been quick and easy.

That wasn’t the case. Few properties were available, and those that were didn’t meet her needs. Much of the property south of the Pioneers Museum was originally platted in 9,500-square foot lots, each 50 feet by 190 feet. 

A 33-unit apartment building may be small by suburban standards, but it won’t fit on a single lot. And after 130 years, many lots have been subdivided or expanded, leaving few affordable development sites.

In September 2013, veteran Colorado Springs developer/builder Bob Elliott offered to sell Nicklasson three adjoining lots in the 400 block of South Nevada for $380,000.

Elliott had acquired the lots, as well as other properties on South Nevada, through foreclosure sales of property that had been controlled by the heirs of Anton Nelson. Many of the buildings were vacant, and had been so for years, even decades. Elliott and his daughter Jenny planned a residential development similar to the Blue Dot on the site across Nevada now occupied by Schooners, a restaurant that closed in the 1980s.

“I really appreciate that Bob was willing to take a chance on me,” said Nicklasson. “He’s been a mentor as well, and has really helped me with the process.”

Time and money

As the Downtown Partnership study reported, “The highest differential factors in cost [for downtown development] are parking, required infrastructure upgrades and irregularities in code and fee structures.” 

Nicklasson will devote Blue Dot’s entire first floor to parking for residents, forfeiting revenue from other possible uses. A larger development would likely require a dedicated parking structure, costing as much as $25,000 per space. Flat parking in a suburban complex, by contrast, costs as little as $2,500 per space.

Nicklasson broke ground on Sept. 4, exactly 50 weeks after closing on the site. She estimates that construction will take about a year, barring major obstacles.

She’s already run the city’s bureaucratic obstacle course. The three lots had to be replatted, creating the Blue Dot Place subdivision. A design had to be created, approved by multiple city departments, and contradictory regulations reconciled. 

For example, downtown’s recently enacted form-based zoning requires that new buildings be built to the lot line, but the Colorado Springs Fire Department required a 10-foot setback on the south side of the building.

“What am I going to do with that 10 feet?” asked Nicklasson, still seething over the parks fee. “Can it be part of my parks dedication? If we dedicated land, we’d have to dedicate more than Blue Dot’s footprint.”

She’s right. Blue Dot’s footprint is 19,000 square feet, and the required dedication for 33 units would be 23,727 square feet.

Yet although the process has been exhausting, Nicklasson singled out some city departments as being “exceptionally helpful.”

“The new Rapid Response Team, the Planning Department, the Parks Department, and many individual staff and boards have done a great job,” she wrote. “It is because of them that we are ready to go.”

She reserved particular praise for Colorado Springs Utilities. 

“CSU crews worked all night last week on our utilities connections,” she said. “They shut off water to the block at 8 p.m. and worked with us through the night — and everything was back on by 6 a.m. They were amazing!”

So what’s next? Nicklasson and Loo are looking for a restaurateur to operate a restaurant in the building directly north of the Blue Dot, but other plans are in abeyance, pending Council action.

“We MUST make it easier and less costly for people to invest in our (downtown) community,” the developers wrote.

Meanwhile, they’re optimistic.

“We already have one apartment reserved,” Nicklasson said. “Thirty-two to go! We told Charlie (the first interested caller) that he has first dibs, so the next person will have second, and so on. We’re aiming it at young professionals, and we think military officers may really like it — but Boomers are welcome.” 

1 Comment

1 Comment

  1. peter miller

    September 8, 2014 at 9:24 pm

    Dear City council and City you should encourage infill and make it more expensive to build on empty land in the city outskirts. Reasons:
    1. More density = more tax revenue to support existing infrastructure. i.e schools, roads, parks etc.
    2. greenfield development = more infrastructure to support new schools to be build while our existing infrastructure is dying.

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