Development on South Nevada is forging ahead despite the COVID-19 pandemic, with several projects set for planning and construction milestones in the coming months.
Jariah Walker, executive director of the Colorado Springs Urban Renewal Authority, said COVID-19 has had only minor impacts on the urban renewal area. In some cases, construction has actually accelerated as a result of the pandemic.
“I think that’s one of the glass-half-full comments with what’s going on, as it has allowed construction to proceed just at a little bit quicker of a pace,” Walker said.
“We’ve actually seen some of our projects going online quicker than we anticipated just because of the fact that … there’s less people on the roads, so you’re able to get to destinations quicker and the construction crews are able to work around things a little bit better.”
One setback: Because sales tax revenue generated from urban renewal area businesses is used to compensate developers for the public improvement projects that are part of their URA contracts, declining sales mean it could take longer to pay them back.
“How these projects work is the developers build it and end up submitting invoices for the pre-negotiated expenses … on public improvements,” Walker said. “But at the same time, they obviously can’t be paid until we have the money to pay them. So in a sense, it could mean a delayed repayment to these developers.”
Natural Grocers, Chick-fil-A, Five Guys and Zoe’s Kitchen were able to keep doing business during the stay-at-home order, Walker said, and the sales tax they generated will help mitigate the shortfall.
Walker said he expects the overall impacts to be minimal for the South Nevada URA.
“One of the good things that’s ironically protected us a little bit in that area is that, frankly, it’s just not built out yet,” Walker said. “So we’re not having to raise our eyebrows over much sales-tax leakage compared to [other URAs].”
The Equity Group and Ivywild Development LLC, two of the three developers working in the URA, expect to meet major project milestones shortly. Vertical construction will go ahead on Creekwalk shopping center, and plans for Ivywild’s 160-room hotel will be finalized.
The Business Journal spoke with Walker, Danny Mientka, owner of The Equity Group, and Ray O’Sullivan, development manager for Sam and Kathy Guadagnoli’s Ivywild Development, LLC, about what’s ahead.
While the pandemic hasn’t rocked the boat for most South Nevada projects, unrelated setbacks are delaying completion of the much-anticipated Creekwalk shopping center.
Mientka had planned to start construction by April and hoped to have shops open before Christmas. But development has been held up by Colorado Springs Utilities, he said, which has been connecting utilities to adjacent properties not being developed by The Equity Group.
“So while we physically scheduled a timeline that suggested an April or May commencement, the reality of what was necessary to coordinate with CSU to get this electric transmission rerouted for the benefit of everything around us was such that we just had to continue to relax the schedule and work on other portions of the site work until that work could be completed,” Mientka said.
They now hope to start vertical construction just after the Fourth of July, with a compressed build-out schedule of 258 days.
“Starting in July kind of puts us around March for completion of the core and shell,” Mientka said. “So I feel good about our schedule. And while we were hopeful to try to deliver stores for the holiday season, getting into February-March is certainly acceptable.”
COVID-19 means Creekwalk has had to step back from seeking pre-leasing agreements from its future tenants — particularly restaurants.
“The [restaurant] industry has obviously, through a government shutdown, experienced a very abrupt change in operations,” Mientka said.
“So … it’s just not an appropriate time to be soliciting retailers and restaurants when they’re really engaged in damage control and survival at this point. So our leasing brokerage firm … has been maintaining communications with folks that we were in negotiations with, but collectively we just want to respect the industry and how it’s been impacted by [COVID-19].”
One positive, Mientka said, was that Gov. Jared Polis’ stay-at-home executive order meant fewer people traveled through the URA, allowing The Equity Group to start utility upgrades and extensions on East Cheyenne Road ahead of schedule.
“[The stay-at-home order] has helped us get into East Cheyenne Road … while the shutdown substantially reduced traffic,” Mientka said. “So we made efforts to accelerate our closure of the road so that we could mitigate our impacts to the community by continuing on with essential-personnel contractors and construction workers. And we’re just about wrapped up with that.”
That early start means East Cheyenne Road — where work was scheduled to start in June — could reopen in the next few days.
There’s also progress on the off-site public improvements The Equity Group took on as part of its URA agreement. Work to underground the electrical transmission lines on South Nevada, Mientka said, is “fully funded, fully designed, and has begun.”
Mientka said CSU has already scheduled its portion of the project. While the electrical work takes place, The Equity Group will start building its city-approved streetscape design along South Nevada — an example of which can already be seen in front of Natural Grocers and Tokyo Joe’s.
“And then we’re going to immediately start widening East Cheyenne Road as soon as the utility work is complete,” Mientka said. “Subject to a plan approval from the city, we’ll extend a westbound lane from McDonald’s [at 1824 S. Nevada Ave.] to Cascade Avenue. It’ll ultimately be a right-turn-only lane on Cascade, but it’ll give great throughput for folks living up in the canyon and ultimately, those visiting the shopping center.”
Mientka said he expects the road will be built by the end of July, though it’s currently unclear when it will be open to traffic.
The Equity Group is also moving ahead with reclamation work on the once neglected and debris-choked Cheyenne Creek.
They’re building two massive retaining walls (designated “A” and “B”) to form a new east edge of the creek between East Cheyenne Road and St. Elmo Avenue.
“We have about 70 percent of Retaining Wall A constructed,” Mientka said. “It is a pretty serious piece of engineering and it supports and holds up what’s sort of the northwest corner of the development.”
Retaining Wall B — the smaller of the walls — should be completed in June.
Starting in the winter, when the creek level is lowest, Mientka said they will begin placing boulders and making stabilization improvements to the creek. He expects all boulder placement will be complete this year, with vegetation and planting starting in spring 2021.
“Every contractor that’s out there, all of our efforts are important to moving our community and our collective psyche through this COVID-19 period and into what we know will be a new reality that will be positive,” Mientka said. “And all of us have a role in it. So Creekwalk and its continued development in the South Nevada URA is one of those things that we all appreciate and will help us kind of get to the other side of this situation.”
With all of its work along South Nevada Avenue complete, O’Sullivan said Ivywild Development LLC is starting construction on its apartment and townhome projects, and finalizing plans for the upscale hotel going in across the street from the Ivywild School.
“Everything seems to be moving along,” O’Sullivan said. “Plans are all in process and we’re full steam ahead.”
O’Sullivan said they’re still working through the planning process for the hotel and hope to have the development plan approved toward Thanksgiving, when they’ll begin civil engineering work and start building the hotel’s foundation.
Vertical construction should begin soon after, with an estimated buildout of 12-15 months.
“So right now we hope [the hotel] will be open … by spring,” O’Sullivan said. “In a perfect world we’d hope to bring the project in about March or April of 2022.”
Ivywild is also “deep into the process” with two 25-unit apartment buildings at Navajo and Brookside streets.
O’Sullivan said they expect those development plans to be approved this summer. They aim to start construction on the first building by September or October, and on the second building by the end of this year.
“We would expect … to be bringing units online in the summer and fall of 2021,” O’Sullivan said. “And we hope to be basically stabilized and complete by the end of ’21.”
Development plans are progressing for the 35-unit apartment building at 131 Mount Washington Drive.
O’Sullivan said he still hopes to start construction on that building late this year, with the goal of bringing those units online by next summer.
Ivywild Development has also secured all final approvals for the 24-townhome development project at 1718 South Cascade Ave.
“The plat is being circulated for recording, the civil engineering plans are approved, and the first 12 units … we would expect to get through Regional Building Department pretty expeditiously,” O’Sullivan said.
The first 12 represent the first phase of the townhome project. O’Sullivan said they hope to start construction on the first buildings by mid-to-late July, and expect all 24 units to be complete by the end of 2021.
“The demand for housing is good in Colorado Springs so we have had really no problems selling the townhomes,” O’Sullivan said.“The first phase are really priced right for the Westside — right about $400,000 to $500,000 — and the second phase will be a little more pricey as we get into the bigger units. We’ll just see what the market is doing in six to 12 months, depending on when we get to those.”