Dreaming of a downtown five-plex

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210-Pueblo-RenderingSmall developers find different obstacles every step of the way

What’s the key to downtown development? Is it City for Champions, tearing down the Martin Drake Power Plant, or is it something else?

We don’t know. But regardless of your position on C4C or Drake, you likely agree with downtown boosters that more residential development is important to downtown’s future health.

Few residents mean that small businesses in the city’s core have to rely upon visitors and downtown workers. More residents would help sustain existing businesses as well as create demand for ones that are now absent from the area — grocery stores, daycare centers, pharmacies and the like.

Residents also bring eyes and passion to the streets, making them busier, safer and more secure.

And even with its faults, downtown is pretty cool. The few residential units that have been constructed in recent years have been well-received by the market (especially given the prolonged local recession), so it’s not surprising that small-scale developers are once again eyeing downtown.

Jenny Elliott, the 40-ish daughter of former local developer Bob Elliott, is one of them. She’s planning to put up a five-unit apartment building at 210 Pueblo Ave., in near southeast downtown. 

The parcel at 210 is an oddly shaped, 6,000-square-foot lot, just west of the Tim Gill Center for Public Media at 315 E. Costilla St. Elliott’s Downtown Development Group acquired the vacant lot last September for $30,000 and began the design phase shortly afterward.

“I think it is critical to the success of downtown as a whole to recognize the importance of small-scale infill development, particularly residential,” Jenny Elliott said. “The community has offered extraordinary support and excitement at the prospect of adding new and sorely needed residential development downtown.”

To novice developer Elliott, it seemed like a no-brainer. Here was a long-desolate piece of property, with frontage on Pueblo Avenue, Weber and Costilla streets, that seemed to exemplify urban decay and neglect.

And a five-plex — what could go wrong?

Regulatory messes

A lot, it seems (pun intended!). Mayor Steve Bach’s administration may be determined to make Colorado Springs “the most business-friendly city in America,” but the sheer weight of decades of city ordinances, regulatory practices and siloed departmental decision matrices still makes life difficult for small developers. City officials are trapped in regulatory webs that leave them little latitude in decision-making and seem to force irrational outcomes.

As an example, city parks ordinances require that Elliott plant street trees. The parks department designated specific locations for the trees, but Colorado Springs Utilities nixed them because they were within 15 feet of sewer lines.

In other words, Elliott is specifically required to do something by one city entity, and specifically forbidden to do so by another.

Sorting out such maddening contradictions isn’t up to the city. Instead, Elliott had to be her own ombudswoman, trekking from Utilities to Parks & Rec and prodding both sides to resolve their dispute.

“It looks as if we’ve resolved that one,” she said earlier this week, “but it took some work.”

Then there’s the “revocable permit.” It’s required for a proposed 1-foot roof overhang 32 feet in the air over a “public way” because the building has a zero lot setback, which will cost Elliott $115.

“[The zero setback] is a feature highly encouraged in [downtown’s] form-based code,” said Elliott. “And why is this permit revocable? What happens to the roof if the permit is revoked?”

Meanwhile, the city is demanding that Elliott file a “Waiver of Replat,” a complex and expensive procedure to perfect title to the property.

Elliott thinks that requirement is somewhere between unnecessary and nuts.

“We are simply trying to build on a lot that was able to be legally conveyed — and title insurance issued for — using its current legal description,” she said. “The waiver application itself is nearly as complicated as a development plan submittal — and requires fees of over $600.”

Abundance of fees

Fees? Yes, Virginia, we have fees.

Some, like the revocable permit fee, fall into the category of time-wasting nuisance. Others, like the “park and school fees for residential development,” are potential deal-killers.

These fees were first enacted in 1973, records say, because the “recent great increase in subdivision development has made severe demands upon public recreational and educational facilities,” and because “older areas of the city should not be unduly burdened by increases in general taxation to raise funds for needed public lands and capital improvements to serve the residents of new subdivisions.”

Total of the two for Jenny’s five-plex: slightly more than $7,000.

To its credit, the Bach administration asked Council to waive those fees for a five-year period to encourage downtown development. Reluctant to offer such a targeted fee exemption, Council nixed the idea during a recent work session.

Elliott continues to be exasperated.

“We didn’t want a waiver,” she said. “We think any reasonable person looking at the ordinance would conclude that someone building a downtown five-plex isn’t a suburban subdivider. We think that all infill residential construction (e.g., in areas developed prior to 1973) ought to be exempt from the fees.”

Another case in point

The fees are bad enough, Elliott noted — but the sheer amount of time required by the process may be worse.

“We’re not alone in our frustration,” said Elliott. “There are countless examples of projects that have been hijacked by the system, leaving individuals and small businesses financially wounded and personally demoralized.”

Elliott isn’t the only exasperated apartment developer in that neighborhood. Darsey Nicklasson is about to break ground on a 33-unit apartment building at 412 S. Nevada Ave. It has taken Nicklasson nearly two years to reach this point, and she expects construction will take at least another year.

“I started out with an idea,” she said. “I had no land, no funding, nothing. But I knew one thing: I wanted to build the building. I was tired of waiting for the Next Big Thing, for somebody else to do it. So I’m doing it.”

While Nicklasson was more circumspect in her comments than Elliott, it’s clear that she has encountered many of the same obstacles.

As Elliott described in vivid detail her problems with siloed city departments, their lack of urgency and the city’s inherent inflexibility, Nicklasson listened intently. 

“The school/park fees will cost us more than $60,000,” she confirmed, “and there are lots of problems in construction that you wouldn’t have [in a greenfield site]. The lot is very constricted and it’s difficult to move equipment around, so that adds to cost.”

Mayor Steve Bach was visibly dismayed when advised of Jenny’s travails.

“Our Rapid Response Team should be helping her,” he said. “Tell her to call me — I want to talk to her.”

What should the city do about these problems? We asked a couple of grizzled developers, with long experience in Colorado and the West.

“The city needs to own the problems,” said one. “Jenny shouldn’t have to spend weeks and months dealing with different departments — they need to compromise their differences, speed things up, and let her get to work. Just think — if she could get construction started right away, then she could be working on another downtown deal now. Why would that be bad?”

Recalling his time as a novice developer, the other chuckled.

“That’s the way you get to be an experienced developer,” he said. “You learn the rules. You learn what you can and can’t do. You know the obstacles and you know how to work with the system.”

And what do you do when you’re an experienced developer?

“Build in the suburbs,” he answered.

Will bureaucratic inertia, a recalcitrant City Council and swarming fees manage to kill their dreams, then?

Jenny Elliott and Darsey Nicklasson looked at each other, laughed and said as one:

“Watch us!” 

One Response to Dreaming of a downtown five-plex

  1. Dear Mayor and City council.. it is time to wake up and really make this a business friendly city… We need infill in the long run and more density and not more streets and buildings out east. This could help us increase our tax base per square mile of development.
    So what needs to be done to support this:
    1. less bureaucracy
    2. a can do can help attitude by city staff instead of rule driven and paper trail driven
    3. review of all rules and see which could be done away with

    peter miller
    July 22, 2014 at 7:52 pm