Opportunities for growth

Scott Turner, executive director of the White House Opportunity Zone and Revitalization Council (left) listens as Jim DiBiase (center) explains the details of the new Marriott project at South Tejon and East Costilla streets. The future hotel is among the first Opportunity Zone projects taking shape in Colorado Springs. [Express photo/Regan Foster]

Federally designated zones could lead to Southeast revitalization, officials hope

The now-shuttered Sam’s Club at 714 S. Academy Blvd. was once a thriving part of Southeast commerce. Now, it’s a huge, vacant building with a parking lot to match set on prime commercial real estate. 

It’s at the corner of South Academy and Wentworth Drive, adjacent to two apartment complexes and south of SecurCare Self Storage and Napa Auto Parts of Southern Colorado. A northbound bus stop, once a convenience for price-conscious commuters and staff members, is directly outside of the formerly bustling doors.

And yet, despite all of this appeal, the 135,762-square-foot building is still waiting for its next occupant. A sign hanging on its western wall shows it is available; real property records show it last sold in August 2013, when Realty Income Properties 25 LLC of San Diego bought the space for a whopping $11 million.

And so the space sits empty.

The shuttered Sam’s Club on South Academy Boulevard is located in the heart of a federally designated Opportunity Zone. [Express photo/Faith Miller]

But here’s where the cavernous behemoth could find some good news: It’s smack-dab in the heart of one of Southeast Colorado Springs’ federally designated Opportunity Zones. That means, if the right redevelopment project were to come along, a program created in 2017 could help investors essentially crowd-fund its revitalization … as long as it’s done with the feedback of the surrounding community. 

 “The spirit is economic development, yes, but equally important is community development,” Scott Turner told a group of about 50 city, county and regional leaders Sept. 13. “The spirit of this, the paradigm of this, has shifted. It’s a new kind of investment, a different kind of investment, so now you have to think about the social impact that has been and should be and shall remain.” 

Turner, who was in Colorado Springs as part of a listening tour, should know. A former Denver Bronco and Texas state representative, he now serves as executive director of the White House Opportunity Zone and Revitalization Council. The council coalesces federal executive departments and agencies to engage with state, local, tribal and territorial governments in an effort to revitalize urban and economically challenged communities. 

““The spirit is economic development, yes, but equally important is community development. All of the deals have to pencil out. … They have to do good.” — Scott Turner, executive director of the White House Opportunity Zone and Revitalization Council

More than a tax shelter

The program was created as part of the Tax Cuts and Jobs Act of 2017, and set up designation criteria for Opportunity Zones in every state and territory. To qualify, a census tract must have at least a 20 percent poverty rate. Colorado Springs is home to eight such designated zones, three of which are located totally or in part south of Platte Boulevard and east of Interstate 25.

With the designation in place, qualified redevelopment projects in those zones can progress with the help of private investors — potentially from across the nation. The investors get the chance to defer hefty tax payments on profits from selling stocks, property or luxury items for up to 10 years by investing instead in opportunity-zone funds that, in turn, financially boost the revitalization projects. 

Some critics have raised red flags, saying that the program amounts to little more than tax giveaways for the rich and may even harm the residents and communities it is meant to serve by fanning the flame of gentrification. Supporters on both sides of the political aisle, on the other hand, have argued that Opportunity Zones create jobs and make a difference in places that could otherwise get left behind.

“The mindset of investors is changing in our country,” Turner said. “The spirit is economic development, yes, but equally important is community development. All of the deals have to pencil out. … They have to do good.”

At the local level, a blighted lot, an abandoned building or a shuttered business could be revitalized into a community asset and potential employer, such as affordable housing, an entertainment venue or a shopping center.

One such project already in the works is construction of the new Marriot Hotel, slated to open in the spring of 2021 at the corner of South Tejon and East Costilla streets. Although it’s currently little more than a gigantic hole in the ground, when completed the site is expected to measure about 300,000 square feet, include a two-story garage and have a slew of amenities — including a rooftop restaurant, conference centers and public parking — that will serve both the community and guests, said Jim DiBiase of developer Olive Real Estate Group. 

He told Sullivan during a tour of the site that the hotel’s location within an Opportunity Zone took it from an idea to reality. All told, the hotel is expected to cost $79 million; of that, an estimated $65 million to $70 million is projected to come from outside investors. 

In addition, DiBiase said his company is working with Pikes Peak Community College’s hospitality program to crate a job-training program, and he anticipates the hotel to have a $25 million annual impact once it is operational. 

“We wanted to have a continuous impact,” DiBiase said. “This is not just for travelers.”

“Everything you talk about — the spirit of the law — that is my district of 75,000 people. [New development needs] to be connected to everybody in our community.” — Yolanda Avila, Colorado Springs City Councilor

 *Related content: Ripe for renewal *

A question of culture

But how to ensure that those investor-backed projects aren’t going to change the culture of a neighborhood or price out the residents they’re supposed to serve? 

“That’s a really good question,” Turner said to the media after the meeting. The trick to avoiding gentrification, he said, is to get buy-in from everyone affected, be that the zone’s residents and business owners or the developers and investors. 

He said Colorado Springs is a national model for that type of collaboration. In Southeast alone, the city planning department has partnered with community-driven organizations including the Solid Rock Community Development Corp., the Colorado Springs Black Chamber of Commerce and the multi-agency RISE Coalition to promote community-wise investment in the zones. 

“We bring the community members to the table, we bring the elected leaders to the table, we bring the project developers to the table,” Sullivan said. “Community leaders may not have the resources, but they have the heartbeat of the community. Now they’re convening together. You see people working together that have never even come across to the other side of the tracks.” 

Colorado Springs City Councilor Yolanda Avila, who represents Southeast, told Sullivan one of the zones in her district had been targeted for a housing development, with no feedback from the community. 

“People who are looking at it are developers from Denver who want to take 42 acres and put tract housing there without any economic development, without talking to the community,” Avila said.

But she said, once all stakeholders weigh in on the projects, the results could be transformative for the community and the area. And that had Avila feeling optimistic.

“Everything you talk about — the spirit of the law — that is my district of 75,000 people. [New development needs] to be connected to everybody in our community,” she said. “I’m elated.”  

regan.foster@southeastexpress.org

 

By the numbers

Colorado Springs is home to eight federally designated opportunity zones. The following statistics show the impact of nine projects matched with Opportunity Zone benefits as of Sept. 13.
* 561 new residential units
* 13.1 million square footage of proposed development
* $422 million-plus in project costs

 

How it works

The following chart explains how an Opportunity Zone Fund and project goes from concept to completion.

[Express illustration/Regan Foster]

This site uses Akismet to reduce spam. Learn how your comment data is processed.