Bringing New Affordable, Mixed-Income Housing to a Small Colorado Community

Bringing New Affordable, Mixed-Income Housing to a Small Colorado Community

Sagebrush Apartments, Fort Lupton, Colorado's first new affordable housing development in 15 years, consists of 72 affordable housing units renting to households at a range of income levels. Photo credit: Rob Smith, The Michaels Organization

In April 2024, Fort Lupton, Colorado's first new affordable housing development built in 15 years opened its doors to residents. Built by developer The Michaels Organization, Sagebrush Apartments is helping Fort Lupton realize its larger redevelopment goals of increasing residential and commercial opportunities in the downtown Fort Lupton area known as Vincent Village. Thanks to Sagebrush Apartments' location, residents enjoy easy access to nearby retail and other amenities, and the use of income averaging allows the development to serve households earning a range of incomes.

Meeting Community Needs

The 72-unit Sagebrush Apartments is helping fulfill needs identified by the Fort Lupton Master Plan, including increasing the number of multifamily housing and renter-occupied units for the community of approximately 10,000 people located 30 miles from downtown Denver. When Fort Lupton adopted the plan in 2018, less than 15 percent of the city's housing stock consisted of multifamily units, with the most recent multifamily development completed in 2005. Community outreach during the master planning process revealed the absence of "missing middle" housing as a particular concern as well as the shortage of units affordable to low-income households. As the commercial redevelopment of the Vincent Village area took shape, building new affordable housing became a priority for local officials, helping to prompt The Michaels Organization's involvement, reported James Weglarz, regional vice president at Michaels.

Sagebrush Apartments features many family-sized units and includes a playground. Photo credit: Rob Smith, The Michaels Organization

Sagebrush is filling a gap in the local housing market; developers are building little affordable housing, and the city's housing stock is aging, said Weglarz, presenting a housing challenge to residents of many income levels and household sizes. To address these needs, Sagebrush offers various unit sizes. Approximately one-third of the units have one bedroom, approximately one-half have two bedrooms, and the remainder have three bedrooms. Amenities at Sagebrush include a 2,300-square-foot clubhouse, a fitness center, and a pet park. The development's efficiency and environmental features have earned it certification from Enterprise Green Communities, and the building's architecture and landscape design, which features drought-resistant native plants, blend in with the aesthetic of the area and provide visual interest throughout the year.

Michaels used income averaging to ensure that Sagebrush serves residents earning a range of incomes, from 30 percent to 80 percent of the area median income. As Fort Lupton grows, Sagebrush reinforces the city's commitment to ensuring affordability in the downtown area, because it occupies one of the area's last remaining developable parcels. Sagebrush also is strategically located between commercial and single-family zoning districts, helping ease the transition from commercial to residential zones. Residents have easy access to major transportation routes, grocery stores, medical facilities, commercial areas, and the recently built public library.

Overcoming Financing Challenges

Development costs for Sagebrush totaled $25 million, and although assembling a financing stack for affordable housing developments often is difficult, funding Sagebrush felt particularly challenging, reported Weglarz. Land for affordable housing often is donated, leased, or sold to developers at a nominal price, but Michaels had to pay market price for the Sagebrush site, contributing to the funding gap. To help offset costs, the Fort Lupton Housing Authority helped negotiate a payment in lieu of taxes agreement with the city. Equity raised from the sale of low-income housing tax credits also was part of the financing package for Sagebrush, although winning approval of the competitive credits required three applications, said Weglarz. The Colorado Department of Local Affairs supplied additional funding from the state's Housing Trust Fund. Project-based rental housing vouchers from the Weld County Housing Authority, which supports 20 households living at Sagebrush, allowed Michaels to secure a mortgage with more favorable terms than would otherwise have been possible, said Weglarz. Finally, Sagebrush will use HUD's Risk Sharing Initiative, administered in the state by the Colorado Housing and Finance Authority, to undergo a permanent loan conversion.

The need for a project like Sagebrush Apartments in Fort Lupton was confirmed by the rapid lease-up of Sagebrush units. Weglarz reported that within 3 months, residents leased all 72 units at the development, reflecting the demand for affordable housing in Fort Lupton at a range of income tiers. Serving the community in this way, Weglarz believes, was instrumental in fostering the positive reception Sagebrush Apartments has received from the Fort Lupton community.