COLORADO SPRINGS — Colorado Springs’ second largest hotel, Hotel Elegante, has sold to a developer who plans to turn the building into “attainable” cost apartments.
The developer’s description of the complex as one offering “low-cost” rent has ignited a regional debate about affordable housing vs. attainable housing, and how those with lower income levels fair in a city that has seen substantial increases in rent over the past few years.
Since 2018, the cost of rent has increased more than 20% in Colorado Springs, according to data from the Apartment Association of Southern Colorado and a 2022 average rent analysis from RentCafe.
In that time, the annual increase of the average rent amounts to $3,804.
“To find a place to live, the market is getting tighter,” said Barb Van Hoy. “Really, for years we have been tracking that the cost of housing has been increasing much faster than wages and incomes.”
Van Hoy is Colorado Springs’ policy analyst for community development. She says the rise in housing is making it more difficult for people to find a place to live.
Some of the people struggling the most to find a home are helped by Mary Stegner and others at the organization Partners in Housing.
“We continue to see, every year, a higher need for families experiencing – or who are about to experience – homelessness,” Stegner, the organization’s executive director, said.
The increase in average rents has coincided with a decrease vacancy rates – from 6.3% to 4.5% recently.
Bryan Rodriguez, a commercial real estate agent with Capital Real Estate Group, who brokered the Hotel Elegante sale, says the low vacancy rates are a sign of a shortage of housing. This drives prices up as people compete for a place to live.
“Price is going up,” Rodriguez said. “So, the only way to really defeat that is you have to add more supply to balance it out in the market.”
Rodriguez isn’t speaking for either party involved in the sale, but believes the nearly 500 units that will come online are part of the solution to bringing down the cost of housing, whether the apartments are below the market rate or not.
“I think it’s competitive with the market,” he said.
The units offered on the website for the soon-to-be apartment complex range from a 364 sq. ft. studio at $969/month to a 2 bedroom-2 bath 1092 sq. ft. apartment at $1849/month
Rodriguez pointed out that renters would have access to the hotel’s gym, indoor and outdoor pool as well as other amenities.
When describing the price of housing and how it plays in to how affordable it is, Stegner says it’s better to think of “affordable housing” as a title, not a description, of a price point.
Affordable housing projects come with state and federal government tax incentives and sometimes local tax breaks. That money comes with the stipulation that only people earning below typically 60% of the county’s median income of $77,700. The rent is then capped at 30% of qualifying people’s income.
Attainable or workforce housing, she says, is a better indicator of a price point.
“Attainable housing are more like properties in town that are affordable because, maybe they’re older properties, maybe the landlord wants to be helping the community by offering lower rents,” Stegner said.
According to data from affordablehousingelpasoco.org, 32% (82,235 households) are “cost burdened” with the price of housing, meaning they’re paying more than 30% of income on rent or a mortgage.
The problem predictably gets worse as people make less money, with 85% of extremely low income (less than $25,100) cost-burdened. Sixty-four percent of those households pay over half of their income in housing.
Fifty-six percent of low income ($25,101-$46,620 in household income) households are cost-burdened, with 13% of them paying over half their rent.
“That means they have no flex in their budget for an emergency,” Stegner said. “When they’re paying so much of their income just to be housed, it’s not sustainable for a family to be able to do that.”
Stegner sees the affordability and accessibility of housing as an existential threat to the city, if prices keep climbing at the current rate.
“When corporations look at moving their company to Colorado Springs, they’re going to look at what the housing stock is, what our housing rates are and can they pay their workers enough to live here. So, it’s crucial for the health of our community that we keep an eye on this,” she said.
Mayor John Suthers has set a goal of 1,000 Affordable Housing units to be added each year, a goal that was beat in 2021.
Van Hoy said that she recognizes that there is a large contingent in the city that doesn’t see the city’s supply as growing fast enough. She says the city is working to attract more state and federal assistance for Affordable Housing projects by easing developers through the process.
“The city does not build housing. The city helps to create the conditions that developers can build more housing,” Van Hoy said.
Rodriguez said that he sees that as a crucial step in combating raising rents. He says that the city assisting developers or developers utilizing existing spaces to create more housing that wasn’t planned through new construction can help keep price points low.
“Without those things,” he said. “Only the most expensive developments make sense for developers to build.”
“What’s going to happen–and you see it all the time–you’ll see bigger developers, bigger entities come in, and they will cater to the higher class, to the higher wage earners,” Rodriguez said. “It’s a case study for the city to figure out how do we add more creative housing so we can provide more options and it goes back to the economic principal right? There’s no supply, there’s high demand.”
Rodriguez is looking at other projects across the city, like utilizing space at the Citadel Mall to bring on more unconventional projects to the city’s supply. He hopes the city takes note of the Hotel Elegante project.