EDITOR’S NOTE: This story has been updated to more accurately reflect Aurora Economic Development Council Vice President Yuriy Gorlov’s statements.
The neighborhoods around the former Fitzsimons Army Medical Center in north Aurora are ripe for development, thanks to the ever-buzzing Anschutz Medical Campus and, now, a federal Opportunity Zone that’s helping to facilitate at least one major apartment complex.
Legacy at the Fitz, which will begin construction at 1363 Victor St. in the coming weeks, will boast 363 units, nearly 500 parking spots and proximity to all things urban: a nearby light rail stop, a bevy of high-paying medical jobs and more and more trendy restaurants and entertainment hot spots.
“Given its proximity to the Anschutz Medical Campus, Legacy at Fitz is quite literally the perfect place for medical students, healthcare professionals, and technology workers to call home,” R. Lane Cutter, senior managing director at Legacy, said in a statement about the development. “Our goal is to make this community one of the most convenient living experiences in the area.”
Aside from the favorable locale, Legacy Partners, which is developing the 4.5 acres, is taking advantage of the region’s designation as one of Aurora’s five Opportunity Zones.
Opportunity Zones, the federal capital gains tax incentive program included in the Trump administration’s tax plan, have been applauded for increasing the possibilities of more jobs, housing and services in regions chosen by the state. Those areas were selected based on census data showing higher rates of poverty and lower-than-average income.
There are now more than 120 designated Opportunity Zones in Colorado, according to the state Office of Economic Development.
Only Denver has more Opportunity Zones than the two primary counties that include Aurora. Adams and Arapahoe County each have nine such tracts, while Denver has 10. Pueblo County also has nine Opportunity Zones, according to state data.
Legacy Partners is also planning to build 225 units in Tampa, 300 units in Austin and 500 units in Baltimore, all in Opportunity Zones.
In Aurora, Opportunity Zones have quickly become expedited financing tools for developers seeking to build in designated low-income areas, according to Yuriy Gorlov, vice president with the Aurora Economic Development Council.
In May, a Connecticut-based industrial developer broke ground on a massive logistics center in an Aurora Opportunity Zone near Denver International Airport. Adams County is also in the process of rolling out an Opportunity Zone task force.
“It changes the interest from real estate groups because the Opportunity Zone program allows for the money to come in at a different rate of return,” Gorlov said. “Ultimately … you’re getting more bang for your buck.”
And while the Legacy at the Fitz marks the state’s first large-scale residential development in an Opportunity Zone, Gorlov said the incentive program could help bump the housing stock nationwide.
“In theory, we should be seeing a lot more residential development in Opportunity Zones, not just in Aurora, but across the country,” he said. “As construction costs have risen, everything is that much harder to do in the top 50 or 30 metro areas. People are getting crunched price-wise.”
Brian Watson, CEO of local real estate firm Northstar Commercial Partners, told The Sentinel in April that his company, too, has not been immune to rising construction expenses.
“The costs for construction have gone up tremendously and sometimes it’s really hard to make the numbers work,” he said.
Watson’s firm recently broke ground on an $80-million mixed-use development near the Aurora Municipal Center. Because the development sits on legally blighted land, Watson’s firm will receive tax breaks through the state urban renewal program.
Gorlov said federal incentives like Opportunity Zones could, in the short term, provide another avenue to infill otherwise vacant or under-used parcels.
“In some locations it could be that other tool,” he said.
Ward I councilwoman Crystal Murillo, who represents the neighborhoods around the Anschutz Medical Campus, has been skeptical of using incentives to stimulate the economy there, especially if it’s at the cost of current residents, who she said may not be able to afford housing like the units at Legacy at the Fitz.
“My general opinion on incentives (is that) if we’re going to be using tax incentives to offset costs and to benefit a developer or business, we need to be critical about how it’s reaching the constituents at the end,” she said. “In Ward I, if the end product is housing and people can’t afford to live there, it’s not serving the ward.”
Murillo has consistently voted against tax incentives for development in the city, citing concerns that it may either displace residents or create a higher cost of living, eventually forcing them to move to more affordable areas.
Legacy Partners would have likely built the development even without the now-available incentives.
“We had the ground under contract before the area was declared an (opportunity zone) but the designation brought more voices and strategic partners into the mix,” Cutter told The Sentinel in a statement. “This enabled us to further evaluate what was best for the project and community.”