Salida, Co — The City of Salida regrets to announce that Artspace Projects, Inc. has informed the City it will halt all further predevelopment efforts on the proposed Salida Space to Create – 1st and D Apartments project.
This decision follows several significant financial challenges identified by Artspace in recent weeks including broader organizational challenges. As a nonprofit developer, the organization is navigating an increasingly difficult financial environment across its portfolio. Its Board of Directors has directed staff to halt new development initiatives and focus on stabilizing existing properties, a shift that may include staff reductions and the disposition of some assets.
According to their notification, the project is also currently facing a funding gap exceeding $2.5 million with no identified source to close it. Additionally, the anticipated Middle Income Housing Tax Credit (MIHTC) is now considered unlikely due to the existing funding shortfall, and because the project’s previously identified tax credit investor has withdrawn from the MIHTC program entirely. A recent softening of the overall rental market, combined with increased inflation and borrowing costs, has also made the project less financially feasible.
“This is not the outcome we were working toward, and it’s understandably frustrating for the community and everyone involved,” said Community Development Director, Bill Almquist. “At the same time, the challenges outlined reflect broader realities in today’s development environment, particularly for affordable housing projects, which are complex and costly to deliver. You still need to build the same foundations, buy the same wood, put in the same utilities, and pay the same wages, etc. for an affordable project as you do for a market-rate project. Unfortunately, just because it is meant to be affordable doesn’t mean it is cheap to build.”
The City of Salida will bring forward action at an upcoming City Council meeting to formally terminate Artspace’s site control option for the property at 1st and D Streets.
Despite this setback, the City remains committed to advancing affordable housing on the site. Staff will begin evaluating the feasibility of moving the project forward with alternative development partners. The City also retains ownership of the most recent architectural designs, which outline a high-quality, community-oriented building that fits into the downtown historic fabric and that can serve as a strong foundation for future efforts.
Importantly, the property is subject to a court order requiring its long-term use for affordable housing, reinforcing the City’s commitment to ensuring the site contributes to addressing local housing needs.
“We remain hopeful,” Bill Almquist added. “Whether this project moves forward in its current form or evolves into something similar, our goal has not changed: to create housing that remains accessible to our community even as market pressures continue to rise.”
