Longmont opportunity zone interest building as city leaders prep St. Vrain corridor, sugar factory as targets
Floodplain redraw could help investors avoid insurance costs; tax cut boosts feasibility of sugar site
Longmont officials are envisioning a redeveloped sugar factory and more uniform growth along the St. Vrain River, both made more realistic thanks to new federal tax incentives and a major city floodplain mitigation project.
City leaders hope to leverage two adjoining federal opportunity zones covering a large southern portion of Longmont as lures for what will be a costly repurposing of the sugar factory property in southeast Longmont, and, more broadly, for attracting new affordable and “work force” housing and commercial space to the St. Vrain’s course through the city.
The opportunity zone program was created by the 2017 Tax Cuts and Jobs Act. It allows investors to put capital gains into development projects within designated census tracts, chosen for their relatively depressed economic status. The taxes on those initially invested capital gains, as well as gains made since on the real estate projects within the zones, get deferred after five years of keeping an interest in such properties, and the tax cut grows if the interest is held for seven years and grows again after 10 years.
For the site of the former and now fire-damaged Great Western sugar factory, the opportunity zone may ease the financial burden of either incorporating the long-standing structure into a new building or tearing it down. It could also help mitigate any costs associated with the potential need to remedy any soil or other contamination on the site caused by decades of industrial activity.
“I think the community at large would really like to see that sugar mill area turn into something that is a positive and welcoming modern gateway into our community,” Longmont Economic Development Partnership CEO Jessica Erickson said.
Sugar factory owner Dick Thomas in a brief interview said the opportunity zone provisions are just one of several financial vehicles being analyzed in talks to redevelop the land — he is engaged with several groups that have expressed interest in bringing modern mixed commercial and residential structures to the property. He said the range between $60 million and $100 million has been identified as an initial cost estimate for such a project.
Thomas hopes to assimilate what remains of the brick factory building into a redeveloped parcel.
“We’re not going to tear it down. Most of what’s there will remain,” he said, declining to further elaborate on redevelopment talks or to identify the investors with whom he is negotiating.
Redrawn floodplain negating insurance costs
Before the opportunity zone can most effectively aid financing development in several key areas along the river, the $120 million-plus Resilient St. Vrain project, which is rejigging the stream’s channel and floodplain through the city, needs to make more progress, and the resulting smaller floodplain will have to receive federal approval so development limitations in the areas purged of risk can be lifted.
“We were very intentional about focusing on areas of strong opportunity and that already had plans in place and broad public support to move development forward, but had some issues in attracting capital,” Erickson said. “The floodplain issues were part of that.”
Preliminary approval of redrawn floodplain maps by the Federal Emergency Management Agency — which dictate which property owners have to buy flood insurance — is expected in July this year. Those new maps won’t take effect until three months after that when an appeal period expires, according to Longmont Floodplain Manager Monica Bortolini. If a legitimate appeal to the preliminary floodplain maps has to be evaluated, the timing of when the final maps would be issued is unknown, she said.
“The part of the opportunity zone that is subject to flooding in the near term is generally south of the rail tracks,” Longmont Redevelopment Program Manager Tony Chacon said. “The drainage improvements to be concluded this year will effectively pull some of the properties immediately adjacent to the creek out of the floodplain, and the remaining areas will see a reduction in the depth of the 100-year flooding condition.”
Of course, flood concerns throughout the rest of the opportunity zones are not impacting development proposals with plans to use the tax cut, according to city leaders.
Even those properties within the current floodplain can be engineered to work around the development regulations in the risky area, Chacon noted.
He added the requirement to purchase flood insurance — especially temporarily, as might be the case for land along the St. Vrain lifted from the floodplain by the Resilient St. Vrain work — can be the most pesky hurdle for developers examining building options for a property in a floodplain.
“In regards to these issues, our engineering and planning staff are working collectively and diligently to facilitate new development in the flood-prone areas,” Chacon said. “While I am sure some prospective developers may deem the floodplain an issue, I don’t see the floodplain issue being a significant deterrent to opportunity zone interest, as, in fact, the city is receiving continued developer inquiry and conversations.”
But talks with developers who could actually use the opportunity zone program beneficially remain secretive and prospective, including those involving attempts to sway Front Range Community College to establish a visible presence in downtown Longmont.
“I can tell you that no one has committed to any particular project yet or even entered into any level of detailed discussion or negotiation,” Chacon said. “We may have something to better share in a few months. I can say the general interest is in vertical mixed-use or residential development, primarily rental.”
Councilman Tim Waters is a part of a group of city and economic development leaders studying the potential offered by the opportunity zone for the St. Vrain River corridor, as well as the regulations that help keep the stream a gem of riparian habitat and natural beauty. An example of such a rule would be the like the 150-foot development setback from the river’s bank for which only city council can approve a variance.
“What exists along the river in San Antonio, that’s just not going to be the case” for the St. Vrain, Waters said. “We’re going to maintain our greenways, we’re going to maintain our riparian areas, our wildlife areas.”
The soon-to-be-finished Dickens Farm Nature Area park along the river south of Boston Avenue between Main and Martin streets will ensure an open space element remains along the St. Vrain River in central Longmont, and the green space could be a highlight for any new multifamily housing developments in the area to market to prospective tenants.
But Waters is also aware of discussions about Front Range Community College potentially moving from its southwest Longmont campus, or adding to its property portfolio in the city, in order to open up shop — possibly with another institutional partner that would offer additional higher education paths — closer to downtown.
“Front Range Community College is happy to be in Longmont, and we like our current location. We’re certainly always open to discussions of other possible partnership options in the community, and greatly appreciate the city’s interest in working with us to create an even better campus,” the school’s president, Andy Dorsey, stated through a spokeswoman. “We have had a very preliminary conversation with the city about this concept, but it’s way too early to suggest that we’ll be moving.”
Councilman: Academic assets would spur economic activity
Waters mentioned the city’s land holdings include a site just north of the river, southwest of South Main and Boston Avenue, that formerly hosted a mobile home park that was destroyed in the 2013 flood. It, along with several other city-owned parcels near the river south of downtown, could be packaged into a land assembly effort for a development project the city would be inclined to support, such as a Front Range or other higher education space that may be able to take advantage of the area’s opportunity zone status.
“We’re keenly interested in a more robust presence of higher education options here along with Front Range so that our kids could go as far as they want in terms of their educational pursuits without ever having to leave home or Longmont to do that,” Waters said, contending more local educational opportunity would lead to an unprecedented business climate for the city.
He believes if the opportunity zone attracts additional academic assets within Longmont, they could satisfy a need for a better educated work force that certain employers in the area have made known. Fostering greater talent locally, Waters explained, will allow businesses to recruit more from within the city instead of luring skilled labor from outside Boulder County and Colorado, atrend that has helped drive recent population growth in the state.
“We have the potential to create an economic engine that transcends the kind of economic development we have seen here before in Longmont,” Waters said.
Sam Lounsberry: 303-473-1322, firstname.lastname@example.org andtwitter.com/samlounz.