Manitou Springs council to consider backing housing authority role in 50-home project

Manitou Springs City Council is scheduled to decide Nov. 2 whether to reaffirm support for the El Paso County Housing Authority’s role in a proposed 50-home affordable housing project at 123 Manitou Avenue. The proposed partnership would make the project property-tax exempt, while a payment plan is intended to offset some of the revenue the city would forgo.

Under terms outlined in an [Oct. 30 memorandum from the Manitou Springs Urban Renewal Authority (MSURA)](https://manitouspringsco.api.civicclerk.com/v1/Meetings/GetAttachmentFile(fileId=8253), the property owner would make payments in lieu of taxes starting at $12,500 in the project’s third year. Payments would rise 3% annually, with an additional $5,000 increase in year 18, and continue through the anticipated 40-year tax-exemption period. The payments would go to MSURA during the remaining tax-increment period and then to the city.

The proposal also calls for Paragon to pay MSURA $175,000 when the property transfer closes. Paragon estimates the city would receive about $45,000 in construction-related use tax. MSURA’s board approved the proposed terms Oct. 9, subject to final documentation; the agreements have not been finalized.

The City Council meeting packet says the county will not proceed without formal confirmation of the city’s continued support. The city must respond by Nov. 3 so the county can prepare documents for its Housing Authority board, which must approve the project by Nov. 11. The packet includes proposed motions to approve or deny the county’s participation; the council has not yet acted.

The property-tax exemption stems from the proposed ownership structure: the county housing authority would join the project as a special limited partner. MSURA says that without council approval, the project would not proceed, putting about $22 million in leveraged MSURA investment, the 50 affordable homes and the negotiated payments at risk. The memorandum describes the homes as affordable for 40 years.

This decision concerns the project’s financing and the housing authority’s participation, not its initial planning or tax-credit review. In January 2025, the council voted 5-0 to support Paragon’s application for a 9% Low-Income Housing Tax Credit award. The [support letter attached to the meeting minutes](https://manitouspringsco.api.civicclerk.com/v1/Meetings/GetAttachmentFile(fileId=8251) described about 43 homes and said the project still needed city review, permits and approvals. A separate [November 2025 mayoral letter](https://manitouspringsco.api.civicclerk.com/v1/Meetings/GetAttachmentFile(fileId=8252) supported the housing authority’s participation and described about 50 homes. The current proposal addresses the tax consequences of that partnership structure. The project received a 9% tax-credit award in May 2026.

The city administrator’s memorandum says council approval is also needed for the project to proceed with Colorado Department of Local Affairs funding. Permits and financing documents must be completed by Dec. 31 to count toward the city’s Proposition 123 affordable-housing commitment. The project does not rely on Proposition 123 funding, the memorandum says, so missing that city commitment would not affect the project itself.