Agenda Date: 06/16/2026
Subject:
Title
Resolution 46-2026: Approving a funding request for South Metro Housing Option's Starlight affordable housing project
Body
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From: |
James L. Becklenberg, City Manager |
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Prepared by: |
Kathleen Osher, Deputy City Manager |
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Julie Latham, Housing Policy Manager |
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Presentations: |
N/A |
PURPOSE:
Consideration of a funding request from South Metro Housing Options (SMHO) to support the construction of Starlight, an affordable multi-family project that will create 72 new housing units in Littleton for families earning between 30-70% of the Area Median Income.
LONG-TERM OUTCOME(S) SERVED:
Robust and Resilient Economy
DISCUSSION:
As the SMHO Commission and staff shared during the annual joint study session with council on May 12, 2026, rising construction costs and uncertainty in soft funding sources have resulted in a projected funding gap of approximately $3.5M on their Starlight project. SMHO is working to close this gap through grants from the Colorado Division of Housing, Arapahoe County, deferred developer fees, and the City of Littleton. As such, SMHO is requesting $1M from the city’s Affordable Housing Fund, which will help close their funding gap and leverage other funding resources.
BACKGROUND:
During the May 12th joint study session, SMHO outlined financing details for the $32M Starlight project, the numerous funding sources required, and the challenges that are creating a gap in funding. SMHO also provided an anticipated project timeline, including a Colorado Housing and Finance Authority (CHFA) application in August 2026, construction start in spring of 2027 if the CHFA application is successful, and estimated project completion in summer 2028.
Starlight redevelops property at the corner of W Littleton Blvd and Delaware to create 72 income aligned multifamily units for families earning 30-70% of the Area Median Income. The location offers walkable, bikeable access to employment centers, grocery stores, parks, schools, and public transit. The project will also include eight foster youth vouchers to support those aging out of the foster care system.
The Inclusionary Housing Ordinance (IHO) went into effect November 1, 2022, with a requirement that 5% of new units be affordable for residential projects with 5 units and up, and that applicants could comply by either building units or paying a fee in lieu. The IHO stipulates that the funds collected from the fee in lieu be utilized by the city for the purposes of planning for, subsidizing, acquisition of properties for, or developing affordable housing in partnership with other organizations. The city established the Affordable Housing Fund to accept these payments and developed a policy on the review criteria and disbursement process for funds. The fund has collected $3.6M from inclusionary housing fee-in-lieu payments to date, with $1,990,929 committed for disbursement, leaving available funds of approximately $1.6M
SMHO’s request for support meets the Affordable Housing Fund criteria as outlined below:
• The request supports 100% affordable properties that are deed, covenant, or otherwise restricted to ensure long-term (30+ years) affordability. Requests that create new formally restricted affordable units or extend the affordability of existing ones are in alignment with IHO parameters
√ Yes, units are formally restricted for 40 years to serve 30-70% area median income levels
• The project is located within city limits
√ Yes
• The requested funding fills a demonstrable financing gap
√ Yes, it is a challenging construction environment and SMHO provided details on their funding stack
• A preference but not requirement that the funding leverages other resources, such as county, state, or federal funds
√ Yes, SMHO is applying for the 4% Low-Income Housing Tax Credit (LIHTC) program and the city’s funding support will help the competitiveness of that application. The project is also anticipating funding from the Colorado Department of Housing and Arapahoe County, as well as 2025 PAB allocations from the City of Englewood and the City of Centennial.
Supporting this request aligns directly with the city’s adopted goals and the 2027 Strategic Plan initiative to cultivate a favorable environment for housing development across all income levels. Additionally, the Denver Regional Council of Government’s (DRCOG) recent Regional Housing Needs Assessment identified households earning at the 0-50% AMI levels as the area of greatest need for additional housing in Littleton, which this project helps address.
Prior Actions or Discussions
• Annually City Council hosts a joint meeting with the SMHO Board of Commissioners during a study session to receive an update on the activities of the city’s housing authority.
• In 2026 the annual joint study session was held on May 12, 2026, and council provided direction to staff to bring forward a resolution providing funding from the Affordable Housing Fund for Starlight.
FISCAL IMPACTS:
The Affordable Housing Fund currently has approximately $1.6M available to support affordable housing projects. This funding request would reduce available funds.
STAFF RECOMMENDATION:
Staff recommends adoption of Resolution XX-2026 to approve SMHO’s funding request in support of Starlight and authorizing the City Manager to sign the funding agreement on behalf of the city.
ALTERNATIVES:
Council could fund at varying levels or deny the funding request.
PROPOSED MOTION:
Proposed Motion
I move to approve Resolution 46-2026 approving a funding request for South Metro Housing Option's Starlight affordable housing project.