Denver Development

Former East Colfax Strip Club Property Becoming Affordable Housing

The development of a former strip club at 8315 East Colfax Avenue lays bare the changes in this rapidly gentrifying area. But in this case, the developer, the city and the neighborhood are all happy with the project.

In the beginning of January, Mercy Housing broke ground for what will become an affordable rental complex of 82 units that will include an early childhood education center on the ground floor. Mercy is calling the project the Rose on Colfax Apartments.

"We're really excited," says Kuhl Brown, the regional real estate development director for Mercy Housing, which specializes in affordable housing projects. Brown anticipates that construction will run through mid-2023, and that the apartments will be leased by that June. Of the 82 units, 26 percent will be for "extremely low-income families," which are those making 30 percent or less of the area median income, according to Brown, with the rest going to those making 70 percent or less of the area median income.

The East Colfax neighborhood runs from Quebec Street to Yosemite Street and from East 11th Avenue to Montview Boulevard. The area is filled with bungalows, apartment complexes and retail business along the Colfax corridor. There are also old motels that provide transitional housing, and some of those living doubled up in these motels will be candidates for the Rose.

"I think it's meeting multiple city goals and neighborhood goals in a unique and combined fashion," Brown says.
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When the building came down last year, the original sign was exposed.
Jonny Barber
The City of Denver has been a key partner in the project. Back in 2015, a murder took place at PT's All Nude II, the strip club that was the last tenant of a building that started as an upscale restaurant called Famous Chef in the 1950s and '60s, then turned into a nightclub, then became a strip club in the 1990s. The murder happened after a dispute between two patrons spilled outside; a regular of the strip club, Stephen Futrell, shot and killed Jeremy Garcia. Futrell pleaded guilty to second-degree murder and is currently serving a 35-year prison sentence.

PT's All Nude II shut down the next year. In 2017, the city bought the property at 8315 East Colfax Avenue at the same time that it purchased a lot at 7900 East Colfax. Brothers Redevelopment is now building an affordable housing complex there for people experiencing homelessness who have experienced a traumatic brain injury.

"This one at 8315, we really wanted a strong family focus because families have really been at risk of displacement because of housing costs," says Nick Emenhiser, the housing development officer at the Denver Department of Housing Stability. "This one is unique because it has a heavy portion of three bedrooms."

The city got Mercy on board through a request for proposal process, in which Mercy applied to be the developer. To make the project possible, the city sold the land, valued at $1.4 million, to Mercy Housing for $10. It also provided a $3.5 million loan with deferred interest. The entire development will cost an estimated $32.8 million.

But the project will bring benefits beyond housing; it's also removing a significant blight. The strip club was "on a list of one of the top addresses in the city in terms of police calls and police response. It was a significant community wish list item to redevelop that site with some community-serving purpose," Emenhiser says.

Even so, developments along the Colfax corridor rarely garner such positive reactions from neighborhood groups.

"East Colfax is finally changing. It’s been taking a long time. Changing for the good in that the public sector has stepped in to sort of seed projects," says Monica Martinez, executive director of the Fax Partnership, a nonprofit that focuses on "development without displacement" along East Colfax.

The Fax Partnership's mission has evolved over the years. In the past, it simply focused on "boosterism of the corridor" and viewed any investment as good, according to Martinez. "Now, we’re having to be a little bit more careful about saying, 'Yes, build here, invest here. Remove the dangerous elements, the low-quality housing, the exploitative landlords.' But do we want a five-story market-rate unit? Not necessarily, because that won’t serve the population there," she notes.
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The early childhood learning center has helped win over neighbors.
Courtesy of Van Meter Williams Pollack Architecture
Evidence of rapid gentrification in the neighborhood cropped up when Mercy and the City of Denver were figuring out funding formulas for the project. The parcel of land is located on two census tracts, which the federal government uses when determining whether a project is eligible for certain tax credits; both of those tracts had previously qualified for the breaks. But in 2020, the U.S. Department of Housing and Urban Development reclassified one of the tracts, removing its qualification for the tax credit.

"There are many reasons that may have happened, but most likely is the fact that it is somewhat representative of the displacement pressures and increasing household income of new residents in the area," says Brown. That led Denver to step up its loan deal with Mercy.

"What they’re offering is something we can appreciate," says Danielle Shepard, president of the East Colfax Neighborhood Association, which represents not just the Colfax corridor, but surrounding residential areas.

While this neighborhood association would have liked even more affordable units in the development, Shepard says that "because they’re bringing in that early childhood center, that really balances out our desire to have more units that are deeply affordable. In our mind, we’d always like to see better."

And that includes keeping the neighborhood's diversity. "We have this really cool multicultural neighborhood that’s eclectic," Shepard says. As a result, she adds, residents are concerned about new projects, and "so concerned about what’s going to come in its place."

"We have to be conscious of new developments and make sure they're meeting the standard of our neighborhood," explains Brendan Greene, executive director of the East Colfax Community Collective, a community group founded in late 2019 that began calling for deep affordability in development projects. "We think there needs to be a different set of criteria and a different set of standards that the city uses for these projects and the displacement impact that it will have on our neighborhood."

For the ECCC, those ideal standards call for ensuring that new developments devote at least half their units to those earning 30 to 50 percent of the AMI or less. "The real need in East Colfax is that housing that is deeply affordable and that's the overwhelming need in our community," Greene says.

But the Rose's early childhood center counts for a lot in a part of town that's lacking such services. "That's also a super big need," says Green. "We're excited to see that be built in the neighborhood."