Historic La Fon Motel site will become affordable housing in Manitou Springs
MANITOU SPRINGS, Colo. — Last week, the Colorado Housing and Finance Authority awarded a federal 9% Low-Income Housing Tax Credit to an affordable housing project in Manitou Springs.
The tax credit will provide $1.6 million to complete the development of 50 affordable rental units on an empty 56,000-square-foot lot in east Manitou Springs where the historic La Fon Motel — briefly the La Fun Motel, renamed after ownership changed — once stood.
“It’s just been like pushing a rock uphill,” Electra Johnson, executive director of the Urban Renewal Authority Board in Manitou Springs, said about the housing project.
Paragon Realty, which now owns the land where La Fon Motel used to reside, originally proposed to build 78 market-price units across two apartment buildings, but the plan did not pass zoning requests, according to The Gazette.
After Paragon Realty pivoted to affordable housing units, the Manitou Springs Urban Renewal Authority provided a $2.1 million investment, generated from the city’s sales tax. The investment allowed Paragon to buy the property in 2022 and tear down the motel.
The new award money from the low-income tax credit allowed the project to reach full funding and start construction on 50 one-, two- and three-bedroom units. Eligible renters must be earning between 30% and 60% of the area median income, which was around $49,000 in 2024, according to Data Commons. Johnson said the unit's rent rates will be posted according to Housing and Urban Development standards, which must not exceed 30% of a family’s income.
“We don’t have a lot of opportunities to do projects like this,” said Natalie Johnson, the mayor of Manitou Springs. Since Manitou Springs is nestled in a mountain canyon, much of the city has been built out and there is not much land in the city’s limits for new construction projects, she added.
Mayor Johnson said she hopes the affordable housing units will bring in a younger demographic and more families. Manitou Springs has an aging population, one that is about 10 years older than the average age of its neighboring city, Colorado Springs.
“This is an opportunity for some fresh energy and new perspectives,” Mayor Johnson said.
Construction is expected to begin towards the end of 2026 or early 2027.
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