Colorado Enterprise Fund Leads $10.5 Million Montbello Redevelopment
The financing will support the Chambers Place redevelopment, creating jobs, food access and community impact
The Colorado Enterprise Fund announced its single largest economic development and commercial real estate investment, the Chambers Place Redevelopment Project, aimed at reinvigorating the Northeast Denver neighborhood, Montbello.
The project will improve retail access to fresh and healthy foods, increase healthy eating and active living, and encourage economic development in a formerly vacated retail center located in a lower-income neighborhood.
"The community really needed this project to once again have access to healthy food," says Ceyl Prinster, president and CEO of CEF. "When grocery stores return to a neighborhood, they support the communities and are a key anchor to spur other economic development opportunities. Chambers Place is an exciting model of mission-driven lenders collaborating on an impact investment resulting in improved health and economic vitality to an under-resourced community. The project model of a grocery store that creates quality jobs and has a wide variety of fresh food options at an affordable price combined with the overall health, fitness and family orientation of the tenant mix is the gold-standard of impact we want to see in a project like this."
The project is expected to create more than 80 jobs and will include additional tenants such as Planet Fitness and a DaVita clinic.
CEF has worked as the lead lender for the secondary financing of the $10.5 million commercial real estate project, collaborating with two other nonprofit funders and a bank lender. The total project cost funds the acquisition, renovation and development of roughly 80.,0000 square feet of commercial real estate leased to grocery, health and other family-oriented businesses appropriate for the Montbello neighborhood. The property includes a shopping center, originally anchored by a Safeway market which exited the project more than four years ago.
The principals are brothers Chris and John Leevers, owners of the Chambers Place property and members of a four-generation grocery family. Their company, Leevers Supermarkets Inc. is 100 percent employee-owned by an ESOP with nearly 200 members and approximately 65 percent minority ownership. LSI primarly operates under the name Save-A-Lot, which is the anchor tenant in the redevelopment. Save-A-Lot is a limited-assortment, value-oriented grocery that provides a wide variety of fresh and healthy foods in some of Denver's largest USDA-certified food deserts. It will increase food access in Montbello and help preserve cultural diversity in a rapidly changing neighborhood.
The Save-A-Lot will provide robust fresh and healthy food at affordable prices, sometimes as much as 40 percent lower than mainline stores. It will offer more than 150 types of fruits and vegetables, 3,000 boxed and canned items and an in-house scratch bakery. The store includes a community room with a kitchen that will be used for cooking and nutrition classes, community meetings and healthy screenings.
The Leevers obtained a $4.9 million loan commitment from Wells Fargo for a senior loan that covered about half the total project cost. They looked for more than two years for the additional permanent financing for the redevelopment of the property. Meanwhile, CEF was instrumental in filling the funding gap by assembling and coordinating the three nonprofit investors that provided $3.5 million in a shared second mortgage as follows:
- $1 million: Colorado Enterprise Fund
- $1.5 million: Colorado Housing and Finance Authority
- $1. million: The Colorado Trust
In other states, similar projects with such high impact in distressed areas like Montbello have been funded by bank investors using New Markets Tax Credits (NMTCs) from a program of the U.S. Department of Treasury's Community Development Financial Institutions (CDFI) Fund.
"NMTCs are designed to stimulate economic growth and bring capital investments to economically distressed communities," says Prinster. "When that option failed to materialize for this project, the Leevers came to use to seek a flexible alternative solution to fill their financing gap. That's when we got creative and sought out our partners."