City officials want to buy the Colorado Department of Transportation’s current headquarters in southeast Denver and then sell the land to a developer.

City officials want to buy the Colorado Department of Transportation’s current headquarters in southeast Denver and then turn around and sell the land to a developer to build affordable housing, according to the Denver Department of Finance.

CDOT spokeswoman Amy Ford confirmed Wednesday that the state transportation agency and the city and county of Denver reached a deal for the state-owned properties in Virginia Village.

City documents show Denver wants to shell out $19.25 million for the combined 23 acres and then be reimbursed by the Kentro Group. The city could loan the Denver-based developer nearly $900,000 to help make the sale and subsequent development of residential housing possible.

The sale would include 11 acres at CDOT’s Region 1 office at 2000 S. Holly St. and 12 acres at the agency’s Central Office at 4201 E. Arkansas Ave. CDOT is expected to use the money from the sales toward the headquarters it’s building in Sun Valley. Agency employees are expected to move into the property near the northeast corner of Howard Place and Federal Boulevard during spring 2018.

To justify building its new headquarters CDOT said the properties it’s selling have safety issues, Americans with Disabilities Act deficiencies, asbestos and floodplain concerns. It’s unclear at this point how Kentro will handle those problems.

The purchase contracts and more details about the project are expected to be shared with Denver City Council members during a committee meeting next week. The sale is anticipated to close in mid-2018, said Courtney Law, spokeswoman for Denver Department of Finance.

“The city has been working with CDOT and a developer to create a real estate transaction to ensure compatible neighborhood development, new affordable housing units and at least 150 new jobs in south Denver,” Law told Denverite on Wednesday.

The city plans to sell the parcels to a developer who will build a combination of market-rate, senior and affordable housing. The project could also include some retail space, she said. Law said the developer was chosen “through a selection process.”

CDOT could not sell directly to Kentro because state law requires that the properties be offered to government entities first. Denver Public Schools initially considered buying one site for a bus barn, but later changed its mind, according to the city documents.

Denverite reached out to Kentro about the project. We will update this article if and when the developer responds. The city documents show Kentro is proposing to create “225 walkup housing units to be sold at market rate and develop 50 to 80 units of senior housing ” near South Holly Street and Evans Avenue.

About a mile to the northwest, Kentro is proposing to develop the western portion of the land at South Colorado Boulevard and East Arkansas Avenue for commercial purposes and the eastern portion for 150 affordable housing units, according to the city.

The units would be available to families making up to 60 percent of the average median income in Denver. That’s $35,280 for a single person and $45,360 for a three-person household.

Affordable is generally considered to mean that only about a third of a household’s monthly income, before taxes and deductions, goes toward housing costs. In recent months, the city and county of Denver has been acquiring land to sell to developers willing to build affordable housing units.

Business & data reporter Adrian D. Garcia can be reached via email at agarcia@denverite.com or twitter.com/adriandgarcia.

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