A 535-acre housing development pitched for decades by a Douglas County landowner made incremental progress Tuesday as the Castle Rock Town Council moved forward on plans to annex the land that splits the town.

Castle Rock councilmembers Tuesday night unanimously approved a pre-annexation agreement with Pine Canyon developers, allowing the developers to address concerns over water usage and requiring them to meet municipal standards.

The Pine Canyon development calls for 800 single-family homes, a maximum of 1,000 multi-family residential units and a 600,000-square-foot limit for non-residential development. Developers plan to retain 176 acres for parks, open space and trails. A hotel resort and spa and business space is also proposed.

The 535-acre unincorporated Pine Canyon site splits Interstate 25, and east of the interstate is located north of Scott Boulevard, south of Black Feather Trail, west of Founders Parkway and east of Front Street. On the west side of I-25, Pine Canyon sits east of Prairie Hawk Drive, south of Highway 85 and is bisected by Liggett Road.

Some residents call it the “donut hole” in the middle of Castle Rock.

The Walker family, which has owned the ranch since 1885, has attempted to redevelop it since 2003 and be annexed into Castle Rock. Pine Canyon developers first proposed a formal annexation in 2013. After three failed attempts to be annexed by the town, the Walkers pivoted to Douglas County for development in 2020.

Kurt Walker, a sixth generation family member, told The Denver Gazette that Pine Canyon ranch has become unsustainable as Castle Rock and Douglas County develops more land around them.

“The fact of the matter is,” Walker said, “the relationship very severely broke down between ourselves and the town in the late 2010s to the point it became very clear to us that there was absolutely no path forward for us ever obtaining staff approval with the plan that we had at that time. We have watched the town grow around us and see the changes to what it is for generations.”

Pre-annexation is a first step before the city can fully annex the site at a future date. It also establishes new regulations for developers to follow that meet municipal standards instead of county regulations.

For instance, in its county proposal, Pine Canyon planned to rely only on nonrenewable groundwater to support the development. But with an annexation by Castle Rock, the development can work with the town’s water agency and not rely just on groundwater, according to Mark Marlowe, director of Castle Rock Water.

The original water plan drew the ire of nearby residents, with some saying the nonrenewable groundwater supply isn’t sustainable.

“This pre-annexation agreement will take a major step to addressing issues with water,” Marlowe said, adding it ensures Pine Canyon “has a sustainable groundwater supply.”

With annexation, Castle Rock Water would provide all water, wastewater, and storm water service to town standards, Marlowe said.

Castle Rock Water would be able to provide 1,220-acre feet of water per year for Pine Canyon, with 1.1-acre feet earmarked annually for each residence, according to Marlowe.

That’s compared to .279 acre-feet minimum if the land was developed under the county.

Earlier in the day on Tuesday, Douglas County commissioners, including newly appointed Commissioner-elect Kevin Van Winkle, unanimously approved developers’ request to table further discussions to an unknown date.

Since September, county commissioners have considered Pine Canyon’s annexation proposal. But they delayed a vote three times amid community pushback and never decided. That led developers back to conversations with Castle Rock.

“We didn’t go to the county for leverage or negotiation tactics,” Walker said. “We did that because it was our only path forward.”

Councilmember Max Brooks said there is “still quite a ways to go on this but the pre-annexation agreement is a very big step.”

A few Castle Rock residents spoke late into Tuesday night’s meeting.

Some expressed worry the pre-annexation agreement doesn’t change much about the development itself. Residents expressed concerns over views, traffic and density.

A metro district will be established to fund some of the construction, according to developers. One resident expressed concerns about using metro districts, claiming property taxes will skyrocket as a result.

Three neighborhood meetings are required for annexation approval, developers said.

Future dates for Pine Canyon neighborhood meetings remain unclear. Developers anticipate the town council will vote for full annexation on May 20.

Pine Canyon developers must submit a formal annexation application within the next 45 days.

“We have this in place to meet the needs of the development,” Marlowe said.

Walker, in response to community concerns, said the intent is “making sure what we are doing really honors … the property itself. We are pleased the town has changed their MO and their outlook toward us.”