YVHA’s Cottonwoods at Mid Valley will deliver 86 condos next year. STR Taxes could add 63 more to the market, starting in the mid-$200,000s
Another 63 condos could be for sale as part of the Yampa Valley Housing Authority’s Cottonwoods at Mid Valley development after Steamboat Springs City Council signaled interest in backing the project with $5 million in short-term rental tax revenues on Tuesday.
Two of the four buildings that make up the Mid Valley project are under construction currently on the parcel along U.S. 40 near Walgreens donated to the housing authority in August 2021. These two buildings will offer 86 condos for sale at the end of next year.
The $5 million in STR revenues would go toward building three of the project. This would transition what is currently planned as 63 rental units into condos that would be sold to qualifying buyers with prices set based on income. YVHA estimates units will cost between the mid-$200,000s to the mid-$600,000s, depending on the size and income level it is targeting.
Jason Peasley, executive director of the housing authority, said the city’s investment would also allow the project to deliver units a year ahead of schedule, in addition to adding for-sale to a market that is seeing more rental being built of late.
“New product that is coming on line right now, it’s either rental or very, very high-end ownership,” Peasley said. “What we’re looking at is providing more choice for our community members, creating opportunities for home ownership where they don’t already exist.”
A shorthanded, five-member council said they were generally supportive of the proposal in a public discussion. Council had included an executive session on their agenda to discuss the project, but opted not to use it, with Council President Gail Garey noting, “these are public monies; we both are governmental entities.”
YVHA is also applying for more than $3 million in grant funding from the state’s Prop. 123 affordable housing program, which was approved by voters in 2022. Peasley said the city’s support with STR dollars wouldn’t hurt their ability to get state funding as well.
With money from the city and the state and the already donated land at Mid Valley, Peasley estimated that each unit would be subsidized on average by more than $200,000, allowing prices to be set well below current condo prices in Steamboat.
YVHA estimates prices for these units will be a 30% to 50% discount of what is market rate in Steamboat. Pointing to data from the Colorado Association of Realtors, YVHA says the median condo price in Steamboat in 2024 is more than $850,000. (It’s $1.44 million for a single-family home.)
Of the 63 units, 40 of them would be priced to target earners with 100% Routt County’s Median Income at the time of sale or less. Currently, the median income for a single person in Routt County is $83,400, as determined by the Colorado Housing and Finance Authority. The other 23 units would target incomes as high as 140% the local median income, which would be a single person making $116,760 a year, based on current numbers.
Prices for units will be set so that someone making the target income would not be spending more than 30% of their income on housing, including their mortgage, taxes, insurance and any HOA dues. Buyers would be allowed to pay more than 30% of their income toward housing each month if they wanted, Peasley said.
The entire Cottonwoods at Mid Valley project is targeting the so-called “missing middle,” Peasley said. This refers to people who make too much to qualify for YVHA’s low-income housing but not enough to be competitive in Steamboat’s housing market.
Units would be subject to a deed restriction requiring a buyer to work full-time for an employer physically located in Routt County or be retired from a job that fits that description. The restriction would also require that it be the only residence owned by the buyer and cap appreciation of the unit at 2% annually plus the calculated value of qualified capital improvements. This deed restriction as described is very similar to what was proposed for the Brown Ranch.
“We are making a significant community investment in these units and we want that benefit to last … for the entire lifetime of that unit,” Peasley said. “But we are also balancing the ability for those individuals to gain equity and build economic mobility. That’s the benefit of home ownership.”
The risk for the city of this project is that when the units are ready for sale in 2027, that the community isn’t interested in buying them, Peasley said. YVHA will conduct an outreach and lottery process for the first 86 condos at Mid Valley next year, which should give them data that would indicate whether they need to pivot back to a rental model.
“I do think that creating a scenario where we have the information to know we are doing the best execution and have the ability to pivot I think is appropriate,” Peasley said. “None of us want to invest in something that isn’t in demand.”
Could Mid Valley be a solution to teacher housing?
Multiple council members mused on the concept of setting some of these units aside for “essential workers,” with teachers being mentioned specifically several times.
In its last meeting in October, City Council directed city staff to find 15 housing units specifically for teachers as part of a potential deal with the Steamboat Springs School District to save Whistler Park. While prioritizing this housing for teachers was mentioned in Tuesday’s council discussion, the connection to the Whistler Park conversation was not.
In response to a question from council member Joella West, Peasley said YVHA didn’t oppose adding language to deed restrictions on some units that would restrict ownership to a particular occupation like a teacher or police officer.
“Yes, we would be, especially if that is a threshold item for the city,” Peasley said. “I’m not going to call it a negotiation, we’ve done that before, we don’t want to do that again. Partnership.”
An alternative to adding something to the deed restriction would be prioritizing essential workers like teachers in the lottery process, Peasley said. The drawback is that this only prioritizes these workers during the initial sale, and not into the future. YVHA is discussing how it will conduct next year’s lottery at its board meeting on Thursday.
After the discussion, City Manager Gary Suiter said he had considered council’s direction to find 15 units for teachers in connection with the Mid Valley proposal. When asked if the city’s interest in prioritizing teachers for this project had a connection to Whistler, Council member Amy Dickson said it was more about prioritizing essential workers.
“No, I think we’ve always talked about teachers, fire fighters, police officers, essential workers, nurses,” Dickson said. “I think all of it is important for our community.”
Council President Garey gave a similar response, emphasizing that teachers are an “essential piece of having a thriving community.”
“If we are at risk of losing 40% of our teachers, which is what we are hearing, how are we a thriving community if we don’t have the teachers to teach our kids?” Garey said. “It’s certainly been brought to our attention that there is a housing crisis for our teachers.”