Housing Authority offers to pay per unit, per year fee to close Brown Ranch operational funding gap
The proposal, if accepted by the city, would take care of operational funding shortfalls, but how the city will pay for its share of capital costs still needs work.
The Yampa Valley Housing Authority has committed to pay for impacts to the city of Steamboat Springs’ ongoing operating expenses brought on by the build-out of Brown Ranch, which amounts to just over $1,200 per unit.
To pay this per unit, per year fee, the Housing Authority will employ a real estate transfer tax on all housing authority units sold, a metro district assessing a property tax on Brown Ranch properties and by reauthorizing the Housing Authority’s own mill levy, which is set to expire in 2027.
The move attempts to close the operational funding gap, which has been projected at $1.5 million after the first 1,100 units and that grows to $3 million at full buildout of the 2,262 units planned, according to an analysis worked on by the city and housing authority.
The proposal was met with some skepticism by the city though and spurred a litany of what-ifs speculating what potential scenarios could arise where the housing authority is unable to make that payment. What if the board of a future metro district votes against its property tax? What if voters do not reauthorize the YVHA mill levy? What if there is a lack of turnover of for-sale units to fund the real estate transfer tax?
“We’re guaranteeing you will get $1,203 per unit, per year after (certificate of occupancy) and the way in which we generate that revenue is essentially up to us,” said housing authority Executive Director Jason Peasley. “We’re an entity of which you guys control — like you seat our board — that’s making an obligation to you guys to pay these funds. … I don’t know how we could do more, is the question, to fill this gap.”
Various ideas were thrown out to potentially mitigate the what ifs mentioned, like a provision that would shift services off the city’s plate for Brown Ranch if a metro district mill levy were reduced. Peasley noted that they would not be able to create a plan that is “100% rock solid,” but that they were committed to filling the operational gap.
The payments of $1,203 per unit, per year would start upon receipt of a certificate of occupancy for various units, which is needed before people can move in. Those payments will grow annually based on the consumer price index for Denver. (City Finance Director Kim Weber noted CPI isn’t the best, but there isn’t really anything better). The city will also have the authority to stop issuing building permits for the Brown Ranch if payments are not being made.
“This on our side is a huge concession,” said housing authority Board President Leah Wood. “We want to stand behind the money to be able to fund this project, we want to be transparent with the public that we are not asking for operating funding or increases in taxes in order to subsidize this affordable housing.”
The Brown Ranch Annexation Committee agreed to add language reflecting this proposal from the housing authority to the current draft of the annexation agreement. That agreement will be reviewed by city council on Aug. 22, a meeting with a packed agenda that could extend into the early hours of Aug. 23.
If this proposal goes through, Brown Ranch residents would actually be benefiting less from tourism than other residents in the city. Currently, services for city residents are subsidized by tourism to the tune of $540 per unit, per year according to the fiscal analysis. The housing authority is agreeing to cover the entire deficit Brown Ranch will create without factoring in increased tourism dollars the housing could spur.
Caption: This slide depicts the capital revenues and expenses forecasted for development of the Brown Ranch. (Brown Ranch Annexation Committee/Courtesy)
On the capital side of the ledger, there are still some significant unknowns — specifically how the city would come up with funding for improvements that will benefit the city at large. Based on the analysis presented on Tuesday, the city is short by more than $41 million by the time Brown Ranch is fully built out in two decades.
The largest of these capital expenses are for building parks and recreation space at Brown Ranch and in the public works department including the city’s share of a new Elk River Water Treatment Plant and improvements to U.S. Highway 40.
The city’s development code dictates who builds what parks, with developers building smaller neighborhood or pocket parks and the city taking on the expense of larger community parks. In the current draft annexation agreement, the housing authority will build these smaller parks and the greenways, while the city pays for the larger community parks. Parks alone are estimated to cost the city more than $74 million.
The city is allocated $17.9 million of the cost for the Elk River water plant, which has a wide estimate of cost between $40 and $58 million. The variability here largely comes from the range estimated to acquire the land needed for the plant, according to Public Works Director Jon Snyder.
The city’s share of the U.S. Highway 40 improvements is estimated at $56.6 million, which Snyder noted does not have a clear funding source, as this cannot be funded by short-term rental tax revenues. The housing authority’s share of these highway improvements is about $22 million, which can be paid with STR funds because this portion of the work has been tied to the development. This share may be further updated after reviewing a traffic study that was just completed and will take some time to analyze, Snyder said.
The housing authority’s share of capital costs is more than double the city’s in total and Wood presented their plan to pay for these costs, including potentially selling some land that could be used for market-rate housing to help raise more funding. There is a nearly five-acre part of the Brown Ranch only accessible through the under-construction Overlook Development that could be sold off, and a 24-acre area that could also be sold that was put forward as a regional park option (it’s not great land for that) and had been previously designated open space.
The plan also allows for the housing authority to change the Brown Ranch development plan to help generate more revenue as well, which could include increasing density in some spots or increasing the target incomes that are served within the Brown Ranch. The latter of those was considered a last resort.
Wood said while the full capital funding isn’t fully sourced at this time, the housing authority would commit to have a fully sourced project before construction starts.
“YVHA is not a (speculative) developer,” Wood said. “We are not going to start building housing if it’s not sourced and we have access to all of the capital that we will need in order to build units and we will only build units if they are going to be affordable and meet the needs of our community.”
Both flavors of fiscal analysis, operating and capital, will be discussed at the city council meeting Aug. 22. The annexation committee agreed to continue working on the draft agreement over the next two weeks and plans to meet again on Aug. 18 for an hour-long check of the annexation agreement draft before it heads to council.
Top Photo Caption: A rendering of the Brown Ranch. (Yampa Valley Housing Authority/Courtesy)