Council showed support for allocating 75% of STR tax revenues toward Brown Ranch, but lacked consensus on whether to send the question to voters to dedicate funding in future years.
There was little progress toward a Brown Ranch Annexation deal during a special Steamboat Springs City Council meeting on Tuesday, as council members had their first meaningful discussion on the project in public since annexation talks started in January.
While council has discussed the project in public, members have reserved opinions and negotiating instructions for executive sessions behind closed doors, a move council leaders have insisted is needed to ensure the city gets the best annexation deal possible with the Yampa Valley Housing Authority.
Another executive session was on the agenda on Tuesday, but council decided to have their conversation in public, allowing constituents and the housing authority to see some disagreement among council members of how to move forward with annexation.
“Obviously there is a fiscal gap — a huge one,” said Council member Heather Sloop, who emerged as one of the louder voices on council opposing moving forward until that gap was completely closed. “I am very uncomfortable with moving on forward with anything going on a ballot until we can really narrow down exactly where this gap is.”
“It’s also time for the city to figure out their piece of the pie, it can’t all be on the housing authority to figure this out,” said council member Dakotah McGinlay, who stressed the need for housing frequently on Tuesday. “We are a part of this community, we are supporting through a leadership role here, it is not right to say everything is on your side of the table, good luck.”
Until this point, council’s opinion has been communicated through the two negotiators on the annexation committee, allowing the city to present either a unified opinion or no opinion at all. Council’s negotiators frequently refrain from sharing the city’s position on an issue in favor of “taking it back to council,” and the opinions of individual council members have largely remained unknown.
“I really appreciate you guys having this conversation in a public forum,” said Housing Authority Board President Leah Wood at the conclusion of Tuesday’s meeting. “It’s been really helpful for us to hear from all of the council as to what it is you are looking for.”
Chief among the discussion was the funding gap, both operational and capital.
After the first phase of 1,100 units, City Finance Director Kim Weber has estimated the city’s general fund will be at a roughly $1.5 million a year shortfall if it maintains the same level of service. That figure, which takes into account revenues the Brown Ranch is expected to spur — grows to $3 million a year at full build out.
Overall, the operating budget gap amounts to a net negative of about $1,200 per household, per year at the Brown Ranch. Current households in the city are a net negative on the city’s general fund to the tune of $511 per household, per year. That gap is filled by sales taxes that stem from tourism and people who live outside of Steamboat to spend money. The housing authority has presented ideas like a Real Estate Transfer Tax on sales at the Brown Ranch to help fill this gap, though it wouldn't completely meet the deficit.
On the capital side, there is a shortfall as well. If allocated the 75% and the STR tax raises revenue as projected ($14 million a year), the capital side has a roughly $11 million gap. That could be larger though, as Sloop questioned grant projections in the capital analysis. The analysis factors in about $38.6 million coming from grants between the city and housing authority, a number Sloop said she believed was far too high.
A majority of council members signaled they were supportive of the idea of allocating 75% of revenues from the short-term rental tax to the Housing Authority for Brown Ranch. That support was only for the 75% figure though, as some on council said they could not support sending the funding question to voters until all the fiscal gaps were closed and an annexation agreement was finalized. For some on council, sending the funding measure to voters also hinged on whether land the housing authority has identified for a regional park is suitable.
“There is still a giant gap but we’ll figure it out?” questioned council member Joella West. “Do you really think that people in our community are going to vote yes on the basis of, well the council will figure it out? First of all it makes us look kind of stupid and second I think it is a way of making sure that this is defeated, which is the last thing in the world that we want.”
West insisted that more work was needed before voters were asked to weigh in and if an annexation agreement wasn’t done before November, then the question should be delayed until they can identify exactly how the Brown Ranch will be paid for.
Council President Robin Crossan contemplated what would happen with dedicated STR funding should the community’s desire for housing change or if the Brown Ranch we’re successful at solving Steamboat’s housing shortage earlier than expected, expressing discomfort in allocated dedicated funding beyond 10 years.
“What happens in 10 years, we have 1,100 units, everything is fine and dandy, the community has changed and people say no we don’t want any more housing?” Crossan said. “We’ve committed to give them 75% of whatever the STR tax is for an additional 10 years, with no plan how to spend it if something were to happen with Brown Ranch.”
(The housing authority projects 1,400 units are needed now, with that number growing to more than 2,200 by 2040.)
Crossan suggested voters should be asked to allocate funding for 10 years, with an option for 10 more if housing is still needed after the first 1,100 units. The housing authority noted they were open to a provision that would stop allocations for Brown Ranch if construction on the project were to stop.
At the close of the meeting, Crossan said she saw five members of council that wanted more information before moving forward with asking voters a funding question this fall and two (Gail Garey and McGinlay) that were ready to move forward now.
“I feel like we made a lot of progress and then we just took three steps backwards,” Garey said. “We have an immediate crisis we have to solve. I agree with moving forward with putting an initiative on the ballot to commit 75% of the short-term rental tax to Brown Ranch. I see that as a cornerstone in terms of helping us put this whole puzzle together.”
The funding question would need two readings at council to make it to the ballot and there are just two council meetings scheduled ahead of a Sept. 8 deadline to refer questions to voters.
There was also disagreement on the vesting term that should be included in the annexation agreement. The housing authority initially asked for 40 years but has since reduced that to 20 years with an added 10 if certain metrics are met. While some on council argued the housing authority needed that length of time to secure funding, others said they favored a shorter, 10 year-term. There was no clear majority either way, as some on council did not share their opinion on the vesting term.
Not discussed on Tuesday were other key issues like the fee in lieu for water rights of $10.5 million the city has asked from the housing authority, what level of transit services will be provided to the Brown Ranch and results of a traffic impact study that is still forthcoming.
The Brown Ranch Annexation Committee is set to meet again on Aug. 8 to continue working on an annexation agreement. If a funding question is to be put on the November ballot, council needs to approve the first reading of an ordinance to refer that question on Aug. 22 and approve a second reading on Sept. 5. Asking voters the funding question does not technically require an annexation agreement to be finalized.
Top Photo Caption: A rendering for the first neighborhood that would be built at Brown Ranch. (Yampa Valley Housing Authority/Courtesy)
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