Housing Authority argues assessing the fee will only make housing more expensive to deliver.
The city of Steamboat Springs is asking the Yampa Valley Housing Authority to pay $10.5 million as a fee in lieu of bringing water rights to the table as part of Brown Ranch Annexation.
The city has a water rights dedication policy that applies to annexed land that was put in place in 2009 during the then Steamboat 700 annexation process. That process — which sought to annex land that is now part of Brown Ranch — ultimately failed.
The policy requires that any water rights dedicated to land being annexed be turned over to the city. As the Brown Ranch does not hold any water rights, the housing authority is subject to the fee-in-lieu aspect of the policy.
When first discussed in March, the housing authority argued that the city should waive the fee in lieu as the city already has enough water rights along the Elk River to build another water treatment plant and that assessing a fee would only increase the cost to deliver affordable housing at Brown Ranch.
The water rights dedication has not been discussed since as city Public Works Director Jon Snyder has been working with a water attorney behind the scenes to understand what the fee should be. On Wednesday, Snyder said that attorney had come up with a broad window of what the city could charge between $3 million and $40 million. A $10.5 million fee was ultimately identified as appropriate from the city’s standpoint.
“What (the water attorney) thinks is the most defensible number for the water rights fee in lieu is $10.5 million,” Snyder said. “I agree with her logic, our legal counsel has reviewed it, our water team has reviewed it, and we are confident in the number of $10.5 million for water rights fee in lieu.”
This $10.5 million would be in addition to the share of an Elk River Water Treatment Plant that the housing authority would need to pay for. That share is yet to be determined. That water treatment plan is estimated to cast between $40 million and $58 million. It would also be in addition to tap fees that will need to be paid as units come on line at Brown Ranch.
This $10.5 million could be used for anything within the city’s water utility fund. Snyder said this could be a wide range of expenses from lowering monthly fees for residents to securing more water rights for the city.
“This is more piling on to a development that can’t afford it,” said Housing Authority Executive Director Jason Peasley. “If you’re literally going to use it to give people a break on their water fees, our argument would be waive this, we’re providing all of the affordable housing in our community. If the answer is we’re going to go out there and invest in new water rights so that our community can continue to grow, that makes sense.”
In response, Snyder noted that if the housing authority were to try to secure water rights for the Brown Ranch on their own it would likely have much steeper costs.
“You would be looking at $40 million (for water rights) plus another $58 million (for the water plant) if not for the city,” Snyder said. “There are folks on the other side of this that are going to say you are getting a heck of a deal by not having to develop your own water system.”
Council President Robin Crossan said city council had not had time to discuss the fee in lieu in executive session during their meeting on Tuesday, though Snyder did present the $10.5 million number to them.
The fee in lieu will continue to be a part of negotiations as the committee works toward a finalized annexation agreement. Council intends to consider an annexation ordinance before the November election.
Top Photo Caption: A rendering from the Brown Ranch Community Development Plan. (Yampa Valley Housing Authority/Courtesy)