After UCHealth Yampa Valley Medical Center decided to pursue another opportunity, Steamboat Springs City Council decided to shelve the project that would have built 10 units for city workers.
After more than two years of work, Steamboat Springs City Council decided to indefinitely pause the once “shovel ready” More Ranch Employee Housing project on Tuesday, a move that will result in the loss of a $1 million grant the city had already secured.
The project had been planned as a partnership with UCHealth Yampa Valley Medical Center and would have built 22 housing units total — 10 owned by the city and 12 owned by the hospital. But UCHealth is no longer looking to move forward as planned after purchasing a 42-unit under-construction development near Walton Creek to address their workforce housing needs.
Without a partner to help shoulder the $1.8 million in infrastructure costs needed to develop the parcel, the city would have needed to contribute an additional $800,000 to move forward. That would bring the total cost of the project to $7.3 million. With only 10 units planned on the city’s portion, the average cost to build each unit would be roughly $730,000.
In a 4-3 “thumbs up” vote, council members decided not to allocate that additional funding and pause the project.
Like other employers throughout the Yampa Valley, the city of Steamboat Springs is struggling to hire employees at all levels because of the cost of housing. As an example, City Manager Gary Suiter said that two finalists for the city’s Director of Human Resources job declined the offer because of the lack of housing. The city is now starting its third search for a new HR Director.
“We lost two excellent finalists,” Suiter said. “Both owned property (in Denver) and just couldn’t make the jump here. … We’re probably going to have to look at increasing signing bonuses just to see if we can lure someone here.”
More Ranch was planned for a parcel that came into the city’s possession because of inclusionary zoning requirements when the Barn Village subdivision was approved. After the developer went bankrupt without building any affordable housing on the parcel as required, the city took ownership of the parcel. YVMC owns the adjacent parcel.
The project is approved and the city has been awarded a $1 million grant from the Department of Local Affairs to help pay for it. The rest of the city’s share had been allocated to the project through the city’s Capital Improvements Plan process.
But even with land, plans and funding, the project struggled to find a contractor, with the first attempt only getting one bid that Deputy City Manager Tom Leeson said was so high they didn’t seriously consider it. The second attempt was able to turn up a contractor that could meet the budget.
City Staff recommended that council use short-term rental tax revenues to fill the $800,000 funding gap, but council members expressed concern about that. While voters approved allocating 75% of STR taxes to the Yampa Valley Housing Authority for Brown Ranch in November, the city still has 25% of revenues in its control.
Council has said they want to establish a process for how to spend its share that 25% of STR tax dollars, but that hasn’t been finalized yet. The initial conversation about the criteria for how to allocate that money is on the agenda for Council’s work session next week. Several council members questioned whether they would be spending money that could be better spent elsewhere.
“We have to consider, is this the best use of our tax dollars, even if it is losing a $1 million grant?” said Council member Michael Buccino.
Council member Brian Swintek asked if they should be saving this money to help pay for upgrades to U.S. 40 needed to support Brown Ranch while Council member Amy Dickson noted the project is in a significantly different place then when it was approved.
“We lost our major partner, and now we are also asking for short-term rental tax revenue to help offset the cost,” said council member Amy Dickson. “That to me has shifted the project significantly.”
Another use for STR tax revenues could be a potential housing project on land off Hilltop Drive that is currently owed by the U.S. Forest Service. A provision in the 2018 Farm Bill allows the Forest Service to lease the land for other uses, such as affordable housing.
According to talking points prepared by the Forest Service and shared with council on Tuesday, the agency is looking for 15 long-term units and 10 units for seasonal workers in whatever development is built.
“It seems like the hospital found a better opportunity,” said Council member Dakotah McGinlay, who said the Hilltop site could likely accommodate 100 units. “I’d like to think that we too could pause and explore if Hilltop or another option might be a better business decision.”
Still, Council members Swintek, Joella West and Steve Muntean each said the city should proceed. Swintek said there is an urgent need for housing and this was a way to address it, even it there could be better options in the future. Muntean said while there may be other opportunities, those are not as real as this one is. West said there are many needs for housing in the community and housing for city workers is one of them.
“There are four of us that feel like this is the thing that should have already been done,” West said. “We have a chance to do it now. It makes no sense to me to walk away from a $1 million grant. … In the meantime, we have a need for employee housing.”
Council members Gail Garey, McGinlay, Buccino and Dickson voted to pause the project, with West, Swinteck and Muntean voting against. City Council is scheduled to talk about housing at its work session next week, including what criteria should be looked at when deciding how to spend STR tax revenues.
Top Photo Caption: More Ranch as originally planned would have built 22 units with 10 of those being owned by the city. (City of Steamboat Springs/Courtesy)