Amidst the tangle of buildings and strange street intersections at the base of the Steamboat Ski Area, there is no truer ski-in, ski-out condominium project than the Thunderhead Lodge. Yet, its owners hope to demolish it in favor of a more contemporary building some day.
General Manager Chuck Porter of Ski Time Square Enterprises said his company has a similar vision for all of Ski Time Square. The retail buildings are outdated and no longer are the best use of prime slopeside property.
"We view those properties right now as being economically inventoried -- they generate enough cash to pay debt service and build some capital reserves," Porter said. "They're just sitting there."
The Thunderhead Lodge and Ski Time Square buildings are examples of why base-area property owners and developers announced plans this week to petition the city of Steamboat Springs to establish an Urban Renewal Authority. If established, the URA would set aside a portion of incremental property tax growth in a narrow horseshoe of land surrounding the lower ski trails. The money, perhaps $5 million to $8 million in the next 10 to 20 years, could be used for improving pedestrian paths signs and transit facilities in the area.
It would not require a new tax, proponents say, and would be used only for city-approved public projects on public land.
The hope is that improvements in public facilities would form the base of a more functional, modern pedestrian ski village. In turn, theoretically, those public improvements would stimulate private investment -- redevelopment of Thunderhead Lodge and Ski Time Square, for example -- and increased valuation of the private property would then grow the overall property tax base.
As much as Ski Time Square Enterprises, which also owns and operates the Sheraton Steamboat Resort and Conference Center, would like to rebuild the area from scratch, demolition crews won't be arriving any time soon. First, the ski area's base needs a fresh start with a unifying theme, Porter and other property owners say.
"Right now, we can't make it work," Porter said. "We don't even have a good pedestrian link in the horseshoe. We need something unifying there to start pulling it all together."
Tax incremental financing
Porter is one of six who have formed the Base Area Reinvestment Coalition to propose the URA.
The others are Chris Corna of Slopeside Grill; Steamboat Ski and Resort Corp. President Chris Diamond; David Baldinger Jr. of Steamboat Village Brokers; Bill Stuart of Market on the Mountain; and Whitney Ward, owner of the Snowflower II development site. They plan to present the City Council with a petition calling for establishment of the URA.
The Urban Renewal Plan they are proposing is one of two "tax incremental financing" mechanisms allowed by state statute.
The URA would have the authority to issue bonds to fund capital projects, Baldinger said.
When new development or redevelopment occurs within the boundaries of the URA, bond underwriters would approximate the resulting increase in tax revenue. A portion of the incremental increase in property tax revenues would be set aside to pay off the bonds.
New development could be as dramatic as Ward's anticipated high-density residential tower at Snowflower II, Baldinger said, and redevelopment could be as modest as new decks on existing condominiums.
The city would determine how the bond proceeds would be spent. However, the bonds would be the obligation of the URA, not the city.
State law would protect public schools from any loss in tax revenue, Baldinger said.
What about the DDA?
The other form of tax incremental financing allowed by state statute is a Downtown Development Authority.
Steamboat had a long, drawn-out discussion over creation of a DDA in the late 1990s until voters overwhelmingly rejected it in 1999.
Proponents of the new URA say it differs from the old DDA proposal in that it is far less complex, would involve a much smaller area, and therefore capture far less revenue than the $150 million the DDA targeted.
Baldinger emphasized the URA would not create a new tax, but would reallocate a portion of the growth in existing taxes to stimulate the rejuvenation of the ski area base.
City Council President Paul Strong said he can't approach the subject of the new URA without keeping the old DDA in mind.
"They are trying to accomplish something we need in Steamboat," Strong said. "We have $50,000 in this year's budget for planning for Ski Time Square. We realize something has to happen up there. I have questions about the finance mechanism and how it works. I'm concerned about how our experience with the DDA will reflect on this. If the DDA had not happened, I'd have no concerns about it."
It's significant to note that the city of Steamboat Springs does not have any property taxes and, as a result, its revenue stream would be less affected by the URA than other taxing entities -- such as Routt County and the Steamboat Springs School District -- that rely on property taxes collected within the boundaries of the URA.
Routt County Commissioner Doug Monger said growth and redevelopment at the base of the ski area stimulated by the URA would place increasing demands on county services. Foremost among his concerns is whether the terms of the URA would allow the county to retain a great enough share of the incremental growth in taxes to pay for those services.
"I talked to David Baldinger and told him, 'I'm not saying absolutely no, and I'm no saying absolutely yes,'" Monger said. "If the authority isn't going to take all of those monies, then the county would potentially participate in the revenue. It will be a good discussion to have."
The Lionshead model
The town of Vail created an Urban Renewal Authority last fall to oversee repairs to streets and other public properties in its Lionshead district. The work represents the public component of the overall redevelopment of Lionshead. The private portion of the project foresees $750 million in new construction and redevelopment of property owned primarily by Vail Resorts. According to an article in the Vail Daily, the town anticipates borrowing about $10 million in bonds that will match $40 million from development deals with Vail Resorts.
The Base Area Reinvestment Coalition has not proposed such an arrangement of matching funds.
A difference between the town of Vail and the city of Steamboat Springs is that Vail Resorts is the dominant property owner at the base of its ski area. That is no longer the case in Steamboat, where American Skiing Co., parent of the Steamboat Ski Area, has systematically divested its real estate. Although the Steamboat Ski Area's involvement as the dominant amenity is of obvious importance, it is not one of the biggest property owners at the base of the ski area, although its Steamboat Grand Hotel is within the proposed URA boundary.
The state statue that enables the creation of urban renewal authorities requires municipalities to demonstrate the target area is in a condition of "blight."
And while a ski-area base with $1 million condos doesn't equate to urban blight in the traditional sense, the statute allows cities to apply that term to public infrastructure that is dysfunctional or in disrepair.
Vail was able to show that Lionshead exhibited "blight" conditions that met four of 11 criteria set forth by the state. Those criteria included: a predominance of inadequate street layout, deterioration of improvements and inadequate public improvements or utilities.
Looking back, ahead
The original Thunderhead Lodge opened in 1968 with 26 rooms.
Steamboat Springs and the base of the ski area presented a very different landscape 36 years ago than they do today. There were large, open meadows at the base of the ski trails, and there were grocery stores on Lincoln Avenue.
The gondola building didn't exist in 1968, and Ski Time Square was an isolated commercial strip near the bottom of the Christie Lift.
Now, resort leaders are looking for a tool to stimulate redevelopment of a ski area base for the 21st century.
Baldinger expects that if the base of the ski area undergoes a large increase in valuation, the URA might generate as much as $8 million, far less than the market value of a luxury ski-in, ski-out condominium project.
"That's a very small investment to make to make Steamboat a more attractive resort," he said. "This is really a pretty small project, but it could have huge benefits."
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