Steamboat Springs The city's purchase of the Iron Horse Inn for the purpose of providing affordable rental housing is, on its surface, a smart deal. But until taxpayers see a business plan for its successful operation, we're hesitant to offer our full support.
On Tuesday, City Council unanimously approved the $4 million purchase of the two-building hotel just south of downtown Steamboat. The city plans to use certificates of participation to fund the transaction, which comes to about $5.2 million when the planned remodeling work is included. Certificates of participation allow the city to fund the purchase without seeking voter approval.
On Friday, Bob Litzau, the city's interim finance director, said the $5.2 million will be paid off during a 25-year period. When interest is included, the total cost to taxpayers will be $10.75 million. Litzau said those figures were based on estimates and could change if and when the deal is finalized.
The city will establish Steamboat Springs Building Corp., an intermediary that will own the Iron Horse buildings and property. Building Corp. will lease the property to the city. The city will take ownership of the buildings and property after the certificates of participation are paid off.
The Iron Horse Inn will operate as a hotel through this winter. Remodeling will begin next spring, with the units available for tenants by fall 2008.
We think it's a smart purchase for the city in several regards. First, it provides affordable rental housing for city employees, an area of housing severely lacking in Steamboat. Second, it makes it easier for the city to attract and retain quality employees. Third, it gives the city a valuable piece of riverfront property just outside of the downtown corridor. The land could have valuable redevelopment use in the future. One of the most difficult aspects of providing affordable housing in the Steamboat area is securing the land on which to build homes.
But we're not without concerns. At the top of that list is the absence of a detailed business plan for the ongoing operation of the property and its debt service. Litzau said the city might have to subsidize the purchase from the general fund - to the tune of $150,000 to $200,000 a year - for at least the first few years of city ownership. That could add another $1 million or more to the bottom line.
As we've said before, housing our workforce will happen only when the businesses that rely on those workers make it happen. Some, such as Steamboat Ski and Resort Corp., have successfully taken on such efforts. Should the city not also run itself like a business, particularly when it has enacted ordinances mandating that private developers and business interests provide affordable workforce housing?
"This is one way to put our money where our mouth is," Deputy City Manager Wendy DuBord said. "It's only going to get more expensive. We've probably waited too long to get into workforce-housing mode."
We agree. And if the city can present a business plan that proves this purchase will work, we see no reason not to support it.