Steamboat Springs Financial challenges associated with the city-owned Rehder Building led to two split votes and a philosophical debate at Tuesday's meeting of the Steamboat Springs City Council.
Council members disagree about the rent being charged to two of the building's tenants. The council also is considering returning a $150,000 grant for capital improvements to the State Historical Fund and transferring matching funds for the capital work to the city's general fund. While some say the move is wise because of the current economic climate, it likely would tarnish the city's reputation with granting agencies.
The Rehder Building is home to Vectra Bank, Antares Restaurant and the Steamboat Art Museum, which has aspirations to occupy the entire building at Eighth Street and Lincoln Avenue in downtown Steamboat Springs. Vectra Bank is leaving this month, however, and taking the $3,571 a month it pays the city in rent with it.
At its meeting Tuesday, the City Council failed to negotiate a higher rent from Antares. Restaurant owner Diane Zahradnik is requesting a seven-month extension of her lease, which is set to expire in September.
Antares pays $9.13 a square foot. Last week, Mainstreet Steamboat Springs Program Manager Tracy Barnett said commercial rents downtown typically range from $20 to $40 a square foot, with an average of about $30 a square foot. Interim City Manager Wendy DuBord recommended a $15 a square foot rent, which Zahradnik insisted was too high.
Citing problems such as a leaky roof, Zahradnik argued that the Rehder Building is in too poor of a condition to command a higher rent.
"The buildings downtown which are charging market-price rents have long-term leases and are in market-price shape," Zahradnik wrote in a letter to council.
Facilities Manger Bob Robichaud, however, said the city has spent about $3,500 on repairs including roof leaks since Antares closed for the fall in September.
"There have been a number of improvements," Councilman Jon Quinn told Zahradnik on Tuesday. "With that in mind, is there some middle ground?"
"No," Zahradnik replied. "We are prepared to leave Sept. 30."
Later, Quinn used strong words to express his disappointment with Zahradnik's unwillingness to negotiate.
"I find it discouraging and pretty remarkable that there's not a middle ground," he said. "I kind of see it as blackmail. The city is essentially subsidizing a private business. It just isn't right to me."
With Quinn dissenting, the council ultimately voted, 6-1, to table the lease agreement. City staff members were directed to return with a lease that does not increase the restaurant's rent.
"In this economic climate, I don't think we're going to have people clamoring for that space," Councilwoman Cari Hermacinski said. "I think $9 a square foot is better than $0 a square foot."
Hermacinski's logic was echoed by others on council, but Quinn said Wednesday that he thinks the majority of council caved.
"I understand that some revenue is better than no revenue, but at the end of the day, I feel like we got pushed around a little bit," he said.
In another 6-1 vote, council approved on second and final reading a one-year, $1 lease for the Steamboat Art Museum, which requested the lease and noted the city has a similar deal with the Steamboat Springs Arts Council at the city-owned Depot Art Center. The museum pays $700 a month in rent. Councilwoman Cari Hermacinski voted against the lease.
In a debate later in the meeting, council members were torn on DuBord's recommendation to return most of the more than $500,000 sitting in the Rehder Building's reserve fund back to the city's general fund, where it originally came from.
Most of that money is earmarked for capital improvements to the building and would be aided by a $150,000 grant from the State Historical Fund. If the money were transferred back to the general fund and the work not done, the grant would have to be returned.
DuBord noted that her recommendation did not have the support of the city's Historic Preservation Advisory Commission or Laureen Schaffer, the city's historic preservation specialist. Schaffer noted returning a grant shows poor planning on the city's part and could hurt the city's chances of earning other grants in the future.
"I'll take the heat on this one," DuBord said. "You never like to give money back to a granting agency."
Noting the city's declining revenues, Hermacinski agreed that the money should be returned to the general fund to help cover the core services of government.
"It's disrupting to me when we spend money that we could be saving," she said.
Others, including Councilman Steve Ivancie, said the move would be shortsighted.
"I know it's attractive to see this money and say, 'Ah, hah!' but we're never going to get this opportunity again," he said. "I just think we can't be reactionary at this time. We have to maintain our long-term vision."
After Schaffer told council that the city had been given a one-year extension on the grant this week, council members decided to delay a decision on the issue.
"Hopefully between now and some point in the future, we will know what our options are," Antonucci said.