Steamboat 700 affordability concerns raised

Residents could pay double the property taxes

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Danny Mulcahy of DM Hollo Management is a principal owner of Steamboat 700 LLC, which closed the purchase of 540 acres west of Steamboat Springs for $24.6 million.

Steamboat 700 timeline

- Tuesday

Steamboat Springs City Council meeting; introduction and discussion of draft annexation agreement

- Wednesday

Negotiating team meeting; discussion of direction from City Council, next steps and revisions

- Thursday

Steamboat Springs Planning Commission meeting; work session to review revised draft of traditional neighborhood design guidelines

- Aug. 31

Joint meeting of City Council and the Routt County Board of Commissioners; work session to discuss annexation issues including funding of U.S. Highway 40 improvements

- Sept. 8

City Council meeting; review of fiscal impacts for capital improvements

- Sept. 9

Open house; city and Steamboat 700 officials available to provide information and answer questions

- Sept. 10

Planning Commission meeting; annexation review and traditional neighborhood design amendments

- Sept. 17

Planning Commission meeting; annexation review and traditional neighborhood design amendments

- Sept. 29

City Council meeting; initial review of annexation plat, annexation agreement and traditional neighborhood design ordinance

- Oct. 13

Final consideration of annexation plat, annexation agreement and traditional neighborhood design ordinance

— As the city of Steamboat Springs nears a decision this fall about whether to annex Steamboat 700, concerns have been raised about how well the proposed project will achieve its No. 1 goal: affordable housing.

Steamboat 700 Principal and Project Manager Danny Mulcahy said the future residents of the development - which proposes about 2,000 homes to be built during 20 to 30 years - could be subject to a property tax burden 20 to 50 percent higher than current residents of the city.

Property in Steamboat 700 also will be subject to real estate transfer fees that will help pay for a school and affordable housing. Steamboat 700 is being asked to pay for a multitude of community needs and cover the expenses it creates for the city. Mulcahy said he is trying to balance how he factors those costs into taxes and the ultimate price of housing in the development.

Some say the additional costs being incurred are appropriate for ensuring that "growth pays its own way."

"We were determined to protect the existing city resident," said former Steamboat Springs City Councilman Jim Engelken, who helped write the city's original West of Steamboat Springs Area Plan and is running for council again in the 2009 election.

Others say all the costs are threatening the primary purpose of the plan.

"I have concerns," City Council President Loui Antonucci said. "Every time you raise the financial burden to Steamboat 700, you increase the cost of the housing up there."

Antonucci said he also struggles with the argument that current city residents shouldn't subsidize the future residents of Steamboat 700. He said the fact Steamboat is sales-taxed based means the current residents are being subsidized themselves by tourists.

"To some extent, we're all getting subsidized already," Antonucci said. "That's how we can have so many amenities in a town of 11,000 people."

Mulcahy seems to be leaning more toward increasing the tax burden in Steamboat 700 than the price tag on its homes. He said his market is limited to working-class people, so he doesn't have much wiggle room on prices. He also noted he will be forced to beat the prices of comparable homes in the area. As an example, he noted that if similar homes are for sale in Silver Spur and Steamboat 700 for the same price, a buyer would choose the Silver Spur home because it still has access to all the amenities of Steamboat 700 without the additional tax burden.

The final additional tax burden in the Steamboat 700 metropolitan district is largely dependent on a fiscal impact model for capital improvements to be discussed at a Sept. 8 City Council meeting. The model will spell out what improvements Steamboat 700 is responsible for constructing and when.

"Taxes and transfer fees do limit the marketability and affordability of the project," Mulcahy said. "I would love not to put any additional taxes in. : It's not fair, but it's also not my prerogative."

At the moment - and in present-day dollars - Mulcahy estimated that about 1,000 of the homes in Steamboat 700 will be priced at $500,000 and less, with an average price of about $280,000. That includes products that range from apartments to detached homes on small lots. The other 1,000 homes will be detached, single-family homes on larger lots. Mulcahy said those homes will range in price from $500,000 to $800,000, with an average price of $600,000.

An affordable housing plan is also a component of Steamboat 700. That plan includes a 0.5 percent real estate transfer tax within the development and the dedication of 12.5 acres to the city. The city or Yampa Valley Housing Authority would develop affordable housing on the land.

The city's West of Steamboat Springs Area Plan calls for 33 percent affordable housing, with 20 percent provided by the developer.

Steamboat 700 originally had proposed coupling a real estate transfer tax with inclusionary zoning strategies that would have required 25 percent of its housing to be made available to Routt County workers earning 70 to 160 percent of the area median income.

Developers who already have built units under the city's inclusionary zoning policies have experienced difficulties selling and financing the units.

"I think it's important to learn from the lessons that are going on right now," Planning Services Manager John Eastman said earlier this year.

A city staff report states that replacing inclusionary zoning with land dedication "eliminates the difficult and time-consuming process of negotiating requirements related to number of units, unit size, target AMI, design standards, unit pricing, etc."

In addition to the unanimous blessing of council and city staff, the alternative approach also was supported by the developer, the Housing Authority and affordable housing advocates the Community Alliance of the Yampa Valley.

Comments

Steve Lewis 5 years, 3 months ago

Thank you for this article, Pilot. Affordable housing is the whole point of an annexation in the west area, so its about time we weigh this annexation in that regard.

If the annexation only marginally meets the affordability benchmarks of our plans, benchmarks known to SB700 all along, then the existing community's obligation to carry an annexation's fiscal burdens is also marginal. Or non-existant.

For me, a the key lies in Danny's claim: "His market is limited to working-class people, so he doesn't have much wiggle room on prices."

Please Danny, put that in writing!!

Put it in the annexation agreement, that X free market units will be sold to working class people of our community. You could follow other models which would require buyers show either Routt residency or Routt employment.

You could also show us an anti-flipping tax overlay that would keep wealthy speculators from profiting on the backs of our nurses and teachers.

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Steve Lewis 5 years, 3 months ago

There is a flaw in the math that the Pilot, and apparently City Council, are representing to the community.

Neither evidence any interest in the significant value the City is about to add to this parcel. Its disappointing indeed, the extent to which Council has already given its blessing to these tax and transfer fee burdens on the future SB buyers.

The future SB buyers will pay taxes and fees in the neigborhood of:

$80 million.

A better negotiator would recognize those burdens should be weighed also against the value the community is adding to the SB700 property.

If my rough calculations are correct, SB700 will spend $50 million total in this deal. A bargain, because the value of their property, once annexed by us should be in the neighborhood of:

$300 million.

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Harvey Lyon 5 years, 3 months ago

"Affordable" is affordable. A developer knows his market much better than those educated in municiple management.

No resident of SS should have to pay one red cent for an expansion of the City Limits! It should reduce their overall costs....period....more folks and fixed costs. No SS resident should subsidize growth....one reason is it reduces property values.

The problem here is some relatively well off folks buy a house and the Steamboat Dream....then they wish to pay the same construction and maintenance costs they paid at their original place of residence. They want the "bike paths they had at home". Well....their houses won't get painted and their carpet won't get changed out, fridge fixed......or something else......until housing becomes "affordable". That means amazing high rates for labor and a reduction in housing costs.....or something in-between....AKA...a "Market".

Moral of the story is the "Market" will determine "affordable".... over time. Each individual makes his own choices.

I myself....have determined the Winter Sports Club is no longer affordable or predictable in projected costs. I've determined one can't buy a pair of affordable shoes here in Steamboat.....and a set of name brand tires in Denver in $120 less for 4. The price of Milk kills me....but as a great ski racer once said....."until folks vote with their feet"..... move on.

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