A choice about the future of Northwest Colorado is landing in city mailboxes this week.
When Steamboat Springs voters decide the fate of the proposed Steamboat 700 annexation in a mail-only election that concludes March 9, they’ll be deciding much more than whether to annex a longtime ranching property into city limits. They’ll be deciding the future of the region’s housing and job markets, traffic patterns, water use, commercial development and population centers.
They’ll be deciding how the city and county grow.
Steamboat 700 is a proposed master-planned community on 487 acres just west of current city limits. The project proposes about 2,000 homes — from apartments to single-family home lots — and 380,000 square feet of commercial development that would be built to the standards of new urbanism design. City planning documents cite a 20- to 30-year time frame for development. Steamboat 700 could one day house about 4,700 residents on the west edge of Steamboat. The city currently has about 12,000 residents.
Steamboat 700 would be the city's most substantial annexation since the Mount Werner ski resort area was folded into city limits decades ago.
Steamboat 700 Principal and Project Manager Danny Mulcahy and his Las Vegas partners purchased 700 acres west of the city in 2007 for $25 million. The project is within the boundaries of the West of Steamboat Springs Area Plan, or WSSAP, which contemplates growth and annexation to help accomplish a number of community goals, principally affordable housing.
The Steamboat Springs City Council approved the annexation in a 4-3 vote Oct. 13, 2009, with members Loui Antonucci, Jon Quinn, Scott Myller and Walter Magill in support. Council members Cari Hermacinski, Steve Ivancie and Meg Bentley opposed.
In the weeks following that approval, the Let's Vote committee led a successful petition effort that suspended the annexation and resulted in a City Council decision Dec. 15 to put Steamboat 700 to a public vote.
The Let's Vote committee has formalized in opposition to the annexation. The Good For Steamboat committee supports the annexation.
Supporters say the development would help fulfill the goals of the WSSAP, allow “smart growth,” put needed services on the city’s west side and provide funding for needed infrastructure improvements.
Critics say the development would create excessive, unsolvable traffic problems; severely impact city services; present too great a risk for city finances; and face a significant chance of failure in a recessionary housing market.
The Steamboat Pilot & Today has created this guide to Steamboat 700 and its annexation agreement with the city to help you decide for yourself.
Issue: Capital projects
Read Exhibit F, the Capital Facilities Phasing Plan in the annexation agreement between Steamboat 700 and the city of Steamboat Springs, here.
The financial plan for the Steamboat 700 annexation estimates $72 million in capital project funding from developers, staggered over years if not decades.
According to the annexation agreement, the money would help fund projects including improvements to U.S. Highway 40, sidewalk and shoulder improvements on roadways near the annexation, new mass transit and public works facilities, a fire station, a public safety building, a community center and more. Capital projects would be phased with the development of Steamboat 700. The Capital Facilities Phasing Plan, Exhibit F in Steamboat 700’s annexation agreement with the city, assigns a specific percentage of cost to developers, the city and other funding sources.
“The Parties agree that the Capital Facilities Phasing Plan, a copy of which is attached hereto as Exhibit F, shall control the timing and construction and/or dedication of capital facilities described therein,” the agreement states. It also states Exhibit F is “the mechanism for determining when and by whom each listed capital facility must be provided.”
The annexation agreement is effective, it states, from annexation “until all of the obligations of the Developer hereunder, including but not limited to those contained in Exhibit F, have been either completed, satisfied, or financially secured to the satisfaction of the City.”
The city’s financial risk related to the annexation has been a topic of local debate.
According to the annexation agreement, Steamboat 700 developers would advance, or loan, $53 million of the $72 million to the five metropolitan districts that would make up the development. Those loans would occur in phases as the development grows. The districts would then reimburse developers with revenue from property taxes. The other $19 million is the municipal bond capacity for lending from other investors.
The number of dwelling units at Steamboat 700 is the primary determinant of when capital projects are built. A new community center that would cost an estimated $3.5 million in 2009 dollars and would be funded entirely by Steamboat 700, for example, is required once the development reaches 1,000 dwelling units.
What proponents and opponents say about the capital projects issue
Danny Mulcahy, Steamboat 700 principal and project manager, says the financial risk associated with capital projects is the developer’s. Mulcahy has said that if the market does not generate enough home sales and associated property tax revenue at Steamboat 700, developers will be holding the bill, not the city.
Bob Litzau, assistant finance director for the city of Steamboat Springs, agrees with that assessment. “The amount that the city is on the hook for, that the city has committed to, is almost nothing,” Litzau said in January, referring to capital projects.
Proponents of Steamboat 700 say the phasing of capital projects is a fundamental component of the annexation agreement’s “pay to play” structure, meaning development cannot continue past each specified phase until requirements of that phase are met.
Financial projections in the annexation agreement cite a total of about $165 million in cumulative property tax revenues generated by Steamboat 700 by 2050.
The Let’s Vote committee, which opposes the annexation, cites the risk of financial failure in what is currently a recessionary housing market.
“When a development falters financially, the first course of action for the developer is to go back to the city to renegotiate their agreement,” states language on the committee’s Web site, http://letsvoteno... citizens we need to realize this is a possibility and the annexation agreement we have now is only as good as the developer’s ability to adhere to it. If the ability of the developer to adhere to the annexation agreement is lost, what happens? The citizens get a renegotiated agreement or a failed development with potentially large financial impact on the taxpayer.”
City planner Jason Peasley, who is neither an opponent nor a supporter of the development, acknowledged the potential of risk.
“There’s obviously a lot of risk involved in development,” Peasley said in January. “With that higher risk, (developers) expect higher returns.”
■ Learn more about future plans for recommended traffic improvements on U.S. Highway 40 on the west side of Steamboat Springs at www.us40west.com/
Transportation and traffic impacts result in the majority of the capital projects required in the Steamboat 700 annexation agreement.
Last year’s National Environmental Protection Act, or NEPA, study of U.S. Highway 40 improvements west of Steamboat Springs projected that Steamboat 700 would generate 19,000 daily vehicle trips by 2035.
To mitigate its impacts, Steamboat 700 would pay $5.5 million for U.S. 40 improvements before development of the first residential unit. That would be followed by funds for phased work on U.S. 40 from 12th Street to Steamboat West Boulevard, the primary entrance into Steamboat 700. Work also is slated for ancillary roadways including Routt County Road 129 and C.R. 42. The projects are detailed according to the NEPA study. Much of the work involves widening U.S. 40 to four lanes of through traffic, improving major intersections and adding multi-use pedestrian pathways. City engineer Laura Anderson said pedestrian underpasses are planned for major intersections west of Steamboat, including where C.R. 129 meets U.S. 40.
Steamboat 700 would pay 77 percent of the costs for all work on U.S. 40 from 13th Street to Steamboat West Boulevard. The payments would be phased with the annexation’s development, as outlined in Exhibit F, the Capital Facilities Phasing Plan in Steamboat 700’s annexation agreement with the city.
The remainder of costs for U.S. 40 work are assigned to the Colorado Department of Transportation, the Federal Highway Administration and other potential annexations west of Steamboat, such as 360 Village. If CDOT, the Federal Highway Administration or other developments are unable to pay their share of improvement costs for U.S. 40 to Steamboat West Boulevard, or for work on ancillary roads, Steamboat 700 must front that share itself or halt development until it is available, according to the annexation agreement.
Routt County Commissioner Diane Mitsch Bush has said the future of federal and state transportation funding largely depends on a re-authorization of the omnibus federal transportation bill.
Steamboat 700 would pay 25 percent of the cost for a solution to the “bottleneck” at U.S. 40 and 13th Street, should the city select a preferred alternative and have its share of funding available. Steamboat 700’s payment would come anytime after 800 dwelling units, upon city request.
In terms of transportation projects, the city is identified as a funding source in three places. The city is required to provide 80 percent of funding for a total of four transit buses, and for an unspecified amount to create a Transit Master Plan. The annexation agreement estimates a total cost of about $2 million for the buses, of which Steamboat 700 would pay about $400,000. The rest could be paid by an “anticipated grant from (the) Federal Transit Authority,” the agreement states.
According to the annexation agreement, the city is not obligated to any other financial cost related to transportation infrastructure in Exhibit F. However, other funding sources for a bottleneck solution are listed as “unknown.”
What proponents and opponents say about the traffic issue
Supporters of the annexation cite three major points related to traffic. First, they say locating services such as a grocery store and commercial space on Steamboat’s west side would decrease vehicle trips through downtown. Second, growth and resulting traffic is projected to occur with or without Steamboat 700, meaning more vehicle trips would come from Hayden, Craig or South Routt County if Steamboat 700 is not approved. Third, other kinds of development would not provide funding for U.S. 40 improvements but still would result in traffic increases.
Opponents of the annexation cite three major concerns about traffic.
First, 19,000 trips is 19,000 trips. More cars on the road mean more traffic and more delays. The growth plan is simply too large for the city’s west side. Second, Steamboat 700 does not provide adequate funding for the bottleneck solution — if there is one at all. Widening U.S. 40 and providing transit buses west of downtown won’t matter if all that traffic gets congested at 13th Street. Third, federal and state transportation entities are strapped for cash and not reliable sources of funding in the short- or long-term.
Issue: Affordable and attainable housing
■ Learn more about local property tax rates, including how to calculate them, at the Routt County assessor’s Web site. Click here.
■ Read a more detailed explanation of potential property tax rates here.
Whether Steamboat 700 provides affordable housing is a key determinant of whether the annexation meets the goals of the West of Steamboat Springs Area Plan.
Steamboat 700’s future affordability is debatable.
The annexation’s contributions to affordability come in two parts: a community housing plan and an attainability program. The community housing plan is designed for a lower income bracket than the attainability program.
The annexation agreement’s community housing plan stipulates that Steamboat 700 would give the city 15 acres, on which the city would be responsible for building an estimated 400 deed-restricted affordable units that are included in the 2,000 total units planned for the annexation. Steamboat 700 also would place a real estate transfer fee, of 1.2 percent of the total sale price, on all sales within the annexation. Of that 1.2 percent, 0.5 percent would go toward a city affordable housing fund. Another 0.5 percent would go to the Steamboat Springs School District, and the remaining 0.2 percent would go to a city fund for capital projects.
The attainability program would require 30 percent of the remaining 1,600 homes at Steamboat 700, or 480 homes, to be marketed for one year to buyers or households earning between 120 percent and 200 percent of the area median income, or AMI.
The Steamboat Springs City Council has not approved the attainability program, but Steamboat 700 must have that approval before beginning development.
According to documents provided by Mary Alice Page-Allen, asset/program manager for the Yampa Valley Housing Authority, 120 percent of AMI for a household of four people is $96,720, in 2009 figures. Assuming a down payment of no more than 20 percent and total, annual housing costs of no more than 30 percent of annual income — numbers stipulated in the annexation agreement — the maximum home price for that family is $408,828, with 80 percent financing. For that same household, 200 percent AMI is $161,200 in annual income. The maximum home price is $681,380 with 80 percent financing.
For a household of two people, 120 percent of AMI is $77,400 and the maximum home price is $327,164 with 80 percent financing. Also for a two-person household, $129,000 is 200 percent AMI and the maximum home price is $545,273 with 80 percent financing.
Steamboat 700 homebuyers would face several costs on top of home prices.
Property tax rates in the proposed annexation would be more than double those in Steamboat Springs and would top rates across Routt County, according to 2009 figures.
The difference boils down to about $100 per month between property tax payments for owners of a $350,000 home in an annexed Steamboat 700 and owners of a home with the same value in Steamboat’s current city limits.
At 36 assessed mills, the owner of a Steamboat home valued at $350,000 would pay $1,002.96 annually in property taxes, or $83.58 per month. Property taxes often are paid monthly as part of a mortgage payment.
Danny Mulcahy, principal and project manager for Steamboat 700, said he expects an additional 42 mills for property owners in the potential annexation. About 37 of those mills, he said, are for Steamboat 700’s capital costs, operations and maintenance. The remaining 5 mills would go to a city fund for capital projects. Using a levy of 36 mills for the city plus 42 assessed by Steamboat 700 creates a 78 mill total for theoretical properties in the proposed annexation.
The owner of a $350,000 home in an annexed Steamboat 700, at 78 mills, would pay $2,173.08 in annual property taxes, or $181.09 per month.
The owner of a $200,000 home in Steamboat would pay $573.12 in annual property taxes for 36 mills, or $47.76 per month. The owner of a $200,000 home in Steamboat 700 would pay $1,241.76 for 78 mills, or $103.48 per month.
For a $500,000 home, a Steamboat taxpayer would pay $1,432.
80 annually for 36 mills, or $119.40 per month. The owner of a $500,000 home in Steamboat 700 would pay $3,104.40 annually for 78 mills, or $258.70 per month.
Tom Leeson, director of the city’s Planning and Community Development Department, also listed Steamboat 700’s public improvement fee for commercial sales and tap fees.
Leeson said the 2 percent public improvement fee would be collected as sales tax on retail sales in Steamboat 700, would fund projects related to the annexation and would sunset upon completion of its infrastructure.
City Public Works Director Philo Shelton said he was awaiting the results of a rate study by consultants to help project potential tap fees at Steamboat 700.
What proponents and opponents say about the affordability issue
Mulcahy has said that when combined with the affordable housing requirements, the attainability program results in 44 percent of the total homes at Steamboat 700, or 880 homes, having either a deed restriction or income-related marketing requirement.
Supporters of the annexation also note that Steamboat 700 would provide land and revenue for affordable housing — two things Page-Allen says the Housing Authority desperately needs. The Housing Authority supports the annexation.
The Let’s Vote committee says the annexation has no guarantee of affordable housing, because developers are not building the units and transfer fee revenues will be inadequate if sales struggle. Futhermore, opponents question the legality of the real estate transfer fee. The Let’s Vote committee also says 15 acres is too small a parcel for 400 units.
■ Read the McLaughlin water and wastewater master plan here.
Capacity by the numbers
■ Projected maximum water demand at build-out of city and west of Steamboat Springs area, including Steamboat 700, 360 Village and other development: 7.34 million gallons per day, or mgd
■ Existing city water treatment capacity: 4.55 mgd
■ Current city demand: 3.3 mgd
■ Potential added capacity through expansion of water treatment capabilities in south Steamboat: 0.85 mgd
■ Potential added capacity through addition of three filter trains at Fish Creek water treatment plant: 2.25 mgd
■ Total city water treatment capacity after additions: 7.65 mgd*
*The total does not include a potential additional 2.5 mgd from a water treatment plant near Routt County Road 44 that would treat 8 cubic feet per second of water from the Elk River. The plant could ultimately have a capacity of 5 mgd and “is necessary to provide adequate service to the west of Steamboat Springs area,” according to McLaughlin Water Engineers.
Source: Water and Wastewater Master Plan Updates, December 2009, for the city of Steamboat Springs by McLaughlin Water Engineers Ltd., based in Denver
It wouldn’t be a debate about development in the West if water weren’t on the table.
City Public Works Director Philo Shelton has said development within the West of Steamboat Springs Area Plan, which includes the Steamboat 700 site and other potential development, would require $34.5 million of water system improvements. That consists of $27.4 million for water projects and $7.1 million for wastewater projects.
Those figures are the totals of short- and long-term cost estimates for WSSAP water development in last year’s “Water and Wastewater Master Plan Updates,” a study by McLaughlin Water Engineers of Denver.
The figures include $5 million to buy a 1,000-acre site for a reservoir to store water from the Elk River; $7.5 million to build the reservoir; $4.75 million to build a water treatment plant; $2.5 million for a new treatment “train,” or system, at the Steamboat Springs Wastewater Treatment Plant; and other construction, land and contingency costs.
The city’s annexation agreement with Steamboat 700 stipulates that developers pay for needed water and sewer infrastructure within the annexation site before corresponding development is built. If Steamboat 700 is annexed, developers also would pay the city $960,000 for improvement of the Elk River water supply.
Shelton says tap fees from future Steamboat 700 property owners would go toward the costs of infrastructure expansion outside the annexation site — such as new facilities at the city’s wastewater plant. Those tap fees have not yet been determined and would be collected over time as development occurs.
The McLaughlin study projects a maximum water demand of 7.34 million gallons per day, or mgd, after build-out within city limits and in the west of Steamboat area, including potential annexations and other development. The city’s current water treatment capacity is 4.55 mgd, and the current city demand is 3.3 mgd, according to the study. Those figures do not include demands serviced by the Mount Werner Water and Sanitation District.
Expanding existing city facilities could boost the city’s treatment capacity to 7.65 mgd, just more than the 7.34 mgd future demand.
But that does not mean expansion of the city’s current facilities could service future development west of Steamboat. McLaughlin engineers said city facilities cannot adequately pump water to that area, would lose water quality over long transmissions, and would face a shortage in the event of an emergency such as a treatment plant outage or fire.
What proponents and opponents say about the water issue
Supporters of the annexation point to the required payments for water and wastewater infrastructure, phased with development, and say the annexation agreement’s “revenue neutrality” clause guarantees that Steamboat 700 would pay for its water and wastewater impacts. Supporters also say the McLaughlin study shows that the region’s water supply and facilities are sufficient to service additional development.
Opponents of the annexation point to ever-increasing demand for water in the West, and they say the $960,000 payment to firm up the city’s existing water rights on the Elk River is far too small. Opponents also question the reliance on tap fees to fund infrastructure, a scenario that could lead to needed infrastructure without the needed revenues from developers.
Concerns about financial liability form a significant part of the Steamboat 700 debate.
The Let’s Vote committee, which opposes the annexation, and others have asked what if Steamboat 700 runs into financial trouble when infrastructure is necessary; what if a secondary developer builds excessive or unsuitable homes that don’t sell; what if the city bonds for infrastructure that development can’t support; or what if other similar, failure-related scenarios occur.
The annexation agreement states that developers and property owners within the site are liable for the costs associated with development.
“The city taxpayers aren’t liable,” says Jerry Dahl, the annexation attorney hired by the city of Steamboat Springs. “This is a phased project. The city is not obliged to grant final plat approval for any individual plat until the infrastructure that’s going to service that plat has either been built or is financially secured.”
What proponents and opponents say about the liability issue
Supporters of the annexation say its “pay as you go” methodology requires funds to be in place before development and its associated infrastructure are approved.
“Existing ratepayers within the city will not be responsible for contributing funds to provide for capital facilities expansion made necessary by the Steamboat 700 project,” Dahl wrote to City Manager Jon Roberts. “Instead, the developer, the metro districts, and the owners of buildable lots, through the payment of tap fees, will fund that expansion.”
Opponents cite the recessionary economy and question revenue sources such as tap fees, which are a designated funding source for water and wastewater infrastructure expansions outside the annexation site. Tap fee revenues are generated by new development, which could occur slower than planned.
Opponents also point to the listing of state and federal entities as funding sources for improvements to U.S. Highway 40. The Colorado Department of Transportation and Federal Highway Administration face uncertain financial futures, largely dependent on the economy.