Updated January 13, 2011 at 10:36 p.m.
Steamboat Springs The city of Steamboat Springs has terminated its lease agreement with New West Inns and will take over management of the Iron Horse Inn today.
Anne Small, the city’s purchasing and risk manager, said Boulder-based New West failed to meet rent obligations for the Iron Horse for three consecutive months, which by contractual terms allows the city to end its lease agreement with 24 hours’ notice. City attorney Tony Lettunich said a termination letter was sent to New West on Wednesday.
A new lease agreement approved by the Steamboat Springs City Council in November charged New West $11,000 per month in rent for the Iron Horse. Small said rent was due by the fifth of each month. For November rent, Small said, New West paid $5,000 on Nov. 15 and $5,000 on Dec. 3. No payments were made for December or January.
“We felt like we had to do it,” Deputy City Manager Wendy DuBord said Thursday about the termination.
DuBord said New West’s three employees at the Iron Horse would become city employees under the transitional city management. DuBord said the city has publicized its request for proposals from potential new managers of the Iron Horse. Responses are due by the end of the month.
“We’re very confident that we can see the Iron Horse through the end of the ski season and hopefully recoup some of the lost revenue, as well as do what is right for the citizens of our city,” Small said. “That’s a publicly owned building, and it was being, in our opinion, not managed to the best interests of the city or its citizens. And that’s why we’re at this point.”
Jay Belyea will continue as the Iron Horse’s manager, a position he held under New West. Belyea also is a parking and code enforcement officer for the city.
“I support the city’s actions. I believe that they gave New West Inns many opportunities to get it right, but in the end, I just don’t think New West Inns had the resources to be at the Iron Horse,” Belyea said. “They just couldn’t pay the rent at the end of the day.”
New West manager Jesse Allison could not be reached by phone Thursday.
New West Inns has operated the Iron Horse since November 2009. The rent issues since November were the latest in a string of financial troubles related to the Iron Horse.
City staff waived New West’s monthly rent of $13,500 — lease conditions have changed several times throughout the past year — for December 2009 and January and February 2010. The city then deferred Iron Horse rent for March through May as the inn struggled through challenges such as higher-than-expected startup costs and low-performing nightly rentals.
Small said New West has signed a promissory note for $54,000 as an obligation to pay the owed, deferred rent. The first payment on that note is $3,000 and is due Saturday. Adding the rent owed for December 2010 and January 2011, and the $1,000 not paid for November 2010, creates a total of $77,000 that New West Inns owes the city.