Steamboat terminates contract with Iron Horse Inn operator
New West Inns breaks rent agreement, owes city $77,000
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.
Comments
mmjPatient22 2 years, 5 months ago
So, when do we get to start the count-down to demolition?
Jason Miller 2 years, 5 months ago
That not a nice thing to say MMJ.Where are all those bed bugs,roaches and various other varmin going to live?
mmjPatient22 2 years, 5 months ago
The Iron Horse is so crappy that I hear all of insects moved back towards the Ponds. In fact, because of the poor economic conditions that most of the country is experiencing, most of the bugs have had to give up a good share of their summer homes.
exduffer 2 years, 5 months ago
I got it! The tubing center of Steamboat!
sledneck 2 years, 5 months ago
The "landlord" business is tougher than most think. The city of Steamboat Springs has no business in it. It is competing with other businesses, it opens itself to accusations of partiality (what other hotel is allowed to operate with infestations?) and it distracts from the legitimate role of the municipality. An all-around BAD idea that just keeps getting worse.
mmjPatient22 2 years, 5 months ago
Like I said, when's the count-down start?
cmc13 2 years, 5 months ago
Yes yes finally! Demolition? At 6 million on the mortgage don't think so. A few of us who contacted the Council members about New West or Comfort Inn managing Iron Horse finally get to say, Told you so.
Interesting New West operated the Hotel without paying hardly any rent, I wonder where all the money went. If you followed the Iron Horse, the city did an audit. What did it reveal? Will there be an ivestigation? Will the Pilot head it up? Will the president of the council? Will the City Managers? Will the IRS audit Comfort Inn/New West?
addlip2U 2 years, 5 months ago
........"DuBord said New West’s three employees at the Iron Horse would become city employees under the transitional city management..." Correct me if I am wrong, but I was under the impression that the City has hiring freeze and City employees hours were cut to work four days/week....
pitpoodle 2 years, 5 months ago
Remember everyone, these are the people who want a SB property tax to raise their spending capacity. I think not.
Fred Duckels 2 years, 5 months ago
During the boom the micromanagers finally got the chance to show their social engineering prowess. We will be picking up the pieces for years, but let's complete the housecleaning by sweeping the AH folly out the door too.
Scott Wedel 2 years, 5 months ago
I think we should add to the City charter that new debt cannot be issued without voter approval. We, as citizens, should not be at the mercy of the City Council and staff making mistakes that burden the citizens for years to come. Other mistakes can be corrected at the next election by voting in a new council to repeal misguided laws, but major purchases with bonds cannot be undone and can burden city residents and businesses for a generation.
A major problem the city faces with a potential operator at the Iron Horse is that the operator knows the city is a flaky owner. That the city is not primarily concerned with owning the property and return on investment, but with political considerations. So like with the Rehder building, it made sense for the city to turn down a rental agreement with Antares and instead keep the space vacant. Or at the golf course where the capable operator is suddenly out. So any potential operator for the Iron Horse knows that doing a good job is not going to be rewarded with contract extensions, but is likely to end up being booted because of making too much profit.
Neil O'Keeffe 2 years, 5 months ago
"Making too much profit" unfortunatley this wont be a problem for the Iron Horse. Once a dog always a dog, and this dog is on its last legs.
Scott Wedel 2 years, 5 months ago
Well, after all this history then the rent for the next operator is likely to be at a reduced amount so if the new operator does merely as well as the previous operator's projections then they could be making a substantial profit.
And if that happens do you think the City will then, at the first opportunity, try to increase the rent? Or be thankful that they be pleased they have a successful operator and do nothing to threaten the operator's success?
cmc13 2 years, 5 months ago
The affordable housing unit is sucking the marrow out of the Iron House and NewWest finished it off. During the Holiday season the Iron Horse wasn't priced right and had 90% vacancy. Plus Newwest owes 70k.
Affordable Housing at $600.00 which includes cable, electric, snow plowing and all, just wonder how the city will ever pay the mortgage of 6 million.
City needs to build a new building (or maybe tennis courts) more efficient (aren't we going green?) and set up their own management team. Or just right it off and stick the costs to the residents.
Maybe after that statement we will get answers to why the city bought a hotel, did they get scammed, what was in the audit and what other boneheaded ideas are ahead for the city.
exduffer 2 years, 5 months ago
How about turning it into a teen wreck center?
Scott Wedel 2 years, 5 months ago
What the City should seriously do is purchase the bonds from the secondary market and once they own enough then the penalties for selling the building won't be so bad. I looked a while ago and about half of the bonds were available on the bond market available for purchase priced the same as anything else earning that interest rate. So then sell the building to a private investor. Absolutely no reason for the city to dig a deeper hole by destroying buildings or even investing in a failed business model. City is completely out of its depth in owning and managing the operators of a motel.
cmc13 2 years, 5 months ago
Who would want to buy it and at what price? 2 million? 3 is ridiculous. Should the city sue Newwest? I do believe there is a hole a whole big mess the city needs to keep covered up. You would think with the Audit the city would have terminated the lease. What was the intent of NewWest? Was it scam? Were there receipts missing in the audit? Don't worry it's all hush hush got to keep the dirty linens hidden it's all about keeping the city a shining little ski town.
Well the city runs it now and undercutting everybody at $62 and has 21 vacancies out of 23. And new city employees to run it, job freeze and all. Nice to see they put up the website again.
This will all go away just like the evidence when the motor cycle gangs ruled Steamboat for a weekend. Where did the evidence go, in a land fill? And lets not get started about the Safeway.
cmc13 2 years, 5 months ago
I wonder if my email to the city council had any effect on termination. Believe it or not the council, the research team and the managers didn't know Comfort Inn was for sale. Comfort Inn and NewWest same owner. It's was for sale for awhile.
cmc13 2 years, 5 months ago
Already the Iron Horse run by the city has 3x's as many sales! Or what is 3 * 2? Turn key business at $62 a night.
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