Photo by Tom Ross
The first two condo buildings at First Tracks at Wildhorse Meadows were built to satisfy affordable housing requirements in the past decade. However, they never found that market because of changing economics and were released by the city to be sold at market rates. Now, a very tentative plan is being explored to use tax credits to allow two new buildings in the previously approved second phase to be built as affordable rental apartments, including studio and one-bedroom units, which are in short supply.
Steamboat Springs Members of the Yampa Valley Housing Authority board said this week that they would like to learn more about a proposal from Brent Pearson, of Resort Ventures West, to tap into federal tax credits that could help a third-party developer build out the remaining affordable housing units in Wildhorse Meadows.
Only this time around, the affordable units at First Tracks would be offered to modest-income families as rental apartments instead of for purchase as condominiums.
Pearson told the Housing Authority board that his company has looked for ways to develop the previously approved second phase of First Tracks or sell the land but that economic conditions make it unfeasible. Now, he thinks he has found a way.
Essentially, he is proposing to work with Denver developer Medici Communities LLC, which has a working relationship with the Catholic Archdiocese of Denver and a successful track record of developing affordable projects. The archdiocese typically works with Wells Fargo Bank as its investment partner on affordable housing projects. The investors realize a return from the tax incentives.
The tax credits allow the developers to have far more equity than debt in the project from the beginning. And an affordable project, which has a strong chance to achieve high occupancy levels, has the potential cash flow to repay debt from the beginning, Pearson said.
Medici “is trying to identify locations outside the Front Range to locate projects where they can provide rental housing for (those who make no more than 60 percent of the area median income). It can be a win-win based on our first look,” Pearson said.
Instead of leveraging the typical 70 to 80 percent of the cost of development in the form of debt, the program allows just 20 to 30 percent leverage.
One of the keys to making the project work, Pearson said, is that his company already has city approval in place to build 49 new entry-level housing units, and that’s specifically what Medici is looking for.
Pearson said his company was involved for the purpose of selling the development ground and would not have an ownership position but likely would play some role with Medici in development because of Resort Ventures West’s knowledge of working in mountain towns.
The role of the Housing Authority, beyond managing the project as it does with Hilltop/Hillside Apartments and Fish Creek Mobile Home Park, would be to make the debt payments after the initial renting phase.
Housing Authority member Kathi Meyer said she would be very circumspect about the organization taking on more debt, given more than $1 million in debt on the site for the moribund Elk River Village project on the city’s west side. She would have to see detailed information about the financials first, Meyer said.
Pearson acknowledged her concerns.
“Frankly, this is more debt, and it would probably take more of a joint relationship involving the city, county and Housing Authority to make this thing work,” he said.
Board member Catherine Carson, who previously had met with Pearson and his colleague Gavin Malia, said the tax incentives pegged to households below 60 percent of the area median income would leave tenants with rent payment beneath the affordable threshold of 30 percent of their income.
Carson said she’s tentatively hopeful the proposal could allow the Housing Authority to meet growing demand for rental housing by allowing it to begin with a high level of equity on debt in the range of $1.5 million to $2 million.
The project is particularly attractive because of the smaller units in the project, Carson said.
The existing approval for the next phase of First Tracks specifies a mix of studio one-bedroom and two-bedroom units.
The studio units would represent an ideal home for single adults who want to graduate from having roommates but have limited incomes, Carson said.
Fellow board member Trish Sullivan said she knows firsthand that one-bedroom apartments are in short supply in Steamboat. She is a vice president with Steamboat Ski and Resort Corp., which places seasonal workers at Walton Pond Apartments.
“At the Ponds, there is always a year-round waiting list for the one-bedrooms,” Sullivan said. “Our occupancy is 60 percent in summer and close to 100 percent in winter, but the vacancies are all two-bedrooms.”
First Tracks originally was a requirement imposed on Resort Ventures West in the middle of the past decade to satisfy an affordable housing ordinance. Resort Ventures West agreed to build the first 47 units in two buildings in order to obtain the necessary permits to build the luxury condominium project Trailhead Lodge, sell luxury single-family building lots in The Range and, in the future, more luxury townhomes at a site just removed from the base of the ski area.
However, local households struggled to fit under the maximum income requirements for the condos at First Tracks, and when the real estate market bubble burst, there suddenly were numerous alternatives on the open market that came without the deed restrictions attached to affordable housing.
Resort Ventures West obtained permission from the city to sell the balance of the First Track units without affordable restrictions and the owners offer many of them as nightly rentals.
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com