Yampa Valley Housing Authority’s Elk River Village parcel
Decision to stop making loan payments is shortsighted.
The Yampa Valley Housing Authority’s decision to stop making payments to First National Bank of the Rockies on a $2 million loan is a shortsighted stunt that puts the agency’s long-term future in doubt.
The YVHA board of directors sent a letter last week to the Steamboat Springs City Council and Routt County commissioners stating that YVHA plans to suspend $10,000-per-month loan payments on its Elk River Village property.
The Housing Authority purchased the 11-acre West Steamboat property in 2006 for $2.3 million, putting down $300,000 and borrowing $2 million from the bank in 2007. The goal was to undertake a project similar to Fox Creek Village, a successful YVHA development that was completed in 2006 and provided housing to 30 families making 120 percent or less of the area’s median income at the time.
YVHA’s timing on the Elk River parcel could not have been worse. Shortly after the loan was completed, the housing market collapsed. Property values plummeted in 2008 and only now are beginning to recover. Demand for affordable housing — and by extension, public support for YVHA — effectively dried up.
The most recent appraisal for the property was $1.5 million in 2011, and the Housing Authority said the only offers it has received on the property have been for even less.
YVHA thinks the bank should lower the outstanding principal on the loan by $800,000 to be more in line with the current value of the property, which YVHA estimates to be between $800,000 and $1,000,000.
To date, First National Bank of the Rockies has been unwilling to revise the terms of the loan, and who can blame the bank? There is no compelling reason for the bank to write down $800,000 in money it rightfully is owed.
YVHA’s threats to stop payments — as well as its claim that the loan is null and void because, in the opinion of YVHA’s attorney, the loan violates terms of Colorado’s Taxpayers Bill of Rights — seem aimed primarily at scaring the bank into negotiations.
So far, the threats have not worked. And even if they eventually do and a revised agreement is reached with First National Bank of the Rockies, what financial entity in its right mind would ever work with the housing authority again?
YVHA is far from the only entity in this position on a property loan. This week, about 50 percent of participants in a Steamboat Pilot & Today survey said they remain underwater on their mortgages despite recent improvements in the housing market. The vast majority of those residents will continue to grind out mortgage payments and hope for better times.
In our view, the city and county — which created YVHA in 2003 and continue to be the YVHA’s sole funding sources — have an obligation to work with the agency’s board of directors to ensure the agency has enough funding to continue its existing operations and meet its debt obligations. It’s disheartening that City Council member Scott Myller and Routt County Commissioner Doug Monger, who both serve on the YVHA board, think threatening to walk away from a $2 million loan is the best option.
Make no mistake — the housing authority does have other options. YVHA could go to voters with a limited property tax proposal, though the chances for success of that seem slim.
A better option would be to continue making payments on the loan in the not unrealistic hope that recent improvements in the housing market will continue and the original goals of the Elk River Village property eventually can be accomplished.
That doesn’t seem altogether unrealistic, except that given this recent stunt, it’s hard to have any faith that YVHA has the foresight and patience necessary to make that happen.