•Alaska-based developer offers $915,000 to purchase Iron Horse Inn
•City appraisal of hotel confirms unsolicited offer is in range of "as is" value for property
•City says it is not in any hurry to sell property, must first outline public process
Steamboat Springs To shine and become competitive again, the Iron Horse Inn needs millions of dollars' worth of attention in the form of new floors, paint and general maintenance.
But developer KC Wilson still sees great potential in the aging and underutilized hotel.
He said Wednesday that he wants to purchase and renovate the city of Steamboat Springs' riverside hotel into a more successful and independent one.
However, city officials said they no longer are in a hurry to rid themselves of the debt-riddled property at the edge of downtown.
Wilson recently approached the city with an unsolicited offer to purchase the Iron Horse as is for $915,000.
A May appraisal of the property ordered by the city confirmed Wilson's offer “is most representative of the 'as is' market value” for the riverfront property and its two buildings Wilson and the city's appraiser estimated would need $2 million to $3 million worth of upgrades to become a competitive hotel. The appraisal estimated the total value of the property and its buildings at between $600,000 and $1.2 million.
“If it works out, it works out. I think this would be a fun project,” Wilson said Wednesday.
Wilson's offer this year is the second bite at the property, and the attention comes after city officials abandoned a plan to retrofit one of the now-closed hotel buildings into a temporary police station.
In March, Chicago-based developer Bob Helle said he was in the early stages of forming a proposal to raze the existing hotel buildings and replace them with an affordable housing project.
The city has not given either proposal serious consideration, saying it first needs council's endorsement to sell the property and then a public process to allow any interested developer a chance to bid on it.
“We have so many things to deal with right now, especially in this heavy tourism season; the Iron Horse just isn't coming to the top of the list of priorities,” City Manager Deb Hinsvark said. “It's not urgent.”
Stopped the bleeding
Hinsvark said the city bought itself some time last year to think about the future of the Iron Horse Inn when it decided to cease hotel operations in the newer building on the property.
After the change, Hinsvark said, the city expects to take in $180,000 in revenue from the property while spending $130,000 to operate and maintain it.
Before the hotel closed, the city was losing money to operate it.
Today, revenue is generated in one building that is occupied by 26 tenants who rent month to month.
“The reason this isn't urgent right now is we've closed the hotel,” Hinsvark said. “The cost of the monthly rentals (in the older building) covers the cost of the care at the other side of the business.”
Even if the city sells the hotel, Hinsvark said, it still will be responsible for paying off the more than $4 million of outstanding debt on the property.
The city purchased the Iron Horse in 2007 for about $5 million and had a vision it would be used as affordable housing.
Although they acknowledge something must be done about the property that since has become a financial burden for the city, council members also have been reluctant to discuss any potential sale in the wake of the recent bids.
“We know that we need to take a look at the Iron Horse again, but right now, it is not at the top of this council's priority list,” Council President Bart Kounovsky said.
But he added the he thinks the city at some point will need to rid itself of the hotel.
He said the first step in any potential sale or repurposing of the site would be to move the collateral off of the buildings and onto another city property.
Hinsvark said a more detailed outline of that process could be presented to the council in the fall, after budget season.
Although any plan the city chooses to rid itself of the Iron Horse would cost it a significant amount of money, a sale could relieve it of ongoing maintenance costs.
Today, the older building on the property still is home to 26 tenants who rent rooms for $625 per month.
Wilson said he recently went on a walk-through of the buildings and found many deficiencies in the property that would be costly to fix.
“Everything in the place is worn out," Wilson said. "It would need new laundry facilities, phone systems, furniture, flooring. You're basically buying two shells that you would have to renovate. But even with that, the location is good, and if the price is right, it would make some sense.”
He also said he is worried about the electricity in the older building that houses the long-term tenants.
He specifically charged that the city did not make adequate adjustments to the older hotel building when it went from serving nightly rentals to the long-term stays.
"This property has not been operated as a hotel nor kept up to date with necessary maintenance or renovations," Wilson wrote to Hinsvark in a letter included in the appraisal.
Hinsvark said the city has taken steps to better maintain the building and accommodate the long-term tenants.
“We paid for a thorough walk-through by an engineer to make sure the facility is solid and safe, and we've taken some steps to resolve some issues,” she said. “We feel comfortable that we've done the due diligence to make it safe.”
Wilson said that when he made the offer, he hoped he could start renovations as soon as this summer. But he's now frustrated it won't be entertained anytime soon.
“Honestly, I just don't think they want to deal with it right now,” he said of the property. “If they can kick the can down the road a little bit, they're going to do that. That's the thought process right now.”
Still, he said that if the city decides it wants to sell it, he currently is interested.
To reach Scott Franz, call 970-871-4210 or email scottfranz@SteamboatToday.com