Affordable housing developer eyes Iron Horse Inn as potential site for new project
March 18, 2013
Steamboat Springs — Weeks after the city of Steamboat Springs determined its Iron Horse Inn wasn’t destined to become a police station, the half-vacant hotel complex is now being eyed for something else.
Chicago-based developer Bob Helle said Monday that he is in the early stages of forming a proposal with the Yampa Valley Housing Authority to replace the Iron Horse with a 42-unit affordable housing project targeted at employees here who make less than $42,000 per year.
"It seems there is a strong demand for affordable housing, but not enough of it," Helle said, adding that he was motivated to look into the possibility of a housing project here after taking a few ski vacations in Steamboat.
The Iron Horse Inn currently has 26 efficiency rooms being rented out for $625 per month.
After it continued to operate in the red each year, the overnight hotel portion of the Iron Horse was closed by the city. The nightly hotel operation is in a newer building on the property.
Helle’s project would demolish the existing Iron Horse buildings and replace them with what the developer envisions would be a three-story complex with one- and two-bedroom units renting from $700 to $1,000 a month. The units would be managed by the Housing Authority.
While it would add to Steamboat’s stock of affordable housing, the project would not be a moneymaker or chip away significantly at the $5.185 million principal balance the city owes on the property regardless of whether it sells it.
Helle said the complex would be paid for by low-income housing credits and future rental income, and he anticipates being able to offer a maximum of $400,000 to the city for the Iron Horse land.
City Manager Deb Hinsvark will float Helle’s preliminary proposal to the Steamboat Springs City Council on Tuesday night.
She said Monday that the proposal comes as other developers have started to express an interest in the property that is expected to cost the city an average of $475,000 annually until the debt service is paid off in 2023.
"I’m hoping that asking for feedback (Tuesday) night might start the conversation of what we do with the Iron Horse," Hinsvark said. "Council might be ready for a task force to be put together to decide where to go. There are all sorts of options we might have for this facility."
In a memo to the council, she acknowledged the property "would likely sell in a bid process for significantly more than (Helle) is offering."
Hinsvark said that before Helle is told to put any more effort or money into developing his proposal, she wants to gauge whether the council would be open to the tradeoff of obtaining more affordable housing while selling the land “for almost nothing.”
The city purchased the property about five years ago thinking it would be a great place to offer its employees an inexpensive place to live at a time when rentals were hard to come by. Since the purchase, the property has been passed over as a source of housing for Colorado Mountain College students, roiled by management turnover and temporarily infested with bedbugs.
More recently, the city proposed razing the aging hotel buildings and replacing them with a 15,000-square-foot police station. After the City Council rejected that idea, it briefly considered temporarily housing its police force in the now shuttered hotel building.
That plan also was scrapped after a new building code adopted by the city raised the estimated cost of renovating the facility for the police from about $113,000 to nearly $1 million.
Hinsvark said the city and the council still must figure out what to do with the property, ideally this year.
The buildings currently are collateral for the city’s debt on the property, but the collateral could be transferred to a newer city-owned property, Hinsvark said.
"I don’t know how the council wants to approach this, but we know it’s going to be something we need to approach. It’s not something we can push out for a number of years," she said.
To reach Scott Franz, call 970-871-4210 or email scottfranz@SteamboatToday.com