Few proposals expected for Iron Horse in Steamboat
History doesn’t bode well for inn management interest
September 10, 2010
Steamboat Springs — Recent history suggests the city might not be flooded with proposals from potential new managers of the Iron Horse Inn.
Steamboat Springs City Council voted Tuesday night to accept requests for proposals, or RFPs, for management of the much-maligned inn between the Yampa River and U.S. Highway 40 just east of downtown. City Manager Jon Roberts confirmed Wednesday that it will be the third time the city has requested RFPs for the inn's management in the past 18 months.
Boulder-based New West Inns has operated the Iron Horse since November. Roberts also said Wednesday that the revised lease agreement New West had been operating under this summer, and that cut New West's monthly rent in half and was rejected by City Council on Tuesday, was "the best option" the city currently has for the inn.
City staff waived New West's monthly rent of $13,500 for December, January and February, and deferred its rent for March through May, as the inn struggled with challenges including higher-than-expected start-up costs and low-performing nightly rentals in a down economy.
Roberts said the city's most recent request for Iron Horse proposals came shortly after New West began its management.
"We RFP'ed this in December of 2009 and we did not receive any interest," Roberts said.
Roberts said New West was the only responder to the earlier request for proposals that led to New West's management of the inn. Even earlier in 2009, Roberts said, the city solicited RFPs to redevelop the entire two-building facility into workforce housing.
Roberts said the best proposal received in that round would have required the city "to sink another $5 million" into the Iron Horse to meet the proposal's needs.
Iron Horse management did draw interest in summer 2008, when the city solicited proposals to redevelop the Iron Horse Inn and potentially double its amount of workforce housing. Anne Small, the city's purchasing and risk manager, said at the time that nine entities responded to that request.
The city contracted late that summer with Mountain Resorts Realty, a division of Resort Group, to manage the property. The full brunt of the national economic recession became apparent in the ensuing weeks.
And after a bedbug problem intensified — and Deputy City Manager Wendy DuBord confirmed bedbugs had been reported at the Iron Horse early in 2008 while it still was under city management — Mountain Resorts told the city it wanted out of its contract. Mountain Resorts moved its employees out of the Iron Horse in February 2009.
Roberts said Wednesday that when Mountain Resorts left its contract, "under their lease, there was money owed to the city, and the decision was not to pursue collection."
"The lost revenue to the city … was probably in the neighborhood of $400,000" in the period between Mountain Resorts' and New West's management, Roberts said.
Roberts said he, DuBord and Small worked together on efforts during winter and spring to help New West move toward profitability. The unofficial lease New West operated under in the summer resulted in rent payments of $13,700, total, for June and July.
In rejecting that lease Tuesday, City Council directed staff to collect the full, $13,500 monthly rent owed by New West since March.
Roberts said in his view, the revised lease was the best deal on the table.
"Even the amended terms that were proposed (Tuesday) is the best option that we are currently aware of and better than anything we had received through the RFP process," he said. "There has not been any proposal better than the amended terms."
City Council members including Jon Quinn, and members of the public, expressed concern, if not anger, Tuesday night at the amount of time it took for New West's rent situation to come to light.
"Why this hasn't appeared at least in the city manager's report or something … is beyond me," Burgess Creek Road resident Bill Jameson told City Council. "There's a lot of ways this could have been alerted."
Roberts said Thursday that any blame for that delay falls squarely on his shoulders.
"The decision to work with New West Inns, in an effort to achieve operational viability at the Iron Horse Inn and provide workforce housing, was made from the city manager's department," Roberts wrote in an e-mail. "Any and all criticisms of those decisions, as well as the timeline for placement of the lease amendment onto the council agenda, should be directed at the city manager."
He said that when they were crafting the rent deferment plan in March, he, DuBord and Small thought a plan for New West's profitability at the Iron Horse soon would be in place. They did not expect the issue to drag into September, he said.
"The expectation was that (the) whole process was going to go much quicker and when that work-out plan was in place to bring it to City Council for approval," Roberts said. "There's no question … it would have been (council members') preference that it was brought to them earlier."