Our View: Iron Horse proposal needs more time
September 25, 2012
It's been five years since a previous Steamboat Springs City Council made the enormously costly mistake of buying the Iron Horse Inn. The current council should learn from its predecessor and not rush into another decision that could cost taxpayers millions of dollars without being thoroughly vetted.
By any definition, the Iron Horse purchase has been a failure. Conceived as an opportunity to provide affordable housing to city employees during the real estate boom of the mid-2000s, the deal has accomplished little besides suck money from city coffers.
Now, some top city officials and council members see a way out — kind of — from under the burden of the Iron Horse. A plan to sell the city's existing downtown police station and fire station at Eighth and Yampa streets to local outdoor gear and energy food companies Big Agnes/BAP/Honey Stinger would net $2.1 million for the city, which it would in turn invest as part of a $7 million project to raze the Iron Horse and replace it with a new police station.
Proponents of the plan like that it would get the city out of the property management business while replacing the cramped quarters of the current police station with a new facility just east of downtown. They also see the move as an opportunity for the city to turn over its aging facility to a growing local company that could improve the space and help propel the redevelopment of Yampa Street into a lively, attractive and pedestrian-friendly shopping and dining district.
But the issue is more complex than that.
Regardless of what the city does with its Iron Horse parcel, the debt obligation on the original purchase isn't going away. Worse, there's a pre-payment penalty that means it would cost the city $7 million to pay off the debt today. So, those six-figure annual payments aren't going anywhere.
City officials say they'll pay for the new police station with unallocated reserves — the same reserves that plan proponent Cari Hermacinski previously has urged her fellow council members to increase, not spend. While the city likely could afford such a large reserve expenditure, we question whether a new $7 million police station is the best use of those funds, particularly when the city's capital budget has been decimated by years of stagnant construction activity. What about the city's other infrastructure needs?
One of those needs, if this deal comes to pass, would be a new fire station. The only logical place for a station is the west side of town. The city has estimated the cost of a standalone station at $3 million. That means the Iron Horse plan actually would necessitate $10 million in new building projects throughout the next two years, not to mention any expenses the city would incur in renting and retrofitting a temporary police station while a new facility is built. It should be noted that the city previously has floated a $19.5 million, property-tax funded proposal for a public safety complex in west Steamboat.
Let us be clear: We want Big Agnes/BAP/Honey Stinger to remain in Steamboat, and we love the idea of it creating a Yampa Street retail presence with offices for 50 of its employees upstairs. But we don't share the sense of urgency with which this proposal appears to be moving through City Hall. It suits the council, city staff and taxpayers to perform their due diligence before any decision is made.