The city approved a loan in exchange for first dibs on units, awarded a grant to convert a project into condos and used $2.5 million in a move to help save Casey’s Pond.
The first $10 million in revenue from Steamboat Springs’ 9% tax on short-term rental stays was allocated to three very different projects aimed at supporting affordable housing, and the city still has more than $14 million in the bank.
Last week, Steamboat Springs City Council awarded a $5 million grant of STR revenues to the Yampa Valley Housing Authority to use for building three of its Cottonwoods at Mid Valley development. The first phase of this development is in the works on the west side of U.S. Highway 40 in Steamboat, south of the intersection at Pine Grove Road.
Council’s unanimous decision was the third time the city has decided to spend money from its two-year-old STR fund, a pool of money that can only be spent to “increase the stock of affordable and attainable housing.” More than 62% of Steamboat voters said ‘yes’ when the STR tax was approved in 2022.
While there has been fears that the STR tax would reduce demand for Steamboat Springs as a destination — mainly because it increased the effective tax rate for some STRs in town to more than 20% — collections in 2024 have exceeded what the city was expecting.
“We collected right around $14.8 million is what I’m estimating the collections [for 2024], which is actually a lot better than had we budgeted for because we anticipated it dropping a bit,” said City Finance Director Kim Weber. “We didn’t see that.”
The $14.8 million in collections last year is an increase of about 3.5% from what was initially projected for 2023 in an estimate provided in the ballot language, an estimate that Weber said she thought was “super high” at the time. That estimate, which was required to appear in the ballot language because of Colorado’s Taxpayers Bill of Rights, was $14.3 million. Sales tax collections in general are up less than 2% through November of 2024, when compared to the same period in 2023.
The city actually collected $9.2 million in 2023, a reduced amount because City Council opted to exempt some STR stays at the start of 2023 from the newly approved tax if they had already been booked. After the city allocates money to YVHA for its Cottonwoods Project, Weber said the STR fund will still have about $14.5 million waiting to be spent.
One proposal being considered for some of that money is from the developers behind the Basecamp Apartments on the west side of Steamboat. That proposal, which city staff says is still being negotiated, would allow STR revenues to essentially subsidize the current rents in the building to bring them down to something considered affordable to someone who makes 80% or 100% of Routt County’s Area Median Income. Rents are currently near what would be considered affordable for someone at 120% Routt County’s AMI.
For a one-bedroom at Basecamp, the monthly rent is $2,671, according to documents presented to City Council on Jan. 14. Bringing that down to 80% AMI would put rents at $1,787 a month, requiring nearly $900 from the city in STR tax subsidy each month as initially proposed. To make rents for a one-bedroom something affordable to someone at 100% AMI, the city would need to contribute about $440 per unit, per month. Basecamp has studio apartments as well.
The city has also received a request from the Milner Park Community Cooperative for $4 million in STR funds to help purchase the Milner Mobile Home Park. The city’s Ad-Hoc Housing Advisory Committee will discuss this request on Monday. Council is also expected to consider using STR Tax revenues to help fund a housing and childcare development near the Steamboat Springs Community Center being pursued in partnership with Routt County and the Colorado Department of Transportation.
In a discussion about how to spend STR dollars going forward on Jan. 14, City Council members indicated they wanted to field requests on a rolling basis rather than having set windows for when developers can apply. The potential downside of this is that it could be harder to compare proposals, but council members believed this could help spur projects at a steadier pace.
“Come to us now or when you are ready with any development opportunity based on these guidelines that have been established,” said Council member Steve Muntean at that meeting. “I don’t see why we can’t do that right now… we don’t even have to say how much, just come to us.”
The Ad-Hoc Housing Committee plans to discuss how this rolling process will work on Monday as well.
In addition to the $5 million for YVHA’s project, City Council loaned $2.6 million in STR revenues to developer Gorman and Co. at a favorable 2% interest rate in exchange for first access to 11 units in its Riverview development in April of 2023. This project is going up behind Natural Grocers in Downtown Steamboat. That loan will be repaid to the city over 15 years.
Another $2.5 million in STR dollars was used as part of a larger package used to save Casey’s Pond, which officials say is “thriving” since it was purchased out of receivership in October after a “miraculous” fundraising effort. When the sale for Casey’s Pond closed there were 110 residents, down from 129 before receivership. Earlier this week Northwest Colorado Health announced the community currently has 126 residents.
“The resident population is growing at a steady pace and even includes some individuals who moved back in after the purchase,” Northwest Colorado Health wrote in a Monday press release. “These numbers outpace the expected timeline for stabilization and are an excellent indicator that the senior living community will be sustainable for the long-term.”
The city’s contribution to the Casey’s Pond deal nets them 15 workforce housing units that will be used for employees of the senior living community first, and then for people who work in Routt County in general if there are any unfilled.
YVHA gets $5 Million for Phase Two of Cottonwoods project. Phase One intends to deliver units later this year.
The most recent allocation of $5 million for the Cottonwoods project allows the housing authority to convert what was originally envisioned as a rental project similar to Sunlight Crossings, to one that will sell the units instead. This move will actually accelerate the project so it delivers units a year earlier than originally planned.
The STR funds are being used on Building Three, which is phase two of the project. These units are targeting residents with incomes between 100% and 140% Routt County’s Area Median Income of $83,400 per year for a single person.
Prices for these units will be set so that buyers at the appropriate income levels are not spending more than 30% of that income on their housing. That 30% includes taxes, insurance and HOA fees in addition to what a buyer pays for their mortgage. YVHA has said prices are expected to start in the mid-$200,000s for the studio apartments and in the low-$600,000s for larger two-bedroom condos targeting the higher end of incomes.
Phase One of the project, which includes 86 units across two identical buildings, have been advertised to start at higher prices than Phase Two. YVHA Executive director Jason Peasley said one of the main reasons for this is because Phase One does not include studio apartments, rather the smallest units are one-bedroom condos. Phase One also includes some three-bedroom units.
Prices for units in Phase One are expected to range between the low-$400,000s and high $600,000s, and YVHA is encouraging those interested in trying to buy one of these units to start talking to lenders now. Final prices for these units will be locked in once the Colorado Housing and Finance Authority releases the latest Area Median Income numbers for Routt County later this spring.
All units being sold at the Cottonwoods at Mid Valley will be subject to a deed restriction that limits the resale price in the future, a tool referred to as an appreciation cap. Peasley said this deed restriction has been created to avoid pitfalls of previous deed restrictions used in Steamboat Springs and tries to balance the amount of equity homeowners can build while maintaining affordability of units into the future.
“The fact that people have made it rich on real estate means that it’s unaffordable for others now,” Peasley said. “We have to try to balance it in some way so the appreciation cap is our tool to do that to make sure that this unit will not start out at $400,000 and immediately go to $900,000.”