Steamboat Springs — The oft-debated future of the Iron Horse Inn could be put to rest tonight.

City staff is seeking immediate direction from the City Council about what to do with the motel purchased for the purpose of providing affordable rental housing to city employees and others.

The city's acquisition of the property has been a somewhat controversial subject since the $4.05 million purchase in September. The purchase was approved by the previous City Council. But after the November election in which three incumbents were defeated and five new members were added, council members began to question the wisdom of the purchase and what to do with the property.

The Iron Horse Inn is honoring its existing reservations through the ski season and also is providing short-term rental housing. The city had planned to spend $1 million converting the inn's hotel rooms into apartments available for long-term rental after the close of the ski season. However, city calculations show that abandoning the redevelopment - and continuing to operate the property as it is being run now - would be more cost effective.

Divesting the property also is an option, but city officials have said a sale - especially an immediate one - would be difficult because of the way the city's purchase of the inn was structured.

City staff estimates show the inn losing $667,174 throughout a 10-year period if it is redeveloped into apartments. Without a reconfiguration, the inn would net a profit of $177,771, according to the staff report. The report notes that the previous City Council thought addressing affordable housing was worth subsidizing a redeveloped property.

"The previous City Council felt that the Iron Horse was a way to provide work force housing and would be an important recruiting tool like other city employment benefits," reads the report, which notes the $2.5 million the city will spend on health insurance for its employees in 2008.

Nearly 30 of the Iron Horse Inn's rooms are being rented to local workers. Iron Horse Inn General Manager Darrell Randall said most of those rooms are booked through April.

"Everyone is real happy," said Randall, who noted that some tenants are paying as little as $12.50 a day in shared rooms.

The inn is home to employees of Yampa Valley Medical Center, City Market, Steamboat Sheraton Resort and other businesses, in addition to city employees. City employees currently living at the Iron Horse include bus drivers and even upper management. Philo Shelton, the city's newly hired director of public works, is in the process of buying a home, but said he couldn't find anywhere else to live on a month-to-month basis. Other rental opportunities, he said, required a six-month or one-year lease.

"In relocating, for me and my family, it worked out great," Shelton said. "I know from looking at places it's good to have that available."

Shelton thinks the Iron Horse is a valuable asset for the city, especially considering Steamboat's high number of seasonal employees. Randall agreed, noting the time it can take to find a home in Steamboat.

"Most of the people who want to transition to an apartment or house, it's taking one to two months to do," Randall said.

In addition to the staff report, Councilwoman Cari Hermacinski also prepared a financial analysis assessing the two options for the Iron Horse Inn. Her conclusions differ from the staff report, because of different assumptions for revenues and expenses. According to Hermacinski, the redevelopment option would lose $930,782 throughout 10 years, while continuing to operate the inn as it is now would result in a loss of $537,808.

City Manager Alan Lanning said Hermacinski's report represents an unusual foray into work traditionally not done by an elected official.

"Research and the preparation of stuff has traditionally been a part of the staff's responsibility," Lanning said. "That's what we do for a living."

Iron Horse proponent and councilwoman Meg Bentley, while noting Hermacinski's right to have questions answered, said she hopes for a speedy resolution to the issue so City Council can move on to other important topics.

"I think if Cari has questions about it, she needs to get those answered so she can feel good about it," Bentley said. "But one of the main problems that people had with the last council was that they were constantly second-guessing themselves. I would like to put this whole questioning of the Iron Horse to rest, and I hope it certainly comes out in favor of keeping the Iron Horse.

Also at today's meeting, the City Council will discuss the future of the Steamboat Springs Liquor License Authority. The council has served as the authority in the past; a function the current council has expressed an interest in delegating. Having researched authority configurations in other Colorado communities, City Clerk Julie Jordan is recommending the city split the local Liquor License Authority into two divisions: administrative and compliance.

Jordan recommends the City Council continue acting as the administrative division that would hear and review applications for new licenses. A hearing officer hired by the city would handle compliance issues.

- To reach Brandon Gee, call 871-4210

or e-mail bgee@steamboatpilot.com