Iron Horse Inn faces new quandary
City's lease to hotel operator could force out tenants
October 22, 2009
Steamboat Springs — As the city nears final approval of a lease agreement for the Iron Horse Inn, some say the former hotel is fulfilling its intended purpose of providing long-term affordable rentals and should not be operated as a nightly rental facility that would compete with local lodges.
On Tuesday, the Steamboat Springs City Council preliminarily approved a three-year lease with Boulder-based New West Inns, owners of the Comfort Inn in Steamboat, to manage the Iron Horse Inn. The move is expected to reduce the Iron Horse’s annual losses to about $160,000 from what originally was projected to be as much as a $500,000 loss this year. The lease is subject to final approval at the Nov. 3 council meeting.
A previous City Council bought the inn in 2007 to provide affordable housing at a time when property values and housing costs were soaring. The inn nearly broke even through its first winter. A recession, a bedbug problem and several operational scenarios later, the inn was declared to be nearly vacant in August, when the council first unanimously directed that the city negotiate a lease with New West Inns.
In an effort to minimize losses until New West Inns’ scheduled takeover of the Iron Horse in December, the city offered $600 monthly rentals. Twenty-eight of its 52 rooms now are occupied, and there is a waiting list for the “efficiency units” that include kitchenettes and are similar to small studio apartments.
In the opinion of Larry Haines, all this amounts to a completely different situation than existed in August when the inn was mostly empty.
“I just wanted City Council to be aware that that was not the case,” said Haines, an Iron Horse resident who spoke at Tuesday’s meeting and said the council should consider the fact that the Iron Horse is now fulfilling its originally intended purpose.
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“In this case, the city has actually been successful in providing” affordable housing, he said.
Although it certainly has the feel of a former hotel room, Haines’ home at the Iron Horse Inn also is similar to many modest rental units in Steamboat Springs. Three pairs of skis are in the corner, and a mountain bike leans against the wall near the table where his desktop computer sits. Personal furnishings are interspersed with those that came with the room.
Haines moved in August from Milner, where he was paying $800 a month for a studio apartment and commuting to Steamboat for work and classes at Colorado Mountain College.
“It was just tough to make ends meet,” said Haines, who said his fellow tenants appreciate the convenience, affordability and flexibility the Iron Horse Inn offers. “In a transitional housing market, that’s exactly what you’re looking for. : They’re working people, and there’s definitely some families here. For families, it’s really tough to find places.”
One of Haines’ jobs is at the Alpiner Lodge downtown. He said he brought the issue to the attention of that motel’s management. General Manager Bea Westwater and Managing Partner Jon Wade also spoke at Tuesday’s council meeting and said it would be unfair to compete against a city-owned facility.
“You filled a niche market. You filled a very, very, very needed source of living quarters in Steamboat,” Westwater said. “I don’t think it’s really fair, as a property manager, to compete with the city.”
City officials acknowledge that it is unfortunate to be competing with private businesses, but they said they don’t want to be in the property management business and that New West Inns’ proposal is the best option for minimizing losses. Facilities Manager Bob Robichaud said the city would have to increase its monthly rents to $750 and operate at 90 percent occupancy to match it.
“I think it’s the best we can do,” Councilman Steve Ivancie said about the lease.
Haines stressed that he understands the position the council is in and praised city officials for answering all of his questions and treating him well.
“I’m just hopeful New West thinks about letting us stay here through the winter,” said Haines, noting that ski season is the toughest time to find housing in Steamboat. “We would really like to have the option to stay here at something comparable to $600 a month through the ski season.”
Jesse Allison, a manager with New West Inns, said the company plans to keep some weekly and monthly rentals in its mix because “the outlook is not good” for nightly rentals this winter.
Allison could not say, however, how many or which long-term rentals would be left out of the nightly rental pool – aside from a room leased by LIFT-UP of Routt County.
And although he said rents would have to be increased during the ski season, he did not have exact figures.
“We’re going to play it by ear,” Allison said.
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