Steamboat Springs City Council and the Yampa Valley Housing Authority pushed even closer Tuesday to settling on language behind an annexation agreement pivotal to the envisioned development of more than 2,000 attainable housing units at Brown Ranch.

“I feel like last night was mostly fine-tuning details,” said the city’s attorney, Dan Foote.

While the annexation agreement may be close to completion, lingering angst over the projected financial impact on the city’s budget left one City Council member to suggest an alternative solution to filling the city’s expected funding gap for the project.

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In prepared remarks delivered Tuesday night, Dakotah McGinlay pitched a potential alternative to the short-term rental tax funding that could come in the form of a lift ticket tax.

Although Steamboat and surrounding communities face a “housing crisis due to the lack of affordable and attainable housing,” McGinlay said recent community surveys indicate “the majority of the voting populous would rather increase a sales tax than approve a property tax.”

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“The community doesn’t like those two options,” she said of the property-tax and sales-tax possibilities. “Maybe this is a golden opportunity to cash in on a lift-ticket tax that has not been discussed.”

The Yampa Valley Housing Authority purchased the 534-acre Brown Ranch using a $24 million donation in 2021. The planned development would provide housing to qualified residents earning between 60% and 258% of the area median income.

Members of the housing authority and City Council began negotiating the annexation agreement eight months ago with an objective to set the table for the affordable housing development by bringing the land into city jurisdiction.

The ongoing annexation negotiations proceeded in parallel with talks around a now-finalized ballot question which, if approved, would provide a funding mechanism for the housing project, which if completed in its entirety, would add 2,264 affordable and attainable housing units to the city to be sold or rented to income-qualified residents.

Council members voted last week to send the finalized ballot language to voters asking them to allocate 75% of the revenue collected from a 9% tax on short-term rentals in Steamboat until 2024, provided the housing authority meets certain performance metrics.

The funds are available after voters passed a ballot measure last year allowing the city to collect up to 9% in short-term tax revenues.

While questions remain over certain language included in the annexation agreement, including “getting down into the weeds” on how 62.71 acres of public park land would be designed, Foote said most of the remaining back-and-forth over the agreement boils down to ironing out “pretty minor details.”

If all goes according to plan, council members are set to vote on approving the annexation agreement on Sept. 19. Then, assuming members of the Yampa Valley Housing Authority also approve the agreement, the city’s community development code would require two readings of an ordinance that, if passed, would officially annex Brown Ranch into city limits.

Without the agreement in place, there will be no ordinance. If the agreement is approved, council members could decide to send the annexation ordinance decision to a vote, or a citizens’ petition could force the measure to a ballot question.

Should the short-term rental tax ballot question fail but the ordinance pass, either by a City Council vote or by a citizens’ petition ballot, the agreement, excluding sections built around the funding question, would remain in place — leaving the decision over how to fund the project to future City Council members on a yearly basis.

“Every year the short-term rental allocation would be appropriated by council,” Foote explained of the scenario whereby the annexation ordinance is in place, but the short-term revenue funding mechanism is not approved by voters.

“And (City Council) would have the power to choose not to appropriate or reduce it if they wanted to,” he added.

By all accounts, Foote said, getting to this point in the negotiations “has been a pretty heavy lift,” especially considering the back-and-forth over the plans has dominated time spent by city staff and housing authority members.

Non-utility infrastructure improvements needed to support completion of the development, including parks and U.S. Highway 40 improvements, would leave the city with more than a $52 million budget gap over the next 20 years, according to the city’s financial forecast.

Despite the projected budget shortfall, the need for housing is pressing and often described by local, state and federal officials, including U.S. Sen. Michael Bennet, as an outright crisis.

Today, the city has 273 affordable housing units spread across five properties, according to figures provided by the housing authority. The units are all currently occupied, a spokesperson for the local agency said, and the combined waiting list for the properties has more than 800 applicants.

The Yampa Valley Housing Authority estimates the median price for a single-family home in 2022 in Steamboat Springs was $1.16 million in a city where the average household has a buying power of $398,000.

A two-person household earning 80% of the county’s Area Median Income brought in $65,500 in 2022, according to the Colorado Department of Local Affairs.

“We are facing a housing crisis in Colorado — and that is not too strong of a word,” Bennet said during a visit to Steamboat last month. “And it is particularly problematic in resort communities.”

McGinlay told the Steamboat Pilot & Today on Wednesday that she broached the topic of the lift tax in relation to Brown Ranch and the city’s housing shortage Tuesday night because she wanted members of the community “to see that they have choices.”

“We need to annex first and then figure out exactly what a plan is for funding, but I believe that we have multiple choices,” she said, adding that she spoke with city officials who told her the lift tax would need be approved by voters and have “some sort of rational basis … but the connection between the Steamboat Ski & Resort Corp.’s operations and impacts on city services is obvious.”  

McGinlay acknowledged that the Ikon Pass, which individuals purchase to gain access to various ski mountains worldwide at a discounted rate, could complicate how the revenues would be tallied. She also stressed that suggesting a lift ticket tax is only one possible solution.

“I believe we need to piece this together in multiple ways to make it more feasible for everybody,” McGinlay said.

City Council President Robin Crossan and City Council member Heather Sloop voted against the proposed funding mechanism articulated in the ballot question approved last week and both took issue with McGinlay’s lift ticket tax suggestion.

Sloop agreed that a tax on lift tickets would be appropriate but said that the funding should be directed to the creation and operation of a regional transportation authority to serve surrounding communities like Craig, Hayden and Oak Creek.

Crossan agreed the transportation authority should get the funding but said the money drawn from the resort should be negotiated in the form of an annual commitment, not a tax.

A spokesperson from Steamboat Ski & Resort Corp., which is owned by Alterra Mountain Co., said the company declined to comment on the matter.

“For me, I think it is more important to work with Ski Corp. and Alterra to find something that can be negotiated, whether it is annually or every two, or three or five years, based on skier and rider visits that possibly would be a contribution that would be totally funneled to the transportation authority,” Crossan said.