Steamboat Springs City Council members gave the first green light to two development groups that have purchased former Steamboat Hotel and Steamboat Mountain Lodge to convert the hotel rooms to workforce housing units for Steamboat Resort employees.

Council approved the first reading of an ordinance Monday but with an added caveat that the groups would not house more than two people per sleeping room.

“I don’t want to see two bunk beds and four people in these tiny hotel rooms,” council member Michael Buccino said. “I think that would be disingenuous to the intent of our affordable housing initiative.”

The groups — Reliant Group Management, based out of California, and K2 Developers, out of Denver — are under contract to buy the former Steamboat Hotel, located at 3195 S. Lincoln Ave., and the former Steamboat Mountain Lodge, located behind the hotel, and plan to close Thursday.

Joe Sherman, CEO of Reliant Group Management, told council members for the 2021-22 winter season the properties would be used as dormitory housing, with two people sharing a room and a communal kitchen shared between several rooms. Sherman said the rental rates would be about $475 per person for an unrennovated room and $515 for a renovated room.

“That seems affordable compared to what the marketplace is charging,” Sherman said.

The dormitory-style housing would only be used for the upcoming season, and in the meantime, the developers said they would work to convert the property to more permanent workforce housing.

To approve the units before the winter season, council and the city planning department waived certain requirements in the community development code, with the agreement that the developers would seek reapproval from council before next season, with plans to follow all city codes at that time.

“You wouldn’t typically hear any recommendation to waive the CDC,” Planning Director Rebecca Bessey said. “But just based on the many discussions we’ve had with City Council and the housing subcommittee, we thought this might be a creative solution to afford some housing this ski season while ensuring quality development and compliance with our codes in the end.”

Council member Kathi Meyer expressed concern that the units would only be used by Steamboat Ski & Resort Corp. employees.

Suzie Spiro, a community member who spoke during the public comment section of the meeting, echoed Meyer’s concern and said that other employees in the community are also in dire need of affordable housing.

“While workforce housing is important at the mountain, there are other people we need to take care of,” Spiro said. “Restaurant workers, people who work at the stores, shuttle bus drivers.”

Ski Corp. Vice President of Human Resources Trish Sullivan said in response that, as one of the area’s largest employers, providing more housing for its employees frees up others in the community to find affordable housing options for other employees.

“This is a short-term solution to a significant workforce housing issue that we have in our community,” Sullivan said. “By bringing on this project and approving this ordinance, it takes pressure off the rest of the community, therefore potentially opening up other opportunities for other business owners and their employees.”

Council members also expressed concern about so many people living in a small space and sharing a communal kitchen.

“I anticipate most people going into this style of housing are going to be from a lower economic class, and they’re not going to have the money to go out and eat out everyday,” council member Lisel Petis said. “There should be something that makes sure that if individuals can’t eat out that they’re not being left to it.”

Sherman said the developers are working to add mini-refrigerators to each room to help ease that issue.

The developers will present to council again in 2022 with a more developed plan for permanent workforce housing.

A similar project by local development group Ski Town Commercial LLC would see the Hampton Inn & Suites and the Fairfield Inn & Suites by Marriott turned into workforce housing units. That project is still working its way through the city’s planning process.