The Steamboat Springs City Council received news of a demand for reimbursement in the amount of $485,674 for alleged “wrongfully exacted contributions paid to the city” to support intersection improvements at the planned Stone Lane bridge.

City Attorney Dan Foote commented on the demand letter from developer Gray Stone LLC, which asserted “the right to have returned to them $485,674” that was paid by the firm to the city for intersection improvements in the area of the future bridge.

According to Foote, the payments were made to offset traffic impacts of the Homewood Suites hotel, which was approved in 2017, and a second as-yet-unnamed hotel to be constructed adjacent to the Homewood Suites.

According to Foote, the letter from the developer “alleges that the city has failed to collect contributions from other developers whose projects would generate traffic to the Stone Lane area.”

In the letter, Gray Stone also alleges that “the city has not demanded a monetary contribution from any other similarly situated developer in the last 10 years.” In the demand for reimbursement, the developer states that the “city required another developer to pay only 0.8% of the projected cost,” which is disproportionate to the “9.4% and 11.7%” of the projected funds that Gray Stone LLC was required to pay to further their development.

According to the demand for reimbursement letter, the issue is still under investigation, but Gray Stone argues, “the city’s imposition of the developer contributions was unconstitutionally arbitrary and irrational, and violates the Equal Protection Clause of the Fourteenth Amendment.”

The letter from the developer does not identify which developments should have been required to contribute to the Stone Lane improvements. Staff requested that Gray Stone LLC identify these developments and had received no response as of Jan. 21, according to Foote.

Council members went into executive session to obtain legal advice on how to handle the demand for reimbursement request from the developer.

Foote stated that he will “continue to investigate and have some discussions with the attorneys who sent the demand letter” and “will consult with the insurer and report back to the council at a future meeting.”