Initial analysis shows Brown Ranch won’t pay for itself, would increase Steamboat’s housing stock by 20%
A preliminary fiscal analysis of the annexation of the Brown Ranch into Steamboat Springs shows it would increase housing stock in the ski town by roughly 20%, but that the new development overall would have a net-negative impact on the city’s general fund.
The analysis from RCLCO Real Estate Consultants, which has offices in four states, is still being refined, but seeks to understand what additional revenues the Brown Ranch would spur as well as measuring the costs to extend city services.
One of the key aspects of the analysis is who would move to the Brown Ranch as it is built out, and what happens to the unit they are currently living in if that is within the city.
The preliminary analysis showed that people who currently work in Steamboat, but do not currently live within the city limits would fill about half of the units at Brown Ranch. For every 100 units built, 51 households would be people that work locally, but live elsewhere.
“(Brown Ranch) would increase the city’s housing stock by 20%, which is not a trivial amount of housing and will have impacts on growth generally,” said Dana Schoewe, a principal with RCLCO who has been working with the city and Yampa Valley Housing Authority to review fiscal impacts.
“It’s necessary to sustain growth in Steamboat over the long term, but we do expect generally for it to create a negative impact on the city’s general fund,” Schoewe continued.
Schoewe said the first part of the analysis sought to understand the current housing landscape in Steamboat. While there is new housing being built, this housing is only really attainable for wealthy out-of-market households, short-term rental investors and existing second homeowners in Steamboat.
“These are really the people who are driving and moving into the net new housing construction,” Schoewe said. “The problem is some of these households who are existing owners in Steamboat who move into this new construction, it really only opens up additional housing for these same groups.”
Who new construction is not serving, Schoewe said, is the regional workforce that lives down valley that would like to live in Steamboat, as well as doubled-up households with two or more families squeezing into the same housing unit.
The Brown Ranch will have requirements to be part of the local workforce to live there, meaning local workers would fill 100 of 100 units built on the property. Still, for every 100 units built, there will be broader impacts across the community, the analysis showed.
For every 100 units added at Brown Ranch, it would create 73 units for people who work in Steamboat but live elsewhere or who are currently in a doubled-up situation. It would also open up 16 units elsewhere in town that under the current analysis would likely be filled by a second homeowner.
Another 11 units opened up by people moving to Brown Ranch would contribute to the tourist economy in the form of a short-term rental, which amounts to another 2,029 tourist days, the analysis showed.
“Brown Ranch is expected to impact mostly full-time households, but also lead to some increases in second home or seasonal owners or tourists,” Schoewe said.
Jason Peasley, executive director of the housing authority, emphasized there won’t be second homeowners or short-term rentals at the Brown Ranch, but that if someone moves from a unit that is within a part of the city that allows STRs, there are not restrictions that keep that unit reserved for the workforce.
“If it’s in the green zone it could be a short-term rental or it could be a second homeowner who sees the property and wants to buy, especially given the asset prices that we have within the city,” Peasley said. “Whether those households are moving out of a green zone or a red zone makes a difference from what they can convert to.”
Overall, the preliminary analysis showed the Brown Ranch would generate nearly $2.7 million annually at full buildout. Schoewe said she is still working with the housing authority and city staff to work out exactly what costs will be added by the development, but that she expected costs to exceed revenues.
City Finance Director Kim Weber said she believed the revenue projections were “fairly accurate” though she wanted to do some additional checking. The city also intends to hire an outside economist to review the fiscal analysis.
City Council members Robin Crossan and Joella West asked what data the housing authority could share about who has moved into developments that have been built in town by the housing authority. Both said they thought it could help inform the analysis of who would be a future Brown Ranch resident.
Peasley said he was happy to share that information, but noted that it likely wouldn’t be a perfect comparison because the Brown Ranch intends to offer a wider variety of housing at a full range of income levels than what the housing authority has been building in recent years.
Another factor to consider is people who will move to Steamboat to fill jobs that are currently vacant or future job growth in the community. Peasley noted that the city saved $4 million last year because of unfilled positions, which also has an impact on sales tax because those are wages not being paid and spent in the community.
“I think that is part of the 51 net new households ultimately, but it’s essentially right now a lost revenue opportunity for the city,” Peasley said. “And the same thing is true with businesses in town who are going to be shut down because they can’t have staff.”
The next Brown Ranch Annexation Committee meeting is slated for 9 a.m. on March 29 and will focus on land dedications. The next conversation on the fiscal analysis is scheduled for April 12.
To reach Dylan Anderson, call 970-871-4247 or email danderson@SteamboatPilot.com.
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