Our view: Iron Horse pulling its weight? | SteamboatToday.com

Our view: Iron Horse pulling its weight?

At Issue

Future of city’s workforce housing property

Our View

Any change of plans for the Iron Horse Inn must account for the value of community housing.

We are as intrigued as anyone to learn what responses the city of Steamboat Springs might receive from its request for proposals regarding the future of the Iron Horse Inn property.

However, we would urge City Council to recognize that, despite its status as a financial burden and a constant reminder of a bad decision, the Iron Horse is currently serving as it was intended to — a critical source of workforce housing.

At Issue

Future of city’s workforce housing property

No one would disagree that the city grossly overpaid for the two hotel buildings on a prime location when it acquired them for $5 million in 2007. But there’s not a lot anyone can do about that in 2015.

Before it enters any deal that would remove the 26 housekeeping units at the Iron Horse from the affordable housing stock in the community (there are 52 units total when the now-shuttered modern hotel is added in), the city must consider how much it stands to gain and then weigh that against how much employers in the community will lose.

Another way to express the same concern might be: How much would it cost the community, starting from scratch, to replicate that much workforce housing at a location that is on a mass transit stop and within easy walking distance from employment, cultural resources and parks in the downtown core?

The Iron Horse may be a fiscal albatross, but as the city has acknowledged, it is stuck with annual payments of $480,000 associated with the bonded indebtedness on the original debt until 2018. That’s when it has the not-so-appealing option of writing a check for $5 million to escape ongoing interest payments and “making the problem go away.”

It’s difficult to recall all the twists and turns in the story of the Iron Horse since 2007, but a short recitation reminds us that in 2011, the city was operating it as a hotel. The good news was that the city took in $341,368 that year. The disappointing news was that it spent $380,000 keeping the hotel afloat.

In September 2012, the city was close to tearing the property down to make way for a new police station. A month later, the city, after a change of plans, simply shut down operations of the Iron Horse, which was fully occupied at the time, and the tenants, who were paying $625 a month for a livable efficiency apartment, were left to ponder their next moves.

In 2013, a developer expecting to spend $3 million to modernize the hotel offered to buy it for $915,000. The city realized it could break even by focusing on longer-term rentals of 26 units in the older of the two buildings.

This winter, the city has been renting rooms to the Sheraton Steamboat Resort for $18,000 a month to house some of the resort’s workers.

We understand that the city will certainly have to invest more money into the upkeep of the Iron Horse if it hangs onto the hotel — good money after bad — and that expense could be avoided by unloading the property. But this may not be the time.

Given that the Iron Horse last appraised for just $1.6 million, it might have to be a very sweet deal for the city to give up on one of the few affordable housing assets in its portfolio. Surely, the Iron Horse will offer a greater return three to five years from now.

One thing that we are not saying is that we think the Iron Horse should continue indefinitely as workforce housing. Sitting on a big bend in the Yampa River, with U.S. Highway 40 access on one side and the river trail on the other, it has tremendous potential as a future redevelopment site.

The arithmetic involved in evaluating any legitimate proposals for the Iron Horse this spring will be a complicated calculus, and one that must take into account the value of workforce housing in the near term.

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