Steamboat Basecamp proposes metro district to pay for infrastructure, maintenance
A new west-side development, which once finished will include more than 100 residential units, is looking to pay its own way by creating a new special taxing district to fund infrastructure and long-term maintenance.
“The metro district is obviously a tool within Steamboat, no different than (the) Overlook (sub-division) or a ton of other projects, to help pay the cost burden,” said Kevin Riegler who is developing the Steamboat Basecamp property at Curve Plaza and U.S. Highway 40, which includes the former offices of the Steamboat Pilot & Today and press room.
“These are incredibly unpredictable and challenging times with construction costs, and execution, and inflation and supply chain issues,” he continued. “Being able to tap into that tool is very valuable, and makes projects actually viable and get built.”
This week, Steamboat Springs City Council approved a service plan, which is the governing document for a metropolitan district.
The resolution will be filed within the records of the city, and a copy will be submitted to the petitioners for the purpose of filing in Routt County Court, the next step of the process.
“This is the fourth time we’ve done this since I’ve been here,” Gary Suiter, Steamboat Springs City Manager, said of creating a metropolitan district.
“Basically, they’re formed so that (developers) can get tax-exempt government bond financing to do the public improvements. Then what they do is they pay those back with revenues, and typically the revenue is derived from property tax,” Suiter explained.
He said the Steamboat Basecamp would become the latest metropolitan district in Steamboat Springs.
Suiter recalled a small metro district was formed to improve Snapdragon Way, which runs between Pine Grove Road and Central Park Drive.
Metropolitan districts have also been created for the Sunlight, Riverview and the Overlook subdivisions, and were used to pay for infrastructure and public improvements.
The new Steamboat Basecamp Metropolitan District will help finance street, sidewalk, water, sewer, stormwater and drainage improvements.
It will also be used for landscaping, and parks and recreation improvements, as well as making off-site improvements along the highway including sidewalks, asphalt, signs and a median island.
“The purpose of the district is a financing tool,” said Russ Dykstra, who spoke to city council on behalf of the petitioners. “Generally, if a developer needs to go out and needs to borrow funds to put in infrastructure, it’s very expensive to do.”
Dykstra said that those loans charge interest somewhere in the range of 10% to 12%, but if the metropolitan district issues bonds, the loan would be in the 5% to 6% range.
“It lowers the cost of development, which, in turn, lowers the cost of housing overall,” Dykstra said.
Metro districts are formed through a statute and require a service plan, which limits and specifies what powers and undertaking the district can perform. A metro district also requires certain functions, such as annual reports, certain levels of transparency and board elections.
The district will raise funds through a mill levy, which Dykstra said will be divided into two segments. The first with will be 40 mills, which will be used to pay off the debt, and then a smaller segment of 10 mills will be used to cover operational and administrative costs.
Suiter said a few years back the state legislature passed laws that require enhanced notification so those buying property inside a metropolitan district will be made aware of the additional taxes prior to closing. There is also a maximum debt authorization limit of $6 million and a maximum term of 40 years.
“The incentive for developers is the interest rate basically,” Dykstra said. “It provides them another tool out of all the available revenues that they can put into a project that they don’t have to go to a bank and borrow for, or that they don’t have to sink equity into when they can use that to go vertical faster. For the owners and residents, it’s a lower cost.”
Riegler expects the project to break ground on the first phase in the next three or four weeks as work begins on the building that formerly housed the Steamboat Pilot & Today.
Riegler said the building will include 75 units, including studios, two-bedroom and three-bedroom layouts. The main building will also include 3,000 square feet of restaurant, bar and lounge space, as well as a fitness facility, adventure desk and equipment storage.
“The second phase will include additional housing,” Riegler said. “The Steamboat Basecamp building was originally 40 units, and now it’s 75. We effectively took density that we were thinking we put out on the corner and just made kind of one larger main building.”
He said the additional phases are still in the early stages of planning, but they’re projecting to add 113 residential units, including apartments, townhomes and condominiums. The development, which is just under 5 acres, will also include open space that Riegler believes will enhance the area.
“We are all-in given that this property is the ‘Main and Main’ of west Steamboat,” Riegler said. “Between our project, Sunlight, Brown eventually and Overlook, it’s going to be a real hub of town. We are developing a plan for the corner that is, for lack of a better way of putting it, kind of the de-facto town square of west Steamboat.”
Colorado has more than 1,800 metropolitan districts, which are independent governmental entities formed to finance, design, acquire, install, construct, operate and maintain public improvements that are not otherwise being provided.
“It’s a fairly common form of development financing,” Suiter said. “As the attorney said, ‘If you’re going for private bank financing, the interest rates are significantly higher.’ So it does lower the cost to the developer if they could issue tax-exempt bonds.”
To reach John F. Russell, call 970-871-4209, email jrussell@SteamboatPilot.com or follow him on Twitter @Framp1966.
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