Steamboat Springs City Council is likely to soon face a choice about how to finance infrastructure at the Brown Ranch development west of town.

Council members heard a presentation Tuesday from city attorney Dan Foote that described two proposals by the Yampa Valley Housing Authority that could commit the city to hundreds of millions of dollars if accepted.

One proposal would have the city take on $210 million in new long-term debt. The other would obligate the city to pay at least $10 million per year from Steamboat’s short-term rental tax for several decades under a long-term contract. The proposals were received “late last week” from YVHA, Foote said.

“It’s not clear what the housing authority intends, although my guess is they’re going to want a question sooner rather than later,” he added, referring to a potential referendum that could be submitted to Steamboat Springs voters.

A bond would allow YVHA to access city funds immediately to pay for streets, sidewalks, water pipes, sewer lines, electricity conduits and the like in the planned sprawling expansion of Steamboat Springs. The long-term fiscal year agreement, on the other hand, would make financial resources available to YHVA as it pays off other loans it may use to build the Brown Ranch framework.

Infrastructure costs at Brown Ranch have been estimated at $280 million.

According to the city’s most recent financial report, Steamboat Springs now has about $28 million in long-term debt and about $43 million in total liabilities. The city also has more than $350 million in assets.

Whether the city chooses to issue a bond in some amount or the long-term fiscal year agreement option, the public obligation could be tied to short-term rental tax revenues.

Steamboat Finance Director Kim Weber explained that linking any debt obligation to the short-term rental tax would be a helpful tool to protect the city’s credit rating.

“If we do a revenue bond specifically secured with STR tax, it shouldn’t affect any other rating throughout the city,” she said. “If we do a general obligation bond and we default, that would be on our general fund.”

The city’s negotiating position in talks with YVHA has been that it will provide “at least 50%” of revenue generated by the short-term rental tax,” Foote said. “The housing authority requests, basically, 75% of the estimated revenue,” he continued.

The basis for the housing authority’s suggestion to dedicate not less than $10 million of STR revenues each year to Brown Ranch, if the city chooses not to issue the $210 million bond, comes from YVHA estimates.

That proposal includes a provision to take into account any declines in the value of the dollar.

“The $10 million annually, it’s kind of hard to decipher what that number is because of the inflation adjustment,” Foote said.

City Council President Robin Crossan declined to say which option the governing board prefers or if there would be a limit of debt obligations to which it would agree.

“You’ll find that out in two weeks at the next BRAC meeting,” she said, referring to the city’s Brown Ranch Advisory Committee.

Council may decide, once negotiations are complete, on financing even before the legal framework for annexing Brown Ranch into the city limits is in place. Whether members choose a bond or the multi-fiscal year agreement approach, voters will have to approve it.

“We can propose a bond to the voters without having to necessarily act on that bond,” council member Dakotah McGinlay said. “Then if the annexation falls through for some reason, we don’t have to bond, but we have the opportunity to bond.”

The deadline to certify a ballot question for the November election is Sept. 8.