The Steamboat Springs City Council unanimously green-lit preliminary recommendations Tuesday for a linkage-fee program that would require new commercial and residential developers to help fund workforce housing for the jobs and residents their projects create.​

Economic & Planning Systems consultants Brian Duffany and Rachel Shindman walked council through the proposal, arguing it beats reviving inclusionary zoning by offering simpler administration, broader revenue capture and flexibility to build housing where it fits best. 

“When you’re in a situation where you have an undersupply of affordable housing, as you continue to add development — particularly development that includes a lot of jobs — you are actually perpetuating that undersupply,” said Senior Planner Brad Calvert, who further explained that “a house is just where a job goes to sleep at night.” 

“So you’ve added a job, but if that job can’t find housing, you have, again, increased the undersupply,” he added, “because that individual, likely not earning enough to enter the local housing market, has now created housing needs that need to be mitigated.” 

The move toward a linkage-fee program parallels council’s decision last month to implement a $3 million pilot deed-restriction program, both initiatives being a result of the city’s Housing Strategy and Action Plan adopted in 2024.

Council’s direction now sends staff back to draft code changes and policies, a process Calvert said could take two to three months before council votes on whether to officially adopt the program.​

Linkage fees hit “net new space” — fresh construction or additions of more than 50% of the existing floor area, the consultants explained.

Developers multiply new square footage by an employee generation rate (building square footage and total employees by land use), a mitigation percentage and the affordability gap per worker — what it costs to house the worker minus what the worker earns.​

The employee generation rate and affordability gap are determined through a nexus study, while mitigation rates are determined as a policy choice by council. 

The consultants used a simple case as an example: a 10,000 square-foot building that is expected to utilize 10 workers, at 50% mitigation and a $100,000 gap per worker, equals a $500,000 fee. 

“It’s a very transparent and linear process in terms of how it applies, which means it’s also predictable for the city, for developers, for anyone looking to understand the program,” said Duffany.

Use of linkage-fee revenue would be restricted to capital costs, such as new construction, land acquisition, infrastructure improvements and engineering studies, versus ongoing operational expenses like rental assistance or child care programs.​

The nexus study, built largely on Routt County employment and wage data, current conditions of building stock in Steamboat, as well as national data on occupation splits per industry, pegs what the consultants called “maximum defensible fees” at 100% mitigation: $64 per square foot residential, up to $1,498 for restaurants/bars (high job density, low pay) or $350 for retail/commercial. 

Restaurants pack the most low-wage bodies per square foot; industrial developments include the fewest, at better wages.​

Duffany said that, while possible, it is rare for communities to adopt the maximum fee. At that point, he said, it typically “kills the market” and makes it too expensive to develop. 

“Look at those maximum fees,” he told councilors. “You charge an impact fee of $1,500-a-square-foot on restaurants and bars, you would get zero new restaurants and bars in Steamboat.” 

The goal isn’t one-to-one units per job, but mitigation — typically at 2% to 30% of maximum fees.​

Duffany and Shindman suggested citywide residential fees, but non-residential only in the “mountain area” — resort-adjacent, roughly within the city’s short-term rental green overlay zone — sparing industrial parks like Copper Ridge, west-side projects or downtown growth that the city’s comprehensive plan wants to nurture. 

Deed-restricted housing at or below 120% of the area median income would be an exception, ensuring the fee program hits primarily market-rate builds.​

The following recommended mitigation ranges, per the consultants’ presentation, cap development cost bumps at 5% to preserve feasibility: 

According to the consultants, from 2015 through 2024, a 25% mitigation rate on residential development would have generated up to $4.3 million per year.

Council could mix rates by use, phase them in or consider them annually based on median home prices or the consumer price index. The consultants encouraged updates every five to seven years to keep pace with inflation, wages and housing costs. 

While council was previously considering potentially implementing both the linkage-fee program and an inclusionary housing ordinance, Duffany and Shindman explained their rationale behind recommending the former over the latter. 

Much of the city consists of infill development, where smaller projects would not generate enough on-site affordable units to be meaningful and would likely pay fees regardless, said Duffany. 

Larger projects tend to occur near the mountain resort area, where deed-restricted units located alongside luxury vacation homes can create management challenges and community concerns about economic disparity.​

The linkage fee, in comparison, is an easier and less costly administrative process and applies to a much broader range of projects without exemptions based on thresholds, generating revenue more consistently. The collected funds would integrate with the city’s existing short-term rental tax revenue dedicated to housing, creating a larger pool for capital projects. 

Calvert added in an interview with the newspaper that with the implementation of linkage fees along with existing incentives for developers, as well as the in-the-works rolling STR tax-revenue application program, an inclusionary housing ordinance would “fill a gap that doesn’t exist” regarding creating opportunities to develop affordable workforce units on the same site as a market-rate development. 

Council unanimously approved the preliminary recommendations by the consultants, moving the process to an administrative phase over the next few months during which details will be fine-tuned.