Editor’s note: This story was updated at 6:30 p.m.

STEAMBOAT SPRINGS — After six years of discussions, intense negotiations and a public vote, developers of the West Steamboat Neighborhoods project said they have not been able to “close the deal” on purchasing property for the proposed housing development from Steamboat 700, according to a four-page project update memo sent to Steamboat Springs City Council on Aug. 28, which Steamboat Pilot & Today obtained today.

“On June 1, 2020, after months of continuing work, we were shocked again when we received a letter from S700 attorney advising us that they were terminating the purchase and sale agreement,” David O’Neil and Melissa Sherburne, with West Steamboat Neighborhoods, wrote.

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The last communication City Council had received from O’Neil and Sherburn was another letter, dated Dec. 10, 2019, explaining why West Steamboat Neighborhood had missed the Nov. 12, 2019, deadline for closing on the property that was part of the annexation agreement. In that communication, the pair told council that a fully executed purchase and sale agreement and related promissory notes and deeds of trust were in escrow with Land Title at that time.

The city of Steamboat Springs had worked for years with Brynn Grey Partners on an annexation plan that would have allowed the developers to build 450 homes west of the existing Steamboat city limits on a 150-acre parcel of land owned by Steamboat 700, which the developers said they were planning to purchase. The annexation ordinance was referred to the ballot, and voters approved the measure in June 2019.

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City Council Member Kathi Meyer said she was extremely frustrated after reading the latest memo from O’Neil and Sherburne.

“I’m really disappointed for the community because a lot of people worked on this, and there were a lot of expectations,” Meyer said. “It would have begun to solve a major problem, and that’s the lack of single-family inventory.”

Meyer said her frustrations go beyond the current developer and extend all the way back to 2010 when city voters rejected annexing 700 acres of land that would have been developed into Steamboat 700, a project that promised to include more than 1,800 housing units.

“This is the second time the city has tried to annex the property and has ended up with a swing and a miss,” Meyer said. “It’s a beautiful piece of ground. Some day, someone will have the financial wherewithal to make this happen.”

Meyer said there is no action City Council could take to make the project happen.

“At this point, it’s really between the buyer and the seller (of the property),” she said.

In the memo, Sherburne and O’Neil said they were not given a clear reason why Steamboat 700 terminated the purchase agreement.

“We cannot pinpoint a reason the negotiations halted,” they wrote. “Also, given the private nature of the negotiation, we have stayed quiet and have not communicated the details publicly.

“We feel badly for Steamboat Springs City Council, the community, the West Steamboat Neighborhoods’ supporters and the WSN Pioneers who, like us, have been excited about West Steamboat Neighborhoods and are disappointed in the delays and the uncertainty that these challenges have caused — for that we are deeply sorry,” they added.

In outlining “what next” for the project, O’Neil and Sherburne said the future of West Steamboat Neighborhoods lies in the hands of Steamboat 700.

“If they want to reinstate the purchase and sale agreement, it would be up to council to decide whether to extend the annexation deadline,” the memo states. “If those two things happen, we are ready to submit our plans to the city to begin construction next spring.”

City Council President Jason Lacy also expressed his disappointment about the failed negotiations.

“It’s a real let down,” Lacy said. “This took over three years of community time, staff time, City Council time and Brynn Grey’s time, and a lot of work went into getting this across the finish line. For this to fall apart because people couldn’t come to terms on the transaction, it’s just so disheartening.”

Lacy said future attempts to develop that particular parcel of land in West Steamboat would most likely be met with healthy skepticism.

“This has created a bit of a sour taste in the community’s mouth,” Lacy said. “Somebody would have to step forward and convince us they’re willing, ready and able to execute this agreement. And the question is who is that going to be?

“We need this housing more than ever, and this is where we have been trying to grow the community,” Lacy added. “We’ve been through it twice, and hopefully, the third time will be a charm.”

To reach Lisa Schlichtman, call 970-871-4221, email lschlichtman@SteamboatPilot.com or follow her on Twitter @lschlichtman.