The Cottonwoods at Mid Valley, the Yampa Valley Housing Authority’s project on the east side of Steamboat Springs, is taking visible shape. 

At their regular board meeting on Thursday, May 8, the housing authority convened to debate the pricing strategy for phase one of The Cottonwoods, shedding light on the balancing act involved with delivering affordable homes in Steamboat Springs.

The meeting opened with a statement from YVHA Housing Navigator Araceli Googins, who spoke both as a staffer and a first-generation homeowner. 

“Home ownership is more than just having a roof over your head. It’s about having a place to truly belong,” she said. “For my husband and I, it meant the freedom to grow, settle in and invest in our community. For a local workforce, the people who teach, protect, care for and support our community, owning a home brings more than comfort. It offers the chance to stay close to the lives they impact every day and truly feel part of the place they serve.”

The Cottonwoods is designed with this vision in mind. Each unit features a private balcony, covered parking and dedicated gear storage. Amenities include a playground, dog park, picnic area and green spaces, all in close proximity to the Core Trail, Yampa River and Steamboat Resort. 

“I know what it’s like to dream of home ownership and feel like it is an impossibility,” said Googins. “We are taking those dreams and turning them into reality.” 

But turning dreams into reality can be expensive, she added.

“There is no magic behind us developing workforce or affordable housing that makes a two-by-four any cheaper than a custom home’s two-by-four,” said Peasley. “It costs hundreds of thousands of dollars to develop every single unit we build.”

Originally budgeted at $42 million, the cost of The Cottonwoods has ballooned to over $46 million due to construction inflation and high interest rates, according to the housing authority.

“Interest rate is the number one lever that influences people’s buying power,” Peasley explained, noting that the current 6.8% mortgage rate significantly impacts affordability calculations.

The board also discussed the disconnect between Area Median Income – the federal benchmark for housing programs – and real wages in Steamboat. While AMI has risen sharply, local wage growth has lagged, meaning even “affordable” homes can be out of reach for many workers. 

In 2025, the AMI for Routt County is set at $91,000 — a 9.1% increase from 2024, according to the housing authority.

“The average worker in Steamboat Springs is at 60% AMI,” Peasley said. “So as you see AMI continue to go up by 9% a year, real wage earners are looking around, going, ‘I’m not getting a 9% raise every year, are you kidding me?'”

The heart of the board’s discussion centered on how to set prices for units at The Cottonwoods. Unlike market-rate developments, where prices are dictated by supply and demand, YVHA uses a formula based on what local buyers can afford. 

The deed restriction on each unit caps the maximum sale price so that a household pays no more than 30% of their income on housing costs (including mortgage, taxes, insurance and HOA dues), assuming a 5% down payment and current interest rates.

This approach yields prices considerably below market value. For example, at 140% AMI, the maximum price for a one-bedroom is $420,000, about a 4% discount to comparable market units. Two-bedrooms see a 28% discount, and three-bedrooms nearly 30%. HOA dues are projected at $500 for one-bedrooms, $600 for two-bedrooms, and $750 for three-bedrooms.

But even these “affordable” prices require substantial subsidies. 

“The way in which we make that affordable is by bringing in subsidy,” Peasley said, citing a past project that required over $280,000 per unit in outside support.

To close the affordability gap, YVHA is seeking to reallocate $5 million in short-term rental tax revenue held by the city– originally earmarked for a future phase of The Cottonwoods – into the current phase to lower sale prices and monthly payments for buyers. 

This move, if approved by Steamboat Springs City Council, would allow for prices in the $300,000s to $600,000s, versus in the $400,000s to $600,000s, with monthly payments as low as $2,585 for a one-bedroom, one-bathroom unit, assuming the interest rate holds.

YVHA Board members debated whether $5 million was enough. Some, like Board Member Catherine Carson, advocated for more subsidies to reach lower-AMI buyers, especially those earning 100% of AMI or less. Others, including City Council Member Dakotah McGinlay, who represents the city on the housing authority board, and Board Member Lou Tortora, urged caution, noting the need to preserve resources for future projects and the ambiguity of future funding.

“With more subsidy, we can drive lower prices and that is super well understood. As you bring the prices down, you expand your market,” said Peasley, who also stressed the importance of not exhausting all resources on a single project, given ongoing community needs.

The housing authority is also exploring additional tools to help buyers, including up to $20,000 in down payment assistance, interest-rate buydowns and seller concessions. These programs could further reduce monthly payments and make homeownership accessible to more households within the income limits.

Additionally, the deed restriction would allow buyers the flexibility to spend more than 30% of their income on housing if they choose, up to standard mortgage underwriting limits.

“If folks are like, ‘home ownership is important to me, I’m willing to spend 32% of my income,’ and the mortgage lender says, ‘you got it, you can do that,’ we would allow that to happen,” Peasley said.

To ensure Cottonwoods remains affordable for future generations, resale prices will be capped at 2% annual appreciation plus the value of qualified capital improvements – well below the pace of recent AMI increases. 

“We are making a significant community investment in these units and we want that benefit to last … for the entire lifetime of that unit,” Peasley said. But some board members, like Carson, expressed concern that if AMI continues to outpace local wages, even capped appreciation may not keep units affordable for the local workforce.

After extensive debate, the board reached general consensus on four key points:

• Setting pricing based on affordable monthly payments.
• Requesting the city to shift $5 million in STR funds from the next phase to the current phase at the June 3 council meeting, but to delay the potential ask for additional funds.
• Renegotiating the partnership agreement with Lone Tree Trust, hired to develop The Cottonwoods, to defer a $2.14 million land contribution and reduce profit margins, further lowering prices. 
• Investigating additional buyer support programs to further reduce monthly payments.

Final sale prices will be set closer to the lottery and qualification process in late summer or early fall when interest rates, HOA dues and insurance costs are more certain, according to the housing authority.

“With the top floor framing now complete, YVHA staff recently toured the site – and the views from the upper floors are nothing short of spectacular,” the housing authority’s Monday newsletter stated. “Future homeowners will enjoy breathtaking scenery, thoughtful design, and a location that’s hard to beat.”