The Yampa Valley Housing Authority accidentally posted a recording of its closed executive session from last week’s board meeting online on Tuesday, exposing tense discussions about a roughly $9 million funding shortfall needed to complete Phase 1 of The Cottonwoods at Mid Valley affordable housing project.

In the session, YVHA Executive Director Jason Peasley outlined the crisis to board members, including new appointees, and explored options amid failed funding plans.

Peasley, interviewed by the newspaper on Thursday morning, said developments since the Jan. 8 executive session had stabilized the situation, with the developer funding a $4 million loan and a donor recommitting to the remaining $5 million through a “philanthropic loan.”​

Executive session leak exposes funding urgency

YVHA board meetings, including executive sessions, are recorded per state statute, said Peasley, but staff inadvertently uploaded the executive session file to the organization’s official YouTube page on Tuesday, meaning to upload the public session instead.

The roughly hour-long recording, discovered by some community members and reported to YVHA, was quickly removed after the error surfaced less than 24 hours later.

Veteran YVHA board members opened the executive session with apologies to the new appointees and urging utmost confidentiality — even including spouses and staff.

Both Steamboat Springs City Council President Steve Muntean, the city’s ex-officio representative on the YVHA board, and YVHA Board Member Catherine Carson emphasized exiting the executive session swiftly for transparency once negotiations advanced.​

The core issue: The Cottonwoods joint venture with developer Steamboat 6732 Partners (formerly known as Loan Tree) had exhausted all loans, leaving a $9 million shortfall to finish construction on Phase 1.

The Cottonwoods is set to be Steamboat’s first for-sale affordable housing project in decades, with Phase 1 comprising 86 deed-restricted condominiums designed for the local Routt County workforce, and purchase prices ranging from the mid-$200,000s to the mid-$400,000s thanks in part to $10 million in short-term rental tax revenue from the city of Steamboat Springs. 

“We have been working for probably the last six months with (Steamboat 6732 Partners) under the auspices of, they were going to go out and secure $4 million, either through a loan or through their own personal net worth,” said Peasley in the executive session, “and that we were going to go and get a philanthropic loan for the remainder.”

“What has changed very recently is that we received news that we will absolutely not be getting that philanthropic loan, and that puts us in a situation where there is still a $9 million cash need to finish the project,” he continued.

“Somebody, and likely both of us, are not getting our money back,” Peasley added, projecting YVHA’s potential $700,000 loss on capital and developer fees under status-quo terms.​

He outlined four potential options moving forward to board members — which, following developments since the meeting, appear moot — noting that the circumstance he’s determined to avoid is Loan Tree defaulting. 

“We do not entirely control that,” Peasley told the YVHA board regarding Loan Tree/Steamboat 6732. “They have proven through our interactions with them that if there is a stupid thing to do, they will do that thing.”

Peasley’s update: Partners step up, donor returns

Speaking with the newspaper Thursday, Peasley confirmed that since the Jan. 8 YVHA meeting and executive session, partners have stepped up with a $4 million developer line of credit and the donor has reengaged with a yet-to-be-finalized commitment for the remaining $5 million.

He clarified that Phase 1 timelines hold firm: YVHA will receive the temporary certificate of occupancy for Buildings 2 and 1 in February and March, respectively, enabling plat filing and closings before unit ownership is transferred to buyers. 

“Our partners have stepped up … immediately funded a $4 million developer line of credit that covers all existing bills and costs through the end of February,” he said, crediting Steamboat 6732 Partners despite past tensions.​

Reengagement with the donor, who Peasley was unwilling to name out of “respect,” yielded a “solid commitment” for $5 million on favorable philanthropic terms — including the possibility of low interest, no interest and deferred payments — with more details expected in seven to 10 days. As of Thursday, Peasley noted that loan is not yet set in stone. 

Peasley attributed the $9 million in overruns primarily to the separation of phases 1 and 2, which were originally planned to be built simultaneously.

“The breaking apart of Phase 1 and Phase 2 resulted in Phase 1 having to cover a pretty good chunk of Phase 2 costs,” Peasley explained. “You’ve got to put in all the water … the sewer … the roadway … the grading and all of that sort of stuff.”

“All of that is costs that had to be paid now, but benefit Phase 2,” he continued, noting that “you can’t just build part of a sewer.” 

Peasley added that those costs could not be considered as part of Phase 2, and thus paid with Phase 2 revenue, because Phase 2 has not yet launched, meaning YVHA “had to incur those costs.” 

He also mentioned two other “buckets” into which the overruns fall: “escalations of expenses” including physical improvements to Phase 1 buildings, and unexpected costs that arose through the construction process.   

The $4 million developer loan will be paid off from Phase 1 unit sales revenue, he said, underscoring that the prices of those units — discounted up to 56% from market rate — will not be impacted by the shortfall.  

“The remaining $5 million will be an encumbrance on Phase 2,” said Peasley. “So there will essentially be about $9 million in the loans on the Phase 2 plan.”

Peasley confirmed that the materialization of Phase 2 may potentially be in jeopardy as a result of the $5 million encumbrance. 

“The current concept that we’re working on is that there would be a sale of Phase 2 to a developer,” said Peasley, “that would exhaust the loans that are on Phase 2 and would also put that developer in a position to develop those 150 units with deep affordability.”

He noted that YVHA may need to return to City Council to request additional STR funds to make Phase 2 possible — something Peasley said he flagged for council members in October when they approved the $10 million in STR revenue for Phase 1. 

Peasley also acknowledged unfavorable comments made in the executive session about Steamboat 6732 Partners, clarifying that “when push came to shove, they’re coming up with the money.”

“That’s why we bring in these private developer partners, right? 
They have the liquidity, they have the risk appetite,” he said. “This project looked quite lucrative on the front end and has turned out to be probably break-even, and they’ve stuck through it. That’s meaningful.”

Regardless of the executive session recording leak, Phase 2 impacts would have surfaced publicly anyway, said Peasley. He characterized the episode as part of the “highs and lows” of the development “soap opera.”​

Steamboat 6732 Partners declined to comment on the recent developments with The Cottonwoods.

“Strong partnerships are defined not by the absence of challenges, but by how people show up when challenges arise,” wrote Peasley in a follow-up statement to the newspaper on Thursday afternoon.

“Steamboat 6732 Partners has consistently leaned in, worked through obstacles with us, and stayed focused on the shared goal: delivering attainable housing for our local workforce,” he added. “That kind of commitment is what allows projects like The Cottonwoods to move forward and ultimately serve the people they were built for.”