Friday, March 14, 2008

City Evaluates Iron Horse Proposals

By Brandon Gee - Steamboat Pilot
Wednesday, March 12, 2008

Steamboat Springs — Two local property management firms have responded to a city of Steamboat Springs request for proposals to manage the Iron Horse Inn. Central Park Management and Resort Group submitted proposals that, after a preliminary fiscal analysis, may save the city money.

The Iron Horse Inn was purchased last year in a deal approv­ed by the previous Steamboat Springs City Council. After honoring existing reservations this ski season, the city initially planned to spend $1 million — of the $5.3 million borrowed for the purchase — to renovate the hotel’s 52 rooms into 40 traditional apartments that it would rent as affordable housing.

The current City Council, however, would rather minimize the Iron Horse’s cost to the city by not renovating the property and keeping nightly rentals in play. The city is providing long-term rentals in 29 rooms for city workers and those of other Steamboat employers.

In addition to keeping nightly rentals in play, the City Council instructed city staff to solicit private-sector partnerships and ideas for the management of the inn. Central Park Management and Resort Group submitted plans for continuing to run the inn as both a work force housing and lodging operation. Resort Group also submitted a second option to use the Iron Horse for work force housing only.

A city staff report estimates that the inn, if run by the city, would have an annual loss of $7,834. It is estimated the Central Park plan would result in an annual profit of $8,197 for the city. Resort Group’s work-force-only option is estimated to make an annual profit of $6,577, its work force and hotel option would lose $4,423.

“The reason I was excited about it was that they came in pretty close to what the city can do,” Councilwoman Cari Hermacinski said last week.

With further negotiation, Hermacinski said the private sector’s offers might get even better. One reason Hermacinski is in favor of a private company taking over the management of the Iron Horse is because she thinks the inn is taking up a lot of time for city employees.

Deputy City Manager Wendy DuBord said her office often takes calls from residents about such things as roof leaks and noise complaints. She said trusting the inn’s management to a private company would eliminate much of the city’s overhead.

“Every month we manage it, quite frankly, we have more confidence we can manage it,” DuBord said last week. “But it’s not our core business, so if the private sector can do it better and cheaper, we want them to do that.”

Curt Weiss of Central Park Management said his company has the experience to efficiently and effectively run the property.

“We’ve been in the long-term rental business for almost 30 years now,” Weiss said.

Weiss thinks the private-management option would allow the city to get out of the lodging business and make some money while still satisfying an essential need for work force housing.

DuBord said the city will enter into a detailed analysis of the proposals, which she said have pros and cons. The city will request a best and final offer from both property managers and return to City Council within a month with a recommendation.

“We want to make sure that the quality of management is at least as good as what we’re providing,” DuBord said. “We also want to make sure that the city gets a certain amount of those units for city employees at a preferred or at least current rates.”

Management plans
• City staff

Revenue: $841,000

Expenses: $848,834

City’s net: $-7,834

• Central Park

Revenue: $858,000

Expenses: $849,803

City’s net: $8,197

•Resort Group (work force)

Revenue: $638,000

Expenses: $631,423

City’s net: $6,577

• Resort Group (work force/nightly)

Revenue: $850,000

Expenses: $854,423

City’s net: $-4,423