Iron Horse - Affordable City Housing or Nightly Rental?

City seeks Iron Horse ideas
Hoteliers discuss implications of city-owned competition
By Brandon Gee (Contact) Steambaot Pilot/TODAY
Friday, February 1, 2008

Steamboat Springs — The city of Steamboat Sp­­rings is seeking proposals from private firms for an Iron Horse Inn management plan. Mean­while, some local hotel operators see the public ownership of a competing property as a less-than-ideal situation.

“If the city bought it for employee housing, I think that’s what they should use it for,” said Greg Koehler, owner of the Rabbit Ears Motel in downtown Steamboat. “I don’t particularly care to be in competition with the city for lodging.”

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 currently is providing long-term rentals in 29 rooms for city workers and those of other Steamboat employers.

Alpiner Lodge owner Jon Wade believes the Iron Horse Inn purchase was a rotten deal for the city. He reserves blame for the previous City Council, however, and applauds the current one for doing what it can about the situation — even if that means competing with his business.

“The current council is trying to make the best of a bad situation,” Wade said. “I wouldn’t feel any inclination to give them any heat. Obviously, it would be best for me if the Iron Horse closed, but that’s not what I’m thinking about. We’ve got to do what’s best for the city.”

Supporters of the Iron Horse purchase have cited the inn’s ability to help the city attract and retain employees, the local need for workforce housing, and the value of securing riverfront property near Steamboat’s downtown corridor.

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. The city has advertised and sent out a request for proposal for a management and operation plan for the inn. Proposals are due Feb. 15.

Thursday, Deputy City Man­­ager Wendy DuBord said the city would be open to anything from mere suggestions to a company’s proposal to totally take over the operation and management of the inn. But DuBord, who formerly worked in Steamboat’s property-management industry, said she is skeptical a private company will be interested in providing a mix of long-term workforce housing and nightly rentals.

“I kind of doubt that a private-sector management company can do what we’re doing and make money,” DuBord said. “We’re not operating from a profit-margin standpoint. All we want to do is cover our direct expenses. … But we would consider anything that is an improvement on what we’re doing.”

The fact that the city isn’t as reliant on making money as other lodging properties is one of the problems with it owning and operating the Iron Horse Inn, Koehler said.

“I just think it gives them an unfair advantage,” said Koehler, who noted other advantages such as the city’s ability to provide extensive employee benefits.

Disgruntled hoteliers have not contacted the city, DuBord said, perhaps because business is thriving in Steamboat.

“I think everybody’s full,” she said. “Obviously the fact that (the Iron Horse Inn is) full and has a waiting list shows there’s a need. There is not enough rental housing in this community.”

Wade said the Alpiner Lodge was full all summer and is running at about 80 percent occupancy this ski season.

“It would be a good thing for me if they weren’t there from a supply standpoint,” Wade said. “But if they need to do some nightly rentals to make it a better deal for the city, I guess I’m OK with that. … The Alpiner is operating at our expectations. There’s always room for improvement, but I’m not going to blame my inability to improve on the city.”

— To reach Brandon Gee, call 871-4210

or e-mail bgee@steamboatpilot.com