Steamboat Springs City Council members are moving toward a deal with a local developer to secure 11 workforce housing units in exchange for a $2.6 million loan.

Council members discussed the potential deal with the developer, Gorman and Company, on Tuesday night.

The $2.6 million loan to the developer would be drawn from the city’s short-term rental fund, which stood at $14.5 million as of February 2024, and would be set for a 15-year term at a 2% interest rate.

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In exchange, the city would get first dibs on the 11 deed-restrict apartments — which would include three studio, four one-bedroom and four two-bedroom apartments. Any remaining apartments would be offered to members of the public.

“I like it,” said council member Michael Buccino, adding that he thinks “this is one of the examples that we have as a community to show the development community that we are serious about doing stuff even if it is outside of the housing authority.”

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Gorman and Company received development approval in January to construct its Riverview Apartments development, which will see 104 residential units built across two downtown properties along the Yampa River behind Natural Grocers.

The firm’s Colorado Market president, Kimball Crangle, said the company has been developing affordable and workforce housing units in Colorado for the past decade, including 800 units built in the state’s high country.

In Steamboat, Gorman and Company partnered with the Yampa Valley Housing Authority on its Sunlight Crossing project.

The 11 apartments dedicated to the city at Riverview would be perpetually deed-restricted for individuals earning 80% of the area medium income, but maximum rents would be set for individuals who earn 30% of 75% of the area medium income.

According to the Colorado Department of Local Affairs, an individual making 80% of the area median income in Routt County in 2023 earned a $57,300 annual salary.

The projected rent for the studio apartments at Riverview would be $1,564 per month. Rent for the one- and two-bedroom apartments would be set at $1,675 and $2,010 per month, respectively.

Under the proposed deal, monthly rents would not include utilities or a $200 monthly parking fee.

The city’s attorney, Dan Foote, noted the upside of acquiring the workforce units versus the downsides of the deal, which included the inherent risks involved with loaning money during the construction and development phase of the project.

“The other risk that I have identified here is inflation risk — the loan that we would be making, there is interest of 2%,” Foote said. “So, when we get repaid 15 years from now, if inflation exceeds 2% between now and then, that money we get back is going to be worth less than it is now.”

Despite the potential downside, council member Joella West said she was onboard.

“I don’t think it’s fabulous, but I think it’s a good investment on our part,” West said. “I realize there is a risk involved with that, but it does address needs in the short term, and at this moment, this is the thing we have that tries to address short-term needs.”

The discussion led to the approval of two ordinances related to the proposed deal. The first, dealing with approving the development agreement with Gorman and Co., passed 7-0.

The second ordinance — approving the $2.6 million supplemental budget appropriation from the city’s short-term rental tax fund — passed 6-1, with council member Dakotah McGinlay voting against.

McGinlay said she didn’t think it was appropriate to allocate money from the short-term rental tax fund for the project before the council completed an effort to develop a process on how to make those decisions. She said that having the process in place beforehand “just makes a statement to the community that we are serious about having public, transparent processes for short-term rental funds.”