How will YVHA use the money from the existing STR tax with out new taxes?
In 2022 Steamboat Springs voters overwhelmingly passed the short-term rental (STR) tax. The tax is already being paid by those who book a nightly rental. The funds generated from the STR tax MUST be used to increase the stock of affordable and attainable housing. It can be used to provide incentives and contributions to facilitate the development of affordable and attainable housing, and to provide funding for critical infrastructure associated with affordable and attainable housing, including, energy, stormwater, water, wastewater, and multi-modal transportation.
In 2023 voters COMMITED 75% of the existing STR funds to the Yampa Valley Housing Authority (YVHA) to invest in the Brown Ranch development and its infrastructure, without raising taxes. It will provide YVHA with a predictable funding source, and again show the will of the community to address its local housing crisis. Having this certain funding assurance from the community also allows YVHA to leverage the STR tax funds to receive additional funding from federal, state, and private sources to bring the development to fruition without additional taxes.
The Annexation Agreement negotiated between the City and YVHA provides clarity about how these STR funds will be used. It clearly delineates the Brown Ranch and the City portion of all costs. The agreement affirms the STR funds allocated to YVHA will be applied to projects in the following ‘waterfall’ fashion:
· U.S. highway 40 improvements
· Core Trail Improvements
· Combined Public Safety Facility
· Brown Ranch Community Parks
After the Brown Ranch portion of these items have been funded, the Annexation Agreement allows YVHA to use additional STR funds to go toward on-site infrastructure and to the actual vertical construction of homes.
So, let’s take a deeper dive into the actual numbers. The City has estimated the STR tax will generate approximately $14 million per year. The YVHA will receive 75%, or $10.5 million per year. So, the City would retain 25%, or $3.5 million to use for whatever other affordable and attainable housing projects it might choose. If the STR tax generates more—or less—than the $14 million estimate, the 75/25 percentage remains. If the tax generates less than the estimated $14 million, the City is not on the hook to backfill the amount YVHA would receive; both YVHA and the City would just receive less. In other words, in a down STR year, both the City and YVHA would receive less, and in an up STR year, both would receive more. Pretty simple.
But what does this REALLY mean? Let’s go back to the ‘waterfall’ and look at actual numbers. The STR tax will bring:
· $20+ million for U.S. highway 40 improvements…from Dream Island Plaza to County Road 42
· $4.8 million for the core trail expansion…from Snow Bowl to Steamboat II/Silverspur
· $16 million for a new combined Public Safety Facility (i.e., SSPD and Routt County Sheriff)
· $7.5 million for development of community parks throughout Brown Ranch
That’s more than $48 million that will be invested in projects that benefit the entire Steamboat Springs community. And YVHA and the City will be able to leverage these funds to receive additional funding from federal, state, and private sources to finally bring these infrastructure projects to fruition.
Without the Brown Ranch, the STR tax funds cannot be earmarked for these projects.