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# Housing authority seeks city backing for Hilltop bonds after Cottonwoods overruns, records show
- URL: https://yvindy.com/housing-authority-seeks-city-backing-for-hilltop-bonds-after-cottonwoods-overruns-records-show/
- Published: 2026-10-20T05:28:02.000Z
- Updated: 2026-10-20T13:15:19.000Z
- Description: Steamboat Springs City Council hears a subcommittee report on the authority's request Tuesday. The authority's own records show a disputed Cottonwoods cost, a Hilltop construction estimate below its own figures and no permanent director.
- Author: Anna Parashina
- Tags: Government, housing

*Steamboat Springs City Council hears a subcommittee report on the authority's request Tuesday. The authority's own records show a disputed Cottonwoods cost, a Hilltop construction estimate below its own figures and no permanent director.*

**Key points**

- City Council hears a subcommittee report Tuesday on the authority's request for short-term rental tax money and a city "moral obligation" to back bonds for Hilltop, an 84-unit rental project. No vote is scheduled.
- The authority's Cottonwoods condo partnership ran out of construction money after cost overruns, with about $9 million needed to finish. The authority is covering part of that by selling donated land meant for the project's second phase; its attorney said an affordability guarantee from the buyer was unlikely.
- Hilltop's estimated funding gap grew from $6 million to $9 million in 2024 to $17 million to $18 million in May, as the authority lowered its average income target from 90% to about 70% of area median income, and before any update to a construction estimate of about $260 a square foot that authority board members called too low.
- The authority would issue the bonds and has not said how large they would be. Authority minutes describe the city pledge as backing the bonds' reserve fund; the city's memos do not say what it could cost the city or how it would affect the city's Aa1 credit rating.
- The authority has had no permanent executive director since June, and its acting director's staff assessment rates housing development tied for weakest of 14 skill areas.

Steamboat Springs City Council will hear a report Tuesday on a Yampa Valley Housing Authority request for short-term rental tax money, in an amount a city memo calls "larger than previous awards," and for a city "moral obligation" to back bonds for an 84-unit rental project. The request comes less than a year after the authority's Cottonwoods partnership ran out of construction money following cost overruns, with about $9 million needed to finish, according to authority minutes.

The authority would issue the bonds and be the project's sole owner, an arrangement its minutes describe as new for the organization. Development team minutes put the bonds' estimated rating at "Triple B-minus" and noted that a "moral obligation pledge on reserve fund may improve rate." If the city declines, bond insurance is the fallback, according to minutes of an authority finance team meeting last month.

The request comes as the authority deals with problems documented in its own records: Cottonwoods overruns it is covering partly by selling donated land meant for that project's second phase; no permanent executive director since June; and an internal assessment that ranks housing development, with community engagement, as its weakest area. Many of the figures here come from minutes of the authority's board work teams, which the authority says are prepared with AI.

The council's Housing Sub-Committee, which reviewed the request, has directed city staff to "research the financial and credit implications for the City." Both of its members have ties to the authority: Council President Steve Muntean sits on the authority's board, and Council Member Brian Swintek served on it as recently as December 2025\. Its report Tuesday is listed for information only; no vote on the request is scheduled.

### Overruns at The Cottonwoods

Authority records trace the Cottonwoods' cost problems through 2025\. In February, development team minutes recorded overruns of about $2.25 million on the first two buildings, from converting amenity space to units, adding carports and upgrading security, and from $800,000 in sales and use tax "initially missed in financial model." In March, team minutes put the missed tax at $1.15 million and noted a change order of about $600,000, executed in May 2024, "that the Board was unaware of." In April, members questioned the development partner's performance and agreed to pause the second phase, which they expected would need $10 million to $15 million more.

By August, minutes of a partnership meeting said costs would exceed the $40.8 million budget by about $1.2 million; the $40.8 million guaranteed-maximum-price contract was unsigned, with only a $34.5 million amendment executed; and the project faced a "$7.5 million cash shortfall." Two change orders signed on the developer's side June 19 were not shown to the authority until a week before the meeting, "causing transparency concerns," the minutes say. The developer, Steamboat 6732 Partners, an entity owned by Lone Tree Trust, was frustrated by the authority's decision not to proceed with the second phase and said it contributed to the financial pressure, according to the minutes.

In October 2025, the authority restructured the partnership. A memo from the authority's attorney said "there have been significant cost overruns," creating uncertainty "or perhaps a virtual guarantee that the Condo Project would not make a profit." The authority gave up its 20% share of profits and the $2.14 million value of its land contribution, which minutes note was land given to the authority rather than cash, and agreed to post a letter of credit with the city to guarantee unfinished infrastructure. Its attorney explained there was concern that without concessions the developer "might simply default" on the first phase, and said the authority would still receive about $650,000 in development fees, the minutes say. In December, its real estate team described the project as "out of construction funds (\~$9M needed to complete)," with the developer partners "contractually obligated to provide capital" as a backup. In its 2024 application for city money, the authority had told the city its partner "makes all personal guarantees and accepts all development and operational risk."

This March, the board voted 12-1 to sell the second-phase apartment lot for $9 million, with $5 million of the buyer's earnest money released early to pay first-phase costs. The lot is part of the nearly 11-acre site the authority acquired in December 2021 through "the generous donation of a community member" to develop housing for the local workforce, according to its 2024 application to the city, which counted the second-phase land as an $11.45 million contribution toward 150 more homes. The authority's attorney, George Eck, told the board the sale would require the authority to remove the deed restriction on the lot and that an affordability guarantee from the buyer was unlikely; an acknowledgment that the lot is to be used for housing "lacks teeth" if other uses were proposed and approved, the minutes say. Jason Peasley, then the executive director, said the sale would let the first phase be completed and would move the land to a developer with a proven record of developing affordable housing, according to the minutes.

The earnest money must be returned if the sale falls through, the authority pays about $25,000 a month in interest on a $4 million loan on the lot, and the minutes say there would be "no real pay-off" for the authority from the sale. The $5 million reached the project by mid-May. In September, the buyer sought more time for due diligence, and finance team minutes that month said the sale was "targeted to close before Christmas." By then, $168,000 remained on the construction loan, which the authority reported paying off the week of Sept. 21\. Board member Michael Ann LaMotte said units priced for buyers at 140% of area median income "would be more difficult to sell," and board member Catherine Carson suggested asking the city for more money to lower prices, the minutes say.

The city added money along the way. In October 2025, the council approved an additional $5 million in short-term rental tax money for the project, with final approval on a 7-0 vote Oct. 21, bringing its grant to $10 million, the largest single expenditure in the city's tracking of the fund. Authority minutes say the city money lowers buyers' prices "dollar for dollar." The fund has also paid $74,673 toward Hilltop predevelopment in 2024 and 2025, by the Independent's count.

Sales of the highest-priced units have been slow. In the 2024 application, it said it was pursuing the conversion of a planned second-phase rental building to condos "due to a high demand for affordable homeownership opportunities," especially near 100% of area median income. By December 2025, 362 people had filled out a pre-screening form, producing 94 active applications and 51 buyers fully approved for the lottery for 86 units, the minutes say. A pricing guide the authority posted Sept. 28 marks 63 units sold and nine pending, leaving 14 unmarked, 11 of them priced for households at 140% of area median income; every unit priced at 100% is marked sold or pending. In its Oct. 8 board packet, the authority reported 71 of the 86 units sold or under contract. In July, the board approved using the remaining $386,000 in city grant money and $311,000 it had budgeted to move 12 unsold units from the 140% tier to the 100% and 120% tiers; by mid-August all 12 had gone under contract, minutes say. Its Cottonwoods web page still says, "Homes are still available!"

![](https://storage.ghost.io/c/aa/3a/aa3a9637-6f90-40b7-a01c-13f8ce5c1e50/content/images/2026/10/05_cottonwoods_timeline.png)

![](https://storage.ghost.io/c/aa/3a/aa3a9637-6f90-40b7-a01c-13f8ce5c1e50/content/images/2026/10/03_cottonwoods_sales_by_ami.png)

### A leadership change and a capacity gap

On March 26, the authority's board voted 11-2 to approve a mutual separation agreement with Peasley, effective June 1\. The public minutes give no reason; they say the personnel issue had been discussed in several executive sessions. Minutes put the severance at about $143,000 with paid time off, plus $4,000 the board added for health coverage, and record a staff answer that the package would cost $78,000 more than a termination without cause under his contract. Board member Lou Tortora said the difference was worth it to ensure a smooth transition, the minutes say. Board member John Spezia voted no "as a protest against the way the whole process was handled," and Muntean said he would support the agreement "with the support of Council," according to the minutes.

Deputy Director Elliot Lawrence has been acting executive director since April 9, and the authority posted the permanent director's job through a search firm, Bridge Partners, in August. At a May 20 board meeting, Tortora said the Hilltop project, among others, requires "expertise that YVHA does not currently have," the minutes say. Lawrence said the authority was relying on its fee developer, Servitas, and a consultant for expertise it does not possess, and agreed it would need more capacity.

Lawrence's assessment of staff skills, based on job descriptions and three years of annual reviews and included in the packet for the board's Oct. 22 meeting, rates "Affordable Housing Development" tied with community engagement for lowest of 14 areas, at 3.5 on a 7-point scale: "Needs Improvement." Development budgets, financial feasibility and underwriting are among the areas it targets, and it lists as root causes capacity, a lack of staff skill sets and a "Lack of Financial, Development and Construction Management Experience." It recommends consultants, training and more staff, and says 44% of all metrics show "a capacity/bandwidth issue more than a skills gap." It rates the organization overall a "Solid Performer" and flags no area as unsatisfactory.

### Hilltop: a bigger gap, and a request for city backing

A Sept. 23 memo from Planning and Community Development Director Rebecca Bessey says the subcommittee met with the authority, Servitas and the authority's financial advisers, D.A. Davidson. Hilltop would have 84 units in 13 buildings on Forest Service land, with 18 prioritized for Forest Service employees and 10 for city employees, for delivery in 2029\. The memo says the request includes "a City moral obligation to support project bonding and a significant predevelopment component," but gives no dollar figure and does not say what the pledge would commit the city to.

Authority records fill in some of the numbers. In May 2024, the project was estimated at $41 million, with a funding gap of $6 million to $9 million and an average income target of 90% of the area median. By May 2026, development team minutes put the cost at about $537,000 a unit, about $45 million in all by the Independent's calculation, with an average target of about 70% of median income and a gap of about $17 million to $18 million "before revised construction cost assumptions." Board members called the construction estimate of about $260 a square foot too low and suggested modeling $400 to $450\. An August budget worksheet lists $11.4 million in Hilltop equity from state Proposition 123 and short-term rental tax money combined; the council has not acted on a request.

The May minutes describe tax-exempt revenue bonds issued by the authority, with proposed sources including a city investment of a roughly $3.9 million predevelopment grant plus city "soft debt." An earlier team meeting found the Forest Service lease "problematic for bond financing" and said the units for Forest Service workers "may jeopardize tax-exempt bond status"; taxable bonds would significantly increase the gap, the minutes say.

The memo does not say how a pledge would be structured or whether it could affect the city's credit. The city's audited financial report for 2025 says Moody's Investors Service rates the city Aa1, its second-highest rating, and lists $23.4 million in certificates of participation and loans outstanding at the end of the year. The authority has not said how large the Hilltop bonds would be. Authority minutes describe the city pledge as backing the bonds' reserve fund. The Independent is asking the city about the credit implications for a follow-up after Tuesday's meeting.

The subcommittee "stressed that the process must be transparent" and called for "best practices and robust risk mitigation measures," the memo says. The tax fund is projected to hold $49.7 million at the end of 2027, and the budget letter says 2027 expenditures "have not yet been identified or budgeted." Separately, the city's ad hoc housing committee was scheduled Aug. 31 to take up an authority request for about $3.2 million from the fund to replace water, sewer and electric lines at its Whitehaven Mobile Home Park. A separate Oct. 7 memo says the city's new financial services partner, the Colorado Housing Accelerator Initiative, is designing an award process so council can accept recommendations "without needing to reexamine the project details." Council is tentatively scheduled to take up that process Nov. 17 and Dec. 8.

### A cost estimate below the authority's own numbers

The construction estimate behind Hilltop is lower than recent figures the authority itself has used. In March 2025, its development team noted current hard construction costs of $300 to $400 a square foot. A July 2025 housing study the authority commissioned put apartment hard costs at about $300 a square foot, based on builder interviews and the authority's recent projects, and townhome and single-family costs starting at about $400\. Hilltop's May 2026 estimate used about $260 a square foot; the minutes do not say whether that includes site work. In its August 2024 application to the city for Cottonwoods money, the authority had put hard costs for that project's second phase at $290 a square foot including about $5.9 million in site work, or about $257 for the buildings alone, by the Independent's calculation

![](https://storage.ghost.io/c/aa/3a/aa3a9637-6f90-40b7-a01c-13f8ce5c1e50/content/images/2026/10/02_hard_cost_assumptions.png)

Authority records give different totals for the first phase of the Cottonwoods, 86 condos in two buildings. In August 2025, partnership minutes said costs would exceed the $40.8 million budget by about $1.2 million, "bringing total project cost to around $42 million." Two months earlier, finance team minutes recorded the developer "projecting $59 million" in total project costs, and a $2 million to $4 million difference between the developer's and the authority's projections. The $40.8 million budget in the August minutes is the same figure as the project's unsigned guaranteed-maximum-price construction contract. The authority has not published a final cost for the Cottonwoods' first phase.

Construction prices are rising again nationally. Producer prices for inputs to multifamily construction rose 10.1% from September 2025 to September 2026, according to Bureau of Labor Statistics data compiled by the Associated General Contractors of America, after annual average increases of 2% in 2024 and 2.4% in 2025\. Over the same 12 months, steel mill products rose 27.6% and copper and brass mill shapes 30%. The index covers materials and other goods, not labor.

![](https://storage.ghost.io/c/aa/3a/aa3a9637-6f90-40b7-a01c-13f8ce5c1e50/content/images/2026/10/04_multifamily_input_ppi.png)

### Who would own Hilltop

Under the authority's project chart, the authority would own Hilltop and act as asset manager, while its fee developer, Servitas, would build the project under a turnkey agreement that guarantees its cost and delivery date. The city holds the right to lease the site, having exercised a right of first refusal on the Forest Service land in April 2024, and would assign the lease to the authority. The authority's August presentation lists its goals as limiting risk to the authority, using tax-exempt bond financing and owning the asset for "control in decision making and local accountability." The city's memos do not say why the project would go through the authority or what the authority would be paid. The Independent is asking the city and the authority those questions for a follow-up after Tuesday's meeting.

### Brown Ranch and public trust

The request also follows the 2024 defeat of the Brown Ranch annexation, which voters rejected 58% to 42% on March 26 of that year. At an April 9, 2024, council work session, discussion included "tension in the community/level of trust with the YVHA," according to the minutes.

A January 2025 assessment for the city's Brown Ranch community deliberation found "diminished public trust and confidence in the City of Steamboat Springs and YVHA." In August 2025, an authority team discussed a "proactive acknowledgment approach" to "take ownership of Brown Ranch missteps and property management issues rather than remaining defensive." The same minutes note that the "housing authority lacks legal control over property management" at properties it helped deliver. In January, after Muntean read a statement into the council record about what the minutes call unacceptable living conditions at several of those properties, Peasley wrote in a Jan. 8 report to the authority's board that it had "a moral obligation to improve the living conditions" for 195 households there.

### Agreement amendment pulled

Not on Tuesday's agenda: an amendment to the city-county agreement that governs the authority. It was on the consent calendar in tentative versions of the Oct. 20 agenda through Oct. 14, but it is not on the final agenda or on tentative agendas through Dec. 8, and the packet does not say why.

At a Feb. 10 work session, Council Member Dickson's written points said the agreement "does not clearly require audits or routine financial transparency aligned with current funding scale." Council members agreed by unanimous consent to require an annual independent audit or financial review and to add conflict-of-interest rules. The authority already obtains an independent audit each year. Minutes of a May 19 joint meeting with county commissioners describe changes to alternates, term limits, outdated language and ethics rules, with no mention of an audit. Muntean told the authority's board May 20 that the city and county were aligned on almost all issues; "The only outstanding item at this point is an ethics/conflict of interest issue," the authority's minutes say. The amendment's text has not been made public. The authority's agenda for an Oct. 22 special meeting lists "Policy and IGA Updates," but the packet contains personnel policies, not the amendment.

### The authority's case

Authority board members have defended the Cottonwoods outcome. When the board approved the restructuring, Carson said the return on taxpayer money was "still excellent, with $220,000 subsidy per unit," according to the minutes; board member Jessica Valand voiced concern about borrowing against the second phase to finish the first but supported the deal. The original partnership put the risk of construction overruns on the developer, and the authority's attorney told the board in 2024 that the authority would not be liable for more money. In May, board members cited strong demand for for-sale workforce housing, pointing to the Cottonwoods.

Carson voted against Peasley's separation, saying the organization was "underwater" with a negative fund balance when he was hired and was turned around under him, the minutes say. Routt County Commissioner Angelica Salinas said her fellow commissioners had commended his service.

The authority's 2025 audit reported no findings, and it posts audits for 2021 through 2025 on its website. At the Sept. 1 council meeting, Council Member Dave Barnes, who is listed among participating authority board members in its March 2 minutes, said he had toured Anglers Four Hundred and The Cottonwoods and that they were very impressive, according to draft minutes.

The Independent is asking the city, the authority and Routt County about the request, the proposed pledge, the Cottonwoods finances and the agreement amendment for a follow-up after Tuesday's meeting, and is seeking comment from Steamboat 6732 Partners and Muntean.

### What to watch Tuesday

The subcommittee report is the council's first public discussion of the request. Questions the records leave open:

- How much the authority is asking for, and how large the bonds would be. The Sept. 23 memo gives no figure.
- What a "moral obligation" would commit the city to, and what staff found when directed to research "the financial and credit implications for the City."
- Whether the Hilltop estimate has been updated from about $260 a square foot, which authority board members called too low in May.
- Why Hilltop would go through the authority, who would manage it and what the authority would be paid.
- Why the amendment to the agreement that governs the authority came off the agenda.

The Independent will report on the meeting and on responses from the city and the authority.

*Emily McLarney, the wife of Independent publisher Michael McLarney, serves on the city's Ad Hoc Housing Advisory Committee, which reviews requests for short-term rental tax money, including the authority's Whitehaven request and, according to the authority, its coming Hilltop request.*

## What the records show

Problems documented in the authority's own records and city records, newest first. Team and partnership minutes are prepared with AI.

![](https://storage.ghost.io/c/aa/3a/aa3a9637-6f90-40b7-a01c-13f8ce5c1e50/content/images/2026/10/hilltop_records_dark.png)

## By the numbers

![](https://storage.ghost.io/c/aa/3a/aa3a9637-6f90-40b7-a01c-13f8ce5c1e50/content/images/2026/10/hilltop_by_the_numbers_dark.png)

## If you go / What's next

- **City Council, Tuesday, Oct. 20, 5 p.m.**, Citizens' Meeting Room, Centennial Hall, 124 10th St., and on Zoom (meeting ID 985 289 877; 1-888-475-4499). The Housing Sub-Committee report is item 1.a under council reports, which the agenda lists as information only; comments on it can be made during general public comment, which comes at 6 p.m. or earlier, three minutes per speaker. Council takes no action on public comment except to direct the city manager. Written comments: citycouncil@steamboatsprings.net.
- **YVHA board**: special meeting Thursday, Oct. 22, at noon in the second-floor conference room at Vectra Bank, 270 Anglers Drive, with "Policy and IGA Updates" on the agenda; regular meeting Thursday, Nov. 12\. The board usually meets at noon on the second Thursday of the month in the Community Room of the Routt County Department of Human Services Building, 135 Sixth St. Comments: inquiry@yvha.org.
- **City Council, Nov. 17**: short-term rental tax fund application and award process, 60 minutes (tentative).
- **City Council work session, Dec. 8**: Housing Commission; short-term rental fund application process follow-up; Home Base pilot review; land banking (tentative).