Facing a federal jury trial on a longstanding land use conflict, the City of Hailey has forged a complicated settlement with the help of Peregrine Ranch Developer Harry Rinker. Rinker, who has been pushing the city for an extension of city sewer services to his 160-acre county property, will get his wish as part of the settlement deal.
The three-part arrangement has been signed, sealed and delivered. It includes the lawsuit settlement, approval by the city council to extend services at the time of Rinker's choosing, and a memorandum of understanding governing how user fees from future Peregrine Ranch residents will be collected,
By Feb. 11, Rinker will take title to 81 acres in south Woodside owned by Judy Castle, the plaintiff in the city lawsuit. The property will be turned over to the city at such time as Rinker taps into the Woodside Treatment Plant, which is adjacent to the Castle property.
In the surprise move three members of the Hailey City Council, Martha Burke, Carol Brown and Don Keirn, decided, after meeting in executive session early Monday morning, to enter into the $4 million arrangement Hailey City Attorney Ned Williamson negotiated with Rinker. Rinker has agreed to pay Castle $1.35 million to settle her suit against the city in exchange for title to her property. According to the terms of the settlement, if and when, sewer services are extended to Peregrine Ranch, Rinker will pay the city an additional $2.65 million for the privilege of hooking up to the municipal system.
Williamson said the city has been wrestling with the conflict over Castle's property since 1999, when the City of Hailey denied Castle's application to develop areas of her property. After Rinker approached the city seeking sewer service in November 2004, Williamson said he conceived of the settlement plan to dispatch the Castle lawsuit.
Williamson said the property that was annexed into the city with the rest of Woodside in 1973 was not properly zoned when it was annexed. He said in its defense the city was relying on a "common law dedication" theory that the city believed the property was designated open space when it denied Castle's application. Castle sued for $2 million in damages. Initially, Judge Edward J. Lodge of Federal District Court in Boise ruled in favor of the city, but petition to the Ninth Circuit Court of Appeals reversed the decision. Because Judge Lodge ruled that there are questions of fact in the case concerning language in documents and statutes of limitations, among other things, a jury trial was required, Williamson said.
Williamson said that because the city's insurance policy excludes inverse condemnation, if the city lost at trial, taxpayers would have had to pick up the bill.
Mayor Susan McBryant and Council President Rick Davis recused themselves from the negotiations, McBryant because of her business relationship with Rinker as a property manager, and Davis because his employer, Sun Valley Title, is managing title arrangements in the deal. Burke, who chaired the meeting Monday when the deal was announced, said the arrangement was a "win-win" for the city because it resolves long standing litigation for the city and addresses the city's sewer problems.
"It is a complicated process. We are very, very grateful to Ned," Burke said, although she expressed some trepidation that due to the litigation, the decision was not discussed in public. "If there were any other way to have this go through the public process, (we would have done it)."
At previous meetings regarding Rinker's request for extension of sewer service, considerable public opposition cited associated impacts on the city in terms of traffic from the development and whether the arrangement would really cover costs of extending sewer service.
Williamson said the city might have won at trial, but he felt that there was also a strong possibility that the city could have lost.
Williamson said the Rinker settlement was "not a reflection of a poor case," but weighing the options Hailey avoids an adverse judgement, the city acquires sewer expansion funds and there is "no financial burden to current citizens of Hailey."
Rinker will pay all costs of installing infrastructure including pipes and lift stations if he receives county approval to proceed with his plans. In addition to hook-up fees, each connection at Peregrine Ranch would be responsible for ongoing user fees for operation and maintenance of the system.
Williamson said that engineering consultants and City Public Works Superintendent Ray Hyde determined that the agreed upon sum to be paid by Rinker is sufficient to cover the costs of extending service. In the memorandum of understanding, either a sewer district or a homeowners association will be responsible for collecting monthly user fees being charged at the time of connection to the Hailey sewer system plus 10 percent.
If Rinker chooses not to hook on to Hailey's sewer system, under the terms of the agreement, he retains the right to develop some 4.5 acres of property, which if it goes to the city could be used to expand the adjacent treatment plant.
Hyde said the move is a positive step for the Hailey sewer service, adding that in the years since the treatment plant went on-line, wastewater treatment in Hailey has changed "from a nightmare to an asset."
"It is a fair pass through of all costs (to the developer). Rinker could acquire a (private sewage treatment plant) anyway," Williamson said, reiterating an argument common to city council members that offering sewer services to property in the county helps to protect the shallow aquifer that feeds city drinking water sources.
When asked to address criticism that the extension of sewer services was not discussed in a public forum, Williamson said by law, a public hearing on the matter was not required and because the negotiations also involved a matter of litigation, discussions were required to be held in executive session.
"The best interests of the residents of Hailey were first and foremost," Williamson said. "That is a sincere and genuine reply. I see this as a win-win situation. It was well thought out."
