In a three-part $4 million agreement signed Monday to extend Hailey sewer services north into Blaine County to the 160-acre Peregrine Ranch property owned by developer Harry Rinker, the City of Hailey agrees to forego any opportunity to comment on proposed housing density for the project.
Nevertheless, Rinker, who has proposed a 380-unit residential development for the property, still faces the remainder of a six-month county moratorium before he can submit a planned unit development application for county consideration. The looming project is part of the reason Blaine County Commissioners called for the moratorium on new development proposals. It is intended to give the county a chance to beef up ordinances governing density related issues, in particular water quality and quantity.
The Peregrine property is currently zoned R-1, which allows only one home per acre. For Rinker to "up zone," or realize higher densities, he would have to include a private sewer system with the project or hook into an existing municipal system, which he successfully negotiated with the city of Hailey this week.
Whether the sewage treatment option for the property, situated over a shallow aquifer just north of Hailey, is sufficient to convince the county that any proposed higher density is appropriate will be debated when the county reviews a PUD application from Rinker.
The $4 million deal includes a $1.35 million settlement of a land-use dispute that was scheduled for a jury trial in Federal District Court this week. Today, Rinker will pay the settlement and take title to the 81 acres in south Woodside owned by Judy Castle, the plaintiff in the five-year-old lawsuit. Castle was seeking a $2 million claim against the city. Once in 1999 and again in 2002, the city turned down a PUD application by Castle to develop 13 or 14 light industrial buildings on hillside property adjacent to the Woodside Treatment Plant, adjacent to Glenbrook Drive. Hailey Planning Director Kathy Grotto said Castle's two applications to develop on the 15 percent grade above the valley floor were essentially the same, except a residential building from the first application was removed for the 2002 submittal. One of the city's concerns with Castle's project was that it could set a precedence for hillside development in the city, Grotto said, adding that the city is still working on developing a hillside ordinance.
The lawsuit claimed inverse condemnation, taking, and substantive due process and equal protection violations by the city. After an appeal in 9th Circuit Court overturned a previous federal court decision in favor of the city, Hailey City Attorney Ned Williamson said the city began to review options, after motions to have the case dismissed failed.
The trial date originally scheduled for September 2004 had been continued to this week. Rinker first approached the city seeking a sewer extension deal in November, when City Council President Rick Davis, in particular, welcomed accepting funds from Rinker because, in Davis' view, such a service would help protect upstream city ground water. For Rinker, using the city system saves the developer space and removes the need for solving wastewater requirements on his property. Considering that Rinker, if his full proposal for 380 units is approved, could predictably raise over $100 million selling each unit at an average cost of $300,000, $4 million for sewer service represents a small risk on his part.
The southern border of Peregrine Ranch is about 5,000 feet from Hailey's city limits. About half of the property is situated within the city's Area Of Impact, an agreement the city has with the county giving the city "preferential consideration" regarding city input on county development projects. However, the city has deferred to the county where the density discussion is concerned in this case.
Because his property is not immediately adjacent to the city, filing for annexation into the city of Hailey is not yet an option for Rinker. But some Hailey citizens are concerned that if Rinker's plans were approved in the county, the development would come with the same impacts of annexed property, in terms of traffic and demand for police and emergency services, without receiving the benefit of city property taxes. A pressing question is whether the city is enabling sprawl in the county, especially after considerable public opposition to Rinker's plans was voiced in January, when the city council decided to negotiate with Rinker about a sewer extension.
There is no legal requirement for such negotiations to be public, Williamson said. He added that matters involving acquisition of public lands and litigation matters, both part of negotiations with Rinker and Castle, are to be handled in executive session, which the city noticed at least 24 hours in advance of Monday's meeting.
In September, the city was prepared to go to trial on the litigation matter. If the city had lost, any damages would have been passed on to Hailey taxpayers this year, Williamson said.
"An owner of a $400,000 home would have been taxed more than $1,200 in one year," he said.
Due to the timing of sewer negotiations with Rinker and council decisions on how to handle the litigation matter, the link Williamson said he conceived was coincidental, Hailey Mayor Susan McBryant said. She also said details of the negotiations and how the lawsuit and the sewer service agreement finally became tied together is privileged information.
"It truly to God was coincidence," McBryant said, adding that although such business deals do not require public input and can have a "slimy feel," the council had the best interests of the public in mind. "The decision to negotiate with Harry (Rinker) was altruistic, to protect drinking water."
McBryant said if the legislative decision doesn't sit well with voters, it will be decided at the next election. At the time the council decided to approach Rinker with the proposed settlement plan in exchange for a sewer extension option, McBryant said she stepped out of the discussions due to a conflict of interest, since Rinker is one of her property management clients.
Williamson said the city might have won the lawsuit, but under the terms of the settlement agreement the city comes out further ahead because at least the land-use debate is over. The lawsuit came about as a result of the fact that the Castle property, annexed with the rest of Woodside in 1973, was never properly zoned. When the city denied Castle's applications, the city's argument was that, although it was never officially designated as such, the property was intended as open space, precluding any development since it rests largely on hillside slopes.
Williamson said he believed that the city could indeed have lost the suit. Rinker has agreed that if he maintains ownership of the property, he retains the right to develop only a small portion of the property on the valley floor.
Rinker will turn the property over to the city if and when, following county approval of his own PUD application for Peregrine Ranch, he chooses to tap into the city sewer service.
Hailey Public Works Manager Ray Hyde said that if the property is conferred to the city, it could be used to expand the treatment plant with a third treatment pond. Hyde said he believes the arrangement is a good deal for the city because, barring any other extension of service with any future annexation such as Quigley Canyon, Croy Canyon or Cutters' Ranch, the current treatment plant can already accommodate Rinker's largest density proposal.
Harry Rinker
