The Hailey City Council agreed Monday to modify several parts of a sewer-services agreement the city negotiated with Wood River Valley developer Harry Rinker in 2005.
Under that agreement, Hailey officials agreed to provide city sewer services to Rinker's 160-acre Peregrine Ranch property in Blaine County north of town in exchange for Rinker helping to bring to a close a pending lawsuit by another property owner against the city.
During the meeting Monday, the council agreed to proceed with amending the 2005 agreement after discussing it and several proposed amendments at length.
Under the proposed amendment, the city will receive title to 4.5 acres of land near the Woodside Treatment Plant as well as additional water rights. In exchange, Rinker will pay a smaller flat fee for connection of sewer services to his property and will also gain city water services, but only for in-house, potable use.
But the amendment to the 2005 agreement isn't in place yet. The council directed Hailey City Attorney Ned Williamson to draft an amended sewer services agreement for their review at a future public meeting.
Also, before both sides can agree to the amendment, several other components must be considered.
First, the value of the 4.5-acre light industrial property the city will receive must be correctly appraised. Appraisers for Rinker and the city have come up with much different appraisal amounts for the property. While Rinker's appraiser calculated the property's worth at $2,600,000, the city's appraiser valued it at $1,785,000.
The discrepancy is due to Rinker's appraiser incorrectly considering 10 acres of light industrial property, rather than the correct 4.5-acre amount, Williamson said.
"The appraiser made a mistake, quite frankly," Williamson said. "I would urge you to use our appraiser."
The value of the water rights Rinker will provide the city must also be considered. These are excess water rights above those Rinker needs for his 160-acre Peregrine Ranch property.
Addressing the value of the water rights to the city, Williamson urged the council to consider the worth of having additional water rights in the city's water bank.
"That water has a significant value to Hailey," he said.
After discussing the proposed amendment, the four Hailey City Council members indicated whether they'd like to amend the 2005 agreement.
Based on a non-binding straw poll, three of the four council members—Martha Burke, Don Keirn and Rick Davis—indicated a wish to proceed. Councilwoman Carol Brown stated she wished to retain the existing 2005 agreement as is.
For those in favor of the amendment, the worth of the 4.5-acre property and additional water rights was enough.
"I'd hate to let water get away from us. I'd really like to get it in our water supply bank," Burke said.
Davis agreed. "I think we need to go for both."
During discussion of the 2005 sewer services agreement, Hailey Mayor Susan McBryant recused herself because of her business relationship with Rinker as a property manager.
As part of the original $4 million sewer services agreement, the city agreed to extend sewer services north into Blaine County to the 160-acre Peregrine Ranch property owned by Rinker.
The deal between the city and Rinker also included a $1.35 million settlement of a land-use dispute that was scheduled for jury trial in federal district court in early 2005.
In exchange for the city providing him with sewer services to his property, Rinker agreed to pay the settlement and take title to 81 acres in south Woodside owned by Judy Castle, the plaintiff in a five-year-old lawsuit. Castle was seeking a $2 million claim against the city.
Once in 1999 and again in 2002, Hailey turned down an application by Castle to develop 13 or 14 light-industrial buildings on hillside property adjacent to the Woodside Treatment Plant, adjacent to Glenbrook Drive. The rejection of the development plans was related to the city's desire to not set a precedent for hillside development in the city.
At the time, Hailey officials were developing a hillside ordinance.
Castle's lawsuit against Hailey claimed inverse condemnation, taking, and substantive due process and equal protection violations by the city.
Rinker is proposing to keep his Peregrine Ranch property within Blaine County and develop 69 homes there. Rinker had indicated a wish to have the property annexed by Hailey, but abandoned those plans after nearby landowners protested a larger development plan.
In a separate but related matter, a lawsuit filed by a group of Hailey residents requesting the 2005 sewer services agreement between Hailey and Rinker be declared null and void because it was allegedly reached through a violation of Idaho's Open Meeting Law was dismissed on March 2.