The U.S. government has threatened legal action against the city of Ketchum so it can sell three Bavarian Village apartment buildings, which were forfeited to it by a convicted drug smuggler in 2003. The government is demanding that the city end a building moratorium, enacted last April, on the zone that includes the property.
In a letter dated April 10, Thomas Moss, U.S. attorney for the District of Idaho, stated that "it is the intention of this office to initiate a show-cause proceeding to require you to appear before the Court and show cause as to why the property should not be immediately marketed and sold under the zoning and other city codes which were in place in October 2005, when the property was (first) auctioned."
Ketchum City Attorney Ben Worst said in an interview that the City Council intends to draw up a response to the letter during an executive session at its next meeting on May 7.
In its letter, the government claims the city interfered with an initial attempt to auction the property Oct. 4, 2005, by intimidating private-sector bidders in the hope that the property could be used for deed-restricted affordable housing. It also implies the city subsequently enacted the building moratorium to discourage any later sale.
The initial auction ended without a sale when the highest bid, of $2.3 million placed by Advocates for Real Community Housing, fell short of a $3.5 million minimum. The minimum bid had not been disclosed to bidders beforehand.
Eighteen bidders had shown up for the auction. However, Moss contends, most bidders appeared reluctant to participate due to the presence of people picketing on behalf of ARCH.
The letter also contends that on the day before the auction, several prospective bidders were invited to a meeting at the offices of the city of Sun Valley, called by Sun Valley Mayor Jon Thorson and then-Ketchum City Councilman Randy Hall, who is now the city's mayor. It contends the bidders were told that the cities of Sun Valley and Ketchum were supporting ARCH in the auction.
"Hall and Thorson made it very clear to the other prospective bidders that any developer who attempted to outbid ARCH would have a very difficult time getting a development plan through the city's planning process," the letter states. "In one prospective bidder's words, the city of Ketchum would make the construction application process a 'living hell' for any bidder other than ARCH."
The letter states that "it is our intent to require the city, and particularly those persons who were acting on behalf of the city ... to give an accounting to the Court of their actions with respect to the failed auction."
In interviews, both Hall and Thorson said they had never made any statements threatening prospective bidders.
Moss' letter also states that since the auction, the government tried to work with the city of Ketchum, ARCH and the Blaine-Ketchum Housing Authority so they could buy the property at the minimum $3.5 million. It states that Ketchum enacted its current building moratorium, in the General Residential-High Density and Tourist zones on April 12, 2006, "almost immediately after the United States was informed by ARCH that neither it nor the City of Ketchum was able to obtain funding to purchase the BV property at the minimum bid amount."
In a news story written at the time, the Idaho Mountain Express stated that the moratorium had been extended to the two zones from the Community Core "so officials can devise ways to offer incentives to developers for community housing."
Moss' letter requests a response by May 2. Worst said the request is not legally binding, but that as a courtesy, he would send a letter before then to ask for an extension.
The property in question was seized after its previous owner, Patrick Cannon, and East Fork resident David Brocklebank pleaded guilty in July 2003 to a massive and complex drug smuggling and money laundering operation. They had been charged with making numerous smuggling trips between Thailand and the United States, bringing in a total of about a ton of marijuana. They pleaded guilty to two of 121 original counts.
For Cannon, the plea agreement included forfeiture of 11 Wood River Valley properties, including those at Bavarian Village, six bank accounts, a Ford pickup truck, a sailboat and the assets of eight businesses. For Brocklebank, the agreement listed 11 foreign and local bank accounts, property in East Fork and Hawaii, and the assets of 14 businesses.