Friday, September 14, 2007

Ketchum hotel deal falls through

Mayor: Developer had problems buying site

Express Staff Writer

The Bald Mountain Lodge hotel site in Ketchum has just gone on the market for $12.8 million after a developer claimed city delays made the project economically unworkable. City officials deny that, but the owners, Bald Mountain Lodge LLC, is selling the city-block-sized site at Main and River Streets. Photo by David N. Seelig

Two proposed hotel projects for downtown Ketchum are unraveling after a major Texas developer failed to fulfill purchase contracts on two sites, saying city procedures were too cumbersome, and the proposals didn't "pencil out" economically. City officials denied those assertions and pointed out that there are still three other hotel proposals in the works.

Both sites, the Bald Mountain Lodge and Gateway—on Main Street on opposite sides of River Street—have just been put up for sale. The city's planning director said he never saw a plan from the Texas developer that would have "combined" the two parcels.

Mark Masinter, CEO of Dallas-based Open House Partners, said there were too many bureaucratic roadblocks for his company to see any light at the end the financial tunnel.

"Our company, Open House Partners, had both sites (Gateway-Bald Mountain) under contract," Masinter said in an interview. "We are big believers in Ketchum. We felt like we had created a great concept and had a great hotel partner. We spent a bunch of time and money ... but the town wasn't ready to do a project of this nature."

In an interview, Ketchum Mayor Randy Hall said Masinter told him that the deal fell through because Masinter couldn't reach an agreement with the seller, and it was purely a business call. The mayor noted that the national credit crunch also may have played into Masinter's decision and that the city still has three ongoing hotel proposals.

"The city was bending over backwards to give these guys every opportunity to get this project off the ground," Hall said.

Ketchum Planning Director Harold Moniz agreed that these particular projects had "hurdles," adding that he, personally, hadn't seen drawings for the combined Bald Mountain-Gateway sites.

"I find it interesting that red tape killed the deals when they haven't approached us with a plan or concept," Moniz said in an interview. "We are trying to respond timely and creatively to issues hotels bring to this community."

Ketchum contract planner Lisa Horowitz, lead planner for the city on hotel proposals, said she had seen drawings for both sites. Horowitz said she tried to get the Open House proposals before both the City Council and the Planning and Zoning Commission as soon as she could.

"I'm so surprised to hear them say that," Horowitz said when told the city was being blamed for killing the proposal.

Earlier this week, the Bald Mountain Lodge site sported a new, shiny, green-and-brown "For sale" sign advertising: "AN ENTIRE CITY BLOCK CITY CORE ZONED." Listing agent Ginny Warjone of Ketchum's Aspen Grove Real Estate LLC said the asking price is $12.8 million or $260 a square foot. The block contains 48,379 square feet.

Warjone said the previous owner tried to develop the site for a hotel but gave up and the current owner, Bald Mountain Lodge LLC, proposed a boutique hotel for the site, but decided to sell now that the Open House deal has soured, Warjone said. She said the principal partner is Ketchum resident Steve Burnstead.

"We've (Bald Mountain LLC, et al) been spending the last three years non-stop on it," she said, referring to the boutique hotel. "This is the third hotel that they have absolutely managed to kill."

Warjone said Burnstead was out-of-state and unavailable for comment.

Things got off-track for Dallas developer Masinter, Warjone said, after the city did a massing study in the Gateway area earlier this year that depicted in moving computer graphics the bulk of the proposed hotels and the shadows they could cast.

Both Masinter and Warjone said they needed a five-story hotel to make the project work financially.

"Then the city council decided in the 11th hour it couldn't handle the height, bulk and density," Warjone said. "It got a haircut basically."

But Moniz said the Steve Burnstead proposal had always been for a four-story hotel. In late 2006, the City Council was considering where it was appropriate to have a five-story hotel. The council decided that a five-story building was not appropriate on Main Street between Rivers and Sixth streets.

"They (the Dallas group) seemed to be surprised that we were not going to allow a five-story building there," Moniz said.

He said the Planning and Zoning Commission will consider changing boundaries for where five stories would be allowed at its Sept. 24 meeting. He said that prior to the massing study, the council did not have enough information on five-story building impacts but now may be "more comfortable" with a building that high at the Bald Mountain location.

Five-story buildings now mesh with the results of the massing study, Horowitz said.

Warjone said that Matt Cosgriff, a local realtor with Sun Valley Group and a minority investor with a Park City, Utah, investment group in the Gateway project, found a hotelier who wanted to combine the Gateway and Bald Mountain sites.

"We thought it was a better solution to the massing problem," she said.

She said the investors were looking at the concept of having the city close Rivers Street. But Moniz said it would be "very difficult" for the council to vacate the street. However, he said, city officials have discussed the possibility of banning or limiting vehicle traffic on the street. Dallas developer Masinter said there had to be some sort of connection via a walkway or sky bridge between the two sites.

Another obstacle to the project, Masinter said, was "no clear voice" from the city on the extent of the developer's financial obligation to provide workforce housing.

Warjone said Cosgriff is the listing agent for the Gateway site, which has a price tag of $15 million. Cosgriff could not be reached for comment.

Across Main Street, on the southeast corner where Trail Creek Village is located, plans are going forward for a luxury hotel called The Hotel Ketchum proposed by the Trail Creek Fund LLC.

"We are still proceeding on track to bring in a formal submittal package ... probably within the next 30 to 40 days," said Trail Creek managing member Jack Bariteau, in an e-mail interview.

The Warm Springs Ranch Resort group has asked for more time on its luxury hotel proposal and will have another pre-application review meeting at an as-yet-undetermined date, Horowitz said.

A third hotel, proposed for the Simplot lot across from the Ketchum Post Office, is on-track, Hall said.

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