Wednesday, March 12, 2008

Developer takes aim at Ketchum affordable housing

City officials vow to fight back

Express Staff Writer

In the wake of recent Idaho court decisions upending inclusionary zoning ordinances in the cities of Sun Valley and McCall, the owners of Chilali Lodge on Second Avenue in Ketchum are taking aim at Ketchum?s deed-restricted housing incentives. Photo by Willy Cook

First it was Sun Valley, then McCall. Now Ketchum has found itself in the sights of a legal argument contending its workforce housing law is unconstitutional, and the city has vowed to fight back.

Representatives for Chilali Lodge, a Second Avenue condominium complex, penned a Feb. 28 letter to Ketchum City Attorney Ben Worst seeking a full refund of $1.05 million in in-lieu fees paid to Ketchum's housing fund, and exploring the possibility of rescinding the pending sale of two deed-restricted condominiums built there.

Ketchum's ordinance, however, is different from those nullified in the cities of Sun Valley and McCall. There, affordable housing was required as a condition of obtaining a building permit. In Ketchum, housing is procured only from developers who wish to build beyond the city's height and density caps.

But that, contends a Boise attorney, is hair splitting.

"The city of Ketchum's ordinance is not constitutionally distinguishable from those of Sun Valley and McCall," wrote Christopher Meyer, of the firm Givens Pursley Meyer, which is representing Sawtooth Lodge at Sun Valley, LLC, the limited liability company that owns and developed Chilali Lodge. "The city may contend that its community housing requirement is voluntary and must be paid only if the landowner desires a higher floor area ratio. This is a distinction without a difference. The city is still conditioning its approval upon the developer's agreeing to give up 'something of value,' just as Judge Neville said it could not."

In a Tuesday, March 11, letter to Sawtooth LLC Manager Patrick McCourt, Ketchum Mayor Randy Hall vowed a firm stance in defense of the city's inclusionary housing ordinance.

"This is especially troubling since one of the (deed-restricted affordable) units is scheduled to close March 14, and the applicant has been on the waiting list for an affordable home since May 2005," Hall stated. "Your decision has impact on a very human level. We respectfully decline your request.

"As elected officials we are deeply disappointed that you would propose to cancel your contractual obligation to our community made in 2005. These were not imposed fees; instead your LLC made this commitment voluntarily."

Hall pointed out that Sawtooth LLC received 6,930 square feet of marketable space, which at current selling prices of $500 to $600 per square foot is worth $3.5 to $4 million.

"Sawtooth Lodge LLC was not required to sign this contact," Hall wrote. "At the time that you volunteered to do so, other developers declined to participate and chose to develop their projects with a lower floor-area ratio. Today the seriousness of this issue is even more acute to Ketchum residents who overwhelmingly support this issue."

The McCall court decision was handed down by 4th District Judge Thomas F. Neville on Feb. 19. Neville ruled that McCall's requirement that 20 percent of all new development must be set aside for deed-restricted housing was unconstitutional and amounted to an illegal tax.

"The city of McCall is attempting to have growth in McCall pay for growth," Neville stated in his 31-page decision. "Whatever benefit the landowner receives is no different than a benefit received and shared by the public at large. The lack of affordable workforce housing is a problem for which the public should bear the cost to remedy rather than imposing the burden on a few landowners or developers. Therefore, the purpose of the subsidy or fee ... is for the benefit of public services at large rather than a benefit to the individual assessed."

The Sun Valley decision was handed down by 5th District Judge Robert Elgee on July 3, and was based similarly on the argument that Sun Valley's requirements amounted to an unconstitutional tax.

Following the McCall decision, Blaine County Housing Authority Executive Director Jim Fackrell said it looked like Ketchum's ordinance was safe.

"I think the city of Ketchum's ordinance differs from that significantly. It's incentive-based," he said. "This one was more akin to the Sun Valley ordinance that was shot down."

Fackrell said the decision was of some concern, "but I think some interesting points were noted in there, that the responsibility rests with the entire community. And I believe that there was some concern, at least in the McCall case, that the responsibility was being borne solely by the developer."

Meyer disagreed.

"The city has no authority under (the Local Land Use Planning Act) to sell entitlements in exchange for illegal taxes. The city cannot lawfully take the position that this development does not meet land-use standards contemplated by the Legislature under (the Local Land Use Planning Act) unless the landowner agrees to pay an illegal exaction. That is not land-use planning. It is certainly not 'voluntary.' It is more akin to extortion, which the dictionary explains is obtaining 'some thing of value by the abuse of one's office or authority.'"

But Hall reiterated that workforce housing is about more than dollars and cents.

"The impact of your decision will not be felt solely in city hall," he wrote. "Our workforce is the very soul of our town. As elected officials we regard this situation with the utmost priority, and its outcome bears directly on the ability of Ketchum to broaden and diversify its economic base."

Hall intimated that Sawtooth LLC's challenge to the city's workforce housing ordinance could reflect poorly on Chilali Lodge.

"We sincerely hope you will reconsider and opt to honor the contractual obligation you have made to this community in June of 2005," Hall stated. "In the meantime I am in the process on behalf of the council of selecting outside specialty legal counsel to represent the city in this matter, as we anticipate your move toward legal proceedings.

"We remain prepared to vigorously defend our inclusionary zoning program for all those citizens who live and work here. We remain committed to this community initiative and to the citizens and businesses that support it."

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