Joe Young is a Ketchum resident.
By JOE YOUNG
Four years ago, the longtime owners of the Warm Springs Ranch sold the property to a developer for a reported $12 million. At the time of the sale, and presently, the value of developable property in Warm Springs was and is about $1 million per acre.
Although the total property is 77 acres, developable land is limited by the creek, flood plains, riparian rights, slope gradients and avalanche zones. Development is also constrained by legal and regulatory restraints including the Ketchum comprehensive plan, zoning laws, height and mass limits, density limits and existing easements. These limits and constraints were in place at the time of the $12 million sale and remain in place today. They undoubtedly were a major factor when that sale price was negotiated. Because nothing has changed, the value of the property should still be about $12 million. The word on the street, however, is that the current owner, Warm Springs Ranch Resort, paid $44 million.
Why would WSRR pay at least double the going rate for property that contains less than 15 acres of developable land? Because it is apparently convinced that the City Council is prepared to trash the comprehensive plan and the zoning ordinances in order to sanction this massive luxury housing development. If this gamble succeeds, WSRR plans to build, in addition to a nine-story hotel, about 400,000 square feet of luxury condos, townhouses and residences with a total sale value of about $400 million. Good for the developer, but nothing for Ketchum except the dubious possibility that 100 hotel rooms with a 50 percent projected occupancy will significantly impact the Ketchum economy.
The downside for Ketchum, and particularly the Warm Springs area, is the loss of active recreational facilities, the inevitable traffic congestion, the loss of view and wildlife corridors and the derogation of the small town character of the neighborhood called for by the comprehensive plan.
WSRR is the third developer to own this property. The first, Sun Valley Ventures, sold out after its hotel partner bailed out of the partnership. The second, Whitetail Club, a luxury resort developer, backed off because, reportedly, it considered the project too risky.
That risk remains. The global credit crunch is alive and well and recently visited the Wood River Valley. Henry Dean's Village Green development filed for bankruptcy last month. According to Mr. Dean, the filing was necessary because his bank "wouldn't work with him."
Surprise, apparently the bank wanted to be paid back the $13 million balance remaining on a two-year loan. You may remember Mr. Dean as the head honcho on the aborted Sun Valley Ventures plan to develop the Warm Springs Ranch. Also of note is the recent bankruptcy filing of the owners of Tamarack and the bankruptcies of the developer of the "Hole" in downtown Boise, and a developer of several commercial buildings in downtown Boise. The Greater Fool theory of investing says that you can't pay too much for a property if you can then sell it for a higher price to a greater fool. WSRR may be the ultimate fool in the progression from $12 million to $44 million, but these guys are developers, they win some and lose some, and then move on to the next project.
The comprehensive plan was adopted because the community feared that unchecked development would ultimately destroy the small town character of Ketchum and eliminate active recreational facilities within the city. That fear will be realized if the present project is approved. The city should stop this project now before more money is spent on studies and tinkering with a scheme that can't possibly comply with the requirements of the comprehensive plan and existing zoning laws.
