With economic calamity on his mind, Hailey developer John Campbell has asked city leaders for a hand.
Campbell, the developer of Old Cutters subdivision on Hailey's northeast border, is looking for re-negotiation of the terms he agreed to when the area was annexed into the city limits in November 2006.
But he didn't get far with the city council, which was generally cool to his appeal.
The Hailey City Council refused to accept a new financial arrangement with developer John Campbell on Monday night that would have released him from his first annual payment of $875,800 in annexation fees. The payment, due at the end of this month, was the first of four annual payments that were expected to bring the city a total of $3.87 million in annexation fees.
Campbell requested an alternate plan that included payments of $50,000 to the city for each lot that is sold in the subdivision.
"We are highly motivated to sell these lots," he said. "The money I owe the city is nothing compared to what I owe the bank."
"We are not working on commission," responded Councilman Don Keirn.
Campbell also wants to re-zone two parcels of land next to the subdivision. The original agreement called for those parcels to be given to the city as a tax-deductible donation.
"I want to know why these parcels have not been conveyed already," Keirn said.
Keirn and Council members Fritz Haemmerle and Carol Brown, the only members present, voted to deny the request, in a meeting that became tense.
They also expressed disappointment that the city has not received a developed lot within the subdivision, known as "Lot 73," that Campbell had agreed to give it after 55 percent of the lots in the subdivision had been sold.
Old Cutters was annexed into the city after three years of negotiations and includes 116 build-able sites. Out of the 149 single- and multi-family units slated for the project, the developer planned to build 25 affordable housing units, 12 of which would be set aside for affordable housing.
Campbell said that due to an extended downturn in the housing market and national economy, he has only been able to sell 13 of the lots. He also said it took three times longer than he expected to finalize the annexation agreement with the city.
"I had 60 lots reserved with deposits," he said. "By the time we were entitled, people just walked from them."
Under the annexation agreement, annual payments of $875,800 were to be paid to the city each year beginning from the date of final plat approval, or when 35 percent, 55 percent and 85 percent of the parcels were sold, whichever came first.
Campbell's attorney, Jim Speck, said Monday night that his client had only $169,000 in an escrow account from lot sales.
"In this market we do not have the ability to pay the annexation fee," he said, adding that under the current agreement, Lot 73, which he estimated was worth $200,000, would not be transferred to the city. He requested a transfer of Lot 73 after 60 of the units are sold or in November 2010.
"Developing is a high-risk, high-reward business," Haemmerle said. "Under your proposal you shift all of that risk to the city. I agree that this is a bad economy, but I believe developers should be capitalized in case of bad economies."
"The city shares some of your pain, "City Administrator Heather Dawson said. "But our tax levies are applied to the price of land. Without the cash flows we expected into our capital improvement plan from this development, we are missing opportunities as well."
City Attorney Ned Williamson mentioned the planned sale of water rights from Old Cutters to the Valley Club golf resort as a possible means of negotiating with Campbell.
'This could possibly be a water, rather than cash, consideration," he said.
Williamson was instructed by the council to meet with Speck to see if an agreement can be reached between Campbell and the city by the next city council meeting on Nov 24.
