Wednesday, November 26, 2008

Hailey waits for its money

Lawyers meet privately to negotiate

Express Staff Writer

The city of Hailey has granted an extension for payment of $875,000 in annexation fees for the Old Cutters subdivision that were due this Friday. The extension was granted while negotiations with developer John Campbell continue on resetting the agreement's terms.

The 116-lot subdivision, located east of Hailey, was annexed in November 2006, after three years of negotiations. Only a handful of the lots have homes on them.

Earlier this month, citing a "calamitous" economy, Campbell requested changes to the terms of the agreement during a City Council meeting Nov. 10.

After the council denied Campbell's request, City attorney Ned Williamson was instructed to confer privately with Campbell's attorney, Jim Speck.

"We will hear from him if and when they work something out," Mayor Rick Davis said Tuesday.

After granting the payment extension Monday night, the City Council tabled further discussion of the annexation agreement to a date uncertain, following a request by Williamson, who called the situation "complicated."

Councilman Fritz Haemmerle contended that the changes Campbell is after would have shifted the financial risk of the development from the developer to the city of Hailey.

Friday's fee payment would have been the first of four annual payments expected to bring the city a total of $3.87 million in annexation fees. Campbell has already paid about $300,000 in fees, and has completed all but $20,000 of $200,000 worth of infrastructure projects due for completion two weeks ago. The council on Monday granted him another year to finish the improvements.

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 has sold only 13 lots. He also said it took three times longer than he had expected to finalize the annexation agreement with the city, and that city officials knowingly over-charged him for the projected fiscal impacts his development will have on the city.

Campbell has requested an alternate plan that replaces the payment of $875,800 with payments of $50,000 to the city for each lot sold in the subdivision.

He told the Express earlier this month that his new arrangement would not decrease the amount of annexation fees, only the timing of the payments.

Speck said during the Nov. 10 council meeting that his client had only $169,000 in an escrow account dedicated to pay the annexation fees.

"In this market we do not have the ability to pay the annexation fee," he said.

He also said a parcel known as Lot 73, which he estimated was worth $200,000, would not be transferred to the city, as originally agreed if 55 percent of the lots were sold in the first year. Speck requested a transfer of Lot 73 to the city after 60 percent of the units are sold or in November 2010.

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