Times are tough for real estate developers and nowhere is this more apparent than in the city of Hailey, where developers are hoping to renegotiate development and annexation agreements with city officials. Representatives of Sweetwater town homes and Old Cutters subdivision showed up at Hailey City Hall on Monday to seek financial relief from agreements struck with the city during sunnier times.
Tennessee developer J. Kevin Adams suspended operations in October on Woodside subdivision's 421-unit Sweetwater Community, the largest residential community ever planned in Blaine County.
Only 49 of the units have been completed, along with the exterior "shells" of another 22 dwellings. None of the units has sold. Ten are designated as deed-restricted affordable housing.
Attorney Jack Magids traveled from Tennessee on Adams' behalf to ask the council for concessions that he claims will jumpstart the development and provide an instant inventory of "affordable housing" in the city—meaning that the units will be offered for sale at discount prices, if and when he can finalize his plans with the city.
"The only way we are going to sell these units is to dramatically reduce the price of them," he said.
Magids requested a $2.3 million break on payments the developer agreed to make when the project was approved several years ago. He is also seeking a six-month extension on final plat approval, a 10-year extension on phasing for construction of future units, and reduced obligations to pave streets and irrigate landscaping within the development.
Magids also requested an opportunity to grade 2.6 acres of land and channel drainage on the property to remove possibly contentious floodplain issues with the city, which could encumber possible sale of the property.
In addition, Magids requested that agreed-upon $1,000-per-unit fees associated with parks development be paid at the time of sale, rather than when final plat is granted.
Councilwoman Carol Brown said several of the requested concessions were reasonable, but expressed shock at the idea of the city's losing $2.3 million.
"You don't have that money today and you are looking at never having it," Magids replied. Attorney Jim Laski, who also represented Adams at the council meeting Monday, said the alternative to working out a deal with the developer would be bank foreclosure on the property.
"If that happens no one knows what will happen to it," he said.
The developer owes the city $165,000 for the cost of building a traffic signal on Highway 75 and Countryside Boulevard, money that Magids hopes to get reimbursed from the Idaho Transportation Department.
Mayor Rick Davis said he will await a written list of concession requests from Magids before continuing discussion on a possible renegotiation of terms.
"We will hold public hearings on this," he said. "The developer is basically asking for the citizens of Hailey to become partners in this development."
Old Cutter's subdivision developer John Campbell was also present at Monday's meeting, requesting final plat approval for seven town homes that are nearing completion in the planned 149-home development. Campbell said the town homes will receive "certificates of occupancy" within two months, but that he was "embarrassed" to learn on Monday that at least one is already inhabited, in violation of city law.
Five of the seven town homes are designated as deed-restricted workforce housing, a fact that Campbell used to argue for final plat approval.
"I have people waiting to purchase these affordable-housing units," he said.
Yet the developer was denied final approval until he resolves an outstanding debt to the city of $875,800 in annexation fees, which came due in November.
The payment would have been the first of four annual payments that were expected to bring the city a total of $3.87 million in annexation fees.
Campbell said buyers were waiting for the affordable housing and that the city was "holding the units hostage" by keeping him from acquiring final plat approval.
Council members Don Kiern and Fritz Haemmerle both spoke against approving Campbell's further applications until he meets his financial responsibilities to the city.
"You are flat-out in breach of contract," Haemmerle said.
Tony Evans: tevans@mtexpress.com
