Old Cutters subdivision developer John Campbell has agreed to convey a portion of an 1883 water right worth $930,000 to the city of Hailey in lieu of cash he has owed it since November. The deal was praised by City Council members who have been both at odds with Campbell over his debt to the city and worried about the security of the city's water supply.
Old Cutters, a 146-acre subdivision, was annexed into the city in 2006. Campbell planned to sell lots for 102 single-family homes, 20 duplexes and 27 town homes. One in five units was slated for workforce or income-restricted community housing.
After paying the first installment of $3,787,500 in annexation fees to the city, Campbell fell behind in November when the real estate and credit crisis gripping the nation caused many prospective buyers to walk away from deposits made on lots in Old Cutters. To date the developer has sold 18 market-rate lots. The developer had hoped to pay the annexation fees in amounts of $50,000 per lot as groups of lots sold, rather than by annual payments.
Campbell tried to sell the water right from Old Cutters to estate lots at the Valley Club north of Hailey. When the Indian Creek Ranch Owners Association and Big Wood Canal Co. objected to the sale, City Attorney Ned Williamson and City Councilman Fritz Haemmerle seized the opportunity to attempt to secure the water for the city of Hailey.
On Monday the City Council agreed to take about half of the water Campbell had hoped to sell to the Valley Club estates, perhaps using it eventually to shore up water rights for the city. The rest of the water will be sold to the Valley Club estates.
In exchange, Campbell will be given full credit for his November annexation fee installment of $883,962 (including interest) and partial credit of $46,037 against the next installment, due in November 2010.
"The deadlines for paying annexation fees have been pushed back, but none of the fees have been waived," said Fritz Haemmerle on Monday. "I can stand behind this because it is a benefit to the city of Hailey."
A memo sent to the Idaho Mountain Express on Tuesday by the city of Hailey stated that "the fees may be made at a quicker rate than required under the (new) annexation agreement because the developer has agreed to make $50,000 payments per lot sales on the very next lot sold."
The early date of the city's new water right, 1883, marks it as a valuable asset. When conjunctive water rights management comes to town, perhaps within the next five years, the city's water rights for wells used during summer, dating from 1960 to 2001, may have to wait in line behind many water rights within the Big Wood River Basin dating from the 1880s.
Conjunctive management is an innovative regulatory practice that manages surface water, or irrigation water rights, along with groundwater, or well-pumping rights. When priority dates of the two kinds of water rights are managed together, the well user typically loses if the water is used for "consumptive uses," such as watering lawns.
Tony Evans: tevans@mtexpress.com
