After striking a deal with the Hailey City Council earlier this month that would have allowed him to begin selling his Sweetwater townhouses, Tennessee developer J. Kevin Adams stormed out of the council chambers Monday, apparently headed toward foreclosure.
He left the meeting, and control of a sizeable development, rather than close the door on a potential lawsuit against the city over its affordable housing ordinance.
"You're going to wind up with a New York lawyer one day here who is going to make it very difficult for you," Adams warned the council as he left.
He was referring to a 2008 court decision handed down by an Idaho 4th District judge that ruled that a similar affordable housing ordinance in McCall, requiring that 20 percent of all new development must be set aside for deed-restricted housing, was unconstitutional and amounted to an illegal tax.
"I think a New York lawyer may find it difficult to operate here, too," replied Councilman Don Keirn.
The heated exchange followed a unanimous decision by the council to deny final plat approval for the development because Adams, represented by attorney Jim Laski, refused to waive potential legal challenges to the city's affordable housing requirements.
Sweetwater is the largest planned residential development in Blaine County's history. Plans call for construction of 421 units on the 21-acre property in Woodside. However, only 49 units were completed before the collapse of the housing market in fall 2007.
Laski said Monday that a deal to which the council had agreed on Nov. 11 only called for abandoning potential legal claims to a $1.77 million River Street property that Adams deeded to the city several years ago as part of his original development agreement.
City attorney Ned Williamson said the deal had also included removing the possibility of any litigation regarding other affordable housing requirements, including $2.23 million in cash in-lieu fees and construction of 40 on-site, deed-restricted units.
Laski said Tuesday that the council had been "dishonest" and changed the terms of the Nov. 11 agreement.
"The banks are going to drain the water in those units and turn them off," Laski said.
Adams suspended operations in October 2008, owing the city about $180,000 for a traffic light on state Highway 75. Until Nov. 11, he also was required to pay $71,000 in park fees before receiving final plat approval for 49 completed and 22 uncompleted units.
Final plat approval is required before he can begin selling the townhomes, located on the corner of Woodside and Countryside boulevards.
Adams told the council last month that he has lost tens of millions of dollars on the $200 million development since the housing crisis began and that he is facing foreclosure on undeveloped portions of the property on Nov. 30.
Earlier this month, the council had worked toward a deal with Adams that it hoped would jumpstart sales of the units and enable further development of the property, rather than have it become bank-owned.
That all changed Monday.
"I'm done," said Adams, who left the council in a huff.
The council expressed regret over his decision, but would not be swayed.
"Leaving the door open to a lawsuit is the stupidest thing we could do," said Councilwoman Martha Burke.
Tony Evans: tevans@mtexpress.com
The units at Sweetwater remain empty long after the first phase of construction was completed. Photo by Mountain Express
