Several years ago, Sweetwater Community in the Woodside subdivision of Hailey was on its way to becoming the largest planned residential development in Blaine County's history. The 421-unit development on the corner of Woodside and Countryside boulevards would cover 21 acres with colorful townhouses, a commercial and retail space, an outdoor pool and a grassy park.
Today, the property lies in foreclosure. It is uncertain when anyone will live there.
Cadence Bank in Memphis, Tenn., postponed the date of a foreclosure auction on about 14 acres of undeveloped land at Sweetwater until Dec. 29, perhaps in the hope of finding a buyer for the property, or salvaging a deal with Hailey. Cadence Bank representatives said the bank's official response to questions about Sweetwater was "no comment."
"There are plenty of examples of foreclosed properties in the U.S. right now, sitting vacant and dilapidated," City Attorney Ned Williamson said. "I don't know if that will happen with Sweetwater. It will depend on whether or not the (potential) new owner can manage the property properly."
Only 49 of the planned 421 units were completed before Tennessee developer J. Kevin Adams suspended operations in October 2008. Since that time he has been in arrears on payments to the city of Hailey and at odds with the city over agreed-upon affordable housing requirements.
Last month, the Hailey City Council agreed to defer $250,000 in fees owed by the developer, as part of deal that might have jump-started sales of the completed townhouses. The deal fell apart when Adams refused to close the door on a potential lawsuit against the city over its affordable housing ordinance.
Sweetwater attorney Jim Laski said the deal, agreed upon in council chambers 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 for construction of affordable housing as part of his original development agreement.
Williamson contends that the deal 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 at Sweetwater.
"They want us to give them everything," Mayor Rick Davis said. "All we want is the guarantee that they won't turn around and sue us for more."
Josh Fields, a manager at AmeriTitle in Ketchum, the company that holds the title on Sweetwater, said the standoff could last awhile.
"Only the bank can extend the foreclosure period, but they can do this indefinitely," Fields said.
The scheduled foreclosure sale would be for land valued at $11 million, but Fields said a foreclosure auction would typically start the bidding with 80 percent of that, or $8.8 million.
"The buyer must have cash. But there are not many people right now with that much cash," he said.
Williamson said he has not spoken with Cadence Bank but has been in contact with one of the other three banks involved with Sweetwater, but only to restate the City Council's position—that Hailey will not grant final plat approval until Sweetwater agrees to waive potential legal challenges to the city's affordable housing requirements.
Sweetwater townhouse units cannot be sold without final plat approval but they can be rented, Williamson said.
Laski said the next likely step for Sweetwater will be bankruptcy court.
"The community housing issue will likely be settled in bankruptcy court where everything will be on the table, including River Street," he said.
Tony Evans: tevans@mtexpress.com
