The Ketchum City Council turned to an atypical compromise Monday for the way an out-of-money developer satisfies the city's community-housing fee.
After much discussion over the details, the council unanimously decided to let Sam Williams—developer of the mixed-use building on Sun Valley Road housing Mountain West Bank—satisfy his $795,000 outstanding community-housing fee by selling an apartment to nonprofit ARCH Community Housing Trust at the discounted price of about $540,000.
ARCH Executive Director Michelle Griffith said the two-bedroom, two-floor unit is currently worth $1.2 million, a number Williams said he agrees with.
Ketchum won't have to put up a cent, but Griffith said ARCH would be taking out a loan to buy the unit and is depending on the market's recovering in two years for the apartment to then be sold at a profit. When it's sold, ARCH will receive the $540,000 used to buy the property and the profit will be split between ARCH and the city. Both groups would then use the money for community housing.
But if the city doesn't recover the total money owed, Williams would still be on the hook for the remainder.
Mayor Randy Hall said the city is reverting to such an unusual effort because of the "Great Recession."
"The downturn in the economy has affected all aspects of our city," Hall said, "including the in-lieu housing payments from developers."
Williams said construction was completed last year but he has struggled to sell units. He therefore doesn't have the money to pay the fee by the December 2009 deadline.
"The late payment is a direct result of the economic downturn," acknowledged Lisa Horowitz, director of Community and Economic Development.
The building has eight two-bedroom units, one studio and commercial space on the first floor. Williams said he couldn't simply give a unit to the city because they're all high-end and out of reach for community housing.
In searching of an alternative method of payment, Horowitz said the city approached ARCH to brainstorm an alternative. This is what they came up with. Hall said including a third party is good for the city.
"The solution crafted for this project avoids risk for the city," he said.
Griffith agreed in an attempt to sway the council on Monday.
"The city isn't investing anything," she said, "but salvaging."
But the outcome of this venture depends on the housing market's improving, something Williams said he's already seeing.
The Sawtooth Board of Realtors reported 24 residential sales occurring from Jan. 1 to Feb. 11, compared to 10 during the same time span of 2009. That's a 140 percent increase in units sold, but the dollar amount of those sales is even more encouraging. The sales amounted to $17.6 million, a 283 percent increase over the $4.6 million in sales during the same period last year.
A single mother has already rented the apartment for the two-year period that ARCH will be holding it.
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