The Ketchum City Council bestowed final approval upon the proposed Bald Mountain Lodge on Monday, while giving developers $6.6 million in incentives to build the Main Street hotel by January 2015.
The decision opens yet another chapter in developers' efforts to build a luxury hotel on the city block between First and River streets. The current ownership group is the third in the last 10 years to apply for approval of a hotel on the site.
Deliberations over the proposed 87-room hotel—with 26 additional residential units—had been held up for weeks because developers didn't want to provide a single employee-housing unit. But the city requires 23 units, somewhere in town, for a hotel of this size. And the council wasn't willing to ignore the city ordinance or need.
On Monday, the council and builders left their trenches and met in the middle, arriving at a timeline the council felt comfortable approving and builders felt would be fair. Under the timeline, the longer developers wait to build, the less financial help the city would give.
To receive the most incentives, developers need to apply for a building permit in 2011 for the hotel to start construction by June 2012 and to finish building by January 2015. Developers would then be waived of $2.76 million in employee-housing fees. And the Ketchum Urban Renewal Agency would give developers half the property-tax revenue generated from the project or $1.5 million, whichever is less, to pay for surrounding infrastructure such as sidewalks.
When those two amounts are added to the $2.36 million in community housing that the city isn't requiring, developers have a $6.6 million incentive to build by January 2015.
After that, the incentives sharply drop off. Councilman Curtis Kemp said the city's intent is to persuade developers to start building as soon as possible.
If developers apply for a building permit in 2012, start construction by December 2013 and complete it by July 2016, half their employee-housing requirement would be waived, meaning they'd have to pay $1.38 million to the city. But they'd still get the same amount from the URA and not have to provide community housing, giving developers $5.2 million of incentives to build by July 2016.
If developers don't meet that deadline, they'd be on the hook for all 23 housing units or the equivalent $2.76 million in employee-housing fees. And they wouldn't get a cent of URA money.
"There's significant incentive to move early on this," Kemp said. "Then it goes away."
Councilman Larry Helzel agreed, and said the sharp drop-off of incentives is only fair, especially after developers' claims that they're the only "viable" hotel project in town, that they have the money in hand to start building and that they're "ready to go."
"It's time for this council to let this applicant put its shovel where its mouth is," Helzel said.
Helzel said developers need to back up the repeated assertion that they're the "great economic hope of the city of Ketchum." And, he said, the city is giving developers a chance to do so by waiving all housing requirements and providing URA money.
However, Councilwoman Nina Jonas contended the city is giving builders too many incentives. She said the employee-housing fee waiver was enough, and developers shouldn't be given URA money in addition.
"I don't even know how we got to this point," she said. "We're losing money now."
Jonas claimed that giving $1.5 million in URA money would mean a "deficit" for the city for this project.
The other council members disagreed.
Councilman Baird Gourlay said the URA isn't losing money because this $1.5 million wouldn't be received at all if the project weren't built. He said the money would come from property taxes the URA would collect by the property's value being increased. With no approval and no construction, the URA's profit would be zero. Plus, he said, $1.5 million is only half the amount that the hotel is projected to produce for the URA. He said it's a benefit, not a loss.
However, Gourlay couldn't convince Jonas, and the hotel was approved by a 3-1 vote.
Trevon Milliard: email@example.com