Wednesday, April 13, 2011

New deal for Old Cutters

Hailey accepts land in lieu of annexation fees

Express Staff Writer

After more than two and half hours of presentations, legal threats, name calling and apology-making between City Council members and Old Cutters developer John Campbell, the city of Hailey finally struck a new deal Monday evening regarding Campbell's financial obligations.

The council agreed to take ownership of eight residential lots in the Old Cutters subdivision in lieu of $2.5 million in annexation fees that Campbell owes the city. The council also agreed to strike from the annexation agreement with Campbell an obligation to build 20 community housing units, worth about $2 million.

The developer had already given the city water rights in lieu of $930,000 in fees owed to the city and renegotiated the terms of deed restrictions on community housing in the development to make his ends meet.

According to Campbell, the Monday deal was struck in the nick of time before "vulture developers" would have taken over the subdivision after it became foreclosed upon by a bank.

The council was split over the amendment, with Martha Burke and Carol Brown voting against it and Don Keirn and Fritz Haemmerle voting for it.

Mayor Rick Davis split the tie with a vote in favor of the new deal.

"No matter what, we are all partners in this," Davis said.

Davis recused himself three years ago from the council's consideration of other changes to the agreement with Campbell due to a conflict of interest. Davis works at Sun Valley Title Co., which has done business with Campbell in the past.

Brown and Burke said they didn't think Campbell's offer was enough to cover the impacts to the city when the development builds out.

Brown said she felt pressured to make a decision and was unhappy that Campbell did not disclose his financial position with his bank to the council before coming to it seeking a new agreement.

"I'm frustrated that I don't have more time," she said.

Campbell told the council that he was forbidden by his bank from disclosing financial details about his planned buyout of the loan for the development, a route that he plans to pursue with investors rather than going into foreclosure.

"I would get in big trouble," he said.

City Attorney Ned Williamson said Campbell was already in trouble for sending e-mails to Davis and Keirn last week that were "inappropriate" and spoke of Burke and Brown in a "derogatory manner."

Haemmerle called Campbell "an idiot" for sending the inflammatory e-mails to council members last week after they did not vote in favor of his request.

Following a presentation by Campbell and his attorney, Erin Clark, in which the developer threatened to sue the city over its community housing requirements and suggested that the annexation fees were "arguably illegal," Williamson suggested that the council enter into an executive session.

"Because the litigation has clearly been breached," he said.

The council declined to convene in private, instead taking public comment. About 60 people had gathered in the council chambers.

Todd Conklin, the listing real estate agent for Old Cutters, spoke in praise of Campbell, saying the real estate business had changed dramatically in the years since the original annexation agreement was struck.

"It used to be a whole lot easier and fun than it is today," Conklin said. "That day is gone."

Architect Jolyon Sawrey also said the city should meet Campbell's request.

Hailey Planning and Zoning Commissioner Geoffrey Moore said altering the negotiated agreement during tough times would send the wrong message to the community.

"This is 100 percent about helping them get out of poor speculation," Moore said. "We [he and his wife] have been through three recessions and never asked for help."

Moore's wife, Cindy, said Campbell was set to make $60 million dollars when times were good and that the city should not reduce annexation fees for the developer when many others in the community had also lost a lot of equity on real estate during the recession.

"Your obligation is to us," Cindy Moore said to the council.

"Join the club," she said to Campbell.

But Keirn said the city's taking a stake in the development to avoid foreclosure and satisfy the desires of Campbell's partners was the only option.

"We have to hold our noses and go for it," he said.

Tony Evans:

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