Wednesday, May 4, 2011

Ketchum URA faces legal complaint

Attorneys leave open possibility for other defendants, including Starbucks


By REBECCA MEANY
Express Staff Writer

Attorneys for two Ketchum residents provided the Ketchum Urban Renewal Agency on Monday with a "courtesy copy" of a legal complaint against the URA, the Cairde Group, Tim Flaherty and Jane Rizzo. Attorneys said they intend to file a lawsuit against those parties.

The Cairde Group, including principles Flaherty and Rizzo, is in the process of negotiating lease terms with the URA to operate a Starbucks franchise in the visitor center on Sun Valley Road. The pending complaint contends that such a lease would be illegal.

During a URA meeting Monday, the URA board and the Cairde Group combed through a proposed lease agreement. The URA was set to meet Tuesday afternoon to consider approving the changes. The URA would then provide the revised version to the Cairde Group for review.

In the meantime, a group of business owners opposed to the idea appears to be moving forward with the legal action.

Jima Rice, president of nonprofit business-promotion group Jigsaw, and Lisa Rippo, co-owner of Java café, are named as plaintiffs, but the complaint leaves open the possibility for other plaintiffs to join the suit.

"At this point we're holding off [on filing the suit] because we want to get a consensus in the group, so everyone is completely on board," said plaintiffs' attorney Alexander McLaughlin, with the Boise law firm Davison, Copple, Copple & Copple, on Tuesday.

The complaint also leaves the door open for other defendants, including Starbucks.

"We were unsure as to the extent of their involvement in this process," McLaughlin said.

He said discussions during Monday's URA meeting reshaped that view, however, leading plaintiffs to believe Starbucks was "intimately involved" in negotiations.

"If Starbucks has a play in this, we would amend the lawsuit to name them as a party," he said.

McLaughlin said he doesn't expect any other changes to the document. The complaint submitted to the URA seeks a halt to the lease agreement between the agency and the Cairde Group and an injunction preventing the URA from permitting the visitor center to be used in any capacity as a private business. It contends that under the lease, the Cairde Group would be conducting private business in a public building, allegedly in violation of Ketchum code.

It also alleges procedural and substantive defects in the lease negotiations.

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"The Cairde Group followed all of the procedures in submitting our proposals as outlined by the [Ketchum Urban Renewal Agency]," reads a statement from The Cairde Group provided to the Idaho Mountain Express. "We understand that a complaint has been filed with the URA by the two other parties that submitted proposals in the bidding process, although to our knowledge no lawsuit has been filed. The Cairde Group's role here is as a potential tenant in this building trying keep Starbucks in town, and as such, we have no opinion on this complaint."

Heritage model of Starbucks

The Starbucks that the Cairde Group plans to open is the corporation's new "Heritage Model."

The Cairde Group would be operating the business as a franchisee, meaning it would be locally owned and operated. The proposed lease agreement states that the permitted use includes limited food and beverage.

"The investors in Cairde Group are excited to be a part of a plan to create vibrancy in the Town Square," said Jane Rizzo, on behalf of the Cairde Group, on Monday. "We are also excited that Starbucks is interested in having their new Heritage Model in our town. It is our view that this will draw significant traffic to the square."

URA board member Baird Gourlay took issue during the meeting Monday with those who he said were spreading rumors about the extent of food options available at the proposed Starbucks.

"Please stop," he said. "It's just not accurate."

Lease terms under consideration

The proposed agreement between the URA and the Cairde Group is a five-year lease, with two five-year options that the tenants can exercise, and the option for the URA to cancel the tenancy after 10 years. The board was set to review the negotiated terms Tuesday afternoon.

Base rent was proposed at $2,950 per month ($1.50 per square foot on the ground level and 40 cents per square foot for outside space on the Town Square). That doesn't include utilities, maintenance, snow removal and taxes. Rent would be recalculated if the Cairde Group wants to exercise additional lease options.

Real estate agent Ellie Ellis spoke during the Monday meeting, decrying the "abominably low" rent being offered to the Cairde Group. She also said there was nothing in the lease to prevent a full restaurant from functioning in that space.

Former Planning and Zoning Commissioner Anne Corrock told the board that if the URA is not paying taxes on the property, it's public land, and therefore cannot be used for private enterprise.

Speaking in favor of the plan was Brad King.

"I think you guys are making good progress," he said. "There is a lot of interest in seeing this become a successful project."

Rebecca Meany: rmeany@mtexpress.com




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