Wednesday, May 2, 2012

Doubts raised about Quigley study

Residents aim to poke holes in cost-benefit analysis

Express Staff Writer

The Quigley Canyon ranch property is currently used for agriculture. The landowners have said that if their annexation proposal is approved, some agriculture would remain on the site east of Hailey. Express file photo

Annexing and up-zoning some 1,000 acres of Quigley Canyon into the city limits of Hailey could be helpful for accommodating population growth over the next 25 years, or it could bring burdensome costs and unneeded housing density to a city facing an uncertain future.

Fiscal-impact expert Richard Caplan, of Caplan Associates in Kansas City, Kan., is charged with estimating the projected costs and benefits of quadrupling the number of allowable homes in Quigley Canyon. He will remain in the hot seat until noon today, May 2.

Caplan presented to the Hailey City Council by telephone Monday a cost/benefit analysis of a proposed 444-unit, 970-acre development in Quigley Canyon. The report, completed April 26, drew enough criticism from the public during the meeting that city officials decided to allow additional questions in written form until today.

Caplan Associates agreed to respond to the questions by Friday, in time to post them on the Hailey city website for public view. The next public hearing on Quigley Canyon will take place on Monday, May 7, at 5:30 p.m. The meeting will include a discussion of water rights associated with the proposed development.

The cost/benefit study assumes that Hailey's population will grow from 7,960 today to 14,935 in 2037, the year that Caplan expects developer David Hennessy's proposed development to be completely built out.

The study assumes that Hennessy's project will be developed and sold at a rate of 4 percent of its planned units per year and supply housing for 1,037 new residents, including 154 new Blaine County School District students. The study states that infill construction in existing city lots would provide housing for the remaining 5,838 new residents.

The Caplan study assumes a 1.5 percent annual growth rate in Hailey until 2015, followed by a 2.5 percent growth rate until 2037, ultimately consisting of 19 percent of housing development over the next 25 years in the city.

Caplan said that because of the housing market crash, the estimated value of housing units proposed for the canyon was adjusted down 31 percent from initial estimates given to him by Hennessy in 2009. That means less property tax revenue than was originally projected. Some people in the room claimed that the figures are still too high.

Hailey resident Bill Hughes said the Caplan study does not take into account the current number of vacant homes in Hailey or the high rate of foreclosures that have sent many residents into the rental market or out of the valley in search of work elsewhere. According to Blaine County Title Co., foreclosures last summer were occurring in the Wood River Valley at a rate of one per day.

Hughes also questioned Caplan's elimination of the cost of a needed new fire station from the total proposed fees that would be assessed to Hennessy if annexation is approved. Caplan said the city could go to a bond for the station, but had no other plan in case the bond failed.

Caplan proposed assessing about $6.7 million in annexation fees and development impact fees, a figure that could be decreased based on the value of an 1880 water right that the developer has offered to give the city if annexation is approved.

Hailey resident and development consultant Greg Travelstead questioned the viability of the entire Caplan study, based on alleged errors in the document that he pointed out Monday to the City Council, including a $700,000 discrepancy in the proposed annexation fees. Caplan admitted to that error during the meeting.

Travelstead also said the city of Hailey's existing water rights, which include a valuable 1880 water right, should be included in the assets that Quigley residents would be "buying into" under an annexation agreement. The inclusion of this asset in the Caplan formula could raise the amount of the fees.

"The city cannot rely on the study because dubious assumptions and outright errors make it unreliable for making a policy decision," he said.

Despite criticisms of the study, Caplan said he remained "99 percent comfortable" with it.

Also on Monday, the City Council reviewed a water rights appraisal that lists seven water rights appurtenant to Quigley Canyon, which would be given to the city under an annexation agreement and be worth between $2.2 million and $3.3 million.

Hennessy's attorney Evan Robertson said he will seek a higher appraised value for the water rights from appraisal firm West Water, because they are worth more to the city when used for purposes of mitigation, rather than for irrigation, as was assumed in the appraisal.

If the annexation is approved, Hennessy and his partners would gain the benefit of increased densities for the land. In exchange, he is offering the city not only the water rights linked to the land, but also public access to Nordic and hiking trails, and land that could be used for a public golf course.

Tony Evans:

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