Idaho Mountain Express: Old Cutters lawsuits upheld by court

Friday, May 4, 2012

Old Cutters lawsuits upheld by court

City of Hailey faces 2 actions over annexation fees

By TONY EVANS
Express Staff Writer

Two lawsuits filed against the city of Hailey last year by Old Cutters developer John Campbell have been allowed to proceed in federal bankruptcy court in Boise.

Campbell filed for Chapter 11 bankruptcy protection last August against $9.5 million in claims from Mountain West Bank and $2.45 million from the city of Hailey.

Citing "extortionate" annexation fees and an allegedly unlawful affordable-housing requirement, Campbell also filed a lawsuit in bankruptcy court against the city in December. The suit seeks a declaration that Old Cutters does not owe any more in annexation fees and cannot be required to provide deed-restricted affordable housing.

Mountain West Bank, a lender to the proposed subdivision, also filed a suit against the city claiming that the annexation and development agreement signed between Campbell and the city in 2006 is invalid. The agreement includes the annexation fees and housing requirement.

Hailey City Attorney Ned Williamson filed a motion to dismiss both lawsuits and the bankruptcy filing, but the motion was denied on April 20 by U.S. Bankruptcy Judge Jim D. Pappas.
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The city of Hailey claims Campbell still owes the city about $2.5 million in annexation fees.

Campbell said in an interview that he would provide the court with a financial plan for working through the bankruptcy proceedings at a hearing on June 25.

Williamson said the city could respond to Campbell's plan or make one of its own.

"That remains an open question," he said.

Tony Evans: tevans@mtexpress.com

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