Wednesday, May 7, 2014

Hailey made offer to end Cutters suit

Fritz Haemmerle


    The purpose of this letter is to explain why the city of Hailey appealed the Cutter’s decision. The Mountain Express headline on this matter was “Hailey plans to appeal Cutters ruling.” The headline could equally have read, “Cutters intends to sue Hailey again.”  I will explain.
    After the recent decision of the federal district court, the city offered to: (1) not appeal the decision of the United States District Court, thereby accepting the ruling that no further annexation fees were owed by Cutters; (2) pay Cutters all its attorney fees; and (3) in exchange, both sides would execute a standard mutual release agreeing not to litigate any other matter relating to the annexation of the Cutters subdivision.  If accepted by Cutters, Cutters would have received everything it received in court and been made whole.  

The city was sued by the Cutters developer, and the city had to defend.

    Instead of accepting this offer, Cutters informed the city that it intends to now sue the city over eight years later on an entirely unrelated matter involving development-impact fees and water and sewer connection fees worth about $816,000. Impact fees and connection fees are not annexation fees. These fees are paid by every new homeowner in the city and in many other Idaho cities when building a new home. Cutters desires to continue litigation on these fees, on the pretext that impact and connection fees were included as annexation fees, even though Cutters expressly agreed in the Annexation Agreement not to seek any credit for these types of fees against the annexation fees it agreed to pay. In pertinent part, the Annexation Agreement reads that Cutters “shall not be entitled to any credit for any obligation for an impact or capital facilities fee, hookup fee, building permit fee, [or] development impact fee … by virtue of the payment of annexation fees.”  
    To date, Cutters has negotiated major discounts on what it agreed to pay its bank (in excess of $5 million) and what it was excused by the court from paying (approximately $2.5 million). Instead of accepting these enormous monetary reductions, Cutters now wants even more extractions from the city in excess of $800,000. To protect the city from further lawsuits by John Campbell, the City Council and I believe it is reasonable to ask for a mutual release. Otherwise, the city will continue to be in litigation with the Cutters developer. Absent a mutual release of claims, the city is unwilling to walk away from its appeal, which we believe presents legitimate issues of first impression.
    I can assure the residents of Hailey that all four of the City Council members and I did not take the decision to appeal lightly. The Council members and I do not enjoy the adversarial nature of this process. We would much rather make our lives better by improving services, bettering our parks and improving our infrastructure, such as the aging sewer plant.
    The city was sued by the Cutters developer, and the city had to defend. It would have been an abject breach of our fiduciary duty to our citizens not to defend agreements entered into between the city and developers. The City Council and I offered to end litigation and to make Cutters whole. Unfortunately, Cutters wants more monetary relief and desires to be treated differently than any new homebuilder in the city. If Cutters merely agrees to abide by its previous word and accept the decision by the federal courts, the litigation can be concluded. 


Fritz X. Haemmerle, an attorney, is the mayor of Hailey.

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