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Wednesday, November 25, 2009

Sweetwater deal blows up

Developer refuses to rule out lawsuit


By TONY EVANS
Express Staff Writer

The units at Sweetwater remain empty long after the first phase of construction was completed. Photo by Mountain Express

After striking a deal with the Hailey City Council earlier this month that would have allowed him to begin selling his Sweetwater townhouses, Tennessee developer J. Kevin Adams stormed out of the council chambers Monday, apparently headed toward foreclosure.

He left the meeting, and control of a sizeable development, rather than close the door on a potential lawsuit against the city over its affordable housing ordinance.

"You're going to wind up with a New York lawyer one day here who is going to make it very difficult for you," Adams warned the council as he left.

He was referring to a 2008 court decision handed down by an Idaho 4th District judge that ruled that a similar affordable housing ordinance in McCall, requiring that 20 percent of all new development must be set aside for deed-restricted housing, was unconstitutional and amounted to an illegal tax.

"I think a New York lawyer may find it difficult to operate here, too," replied Councilman Don Keirn.

The heated exchange followed a unanimous decision by the council to deny final plat approval for the development because Adams, represented by attorney Jim Laski, refused to waive potential legal challenges to the city's affordable housing requirements.

Sweetwater is the largest planned residential development in Blaine County's history. Plans call for construction of 421 units on the 21-acre property in Woodside. However, only 49 units were completed before the collapse of the housing market in fall 2007.

Laski said Monday that a deal to which the council had agreed on Nov. 11 only called for abandoning potential legal claims to a $1.77 million River Street property that Adams deeded to the city several years ago as part of his original development agreement.

City attorney Ned Williamson said the deal had also included removing the possibility of any litigation regarding other affordable housing requirements, including $2.23 million in cash in-lieu fees and construction of 40 on-site, deed-restricted units.

Laski said Tuesday that the council had been "dishonest" and changed the terms of the Nov. 11 agreement.

"The banks are going to drain the water in those units and turn them off," Laski said.

Adams suspended operations in October 2008, owing the city about $180,000 for a traffic light on state Highway 75. Until Nov. 11, he also was required to pay $71,000 in park fees before receiving final plat approval for 49 completed and 22 uncompleted units.

Final plat approval is required before he can begin selling the townhomes, located on the corner of Woodside and Countryside boulevards.

Adams told the council last month that he has lost tens of millions of dollars on the $200 million development since the housing crisis began and that he is facing foreclosure on undeveloped portions of the property on Nov. 30.

Earlier this month, the council had worked toward a deal with Adams that it hoped would jumpstart sales of the units and enable further development of the property, rather than have it become bank-owned.

That all changed Monday.

"I'm done," said Adams, who left the council in a huff.

The council expressed regret over his decision, but would not be swayed.

"Leaving the door open to a lawsuit is the stupidest thing we could do," said Councilwoman Martha Burke.

Tony Evans: tevans@mtexpress.com


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There are 32 comments


The comments below are from the readers of mtexpress.com and in no way represent the views of Express Publishing Inc.
jay
11/27/09 - 16:28

The real problem is the fact that the city attorney is absolutely incompetent and incapable of giving the council sound guidance. We will have Ned Williamson to thank for the years of legal bills to come.. Oh and let's not forget friend Fritz whose ego is only matched by the depth and breadth of the size of the list of personal agenda items we must listen to ad nauseum. Lets face it they have always felt they can write and change rules at their pleasure. Heaven help us, these fools certainly won't

Aj
11/27/09 - 06:20

It's really too bad Hailey is throwing this project to the dogs, and I don't mean the New York lawyers. As is happening all over the country, once the banks take over Sweetwater the entire site will fall into disrepair; the landscaping with cease, the snow plowing will stop and any signs of life will disappear. Hailey really screwed the pooch on this one, all in an effort to collect a few bucks protecting their illegal, low income housing provision. I know everyone sees the obvious outcome too all this, I just can't understand why the City Council and the outspoken, normally level headed Keirns's could push this so far as to let all side lose. There are no winners if the project continues down this path. But there will be lots of losers, most noticeably the citizens of Hailey. Oh well...at least we'll get to watch the long, drawn out, expensive lawsuit empty the cities coffers, I'd guess a million in legal fees would be a good start. Fortunately the Council is not afraid to stand it's ground, so the entertainment value of the lawsuit should last for a number of years. Yep, nice work on the Council's part....somehow I think it might have been smarter to give this Adam's character a little room to breath. It wouldn't have cost the City a penny, but now...it not only going to get very, very expensive, but the project will never be finished and the existing homes will be a blight for years too come. It's just so stupid that a few big ego's let this disaster happen. Maybe with the next election cycle we can find some new council members who have the citizens of Hailey's best interest in mind, and are wiling to compromise instead of fight. A battle of this proportion is futile, and as always, will end in the compromise that should have happened in the first place.

Reply to Aj
boise bronco
11/27/09 - 06:50

Hailey just does not understand the shallowness of its Council. One of the council ladies says it would be stupid to let Adams sue the City. OK -- and why would Adams be suing the City? Because the City has extracted money from the developer based upon an unconstitutional affordable housing ordinance. This lady should know better; and how about the lawyer on the council. Wouldn't you expect him to stand up and say no matter how short on money Hailey may be, we must conduct our business so that people who come to Hailey will have confidence in our integrity?

All of this highlights the real issue -- Hailey has not managed its finances very well and cannot return the money it illegally took from Sweetwater. And to think that the Council thinks that the citizens are not going to find out about their tactics?

dog bob dog
11/26/09 - 11:19

cry me a river, if it worked how much $ would have you turned around to Hailey ? some plans are thought thru --- yours!!!!!! GO HOME

hmm
11/25/09 - 21:21

While we should have no sympathy for Mr. Adams, why is our city in a position to be bargaining against lawsuits? Both parties should have seen the inevitable litigation coming, due to prior rulings within this state. The developer signed a contract he should uphold, but Hailey should loose the ridiculous "affordable" housing ordinance. Sun Valley (city) spent a lot of dough loosing this fight years ago and it sounds like McCall did too.

perry mason
11/25/09 - 20:30

This guy Adams must not be too bright. He has a real good local lawyer who he insults by threatening to bring in a "New York" lawyer.

By by Midlle Class
11/25/09 - 20:22

It is amazing the hatred and disrespect for and Independent Self motivator who obviously was very fortunate in life with wonderful success being dissed over the economical failures created by politicians bent on breaking the American Middle Class of this nation, (Clintons NAFTA-GATT) (Bush WARS) (Now OBama Cap and trade-and forced health care).. By utter fools. This free market system is being wiped out. No Middle Class no Country, no Freedom, no opportunity for the advancement in life as this person had for your selves. Of course I doubt any independent private business owners are lambasting J. Kevin Adams in this thread, most likely it is a bunch of Employee mentality's who never risked anything to get ahead in life..I suggest they go enjoy their futures, picking cotton for the government, go watch the soup bowl lines and perhaps you appreciate the dying breed of Independent Middle class self motivators more..

Reply to By by Midlle Class
kw – hailey
11/26/09 - 07:12

"Independent middle class motivator" or greedy, thoughtless, insensitive, wannabe upper class, over my head, out of my league, stupid-----, out of town, developer?

Reply to By by Midlle Class
kw – hailey.
11/26/09 - 08:46

"employee mentality"? Does that have to do with "honest" work for a living (not all of us need to be rich), the American work ethic, or just not being above getting ones hands dirty?

Reply to By by Midlle Class
By by Midlle Class
11/26/09 - 12:27

So becoming self employed and controlling my own destiny and how much I make is dishonest, giving nine people a job is dishonest, The accumulation of $250,000 in tools and equipment is dishonest.. So the selfish boss you work for is dishonest.. People like you should work for the government then, they'll never ever be dishonest..
Dollar Will Collapse at The End of 2010
www.youtube.com
Get ready to learn some very hard lessons.. Sleep Walker !!!!

lots-o-litigation
11/25/09 - 20:11

because of lawyers, doctors wont even help people injured in a wreck or dying of a heart attack. hey lawyers , are you happy with your stinking legacy?

Reply to lots-o-litigation
By by Midlle Class
11/25/09 - 20:29

Who has been stealing us blind ? Bankers have. Lawyers have. I dare say the Hailey Council was influenced by the bank to change their decision to work with Adams on this deal... The bank waltz's off with Adams money, all the work done, for their initial loan. Once again the bakers make a killing.. They own this nation and they would sell it out from under us to China... They would sell their own mothers..

George Martin, Jr.
11/25/09 - 20:04

While many of you may not like Sweetwater, the developer, the prices, the color, the location, etc., you haven't seen the likes of what a normal failed project looks like.

This developer has done an excellent job of maintaining the exterior why the units sit unsold and vacant.

He has had landscaping crews maintain the grounds, plant new flowers and make the project look as good as it can be while trying to work through the various issues, including the economy.

This all takes money and lots of it. From the landscapers bills, water, electricity, etc.

I haven't studied all the issues, but it appears that the end result will be a terrible outcome for all parties involved.

Being a builder and/or developer is a very high risk business. Recently some of the best, most seasoned and reliable builders in the Seattle area have gone bankrupt. Many of these industry leaders have been in business for more than 30 years.

Having any project go back to the bank normally doesn't have a happy ending.

I was active in the real estate market when the prime hit 21% and saw similar things happen. Even helping, consulting and working directly with the banks never had as good of outcome as working with the builder/developer that had the original vision and desire to make it a success.

Say what you want, point fingers at who like, this isn't a positive story for our community.

Hopefully the bank won't let it turn into a slum - but if they can't get final approvals either the units will sit vacant.

Cash is currently king and chances are the bank will hold on to theirs versus maintain the property in it's current condition. Only time will tell.

No joy should be had by this story as it serves no benefit to anyone.

Webster – Hailey
11/25/09 - 18:36

so sad for Hailey....all the surrounding cities around us have been blessed with progressive leadership from developers who have taken a risk to build projects that have brought jobs for their people and revenue from visitors and class to their communities...and look who we have leading our pitiful city..we aren't going anywhere..What future developer will ever come here ? We are an ungrateful, ignorant ,flawed, dishonorable, stagnant community of people. I may have to move to Bellevue, SunValley or Ketchum.

boise bronco
11/25/09 - 16:56

How did Adams come to Hailey in the first place? My bet -- he got snowed by someone who lives here. Then he puts his money where his mouth is and builds units based upon information he got from where? Hailey, of course. Then the economy turns sour.
The City has ripped these people off big time. Why should Hailey return the $1.7MM to Sweetwater the City hustled off of them and cancel all of the affordable housing provisions in their agreement?
1. The economy has certainly driven the value of Sweetwater units down making them "affordable". Adams has publicly stated that he plans on selling these units at a fraction of their orgiinal asking price;
2. The Hailey affordable housing ordinance is just like other Idaho town ordinances that have been ruled "illegal" as being unconstitutional. The Hailey City Council should stand up and say "We should have never asked for the affordable housing commitments in the first place since we now know doing so is "wrong".
Hailey should make every effort to keep Sweetwater? It's the least Hailey should do since Hailey received a property with a value of $1.7MM from Sweetwater three years ago that Hailey should have given back the minute Idaho courts ruled the ordinance unconstitutional.
And what about the future of investment into Hailey? If I were a developer, I would run the other way rather than deal with the likes of the City Council and its attorney.
Real amateurs.

Scott Phillips
11/25/09 - 13:55

This Sweetwater disaster was pretty much inevitable.
An economist I am not but I am fairly good at "connecting the dots." Please consider the "dots" below. 1. Bank of Idaho failed last spring. 2. Many homes in the valley in foreclosure and new homes built not selling. 3. People having real difficulty finding jobs. 4. Now, the complete collapse of Sweetwater. Add it all up and it says "STOP."
Some of the fat cats and boosterism rah rah good ol boys are still in denial but the Wood River Valley is feeling the effects of the national and global economic downward spiral. No, we are most decidedly not recession proof.
We cannot get ahead of the curve on this MESS with the failed boom and bust policies of the past that have obviously failed. The dark economic climate will be with us for a considerable number of years and it is absolutely not the time for Hailey City Government to make a horrendous blunder and annex Quigley Canyon. It would be an economic and environmental disaster. Wrecking the last undeveloped side canyon in the Wood River valley would be a travesty.
Perhaps the silver lining in the Sweetwater debacle will be that it is incontrovertible proof City Governments must put the brakes on and deal with the new realities. Time for progressive new thinking.

Reply to Scott Phillips
cn – Hailey
11/25/09 - 15:19

Scott,
that was very well stated,nice!

Noelle
11/25/09 - 11:30

No, people do not have a right to affordable housing. And people do not have a right to own a home. If you want to own a home or you want to live in a nice place, work hard. I did. I worked 3 jobs for many, many years to buy my house. I got a 30 year fixed mortgage that I could afford. I had roommates to help pay my mortgage. I did not by a bunch of toys or a new car or travel or have kids. We live in a society which rewards hard work and smart decisions. Live with the decisions you make and don't blame others for your poor situations.

Reply to Noelle
B.R.
11/25/09 - 12:12

Noelle,
I wish everyone had your ethics! I have a very similar story. And I never depended on anyone else for my success. You did what you had to do to make things work.
Walk tall!

Noelle
11/25/09 - 11:30

No, people do not have a right to affordable housing. And people do not have a right to own a home. If you want to own a home or you want to live in a nice place, work hard. I did. I worked 3 jobs for many, many years to buy my house. I got a 30 year fixed morgage that I could afford. I had roommates to help pay my morgage. I did not by a bunch of toys or a new car or travel or have kids. We live in a society which rewards hard work and smart decisions. Live with the decisions you make and don't blame others for your poor situations.

MFM
11/25/09 - 11:08

I hope Adams goes bankrupt, what a loser, go back to Tennessee and don't come back. SweetWater is lame, horrible location, no one is going to buy those for the outrageous prices he has listed.

Reply to MFM
frank – Hailey
11/25/09 - 20:43

You are the loser you big slob

Idaho Native
11/25/09 - 09:37

It's no doubt that we are in this situation... City politics are keeping the people paying higher and higher rent. I wonder how many people are going to be living in tents and trailers in the near future! We finally get some extra housing in the valley then the politics shoot it down. Maybe we should check our aim!

Reply to Idaho Native
cn – Hailey
11/25/09 - 09:55

Are you serious? the paper is filled with rentals,Rental rates are a directly related to real estate/supply&demand.Rentals rates are way down right now.
Did you think this extra housing was going to be given to you for free?
Stop depending on others for your existence!

Tennessee Jed – Sweetwatersville
11/25/09 - 09:27

Dont let the door hit you on your way the %^&%$ out of our sweet valley . People from Tenneessee should not be developers nor should they live here . You better head back .Today would be nice ........

Duh
11/25/09 - 08:37

Mr. Adams signed off on this deal before he broke ground. Someone (maybe his lawyer/liar) should let him know that the court will throw out his lawsuit on the grounds that he made the agreements. He can not then go back and sue after the fact. He should have done so BEFORE he signed off on it. He entered into a crontract and then reniged, for whatever reason.
He will throw good money after bad as I am sure some lawyer/liar will convince him he has a case. That's what lawyer/liars do!

Oh really?
11/25/09 - 08:30

Mr Adams (former Tennessee Titan),

Ha, ha.
Can you say "Idaho Range Justice"?
Now just go away, don't come back another day.

Reply to Oh really?
GFY
11/25/09 - 18:48

You must like living in a hut with your potatoes. Progress must be scary to you.

jk – Bellevue
11/25/09 - 07:41

another unfinished housing development eye-sore. Lets anex more property so this can happen again elsewhere.
This was a bad plan from the start. And I sick of hearing about affordable housing in the valley. SHOULDNT WE ALL BE ABLE TO HAVE AFFORDABLE HOUSING!!!
I agree with kw. a spud field would look better that that "project"

cn – Hailey
11/25/09 - 07:10

So now its the councils fault for YOUR bad business decision? Bye!

kw – hailey.
11/25/09 - 07:00

Where`s he getting the money for this hot-shot lawyer? Personal stash? Let`s burn Bitterwater and grow spuds.

Barbeque Bob – Off the housing grid
11/25/09 - 03:01

New York City!? Them's fighting words!

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