The Hailey City Council and Mayor Fritz Haemmerle are considering mounting a second appeal of a federal bankruptcy court decision dating from December 2012 that prohibits the city from collecting $2.5 million in fees from developer Old Cutters LLC.
The City Council and staff, Haemmerle and attorneys Keith Roark and Jim Phillips entered into an executive session after a City Council meeting Monday to discuss “pending and imminently likely litigation,” related to the Old Cutters decision.
On Tuesday, Councilman Don Keirn said appealing the decision is “one option” the city is considering in response to a ruling on March 31 that upheld the 2012 decision.
Roark mounted the recent unsuccessful appeal, which ended last month when U.S. District Court Judge Edward J. Lodge reaffirmed that the city illegally charged the Old Cutters group fees associated with the annexation of Old Cutters subdivision.
Lodge cited in his decision a process of negotiations from 2003-2006 between the city of Hailey and developer John Campbell, during which time the annexation fees rose from $350,000, based on a study by consultant Tischler and Associates, to $3,787,500, based on subsequent studies.
“It is thus unclear whether Old Cutters actually voluntarily consented, or was in fact financially compelled to consent, to the annexation agreement,” Lodge wrote.
As a result, Campbell will not be required to pay $2.5 million in fees the city said it was owed under a 2006 annexation agreement. The developer will also not have to build 20 affordable-housing units in the partly built 108-unit subdivision in east Hailey.
Hailey City Attorney Ned Williamson said the second appeal, if it is filed, would be made in the U.S. Ninth Circuit Court of Appeals. Williamson said “several options” were discussed in the executive session Monday but would not go into details of what the other options would be.
Williamson would not estimate how much another appeal could cost the city.
Hailey resident Bob Wiederrick said at the Monday meeting that he would form a petition to have city leaders removed from office if a second appeal is pursued by the city.
Old Cutters has paid $1.3 million in annexation fees to the city already, none of which the developer sought to be refunded.
Campbell said earlier this month that he expects to be reimbursed about $100,000 in legal fees he has incurred already while in litigation with the city.
“I didn’t think the city of Hailey had that kind of money lying around,” Campbell said.