Ketchum, developer eye deal to revive Main Street hotel project

On Wednesday, acclaimed chef Charlie Palmer and Four Seasons hotel veteran Christopher Hunsberger announced the launch of a new “culinary-first” hotel brand, Appellation, with one of the first hotels to be opened in the Sun Valley area. A company spokesperson confirmed Thursday that the Appellation hotel is planned for the 300 River St. E. site, on the southeast corner of River and Main streets.

However, approval of the draft agreement would have to come first, said Lisa Enourato, spokesperson for the city.

“This is not a done deal,” she said. “We really want to first hear from the public on this.”

The project site is currently a large hole, after construction of the 65-room, 14-residence hotel structure stalled in 2020.

The project has a long history that dates back nearly 15 years. In June 2008, Bariteau cleared the first hurdle of approval for a project called Hotel Ketchum—now the name of a different hotel farther north on Main Street. Plans went through different iterations after the Great Recession halted most development, and the Harriman Hotel project was eventually approved by the city.

Over the years, the City Council granted extensions and various amendments to the development agreement, which included timelines for completion of the project. The most recent extension was a 2018 amendment to the development agreement, which included a condition requiring proof of construction financing for the project and a $453,000 site restoration bond.

In November 2020, the city deemed Harriman Hotel in breach of the 2018 development agreement for failure to provide proof of project financing. A 60-day “cure” period was initiated to meet the financing terms of the agreement.

That month, Harriman Hotel’s attorney issued the “notice of tort claim” to the city for up to $100 million in damages. A tort claim is a civil action taken outside of court that alleges a “tort”—or civil wrongdoing—and typically demands damages for that wrongdoing. A notice of tort claim essentially gives a public agency notification that the claimant has a formal complaint and—if the matter is not resolved to the claimant’s satisfaction outside of court—could ultimately choose to file a lawsuit against the agency.

In January 2021, the city voided the development agreement and any associated permits for the project because a “cure” was not achieved. When the development agreement was voided, city officials said that if Bariteau wanted to proceed with building the hotel, he would have to file a new development application with the city and go through a new approval process.

The city then sought to secure the site restoration bond to remediate the excavated site. However, “the insurance company that issued the bond has so far denied the city’s request for the bond,” the city stated Thursday.

The city also stated that “Harriman Hotel LLC asserts that the effects of the COVID-19 pandemic and its economic impacts be construed as force majeure considerations to extend the timeframe to cure the breach. Force majeure would allow an extraordinary event or circumstance beyond its control to release the owner from a contractual obligation.”

Now, the city and City Council are seeking public comment on the proposed settlement agreement that would reinstate the 2008 project approvals and clarifications made in 2016. The new investor, called Harriman SV Properties, has conditioned participation on the City Council reinstating the project’s development rights and the city and the owner resolving their disputes through the settlement agreement.

The settlement agreement would also:

• Require the developer to return to the Planning and Zoning Commission to apply for amendments to previous approvals to modify the project. The process would include public testimony.
• Require commencement of construction by May 1, 2023, or five months after issuance of a building permit, whichever is later.
• Release all claims alleged against the city in Harriman Hotel’s $100 million tort claim.
• Set terms for pursuit of project amendments, settlement of litigation and claims, site restoration, and screening of the project property.

A new financing arrangement has been entered into between Harriman Hotel LLC and entities controlled by Andrew Blank, the city stated Thursday.

“Blank and his father, Jerry, have long-term family ties to the cities of Ketchum and Sun Valley, and a history of investing in similar types of hotel projects,” the city stated.

The Blank family “would assume management control of the project and have the financial capability and experience to move the project to completion,” the city stated. “If the draft settlement agreement is approved, the city would reinstate the 2008 entitlements and assign the project entitlements to a new company, funded and controlled by the Blank family.”

Blank has proposed changes to the project that would require the new company to go through a full process of approvals by the Ketchum Planning & Zoning Commission, the city stated.

“If the commission denied the changes, the project could still move forward with the reinstatement of the 2008 entitlements,” it stated.

City staff has not made a recommendation to approve or deny the settlement agreement, the city stated. If approved, it “would lead to an amicable resolution,” it stated.

Public testimony will first be heard by in-person attendees at the June 23 meeting, followed by testimony from online attendees. The city also accepts public comment via email at participate@ketchumidaho.org.