Developer Jack Bariteau’s long-awaited luxury hotel has finally demonstrated proof of financing, the Ketchum City Council ruled Monday, and should materialize at the southern gateway to town by 2021.
The 3-1 vote followed news of Bariteau’s recordation of a $60 million private construction loan with Delaware-based Mosaic Real Estate Investors on Thursday afternoon.
A final deadline for Bariteau was drawn for Dec. 6 after the city found the developer’s firm, Trail Creek LLC, in breach of its development agreement two months prior and gave it a 60-day “cure” period to obtain financing for the hotel.
By closing out the loan with Mosaic—a large funding provider for the hospitality industry—and delivering a subsequent deed of trust made out to Blaine County Title, Bariteau reached the finish line just in time, the council determined.
If the City Council had once again found Trail Creek in breach of contract on Monday, staff would have needed to draw up the necessary paperwork to fill in the current hotel excavation site across from the Kentwood Lodge.
Now, that won’t be necessary.
“[The loan] came in at the 11th hour, 59th minute and 59th second, but it’s here now and it’s clear to me that we need to get this thing approved,” Councilman Michael David said.
Through his attorney, Ed Lawson, Bariteau said the total cost of the project exceeds the $60 million loan amount by about $20 million, and that difference is being provided by private investors.
“This loan, coupled with the combined private investment equity contributed to the new limited-liability company formed to build the development, Harriman Hotel LLC, provides all the funds to construct, furnish, open and operate the hotel,” Bariteau wrote in an email to the city on Dec. 8.
On Thursday, the construction loan deed of trust effectively transferred pro-ject ownership from Trail Creek Fund LLC, to Harriman Hotel LLC.
Councilwoman Amanda Breen said that be-tween the deed of trust and promissory note presented by Bariteau—and from Lawson’s assertions—the council had enough evidence of financing.
“In my mind, as a lawyer and councilperson, this is sufficient to cure the breach [in contract],” Breen said.
Mayor Neil Bradshaw said the hotel, now 15 years in the making, has already been held to higher standards than most other Ketchum developments.
“Obviously, we don’t know 100 percent that this project won’t encounter hurdles, but this is the most visibility in terms of financing that we’ve had in Ketchum’s history,” he said.
The Harriman Hotel, formerly the Auberge, will soon enter the construction pipeline, though it’s not clear how soon. Until recently, Bariteau planned the project as an addition to the Auberge Resort Collection. Now, he says it will be managed by MAKR Hospitality, a firm founded by restaurateur Charlie Palmer and based out of Healdsburg, Calif.
Previous renderings for the Auberge Hotel called for some 62 rooms and 12 residences with multimillion-dollar price tags, but it’s unclear what the Harriman Hotel has in store; Bariteau did not respond to a request for updated renderings by press deadline Tuesday.
Last Friday marked the final cutoff point in an 11-year series of missed deadlines and city-granted building permit extensions for Bariteau. Since he obtained a development agreement in 2008, he has received five extensions—in 2010, 2012, 2013, 2015 and 2018—to buy time and keep his project afloat.
“It has been a long road … a journey that began in mid-2005 when our application to the city for the project was initially submitted,” Bariteau wrote in a now-public email to Sun Valley Economic Development in September.
Under the latest city-granted extension, dated June 2018, Trail Creek Fund LLC needed to show “sufficient evidence” of hotel financing by Sept. 30, 2019.
But when that date rolled around, Bariteau said the loan commitment was in place but not recorded—and found himself in hot water that day at a special City Council meeting.
When it appeared that the developer would follow through with his promises late last week, however, letters of support began to pour in. Fifteen total were received by the city of Ketchum on Dec. 9, all praising the to-be hotel.
Many of those comments were echoed throughout the public-comment section of the meeting Monday, touching on the hotel’s potential to attract top clientele, increase local-option tax revenue and boost employee housing.
Others in the packed City Council chambers vouched for Bariteau’s track record in completing both the Colonnade and Christiania buildings downtown.
“For 35 years, I’ve been working with developers, and now Jack is the only one I will work with,” said Hailey engineer Brian Formusa. “He pays his bills, and he produces high-quality work.”
Formusa’s comment elicited a small round of applause, to which Mayor Bradshaw asked the public not to clap or comment on merits of the hotel.
“It’s about what the council has in front of them today, if that’s enough to get this project to the finish line,” he said. “Please, no applause. That does not create a safe environment.”
But not everyone at the meeting had faith in the documents Bariteau had procured.
“A deed of trust and a promissory note are not proof of financing. For $100, anyone can create a limited-liability company and prepare these things,” attorney Ed Simon said, representing homeowner Vicky Graves. “There’s no proof of financial viability of lender, or a letter of credit here.”
Lawson rejected Simon’s statement and asked the council to be logical.
“The suggestion of a letter of credit simply reveals that Mr. Simon does not know what he’s talking about. We were repeatedly told that we only needed to provide a deed of trust—we did that, and that deed has evidenced the ability of [Mosaic] to make a $60 million loan,” he said. “The building will get built.”
Lawson—who is representing Bariteau, Trail Creek LLC and Harriman Hotel LLC—swore under “penalty of perjury” that his client would repay the loan.
“If the project is short of funds for some unforeseen reason, Jack has obligated himself to get the hotel built using his net worth, which is enough to satisfy project requirements,” Lawson said.
When it came time for a council vote, all council members except for Jim Slanetz agreed that they should not require Bariteau to provide further documentation.
“It’s incumbent upon us to not keep moving the goal posts. We could go down this rabbit hole forever,” David said.
Slanetz questioned why Mosaic did not sign the deed of trust and ultimately voted “nay” on whether Bariteau had cured the breach of contract.
“That [lack of signature] seems sketchy to me,” he said.
In an earlier email to the city, Bariteau said he had been prepared for continued opposition.
“The boo birds and naysayers who cannot envision that our town must evolve … their specious and negative comments hold no water legally and are without merit,” he wrote.