The Ketchum City Council has moved one step closer to acquiring a property on Northwood Way for $3 million.
On Monday, three of the four council members expressed their support for purchasing the property, although they did not cast a vote. A formal vote on the transaction will occur on Jan. 21. Councilman Jim Slanetz said he would oppose the deal because he wants to renegotiate the prices.
The property at 290-298 Northwood Way—in the light-industrial area—would be used to develop affordable housing, Mayor Neil Bradshaw said, and includes two parcels that total 47,480 square feet. That should be large enough to accommodate a possible development of 80 units of housing.
The transaction with property owner Brian Barsotti has two parts. First, the city would give its property on Sixth Street and Leadville Avenue to Barsotti. It is being used as a parking lot currently, and its appraised value is approximately $1.48 million.
The city would lease back the property, so it would continue to be used as a public parking lot for the next three years. The city would pay the equivalent amount of the lot’s property taxes for three years, Bradshaw said.
The second portion of the transaction is a cash payment to Barsotti of $1.55 million, which would come from the city’s in-lieu housing fund. That fund has about $2.4 million in it, and does not include money from general tax revenues.
Rather, developers pay into the fund to satisfy community-housing requirements for their projects. The city requires community housing to be provided for projects that go above 1.0 floor-area ratio in certain parts of town, such as the community core. Developers can convert that obligation to a fee.
The revenue available to Bradshaw slowly accrued under the past City Council.
Bradshaw, Councilman Michael David and Councilwoman Courtney Hamilton said the Northwood Way property is ideal to develop for affordable housing, although it may need tax-credit financing to proceed.
Councilwoman Amanda Breen said she would support the purchase, but questioned if the site would be financially feasible for a housing developer.
Last fall, the Idaho Housing and Finance Association announced that it would not award tax-credit financing to another affordable-housing development proposal on city-owned property next to the Northwood Place and the YMCA.
Bradshaw said new applications for tax-credit financing would be received more favorably in 2019, thanks to expected changes in IHFA’s scoring rubric. He said he has met with private developers and felt confident they could deliver an affordable-housing project on the 290-298 Northwood Way site.
“I feel confident that there will be a cocktail of financing that meets everyone’s needs,” Bradshaw said. “I wouldn’t go ahead unless I felt very confident that there is a developer out there.”
He said Barsotti would provide an option for the city to get a full refund for its purchase, if it fails to succeed to develop housing. The offer, however, does not include ceding the Leadville Avenue property back to the city.
David said it was an opportunity that the city could not afford to pass up. The Leadville Avenue site is 11,000 square feet in total.
A Boise-based development firm called deChase Miksis submitted a proposal to develop 28 units of affordable rental housing on the Leadville property, as well as parking and retail. The proposal was not discussed during Monday night’s meeting.
“We’re swapping for a piece of land that is ideal in so many respects,” David said of the Northwood Way site. “We can’t pass this one up. It could be gone forever. It is what those in-lieu funds are meant to be done with.”
Slanetz balked at the negotiated prices. A city-initiated appraisal of Barsotti’s property pegged its estimated value at $2.4 million. Barsotti procured his own evaluation that estimated the value at $3.1 million.
Slanetz said $3 million could be used to pursue other opportunities for affordable housing in Ketchum, such as a buildout of the Lift Tower Lodge, which is operated by the Blaine County Housing Authority, or pursuing a development near River Run on property owned by Sun Valley Co.
Bradshaw responded that he explored River Run and Sun Valley Co. was amenable to negotiating with the city, but the development plans call for installing a roundabout and other improvements. He referenced the 1950s-era play “Waiting for Godot,” in which the characters wait for something that never arrives.
“We were going to be ‘Waiting for Godot’ a little bit,” Bradshaw said. “I think it’s time for us to move on this.”