Ketchum city leaders on Monday sent a formal message to the developer of a stalled hotel project on the south end of Main Street: Provide proof of financing to complete the project, or the city will take action to begin restoration of the excavated site.
At issue is a luxury hotel and residential project planned for a high-profile site at 300 River St. E., at the southeast corner of Main and River streets. The project—slated to have 65 hotel rooms and 14 residences—has been in the works for more than a decade. The construction site was excavated—with that work starting in 2016—and some infrastructure has been installed. Under a development agreement with the city, which has been amended to accommodate delays in the project, the hotel must be built by the end of December 2021.
After listening to a brief report from Mayor Neil Bradshaw and the city’s attorney, Matthew Johnson, City Council members voted unanimously to declare the legal owner of the project, Harriman Hotel LLC, in breach of its development agreement with the city.
“We learned from the developer that part of the financing was now no longer in place and that construction had been halted to find new funding partners,” Bradshaw told City Council members. “This affects the ability of this project to meet the agreed deadline for completion.”
A June 2018 amendment to the city’s development agreement with developer Jack Bariteau requires Bariteau to provide evidence that he has “full financing and funding” to complete the project. The developer was determined to be in breach of the development agreement in October 2019, but the breach was ultimately determined to be fixed by Bariteau.
Johnson said city officials met with Bariteau in September and learned that the developer did not have sufficient financing to build the hotel but were told that new financing would be procured.
“We were told that proof of that replacement financing would be coming in 30 days,” Johnson told the council. “It was not.”
In an Oct. 22 letter to Harriman Hotel attorney Ed Lawson, Johnson stated that Bariteau acknowledged in the Sept. 17 meeting “that some of the previously represented financing indeed was no longer in place” and Bariteau was allowed 30 days to resolve the matter. With 30 days passed, Johnson said in the letter, the city was asserting that it had cause to formally declare a breach of the development agreement and that the matter would be brought to the City Council.
In an Oct. 30 letter responding to the city, Lawson stated that the Harriman Hotel “disputes the asserted breach” and requests a “return to normal relations.” Lawson stated that his position is that the language of the June 2018 amendment only requires the developer to prove financing prior to one specific date, Sept. 30, 2019.
“In other words,” Lawson wrote, “there is no obligation under the Agreement for Owner to maintain or provide proof of adequate financing on an ongoing basis.”
He concludes by saying the owner “will continue to undertake every possible measure” to bring about “a rapid pace of construction.”
Neither Bariteau nor Lawson was present at the City Council meeting Monday, something pointed out by Councilman Michael David.
“I’m troubled … that the applicant isn’t here tonight to talk to us at this point,” he said. “We’ve granted extensions. We found a breach at one point but they cured the breach. We’ve been working together. … I don’t understand why they’re not here to talk to us and tell us what’s going on.”
David said he is concerned about the developer’s ability to complete the project by the established deadline.
“It’s not coming together. I think that’s pretty obvious to everyone that looks at this—in time to meet the agreement.”
Councilman Jim Slanetz said he has previously questioned whether the developer had adequate funding to build the hotel.
“I didn’t think the funding was adequate in the last round,” he said.
The city has granted several extensions of the developer’s building permit over the 12-year lifespan of the project, which first went to the city for approval in 2008 as the Hotel Ketchum, with that name now being used by another hotel in the city. The hotel project was later referred to as the Auberge Resort Sun Valley, named for a planned operator of the business.
Bariteau and the Harriman Hotel team have 60 days from being served notice to “cure” the breach declared by the City Council. Johnson said any documents submitted to prove adequate financing and funding for the project would be reviewed by city staff but the City Council would have the “ultimate call” as to whether such proof was adequate.
If the matter is not resolved, the city can tap into a $453,000 bond put forth by the owner to begin restoration of the excavated and fenced-in construction site.