The city of Ketchum has notified the developer of the stalled Harriman Hotel project that the window to resolve a breach of his development agreement has passed and the agreement and associated permits for the long-running project have been voided.
The action by the city essentially nullifies the approvals granted by the city to developer Jack Bariteau to build the luxury hotel and residential project at the southern entrance to the city.
In a Jan. 8 letter to Bariteau and his attorney, Ed Lawson, City Attorney Matt Johnson states, “At this time the cure period has run with no cure or pending cure by Harriman Hotel. Therefore, the Development Agreement is void by reason of default and any such opportunity to cure such default is now passed. ... Any further associated building permits or the like associated with this Development Agreement are now likewise void.”
The city declared Bariteau in breach of the development agreement on Nov. 2, 2020, because Bariteau could not prove he had full financing to complete the project, as required by the agreement. With work on the project halted, Bariteau had 60 days to “cure” the matter by proving he has financing.
The city is pursuing collection of a $453,000 bond posted by Bariteau to pay for site restoration in the event the project is not completed. The property was excavated—with that work starting in 2016—and some infrastructure has been installed, but limited progress has been made and the site at the southeast corner of Main and River streets has remained a large hole in the ground.
Ketchum City Administrator Jade Riley said that if Bariteau wants to proceed with building the hotel, he will have to file a new application with the city and go through a new approval process.
On Tuesday, Lawson said Bariteau plans to proceed with the project, claiming that the development agreement was not breached and therefore no “cure” was needed.
“Too much time and money has been invested,” he said.
In the fall, Lawson argued to the city that the requirement to prove financing only applied to one specific date in 2019 and was not required on an “ongoing basis.” Lawson said Tuesday that financing was in place last year but was disrupted by the COVID-19 pandemic, an argument he also made to the city in the fall as a reason not to declare a breach. He said the city’s actions have also complicated acquiring financing and he is “looking at a number of different options” to move forward, “including formal legal action against the city.”
On behalf of Bariteau and Harriman Hotel LLC, Lawson on Nov. 10 issued a “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.
Riley confirmed on Monday that a formal lawsuit against the city has not been filed.
Essentially, the tort claim alleges that the city caused financial harm to Bariteau and the Harriman Hotel group in actions taken in October and November. The claim alleges that “the damages were brought about by the defamation of the claimant and its hotel project, the tortious interference with claimant’s contractual relations and economic interests and the negligence” of city officials. The filing also alleges the city wrongly determined the Harriman Hotel group was in default of the governing development agreement.
The document also makes other claims against the city, naming the people involved as Mayor Neil Bradshaw, the four members of the Ketchum City Council, the city administrator, the chief city planner, and the city attorney.
In claiming damages, the filing states: “Claimant has sustained special damages in excess of $1,000,000 and may sustain special and general damages in excess of $100,000,000. Accordingly, demand is hereby made for payment of said sum.”
The city has ninety days to respond to the tort claim. Lawson said Tuesday that the city has not responded. If it does not respond, the claim is deemed to be denied and Bariteau and Lawson can decide whether to take formal legal action.
Riley said on Monday that Bradshaw could not comment on a matter of potential litigation.
Bariteau has been working to develop the 65-room, 14-residence hotel structure at 300 River St. E. for more than a decade. Over the years, amendments to the development agreement have been made and the project has been granted extensions. Under the now-voided development agreement with the city, the project had to be completed by the end of December 2021.