Unfinished zombie housing developments haunt the rural West

  • Timberline Ranch in Victor, Idaho, has 81 lots platted, and some infrastructure, including this bank of mailboxes. But just one lot has been sold and built upon; the other 80 are still owned by the developers.

    Bradly j. Boner
  • Horseshoe Meadows, near Driggs, was subdivided in 2006 with lots ranging from about 3 acres to 10 acres, listed at more than $200,000 each. Today, most of the subdivision is still unoccupied, and it's possible to buy a lot for less than $100,000.

    Bradly j. Boner
  • Matt Hail was developing two subdivisions in Teton Valley when the housing market tanked in 2008. Because of his development agreement with Teton County, Hail is required to finish the infrastructure in the subdivisions, in several phases over the next four years, despite having sold only four of the 44 lots. "All we can do is keep moving forward," Hail said. "I've put everything I have into this."

    Bradly j. Boner
  • Teton Springs, the county's first big resort-style development, was approved in 2000, but today there are still hundreds of vacant lots.

    Bradly J. Boner
  • Angie Rutherford became Teton County's planning administrator during a volatile time. Part of her job is to mitigate tension between longtime valley farmers and ranchers who fiercely defend their rights as property owners and those who want more assertive regulations on development.

    Bradly J. Boner
  • Anna Trentadue, program director and staff attorney for Valley Advocates for Responsible Development, has been working with local developers to help replat zombie subdivisions, so they'll have less impact on the environment and be more appealing to buyers.

    Bradly J. Boner
  • Bruce Arnold, a fourth-generation farmer, sits on Teton County's planning commission and has a reputation for fairness when considering planning and development issues facing the county.

    Bradly J. Boner

Page 3

Teton County's farming heritage still endures. The local drive-in theater is called "The Spud," and public schools give students a break during the 10-day harvest period, a legacy of the era when most kids helped in the fields. But zombies lurk everywhere.

Driving east from Driggs toward the Grand Targhee ski resort, you come to a subdivision near the Wyoming border that has streetlights and curving roads, but nothing else. Another development, between Driggs and Victor, has a giant horse barn and a smattering of semi-palatial houses; a woman in a local restaurant confides that she and her husband own one of those houses and are desperate to sell. Some people invested their retirement savings in lots and houses, figuring to flip the real estate after six months or a year of appreciation. Not only is there a shortage of buyers, they can't make mortgage payments on loans as large as $800,000. Couples have walked away from their houses and mortgages, convinced it will take many years before those houses will be worth as much as they owe. (Last March, one of every 175 housing units here was in foreclosure -- a rate more than twice  the national average. More than $155 million worth of property has been foreclosed on since 2010.) Many subdivisions never even broke ground and are just snow-covered weedy fields.

The developers often can't afford to finish roads and utilities, including ponds and hydrants needed for fire protection, or to fulfill other promises to buyers and investors. And in many cases, when developers' financing collapsed, ownership has reverted to banks, which are even more hesitant to shell out cash for maintenance or to fulfill the developers' promises. "The banks especially don't want to sink any more money into (zombies). They say, 'We're not developers,' " says Angie Rutherford, the county's planning administrator since 2010. She has a master's degree in environmental studies from Yale and used to work as a backcountry ranger in Glacier National Park.

Rutherford faces many complicated obstacles as she tries to untangle the problems caused by the zombies. Back in the gung-ho era, the county made loose contracts with developers, sketching out the basics of projects as well as the timelines for finishing infrastructure. Many contracts said infrastructure must be completed within two years; those deadlines are totally blown by now, but often no penalties were spelled out for missing deadlines. And in some cases there were no deadlines at all, or the county promised to complete infrastructure if the developer didn't. The county "allowed developers to sell lots to raise money to build the infrastructure" -- a gamble that many other local governments avoid -- so once the lot sales stopped, so did the infrastructure, Rutherford says.

If all of the zombies are completed as planned, and houses are built on all the vacant lots and occupied, the county government would suffer at least a $1.9 million annual shortfall in revenue -- the difference between the property taxes and the cost of providing road maintenance alone -- according to a study done for VARD in 2010. The county would also have to spend $15.5 million total on buying more snowplows, hiring more deputies and adding other infrastructure, according to the study. To limit those costs, the county commission is considering not providing some services to some of the zombies -- which would shift that burden to everyone who buys into those subdivisions. "There's going to be tough decisions as this plays out, and it will probably involve the word 'sorry,' " Rutherford says.

All the problems would be reduced -- at least somewhat -- if the developers, banks, other players and the county government could agree on new contracts reshaping the zombies. They could reduce the number of lots, the promises for services, and the impacts on wildlife habitat and other aspects of the environment. Or they could extend the deadlines for installing infrastructure, trying to keep subdivisions viable, so all the work that went into them isn't wasted and the county isn't saddled with more costs of cleaning up messes. Or the county can even "vacate" subdivisions, which means erasing the lots and officially reclassifying them as big parcels of farmland -- an option some developers are seeking to get them off the hook for all the promises they made.

The county government is reluctant to pressure developers and banks to do much, for fear they might sue the county; under Idaho law, a county's liability insurance generally does not cover lawsuits over planning. But in the fall of 2010, the county commission passed a "replat" ordinance that streamlines the process for modifying existing contracts with developers. Still, it's very difficult to put the toothpaste back in the tube. "We seemed to have an easy time getting into the mess, but ... there is no clear path to getting out of this mess," says Rutherford.

So far, only one small development -- Warm Creek Manor, which was only 19 lots -- has been vacated, at the behest of the developer. Just three others are in the process of being vacated. In the negotiations over other zombies, conservationists are involved in an effort along three miles of Teton Creek, where cookie-cutter subdivisions have more than 600 vacant lots; the goal is to reduce the number of lots and impacts on the creek, along with creating more open space and trails. If those deals can be made, the area would become "an amenity for the whole county, and the green belt would add value to the remaining lots," Trentadue says. Meanwhile, the owners of the Canyon Creek development -- 350 lots on 2,800 acres straddling the border with Madison County -- are offering to reduce the number of lots there and reconfigure them to preserve more wildlife habitat; the Teton County government keeps pressing those owners to offer more concessions.

At the biggest stalled development, River Rim Ranch, millions of dollars of infrastructure have been installed, but fewer than a third of the 650 platted lots have been sold, and the 500 acres bladed for the golf course are just weeds. It's now owned by Montana-based Glacier Bank. The county negotiated with the bank for a year to try to reshape it, without winning much. The bank floated a bond to help pay for infrastructure, but refused to reduce the number of lots, Rutherford says. The recast county contract for River Rim Ranch extends the deadline for finishing the rest of the core infrastructure and half of the golf course to 2016; the deadline for completing subsequent phases has been extended all the way to 2026.