Bank's failure puts historic lodge in limbo
<p>The owners of the Salmon River Lodge near Stanley say they had never missed a mortgage payment. Their loan from First Bank of Idaho was in good standing until the Ketchum-based bank collapsed one year ago.</p>
STANLEY (AP) - If their bank had not been shut down, Karen and Gary Zak say they would not be in this situation.
"We didn't fail. The bank failed," Karen Zak said.
The Zaks say they had never missed a mortgage payment on the lodge they own near Stanley. Their loan from First Bank of Idaho was in good standing until the Ketchum-based bank collapsed one year ago. The bank's branches and desirable assets were taken over by U.S. Bank, but the assets U.S. Bank wouldn't take - including the Zaks' loan - were left to the Federal Deposit Insurance Corp.
Now, after a year of unsuccessfully wrangling with the FDIC, the Zaks are about to lose their beloved lodge, and a prime piece of Stanley Basin property could soon be on the auction block.
On the outskirts of Stanley, the Salmon River Lodge sits on the east side of the river after which it is named.
Sun Valley founder Averell Harriman often stayed in the five-bedroom lodge built in 1931. A small cabin built in 1898 was the original stage stop when the road ran along the east side of the river before crossing at the Lower Stanley bridge and continuing to Yankee Fork.
Karen Zak, a writer and journalist, and Gary Zak, a financial adviser for the Paul Allen Co. in Seattle, became part owners of the lodge in 2002 and full owners in 2006. The Zaks are divorced but remain friends and partners in the lodge. Karen Zak recently moved to Boise from Hailey; she spends her summers working at the lodge, which has two employees.
Today, the lodge is used by vacationers and for weddings, family events and other large gatherings. Last summer, the lodge had 2,500 guests, Karen Zak said. Four weddings already are scheduled for this summer. Zak fears she will have to cancel the weddings if they lose the lodge.
"These are real-life people who have been planning their wedding for months. They don't deserve to have this happen," Zak said.
The 4.9-acre riverfront parcel is zoned commercial, but it is surrounded by thousands of acres preserved under conservation easements through the Sawtooth National Recreation Area.
The Zaks had worked with the U.S. Forest Service to draft a conservation easement for their land to protect it from overdevelopment, but the easement had not yet been put in place when First Bank failed.
"This is not just another property lost to a foreclosure ... It is a historical site in a commercially zoned spot," Zak said. "Someone could come into that view corridor and destroy that beautiful piece of property."
Zak contends the FDIC's policies led to their "performing loan" being reclassified as a "nonperforming" one.
Seasonal businesses often rely on a line of credit or other financing to help make ends meet when cash flows decline during slack periods between the winter recreation season and summer tourist season.
Local banks frequently work with their clients to customize financing plans to accommodate these seasonal fluctuations, said Bryan Furlong, a former First Bank of Idaho president who now works at Zions Bank in Ketchum.
When the Zaks bought out their partners in 2006, the lodge was appraised at $1.3 million. The Zaks got an $890,000 mortgage and a $92,500 equity reserve account through First Bank of Idaho. The equity reserve account was used to make half of each month's $5,600 payment during slow months.