April 10, 2001 11:00 pm

By Gary Fletcher

Observer Staff Writer

JOSEPH Plans for developing 60 acres near Wallowa Lakes terminal glacial moraine have been shelved.

During a short Joseph City Council hearing Tuesday night, Steve and Paula Krieger withdrew their request for annexation of 60 acres near Old Chief Josephs gravesite at the foot of the lake. Annexation had been proposed as the first step in developing housing on their property adjacent to the city limits.

Were going to save you the trouble and withdraw the petition, attorney Rahn Hostetter said 12 minutes into a special meeting. He represents the Kriegers, operating as WGK Corporation.

A complete surprise, was how Mayor Max Prout described the announcement. It was not expected. At the same time, he said he was also kind of relieved.

The meeting was called to formulate findings of facts regarding the councils 4-3 decision on Feb. 20 against annexation. Two February meeting were attended by more than 70 people. Tuesday, Hostetter and Paula Kreiger were among an audience of eight.

Early in March, councilors Henry and Judy Kinsley, who voted for and against annexation, respectively, resigned but said their resignations were not related to this issue. Then city attorney Mona Williams resigned effective March 31.

Jacqueline Haggerty was appointed city attorney April 3. Replacement councilors are expected to be appointed at a May 1 meeting.

After Tuesdays meeting, Hostetter said that now WGK will have to spend money to develop its own water project for an as-yet-unspecified development.

The next step will be to take a look at engineering and fact gathering, with an application to the county in mind, he said.

We always had that option, he said, adding it will now take some time.

Why should we continue to spend money and energy (on this annexation proposal), he said.

The prior city council and the county encouraged annexation, Hostetter said. That was wise (because) they could have worked together, after annexation, to develop a good plan.

The city, county, state Department of Land Conservation and Development and the Department of Transportation all met with WGK representatives and everyone was excited, Hostetter said.

The council has now become unwise, Hostetter said, because the council, with three new faces since the November election, is not willing to be part of the project and be in primary control of the development.

Prout said he did not feel the project would have been good for the city. Prout thought that several criterion had not been met. The proposed development did not satisfy, in his opinion, the public comments that he had heard opposed to it.

A few years ago, the site was proposed for single family homes under a different owner, but that project died.