by Lora Volkert @ Idaho Business Review
Most people know it as “The Hole In The Ground.”
The empty pit of concrete and rebar at Eighth and Main in Boise was the beginning of a 25-story office and residential building that inspired artwork, vitriol, lawsuits and its own Web site.
Although the hole was only the beginning, during 10 long years city officials and residents realized the project had no middle. But they are tentatively, tepidly listening to an idea that could mean the saga’s end.
It began in 2001, when the Capital City Development Corp. — the redevelopment agency for downtown Boise — sold the lot at Eighth and Main to developer Rick Peterson for $265,000.
Peterson promised 25 glorious stories and said he had financing to make it happen. But that financing fell through again and again. The developer put some of his own money into the project, but construction was stop and start, with little work done after the first year. Contractors did just enough to keep the building permit valid — a little concrete here, some rebar there — while Peterson sought other financing deals, none of which panned out.
Contractors went unpaid and filed liens. The building permit was revoked, then reinstated.
Headlines in this paper tracked the lack of progress.
June 2001: “Boise Tower groundbreaking ceremony postponed.”
February 2002: “Work to resume on Boise Tower.”
May 2002: “Boise Tower seeks new construction financing.”
November 2002: “Developer says work on Boise Tower may resume.”
January 2003: “Boise Tower announces third lender; construction to go forward.”
June 2003: “Boise Tower default declared.”
October 2003: “Work on Boise Tower starts up again.”
Boiseans waited. They stewed. They sniped. The Tower became a running joke.
A snarky Web site sprang up, www.theboisehole.com, with a forum for readers to submit ideas for filling the hole. Among the suggestions: an ice skating rink, PETA supporters, people who use air quotes, and bacon.
The city put up plywood fences around the site and had murals painted so citizens wouldn’t have to look at the hole. But a nearly 60-foot banner with the ironic proclamation that Boise Tower is “what’s going up downtown” remained for years.
In June 2003, CCDC declared Peterson’s firm — Boise Tower Associates — in default and asked for the site back.
But Peterson refused to hand it over. The resulting court battle seemed to be settled in February of this year, when Judge Kathryn Sticklen told Peterson to return the site to CCDC. The ruling was appealed.
However, in April Peterson’s firm agreed to pay CCDC $950,000, according to court documents. That agreement was part of a three-way deal to transfer title of the land to Charterhouse Boise Downtown Development, a new firm that wants to build a 31-story building at the site.
But CCDC has not been paid most of its money, and it may be a long time coming.
Sub
Rather than turn the title back to CCDC, Peterson is selling the property.
CCDC Executive Director Phil Kushlan said it was only when Peterson faced losing the title in his appeal of Sticklen’s ruling that he agreed to transfer the property to Rogers.
But Peterson’s firm sold the land for considerably more than the $100,000 CCDC has received from the sale, according to an attorney involved in the case.
“Charterhouse paid quite a bit more than that,” said Rick Boardman, an attorney at Perkins Coie who represented CCDC in the settlement, said.
Gary Rogers, the developer who founded Charterhouse, hasn’t disclosed what he paid for the site.
“We paid more money than I wish we had to acquire the site,” Rogers said. “We paid more money than we wanted to solve a problem.”
The Ada County Office of the Assessor has set the site’s value at $943,300. Assessments tend to lag behind purchase prices, Deputy Assessor Brad Smith said.
According to court documents, the $100,000 Charterhouse paid to CCDC as part of the sale will be applied to what Peterson owes the agency.
Boise Tower Associates will pay a portion of the remaining $850,000, and Charterhouse will pay the rest, Kushlan said.
But CCDC won’t receive the rest of its money from Charterhouse until the company’s construction financing closes, Boardman said. Rogers has said he has two investment firms interested in his project, and he wants to begin construction by Christmas.
It may take longer for CCDC to receive its money from Boise Tower Associates. According to court documents, payments to CCDC are contingent on the firm winning or settling its lawsuit against Washington Capital Management, which at one point committed to provide financing for the original project.
The transfer of property from Rick Peterson to another developer was what CCDC wanted all along, Kushlan said. It was a better scenario for CCDC than simply getting the property back.
“We didn’t want the title back. We wanted a building there,” he said.
City suit
A provision of the agreement between Peterson and CCDC gave the group the right to take back the title to the site if Boise Tower Associates failed to fulfill its part of the bargain. CCDC tried to exercise that right, but Peterson refused to return the title.
Boise Tower Associates countersued CCDC, the city of Boise and former Boise Planning and Development Services Director Timothy Hogland.
The company claimed that CCDC unreasonably withheld approval of financing and that CCDC interfered with the construction process by conspiring with the city of Boise to revoke the building permit before it had lapsed.
The settlement terms for CCDC’s lawsuit required Peterson to drop his countersuit against CCDC.
However, Peterson has not dropped his suit against the city of Boise, which is scheduled for trial on March 12, 2007.
In a deposition, Peterson’s attorneys asked Hogland about the permit revocation. According to court records, he was asked if he had any reason to dispute work was done the day concrete was poured.
“Well, if you call 14 yards of concrete work, yeah,” Hogland said.
“I guess I don’t have a feel for what 14 yards is,” the attorney said.
“A project that size, it’s like I said, it would be equivalent to nailing a few nails on a house,” Hogland said.
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