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The Hole Story

The Boise Hole turns 21

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Raise your glasses, Boise—and make it a stiff one—it's time to mark an auspicious occasion. The Boise Hole is 21 years old.

For more than two decades, a chunk of prime real estate on the corner of Eighth and Main streets has remained vacant, stubbornly ignoring the redevelopment and economic boom going on around it. One after another, major proposals have fallen into a quagmire of litigation, liens and loans.

Most recently, Gary Rogers, owner of Charterhouse Boise Downtown Properties, has been fighting an effort to turn a Chapter 11 bankruptcy into a Chapter 7, which would force the liquidation of his project, and put the property back on the market. If that happens, it would be the second time a development has failed after years of planning and millions of dollars.

The fact that no one has been able to build something on the site since the historic Eastman Building burned down on New Year's Eve 1987 has left many shaking their heads and pointing fingers.

But who's to blame? Here are the leading contenders.

Capital City Development Corporation

The Back Story: CCDC bought the property in 1972 for $528,000, with plans to refurbish the Eastman Building. The agency entered into a development agreement with Rick Peterson in 1997, and later sold him the land at a discounted price of $265,000 in November 2001. CCDC required Peterson to meet certain benchmarks or the agency would reclaim the property. He didn't, and they did.

But when Rogers bought the corner directly from Peterson in 2006, CCDC signed away all rights to the property. Phil Kushlan, executive director of CCDC, said that decision was made to put an end to the costly legal battle, reunite the property's title and deed, and to put the land squarely in the free market.

How they messed up: Giving up oversight control hamstringed the agency's ability to make sure a development happens in a timely and appropriate manner.

There is now no recourse if a developer fails follow through on promises.

But it Wasn't Our Fault: Both Kushlan and CCDC board member Dave Eberle, who is also president of the Boise City Council, said they stand behind the choice.

"The ability to let the private market control it was the best decision," Kushlan said. "It remains the best direction."

"The nature of urban renewal districts is to take risks," Eberle said. "This is one where they got tagged. It was an appropriate decision, not an ideal decision," he said.

Rick Peterson

The Back Story: Peterson was the only developer to submit a bid for a project when CCDC first began the process in 1994. His plans to build a 25-story building went askew after a drawn-out series of financing problems, labor disputes and missed deadlines caused him to lose his building permits.

Peterson filed two $10 million tort claims against the city for revoking the permits and alleged the city and CCDC conspired against him. In the end, he sold the troubled lot to Rogers for an undisclosed amount.

How he messed up: Peterson's deal with an investment fund corporation, comprised of union pension plan trusts, blew up. As part of the financing agreement, Peterson agreed to hire only union workers. Unfortunately, the deal stated that he would use union workers on all his projects in southern Idaho, not just the downtown development. When he argued this point, the unions pulled funding.

His attempts to fight City Hall drew the property into a legal battle that lasted until 2006 with nothing more to show than the subterranean network of steel and concrete that gave the Boise Hole its name.

But it Wasn't my Fault: Peterson could not be reached for comment but in 2006 told the Idaho Business Review, "I feel this is the best solution for CCDC, BTA, myself and the city of Boise," regarding his decision to sell to Rogers.

Gary Rogers

The Back Story: Rogers played intermediary in the fight between CCDC and Peterson. He made a private deal with Peterson and introduced a plan for a 34-story building. But like Peterson, Rogers faced financial problems almost from the start. He declared Chapter 11 bankruptcy last August after defaulting on loans, including one to Peterson. After failing to file necessary paperwork and fees, bankruptcy trustees asked the courts to convert the bankruptcy to Chapter 7, and force liquidation. Rogers is fighting the effort. He had until Jan. 22 to take the necessary steps, but it was unknown as of press time if he had done so.

How he messed up: While Rogers dazzled the city and CCDC with plans for a tower that would be the tallest in the state, he didn't get his financial ducks in a row.

The Hole is the most-anticipated development in Boise, and carries the most financial baggage. Its long, sordid history has made the site too expensive for an "economically feasible building," Eberle said.

But it Wasn't My Fault: "I can't comment," Rogers said when contacted by BW.

City of Boise

The Back Story: The city neither owns the land nor has the ability to pick a developer, but it does have final approval of any development. The City Council approved both Peterson's and Rogers' projects, even though planning staff had suggested a phased approval process in Rogers' case.

How they messed up: City leaders seem to have been taken in by a flashy design and the promise of finally filling a blight in downtown. "He dazzled a lot of people with his plans," Simmons said.

But it Wasn't Our Fault: "All we could do was react to the plan that he brought forward," Simmons said. "The Council did ask him point-blank if he had the funding, and he assured them everything was fine."

The city has limited options. According to Simmons, it can rewrite or adopt new plans and codes, but since the current plan was written for The Hole, Simmons said he doesn't foresee that happening.

"All we can do is wait until a developer comes along with a live application and hopefully be discriminating enough," he said. "All we can do is wait and see."

Waiting Until Last Call

Eberle said the one rule of bankruptcy is that it can "go on forever."

"There's nothing you can do about it except cry," Eberle said.

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