UI Foundation to ask for another year to pay off debt

BOISE – The University of Idaho Foundation is asking for an extra year to pay back a $5 million debt from the failed University Place project.

The foundation will ask at today’s meeting of the state Board of Education that the board extend the loan payment deadline from Dec. 31 this year to Dec. 31, 2005. The foundation has the support of the University of Idaho, which gave it the money as part of an $8 million note to help cover pre-development costs at the school’s proposed satellite campus in Boise.

If the board agrees, it will be the second extension granted on the note, which was originally due July 1, 2003.

The foundation’s interim executive director Mike Wilson said the foundation needs the extension because it doesn’t have the resources to meet all its obligations by their due dates. Besides, he said, the extension would give the foundation more time to try to recover money it believes it is owed from third parties connected with University Place.

“This is a practical, rational restructuring of the debt,” he said.

Rod Lewis, state Board of Education president, said he has known for some time that the foundation might not meet its December deadline. But he praised the foundation for cutting its University Place debt from $26 million to $13 million in the past year.

“I think it is fair to say we have been supportive of the action they have taken,” Lewis said.

The loan came out of the university’s cash reserves and an extension would not cause problems for the financially strapped school, said university spokeswoman Kathy Barnard.

“I can’t imagine it would impact anything in the budget,” she said.

University Place, once envisioned as a three-building complex, fell apart over questions of financial management. The collapse cost then university president Robert Hoover his job in 2003 and left the foundation $26 million in debt. The project is now the focus of both federal and county criminal investigations.

Besides the $8 million note, the foundation also owes the university $2 million due at the end of 2005. That debt is part of a total of $13 million still owed by the foundation to various groups involved in the project.

Foundation officials hope to recover some of that money, however.

The foundation filed a claim in March with Idaho’s Office of Risk Management, saying it lost money on University Place because former university vice president Jerry Wallace didn’t “faithfully perform his duties as prescribed by law.”

In the claim, the foundation estimated its losses at more than $12 million.

Foundation officials also filed a lawsuit earlier this year seeking $7 million against California-based developer Civic Partners for work the foundation claims it paid too much for.

Civic Partners President Steve Semingson said Tuesday that he denies the foundation’s claims that it was overcharged.