University Place fight settled

The University of Idaho and other parties associated with an ill-fated, multimillion-dollar attempt to expand into Boise have settled most of the legal claims surrounding the project.

The key piece of the mediated settlement announced Friday is the repayment of trust funds used to finance the University Place project – in transactions investigators described as improper and possibly illegal. In the economic and legal fallout after the deal collapsed in 2002, the university found itself cutting budgets, programs and jobs, though that kind of budget pain is past.

“It puts an end to a long and hurtful chapter at the University of Idaho,” President Tim White said in an interview Friday. “It allows the entire university community to move forward.”

The settlement involves several parties and competing claims, but the bulk of the $8.3 million goes to repay money from UI Foundation endowments used to finance pre-development costs for University Place. UI itself will recover $2.5 million – the same amount the foundation will pay.

The settlement also releases parties from further civil liability, including former chief UI administrators, attorneys and state officials. A federal criminal investigation into the deal is ongoing, as are proceedings in the Idaho Bar Association against several attorneys involved in the case.

But for UI and White – who arrived as president after the deal imploded and former President Bob Hoover resigned – the settlement puts most of the University Place issues to rest.

“There’s now a monkey free in Idaho,” White said. “It jumped off my back. It jumped off the university’s back.”

Lawrence Wasden, Idaho’s attorney general, said his responsibility in the settlement was chiefly toward restoring money from the foundation’s trust funds – known as the Consolidated Investment Trust.

“We think this is a very good settlement,” he said. “That trust is made up of about 1,000 or so individual endowments, and with this settlement that fund is now made whole.”

The settlement does not cover the foundation’s suit against the initial project developer, Civic Partners, or the developer’s counterclaim.

Originally planned as a $136 million, four-building campus in Boise, University Place was financed through a series of deals between the university and its fundraising foundation that were described as improper and potentially illegal by state investigators.

Between January 2000 and December 2002, UI and the foundation pursued the Boise development with what one former administrator described as “evangelistic zeal,” forging ahead in the face of warnings and uncertain financing, according to an extensive state investigation into the deal.

Hoover and former Financial Vice President Jerry Wallace were the key UI officials involved in driving the project. State investigators characterized Hoover as pushing hard to make the Boise project work – it was seen as a way to expand UI’s statewide reach and capitalize on the booming economy in the state capital.

The report characterized Wallace as the person who took care of the details, arranging the questionable transactions between the university and the foundation in his administrative role in both organizations.

Repeatedly, foundation assets were used to finance the pre-development costs, and university officials reassured the foundation that the money would be repaid when the state sold bonds to finance the project, according to the state report. But bonding officials eventually refused to repay any project expenses, and the project unraveled.

Eventually, the foundation wound up in a $26 million hole – though that was eventually trimmed to about $10 million. Attempts to reach foundation officials for comment were unsuccessful Friday.

Partly because of the project, the university found itself cutting more than 200 jobs and scaling back programs to get out of a $30 million deficit. The state, meanwhile, revamped its rules governing universities and their fundraising foundations to prevent the kinds of conflicts that arose with Wallace’s role, in particular. Hoover and Wallace both resigned, and Hoover cited the failures of University Place as the chief reason.

White said UI has balanced its budget and done most of the painful work needed and is moving forward with new goals and initiatives.

While the university spent more than $2.5 million on the project, it’s hard to disentangle exactly how much. White said the settlement is a good deal because further litigation would have been costly, and this gives UI some money that it can immediately apply to legal bills, academic programs and other university needs.

“We can now stop spending our money chasing money,” he said.