The Greater Boise Auditorium District is asking a judge to allow the district to borrow as much as $23 million for the construction of a new ballroom, commercial kitchen and furnishings for that space.
The new convention space would be part of City Center Plaza, a $70 million commercial development the Gardner Co. plans to build on U.S. Bank Plaza, which the company bought last year. In addition to the district's space, City Center Plaza would have room for several restaurants, parking, office space and an underground public transportation hub.
Under normal circumstances, public agencies in Idaho need supermajority voter approval in order to borrow money long term. Capital City Development Corp., Boise's urban renewal agency, does not need that approval.
In this case, the district would use its 5 percent tax on hotel-room rentals throughout Boise to make payments on bonds the renewal agency sells. The agency would act as a pass-through for the money. It would not own the building and would not be on the hook if something goes wrong and the district can't make its payments of $1.5 million to $1.6 million per year.
Instead, bondholders - the companies that lend money for the project - would own GBAD's portion of the building and lease it to the district on a series of one-year, renewable contracts. When the district pays off the bonds after 20 to 25 years, it would own the property. If the district couldn't - or wouldn't - pay, the bondholders would retain ownership.
Nicholas Miller, the district's bond lawyer, said there are several precedents for this scenario in Idaho. The most recent was in Pocatello, where a judge recently approved an almost identical transaction.
In fact, the district paid for Boise Centre, its convention center, through a similar bonding agreement. The district paid off that bond 18 months early, executive director Pat Rice said.
Ada County Treasurer Vicky McIntyre, who is not involved in the transaction but routinely buys bonds in her elected role, acknowledged those precedents. But she said she doesn't trust the bonds as the district has described them because there's no guarantee the district will keep paying them. When McIntyre buys bonds in her official role, she wants the agency that's selling them to be the same one that's securing them.
Boise watchdog David Frazier said he plans to sue to stop GBAD from entering this agreement without a vote. Frazier is no stranger to debt-related lawsuits, having successfully stopped the city of Boise from borrowing more than $20 million without an election to build a parking garage at the Boise Airport.
Borrowing money for its part of the City Center Plaza project allows the district to use its savings to pay for other components of the Boise Centre expansion.
Those include a $5 million renovation of the existing Boise Centre, a $2 million walkway that would connect the new building to the existing convention center, and a few million dollars for equipment and fees for architects, lawyers, accountants and other professional services.
Without the bonds, Rice said, the district could have to build these components one at a time as money comes in.
At the earliest, a judge could hear GBAD's arguments by mid-July, Miller said. After that, it's hard to say how long a decision would take, he said.
Gardner plans to start building City Center Plaza in July.
Sven Berg: 377-6275