There was no haggling when Shannon Tourville and her husband, John, purchased their home in the Lochsa Falls subdivision in Northwest Meridian in June 2006.

It was the height of the building boom in the western Ada County community, and there were five competing offers for the 2,700-square-foot, four-bedroom home on West Grand Teton Drive priced at $349,000. Take it or leave it.

The Community Planning Association of Southwest Idaho (COMPASS) estimates almost 25,000 people streamed into Meridian between 2004 and 2007, making it the fastest-growing city in the state. The city's northwest region was the hottest real estate market in Idaho.

But that was before the economy began its downward spiral in 2007. COMPASS estimates Meridian's population will grow by only 2,200 in 2009.

Lochsa Falls also has changed. Almost every street now has at least one for-sale sign on display, sometimes more. Job losses have forced several families in the subdivision into foreclosure or short sales, Tourville said.

"Half of these homes are sitting vacant. The grass has overtaken the gardens, and they just look forlorn," she said.

A depressed housing market is not the only sign of hard economic times in Meridian.

® The Meridian School District will have to tap its rainy-day fund for $8 million for fiscal year 2009-10 to offset cutbacks in state funding and projected lower property tax revenues.

® Eighteen Meridian businesses have closed in the last eight months, according to the Meridian Chamber of Commerce.

® Commercial construction has become so scarce the Meridian City Council passed a resolution removing the police and fire impact fees included in the cost of a commercial building permit through Sept. 30.

Across the country, areas like Meridian that grew the fastest have become the hardest hit in the economic crisis. But it's not all gloom and doom; a couple of economic forecasting companies recently said that Idaho could be one of five states to lead the country out of recession. Recovery just might take a little longer to reach Meridian.

THE HOUSING COLLAPSE

In 2006, there were 1,625 home sales recorded in Northwest Meridian, and the median home price was $250,000, according to the Intermountain Multiple Listing Service.

Sales were down to 628 in 2008, and the median price was $200,000.

For the first quarter of 2009, there were 114 sales and the median price had fallen to $181,800.

Shaun Tracy, an agent with Re/Max Capital City, said the recession hit Northwest Meridian particularly hard because many of the homes were built and purchased at the peak of the market. Buyers never got in on skyrocketing appreciation rates, which left many owing more than the house is worth when prices began falling.

Jason Mayfield is a real estate agent with Keller Williams Realty Boise and lives in Lochsa Falls. His home has lost $75,000 of its value, and he said he expects the value to fall even further because of all the short sales in the subdivision.

Earlier this month there were 35 homes for sale in Lochsa Falls. That's not a huge number when you consider that the subdivision has almost 700 homes, he said. But 11 of the listings were short sales, where a lender is being asked to take less than what is owed on the house. That will drive down home prices in the area even more, Mayfield said.

"When you say 34 percent of the market is short sales, that is not good," Mayfield said.

When the economy improves, home prices are not expected to rise dramatically, based on the number of homes for sale and the availability of existing building lots. Buildidaho.com, formerly Buildingcredibility.com, has been monitoring the Treasure Valley residential real estate market since 2005. It estimates that Meridian has more than 2,700 residential lots waiting for buyers.

"You might see 1 percent or 2 percent appreciation," Tracy said. "But you're not going to see 20 percent appreciation again."

BUSINESS LOSSES

The economic downturn has helped close 18 Meridian businesses during the last eight months, said Terry Sackman, president of the Meridian Chamber of Commerce.

"I would consider 18 lost businesses in that time period a lot, yes," Sackman said. "You have to remember, for the last 15 years, Meridian has been a growth place. For people to go out of business was extremely rare."

The only sector of the business community to suffer multiple failures was the restaurant industry, which lost such familiar names as Carrabba's Italian Grill and Andrew's Rib Shack. Andrew's reinvented itself as a catering service.

The news isn't all bad - for each restaurant that closed, another has opened, including Buffalo Wild Wings and Gino's Ristorante, which moved from Boise. Other new businesses include a toy store, a scooter retailer and a rehabilitation and fitness center.

Restaurants are a good indicator of the economy's health, because during tough times people eat out less, said Don Holley, a professor of economics at Boise State University. So whether the four new Meridian restaurants can survive in the current economic climate is the question, Holley said.

"The way the economy is, we (consumers) are not spending enough to keep all these restaurants open," Holley said. "If four restaurants closed because there was no market, is there room for four more restaurants? I don't think so."

TAPPING THE RAINY-DAY FUND

The Meridian School District is rapidly going through its reserve fund.

Finance director Alex Simpson recently told the Board of Trustees that the district will spend $8 million of its $15 million rainy-day fund in 2009-10 to cover a shortfall in state funding, salary increases for eligible employees and a $1.8 billion decline in property values inside the district last year.

A large share of the money from the rainy-day fund will go for increased salaries and benefits for teachers, even though the 2009 Legislature froze teacher salaries. Meridian is contractually obligated to raise salaries in 2009-10 under a two-year contract negotiated with the teacher's union in 2008.

Unlike Pocatello and Coeur d'Alene, Meridian could not invoke a new law that allows a school district to declare a financial emergency to renegotiate its teacher contracts. One criteria for declaring such an emergency is that a district's reserve fund be less than 5.5 percent of its total budget, according to district spokesman Eric Exline. Meridian's $15 million rainy-day fund in September 2008 exceeded that percentage.

Without more state money, any additional expenses in 2010-11 will have to come from budget cuts, or from the $7 million left in reserve, Simpson said.

The school district also has been victimized by the financial markets. In May 2008, money it had invested through the Idaho State Treasurer's Investment Pool was earning about 3 percent. In May 2009 the rate of return was down to 0.63 percent, Simpson said.

Plans are in place, starting this fall, to offer lower starting salaries for bus drivers and require a 30-day waiting period before new employees are eligible for health and dental insurance.

COMMERCIAL REALTY FOLLOWS RESIDENTIAL

In early 2008, commercial developer Mike McCabe was making plans to start building The Hub in downtown Meridian in spring 2009.

The 28,000-square-foot, three-story, mixed-use project is a joint venture between McCabe's Lightyear Development and Meridian Development Corp. It would be the biggest downtown development since Meridian City Hall.

What McCabe wasn't counting on was an economy that would slow so dramatically, followed by a credit crunch that would make financing almost impossible to obtain.

Now McCabe projects a starting date of spring 2010, and that's only on the assumption that a restaurant signs a lease for the first floor and tenants can be found for the second floor. The third floor is under lease to Johnson Architects and Agree Technologies.

"I still believe in downtown commercial development. But it's going to be a little while (before development starts again)," McCabe said.

The resolution recently passed by the Meridian City Council to remove police and fire impact fees from the cost of a commercial building permit amounts to about 31 cents per square foot, or a savings of $3,100 on a 10,000-square-foot building.

"It might help some smaller owner-occupied commercial developments," McCabe said. "But a bigger project is more challenging. It's not going to be a make-or-break trigger for a project like The Hub."

Joe Estrella: 377-6465