Don Johnson's family has been farming in Kuna since 1943.

Now 72, Johnson is worried about losing his 124-acre farm because he joined the city's local improvement district in 2006 to help the city expand its sewer capacity and promote economic growth. Had the growth continued, residents stood to make several times the amount they paid for the land; at least one landowner said he had million-dollar offers.

Then the economy tanked. Property owners who pledged their land to secure the $27 million the city used to build a wastewater treatment plant with a capacity of 13,000 sewer hookups now say they face foreclosure.

"We were trying to help the community," Johnson said. "They kept saying they needed more sewer capacity."

Mayor Scott Dowdy says the landowners are getting ahead of themselves. The Idaho statute that allows cities to create local improvement districts precludes lenders from foreclosing on the property for three years, he said, and the economy could recover in that time.

The district consists of 187 members, including 26 individual property owners, limited partnerships, banks, homeowner's associations and builders. Each agreed to be assessed a portion of the more than $27 million owed on the plant.

They plan to put their questions to the Kuna City Council during three days of protest hearings next week.

But even Kuna residents not involved in the district will be watching the hearings closely, worried that their taxes could increase if the city must assume the debt. How much taxes would increase is unclear.

In the meantime, the city is trying to help by using the $4,200 collected each time a sewer connection is sold to pay off some of the improvement district debt, Dowdy said.

After the hearings, landowners will have 30 days to pay what they owe in full. If they don't, they will have to begin making payments in December 2010.

Rumblings of litigation against the city are growing louder, Kuna officials say. Landowners say the city encouraged them to join the district, and they want it to pick up the tab.

"We're figuring on it (a lawsuit)," said City Engineer Gordon Law.

Local improvement districts are common in Idaho, according to Stephanie Bonney, an attorney with Moore Smith Buxton & Turcke in Boise, but usually not involving undeveloped, bare ground.

"There is nothing that says you can't use it for bare ground," she said. "But traditionally, it would be used for things like a subdivision that needed paved streets or a community water system."

BAD TIMING

The improvement district was envisioned as a win-win for everybody. The city had reached its limit for sewer hookups and couldn't grow further. Real estate developers eager to build housing in the area suggested the city create the district to fund a new wastewater treatment plant that would increase the city's supply of sewer connections and allow more development, Dowdy said.

Under the Idaho statute that applies to local improvement districts, landowners pledged more than 2,700 acres throughout Kuna as collateral so the city could obtain a $15 million loan to build a treatment plant with a capacity of 8,500 hookups.

That number grew to 10,000 hookups when the city's consultants pointed out that 8,500 hookups would cover the improvement district but would not provide a reserve for future growth. The number grew to 13,000 hookups when Osprey Ridge Development offered $1.5 million as a down payment for 3,000 sewer connections for its residential project.

The benefit to the landowners who were risking their property was that trading a septic system for sewer connections could make their property extremely valuable to developers.

"They (landowners) would trade sugar beets for rooftops," said Kuna City Planner Steve Hasson.

What nobody could envision was the housing market crash after construction had already begun on the treatment plant. Developers who had supported creating the district no longer wanted to purchase the land. That left the district's property owners to pay off the plant but nobody to sell their land to in order to raise the money.

"Three or five years ago it (the improvement district) seemed like a good idea," said Kuna City Mapper Mike L. Borzick. "But it was an investment. And all investments are risky."

Adds Dowdy: "If the real estate market was still going like it was three years ago, nobody would be protesting anything."

$3,200 PER HOOKUP

The cost of the plant is being divided based on how much acreage has been committed to the improvement district. The district has 8,500 of the plant's potential 13,000 hookups set aside for its landowners. Each acre receives three sewer hookups at a cost of $3,200 apiece. That means 372 hookups on Johnson's 124 acres, or a bill of $1.2 million.

"We've been told that we can pay it off immediately, if we want, and avoid interest," Johnson said. "Yeah. How are we going to do that?"

Ozzie Gripentrog, a senior budget analyst for the city of Boise, purchased 36 acres between Lake Hazel and Columbia roads in 2002 at about $8,000 an acre. He planned to build a home for his wife, Loral, and their two children after they moved to Idaho from Nevada in 2004. They initially settled in Meridian. By then, developers were offering millions for their Kuna property.

Gripentrog was not interested in selling, even though "the last written offer I had was $65,000 per acre in 2006."

Gripentrog now owes almost $350,000 for 108 sewer hookups he does not have.

"If I wanted to develop the land tomorrow I couldn't, because they didn't even run a line near my property," he said.

Dowdy said the city's agreement with landowners stipulated that running lines to land owned by district members would be the responsibility of the developer.

Unlike some, Gripentrog wants to hold on to his Kuna property as an inheritance for his children and has arranged private financing to pay off his debt.

"I'm paying $350,000, and at the end of the day I don't get any benefits (from the district)," he said.

Joe Estrella: 377-6465