These apartments were going to revitalize part of this Boise-area city. What went wrong?

The developer behind a downtown Meridian vision to bring 350 apartments and 12,500 square feet of commercial business space to the growing city failed to pay the contractors on the project for months, according to lawsuit.

Seven contractors and subcontractors are suing Galena Opportunity Fund, the development company behind the Union 93 building, which was expected to go up across from Meridian City Hall on Broadway and Main streets.

The companies said they worked for months on the building without being paid, according to the lawsuits. The companies are seeking $17.3 million for work they say they completed but were not paid for.

Union 93 funding falls through

Through its attorney, James Donoval, Galena Opportunity Fund said it doesn’t deny that the companies were not paid for work they completed.

“(Galena) had secured financing that they thought was a sure thing for the back end of the project,” Donoval told the Idaho Statesman by phone. “(Galena) put up a bunch of front-end money to start the project and then at some point in time, the partner that was supposed to fund a substantial portion of the project backed out in 2022.”

Donoval declined to tell the Statesman who the investor was.

As Galena tried to find alternative funding, the contractors continued to work, “thinking that my client was going to get a second, a second chunk of funding to finish the project,” Donoval said.

But Galena didn’t.

In September 2022, Donoval said, the contractors stopped their work. Then, he said, the companies filed liens and lawsuits against Galena.

Union 93 is located within an opportunity zone, one of 28 areas throughout Idaho that are designated as economically distressed. New investments in these areas qualify for tax benefits through the federal government, the Statesman reported.

Galena has 10 opportunity-zone projects in the Pacific Northwest, mostly in Washington state, the Statesman reported. In 2021, Dan Fullmer, Galena’s chief investment officer, told the Statesman that Union 93 would not have been possible without the opportunity zone.

“Opportunity zone money is intended to come into blighted or early stage areas where typical investors want a lot more security than in an area that has already been beautified,” Fullmer said.

Galena ‘optimistic’ it will secure funding

Bill Truax, president of Galena Opportunity Fund, did not respond to a request for comment about the lawsuits, but Donoval said Galena is “still optimistic they’re gonna get the funding to complete the project.”

The contractors’ case against Galena is scheduled to go to trial in September, but Donoval said he is hopeful he can reach a settlement with the companies. Aside from some disagreements related to the exact amount that the companies are claiming they are owed, Donoval said Galena will pay back what it owes.

The plaintiff companies include general contractors Okland Construction Co. and CM Co. Inc.; Axiom, an engineering firm; Jackson Main, an architecture firm; Idaho Pacific Lumber; Sunroc; and Concrete Construction.

Even after nearly a year of trying to secure alternative funding to finish Union 93, Galena is still “avidly” trying to find the money.

“It’s pretty close,” Donoval said, but he added it may take another week or so. “They’re intent on getting funding and getting all these plaintiffs paid off and continuing the project.”

What happens next?

If the case ends up in a trial, Donoval said, Ada County Magistrate Judge Annie McDevitt may order Galena to sell the Union 93 property to pay back the debts.

If that happens, Donoval said Galena is confident that an assessment of the area, which now consists of some infrastructure, a concrete pad and portions of ground-level structures built, will come back higher than the $17 million owed to the contractors.

“It’s not raw land,” Donoval said. “It’s got some of the infrastructure to finish the buildings.”

The Union 93 project is within Meridian’s Union urban renewal district. The Meridian Development Corp., the city’s urban renewal agency, created the district in 2020.

The year a district is created, the property taxes collected by authorities like the city, county and highway district freeze. For the next 20 years, any increase in property taxes as a result of new development or increases in property values are diverted to the urban renewal agency, which spends those funds on public improvements in the district.

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