Boise County, Idaho Files for Bankruptcy

Boise County, Idaho, has filed for municipal bankruptcy protection, but not because of falling tax revenue, rising spending, unfunded pension obligations or any of the other problems that have raised concern about city and county finances nationwide.

The small, rural county—which, despite its name, isn't home to the capital city of Boise—sought protection from its creditors this week because of an inability to pay a multimillion-dollar judgment against it, County Commissioner Robert A. Fry said.

Municipal-bankruptcy filings are uncommon—this is the first in 2011, and there were six in 2010, according to Jim Spiotto of law firm Chapman and Cutler LLP—and frequently are associated with speculative land development, many in California and Florida.

Mr. Fry said in a telephone interview that the county, population about 7,500, had little choice but to seek bankruptcy-court protection after it lost a federal lawsuit brought by the developer of a proposed residential treatment facility that would have housed 72 boys.

When the county placed restrictions on the developer, Oaas Laney LLC, the firm sued under the federal Fair Housing Act and won a $4 million judgment plus $1.4 million in attorneys' fees. Boise County has an annual operating budget of about $9.4 million.

The county appealed while simultaneously trying to work out a settlement with the developer. That didn't work, and the firm threatened to seize county assets, according to Mr. Fry.

"We made an offer that was the maximum we could reasonably be expected to pay," the commissioner said. "But they said they were going to seize county funds. That left us with little options."

Oaas Laney couldn't be reached for comment.

The county filed an appeal notice, which now has been stayed because of the bankruptcy filing, Mr. Fry said.

Boise County has no bonded debt.

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Posted in bankruptcy , Boise County , Idaho , Municipal Bankruptcy