The Dwarven Sinkhole
Originally a small quarry on the property of Beregon Hillstar, this area was the source of much of the stonework in the area. Beregon retained the services of a dwarven family of miners, who lived in the quarry in return for their work.
However, unknown forces (and theories vary - some say drow, Zhentarim, or Cult of the Dragon) burrowed up into the quarry and slew the dwarves. Only quick action by a band of adventurers who were spending the evening at the Old Skull inn prevented an invasion of the city (or so say they). Their actions, however, included free use of fireballs and lightning bolts, such that the entire quarry complex and its attendant mines collapsed in on the supposed invaders. The sinkhole spread, taking with it most of Beregon's farm.
Since that time, the community has used the sinkhole first as a dump and later as just a dumping ground for excavated earth, particularly that moved for the new temples. It is a regular stop on nightly patrols through the settlement, but to date nothing has come out of the pit to challenge the worthies of Shadowdale.