House clears bill to force sale of state-owned commercial storage facility

House clears bill to force sale of state-owned commercial storage facility

by
Dustin Hurst
March 5, 2012
Dustin Hurst
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March 5, 2012

On Monday, the Idaho House approved a bill to force the state to sell a commercial storage facility it purchased in 2010 and would prevent Idaho from buying other businesses.

The measure, House Bill 495, cleared the House on a 66-3 vote and now heads to the Senate.

The legislation wouldn’t prevent the state from owning properties, but it would stop officials from buying and running businesses. Under the plan, the state could still own commercial properties, including the several office buildings it holds in downtown Boise.

The legislation would also force the state to sell the commercial storage facility within a certain period of time.
The state, through the school endowment fund, purchased Affordable Storage in Boise for $2.7 million in 2010. The Idaho Department of Lands (IDL), which administers the endowment fund, believes commercial properties provide a greater return on investment, but the bill sponsors object on philosophical and fiscal grounds.

Rep. John Vander Woude, R-Nampa, argued allowing the state to dabble in the private sector is unconstitutional, as well as risky for endowment funds, which are distributed to schools and other programs yearly. “I question whether this is the proper role of government,” Vander Woude told colleagues.

Even if it is the proper role, Vander Woude noted, commercial investments don’t provide much return on investment. According to department projections, commercial properties have returned 1.23 percent to the endowment fund in the last 10 years, an artificially boosted figure because government-owned properties don’t pay property taxes. “Their numbers, not mine,” Vander Woude said.

In the committee hearing on the measure, IDL director Tom Schultz didn’t take a position on the bill, but noted that his agency’s investment activities reduce tax burdens for state residents. “Our motives are pure,” Schultz said. “Our motive is to generate revenue to support education and defray taxes in the state.”

The storage facility alone has returned 8 percent on the state money, Schultz noted in the panel hearing. “Should we be doing that?” Schultz asked after pointing out the high returns. “That’s a decision for you to make.”

Rep. Grant Burgoyne, D-Boise, the legislation’s co-sponsor, argued the state lacks the expertise to effectively run businesses, which could hurt investment returns. In prior interviews, Burgoyne called the storage facility purchase “pure socialism.”

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