Land Board critics skeptical of ‘suspension’ of commercial property purchases

Land Board critics skeptical of ‘suspension’ of commercial property purchases

by
Idaho Freedom Foundation staff
February 20, 2014
Idaho Freedom Foundation staff
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February 20, 2014
[post_thumbnail] John Runft, a critic of the state Land Board investing in commercial real estate, worries that the board voting to suspend such purchases is temporary, not a permanent shift in policy.

The board of directors of the Idaho Department of Lands has voted to suspend the practice of obtaining commercial properties.

However, critics of the Land Board note that the vote is a suspension, not a permanent policy decision. So they remain skeptical of the long-term intent of the board.

The department’s asset management plan, officially adopted by the Land Board in 2012, called for the department to invest heavily in commercial ventures.

Department spokesperson Emily Callihan told IdahoReporter.com in November of that year that the department’s quest was for a more diverse portfolio and included the pursuit of “more leasing activities such as office-retail, commercial energy resources, commercial recreation, communication sites, industrial facilities, and many other types of leasing scenarios that fit under the ‘commercial real estate’ asset classification.”

Reaction to the board’s decision to now suspend commercial real estate purchases was guarded among legislators and private citizens who have been opposed to the Land Board investing in purchases that compete with the private sector.

“My first thought is that they are only suspending this practice. That is, they are interrupting it or postponing it,” former Idaho state legislator and self-described IDL watchdog Bob Forrey told IdahoReporter.com. “They apparently are not doing away with the practice and it would seem to me that they are going to suspend this until after the election because the board members don’t want to face the electorate while they’re engaging in this kind of activity. I presume we’ll see this return after November’s election.”

In recent months Forrey and other private individuals across the state formed a grassroots movement called the Tax Accountability Committee (TAC), which has focused much of its attention on the Land Board’s activities.

John Runft, a private practice attorney in Boise and a leading voice among the TAC, said he shares Forrey’s concern.

“Some of the clients that I represent as well my associates at the TAC support this move from the Land Board because it’s a move in the right direction,” Runft commented. “But we also note that the decision is only a suspension, and not a termination of the policy and the plans to acquire commercial property. We look forward to the time when the department permanently terminates this policy.”

Another Land Board critic observed: “We need to get the Land Board, the department of lands, the Legislature and other stakeholders including the endowment beneficiaries together,” Rep. Grant Burgoyne, D-Boise, said. “First, we were going to exchange cottage site leases for timber land and then the rug got pulled out from under that. We were going to have the state get into commercial property and now that’s ended. We need to get together, roll up our sleeves and work on these issues. We have got to craft a consistent policy of land acquisition, management and disposal going forward.”

Rep. John Vander Woude, R-Nampa, said of the Land Board’s decision that “They have finally come around. I’ve been fighting with the Land Board for three years, and now suddenly they may be realizing that their actions are not productive.”

The Idaho Department of Lands was established in the Idaho Constitution to manage Idaho’s original endowment lands. Consisting of statewide constitutional officers (the governor, attorney general, secretary of state, state superintendent of public instruction and state controller), the current members of IDL’s governing board have stipulated that the Idaho Constitution requires them to manage the public lands that were granted to Idaho at the time of statehood “in such manner as will secure the maximum long term financial return to the institution to which granted.”

The current board members have been criticized for using funds derived from the sale of public lands to buy and operate commercial properties. Critics worry that the IDL is competing against the private sector, while local government authorities complain that private properties acquired by the IDL deplete city and county government of tax revenues because property acquired by the IDL is no longer taxed.

After many months of pursuing the same course, why would the Land Board reverse course now?

“The board members’ vote was based on recommendations from the subcommittee that the governor appointed last month,” said Jon Hanian, spokesperson for Gov. Butch Otter, who had appointed a task force to investigate the Land Board’s dealings.

Dan Goicoechea, spokesperson for the state controller, Brandon Woolf, rejected the notion that the board’s recent decision represents any kind of policy reversal for Woolf himself. “The adoption of the asset management plan predates Controller Woolf’s service on the land board,” he told IdahoReporter.com. “If anything, Mr. Woolf has been the board member who came on to the board asking about a divestiture plan, not looking for more acquisitions.”

However, Woolf, who was appointed by Otter to fulfill the term of former Controller Donna Jones in 2012, told IdahoReporter.com on Oct. 16 of that year that he supported his predecessor’s choice in purchasing the Affordable Storage commercial business. “Had I been on the Land Board at the time of the Affordable Storage purchase, I would have voted as Controller Jones did,” Woolf said in a telephone interview.

Vander Woude told IdahoReporter.com that he intends to request an interim committee to study the Land Board, with the idea of making recommendations on how it might be legislatively changed.

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