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Land Board has no business competing with the private sector

Land Board has no business competing with the private sector

Wayne Hoffman
October 22, 2013

Forgive me if I don’t take a lot of comfort in the Land Board’s decision a few days ago to reject a plan to exchange 69 cottage sites on Priest and Payette lakes for $25.5 million in commercial property. The Land Board’s decision is great.

But the underlying problem remains: Our government, for all its hooting and hollering about supporting conservative values, can’t help but be an integral, if unwelcome, part of the marketplace. Heck, the state of Idaho owns commercial real estate throughout Idaho, including a storage business, and has poured tons of money into a downtown Boise bar. The state wants desperately to acquire more land.

I’ll be convinced the Land Board—which includes the governor, secretary of state, superintendent of public instruction, controller and attorney general—are sincere when the board swears off the notion that it’s OK for the government to own business enterprises. It hasn’t done so to date.

The Department of Lands wanted to swap the cottage site properties for commercial buildings in Idaho Falls and an office building in Nampa. The agency said the land trades would mean more money for Idaho’s public schools. But critics, me included, have argued that purchases would take the property off the tax rolls, resulting in added pressure on other taxpayers to make up the loss in revenue.

Other criticism involves whether the appraisals for the building being swapped were on the up and up. And that seems to be where the Land Board choked on the deal.

The Department of Lands has not backed away from its belief that engagement in the marketplace—being a landlord and business owner—is not a bad thing. Printed on all the department’s land swap documents are these words: “The state will not undercut the commercial real estate market with its rental rates because the IDL must charge market driven rents. Like state endowment owned forestlands that compete with privately owned lands in the sale of timber, the IDL must charge a market price for the use of the asset.”

It’s that kind of warped thinking that gets us in trouble, and should terrify anyone in business. The government—the state government, lauded for its sense of conservatism—believes that by charging “market-driven rates” that it will not undercut its competitors. So, as long as the state charges the same prices for automobiles, hotel rooms and cans of beans—the state can enter any line of business without harm to the private sector, whether they are car dealers, hoteliers or grocers. That’s clearly a bucket of bull.

If government participation in parts of the economy is good for Idaho and its schoolchildren, clearly we should be doing more of it. Considerably more. The state is only limited by its availability of money and imagination. Of imagination, the government has plenty, including the concept that the state’s ownership of commercial real estate isn’t truly “government ownership,” it’s “endowment” or “trust” ownership. Those be two separate things, don’t ya know.

Such impaired thinking makes me believe the land exchange proposal in due time will be back before the Land Board. The appraisals will be validated, and our so-called conservative executive branch officials will dive in. Idaho businesses will lose, taxpayers will lose and another vestige of free market capitalism will be destroyed, right here in “conservative” Idaho.

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