A citizens’ activist group and two members of the Idaho House of Representatives Monday expressed “serious concerns” about the Idaho Department of Lands plans to acquire and operate more commercial property.
They held a press conference at the state Capitol Monday, decrying lack of legislative oversight for IDL as well as IDL decisions competing with the private sector.
“We have serious concerns about both the policies and the activities of the IDL,” said John Runft, a private practice attorney with the Runft and Steele law firm in Boise. Runft is active with the Tax Accountability Committee (TAC), a loosely organized group of individuals from around the state that meets periodically to discuss and analyze the many ways in which the Idaho state government spends the public’s money.
“We believe there are serious problems with IDL’s Asset Management Plan (a plan published by IDL outlining its intent to purchase more commercial property), and we are urging the Idaho attorney general to investigate the matter,” said Runft.
Runft was joined by House Assistant Minority Leader Grant Burgoyne, D-Boise, and House Majority Caucus Chair John Vander Woude, R-Nampa, as they singled out one of IDL’s dealings from November of 2012. At that time, the board of directors of IDL unanimously approved a swap of approximately 14 acres of land in McCall (which was then being used by the University of Idaho’s McCall Outdoor Science School) in exchange for a privately owned commercial building located in Idaho Falls.
The McCall land, described as endowment lake front property, was appraised at $6.1 million. “We have serious concerns about how IDL determined that the office space in Idaho Falls just happened to also be worth exactly $6.1 million,” Burgoyne commented.
In a letter written on behalf of TAC and addressed to Tom Schultz. IDL director, and all of IDL’s board members, Runft argues that IDL used appraisal data for the Idaho Falls property that was derived by faulty means.
Runft said the Idaho Falls office space was compared by IDL to similar properties in Texas, Ohio and Utah. He noted that the value of the Idaho Falls property was determined by examining office space in "vastly different markets with higher lease rates than the market rates in Idaho Falls." Through an independent appraisal commissioned at their own expense, TAC estimates that the Idaho Falls property should have been valued at approximately $1.3 million less than IDL’s figures.
Both Burgoyne and Vander Woude stated that the procedures that led to the appraisal of the Idaho Falls property and the approval of the land swap need to be changed. “There needs to be an appraisal review process put into place with the Land Board, and we will be introducing legislation that will allow for that next year,” Vander Woude stated.
“I’m not saying there is corruption here, but I am saying that this situation is potentially very dangerous,” Burgoyne added. “As members of the Legislature, we are elected directly by the people of Idaho and we serve them directly. We can provide oversight to the Land Board and serve as a board of directors, of sorts, to them.”
In recent years, the board members of IDL have been criticized for investing in commercial property in competition with the private sector. Consisting of the statewide constitutional officers (the governor, attorney general, secretary of state, state superintendent of public instruction and state controller), the current board members 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.” This, according to IDL board members, is said to imply a “fiduciary responsibility” for the board members.
The Land Board has sought to uphold this fiduciary responsibility by taking funds derived from the sale of public lands, using them to purchase for-profit business entities and commercial properties.
For example, IdahoReporter.com reported that in late 2010 that the Land Board had voted unanimously to purchase Affordable Storage, a commercial storage business in Boise.
Months later in 2011, Otter told IdahoReporter.com that this purchase was a “mistake,” while Superintendent Tom Luna expressed regrets as well. The three other members of the Land Board—Attorney General Lawrence Wasden, Secretary of State Ben Ysursa and then-Controller Donna Jones—all stood by their “yes” votes.
Then again in early 2012, the Land Board purchased a commercial building in downtown Boise and arranged a lease agreement with the 10 Barrel Brewing Company of Bend, Ore. The Land Board continues to lease the property to 10 Barrel Brewing as the company operates a sports bar and restaurant in downtown Boise near the Capitol.
“We don’t see that there is a steady hand at the wheel of the Land Board right now,” Burgoyne said. Noting his concerns for the Land Board operating commercial businesses and competing against privately owned enterprises, Burgoyne added that “some people devote their entire careers to becoming experts in operating storage businesses or becoming experts in the field of commercial real estate or restaurant ownership. We have a Land Board that seems to think that they can be storage business experts one day and commercial real estate experts the next, but those of us who have actually operated businesses in the private sector understand that if you don’t really know what you’re doing you can lose it all pretty quickly.”
“Commercial businesses operated by the Land Board aren’t operating on a level playing field,” added Vander Woude. Noting that the state does not pay taxes when it operates commercial businesses, he stated that “this is tax revenue that would otherwise be used for Idaho’s school children and our public schools.”
When asked about the assertions that Burgoyne, Vander Woude and TAC were making about the IDL, Jon Hanian, spokesperson for Otter, deferred to IDL spokesperson Emily Callihan.
While Callihan was unavailable for comment, Renee Miller, assistant to Tom Schultz, IDL director, told IdahoReporter.com that IDL was declining to comment pending a full review of TAC’s claims.