Recently, there was much attention paid to the Boise City Council’s decision to relocate The Cabin, a historic city-owned structure, which houses a nonprofit by the same name. The attention will most likely continue for months, as the council decided to move The Cabin, but has yet to decide where.
For this situation overall, a simple question lingers: Why are city councilors so focused on where to move this building?
The answer: The city owns this building and, in 1996, it entered into a 30-year-lease agreement with the nonprofit. Thus, the city is contractually obligated to provide a structure and location for The Cabin through 2026.
The 30-year-lease is proving costly for the city—specifically costing more than what the city collects in rent. City officials estimate that moving The Cabin will cost $650,000. To date, The Cabin has paid the city $23 in rent—for the past 23 years. Under its lease agreement, The Cabin only pays $1 a year. By the end of its lease in 2026, the organization will have paid a grand total of $30—for 30 years.
Thus, the relocation of The Cabin will cost city taxpayers approximately 21,000 times more than the total rent paid by the nonprofit.
As if the above weren’t bad enough, it gets worse…the entire system of the city renting out public land and structures under decade-long leases is costly in another way: city planning.
With few exceptions, the reason the city can rent out its vacant lands and unoccupied facilities is because it is not currently using them. The city does not sell said holdings because one day it intends to use them.
Decade-long leases are widespread in the city. Of 69 lease agreements I examined between the city and nonprofit, commercial, or industrial organizations, 27 had lease agreements that last more than 10 years. The longest lease agreement is for 60 years.
Some of these longest leases have the lowest rents—at $1 a year. Of the 27 leases with a duration greater than one decade, eight charge an annual rent of $1, with no rent increases—ever.
The impact of these decades-long rental agreements: The city’s accountability lies with the organization it is leasing to instead of city residents. When a plot of land is wrapped up in a 20-year lease to a farmer, nonprofit, or business, that land cannot be converted into a park or city building. Or, in the specific case of The Cabin, when the responsibility is to the organization instead of city residents, taxpayer funds are used to relocate a facility for an organization that only pays $1 a year in rent.
The solution: If the city chooses to lease a plot of land or a facility, it should only enter into lease agreements that last ten or fewer years—not 60 years. Decades-long leases wrongfully place the publicly-funded land with the organizations renting them, and restrict the city’s ability to use public lands to benefit the public. The property belongs to the people, and the city should not be acting as a real estate business.