Constitution

Land Board Defends Private Venture

After the GUARDIAN broke the story about the Idaho Land Board going into the private storage business last, Director George Bacon offered up a damage control missive in the DAILY PAPER Sunday justifying the need for the state to enter the tax exempt rental business.

In addition to their $85,000 contract with the Guv’s election campaign firm, state officials have been busy “educating the public” about public education funding. Our guess is they will have to plead their case before the next session of the legislature as well, but who knows…the politicos may encourage even more private ventures if they will help balance the budget!

Here is Bacon’s justification:
There has been some concern expressed over the recent acquisition of a storage facility in Boise. The news stories and opinion pieces regarding that transaction provide an excellent opportunity for Idahoans to learn more about the purpose of “endowment lands” in Idaho.

The property, known as Affordable Self Storage in Boise, was purchased in the name of a trust that was established in 1890 to help support Idaho’s public schools. This property and millions of acres of other land in Idaho, called “endowment lands,” are held in trust for various state institutions. It is important for Idahoans to understand how the State Board of Land Commissioners (or Land Board) and the Department of Lands fit into the management of these trust properties for the “endowed” beneficiaries.

At statehood, most states west of the Mississippi River received land grants to help them support vital services. In Idaho, the grants delivered 3.6 million acres to nine separate trusts that support 14 specific beneficiaries. Beneficiaries include schools, universities, veterans’ homes, prisons and other institutions.

These trust lands are not “public” lands like federal lands. They are not like state parks or other properties owned by the government. Endowment lands belong to the beneficiaries and are held “in trust” for a specific purpose — to make money. Use of the land provides income for the beneficiaries and pays for the costs of management. No tax dollars are used. Just like any private enterprise, the trusts have to support themselves.

The trusts were established in 1890 to operate as a business. In fact, Idaho’s Constitution requires that the land be managed to maximize the long-term financial return to the owning beneficiaries. The constitution also names the Land Board to serve as trustees.

The Land Board consists of the governor, the secretary of state, the attorney general, the state controller and the superintendent of public instruction. Their responsibilities as trustees are totally separate from their other weighty duties of running state government. That is an important distinction. The Board must act with undivided loyalty to the trusts, in spite of what others might want.

Although the state protects the interests of the trusts, it is private business that operates on the land. Not only does endowment land earn income for state institutions, it creates jobs for private industry. That is a model that has worked pretty well over the last 120 years.

In fact, during that time the trusts have built a portfolio of about $3 billion in financial and land assets. Right now, those assets provide $46 million in distributions to schools and other institutions each and every year. That number will grow as investments grow. That’s $46 million produced by delivering goods and services in the open market. That’s $46 million earned through hard work and the wise management of property. That’s $46 million left in tax payers’ pockets.

When every Idahoan understands the nature of endowment land, they will agree that our founding fathers were pretty smart. We can say with them — that’s a good idea; that’s good stewardship; that’s good government. That’s keeping the trust!

Comments & Discussion

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  1. How does a private individual compete with a government entity? There was no mention of any sales, income or property taxes paid by the “investment” business trusts outined by Mr. Bacon.

    The single proprietor who gets stuck paying all the taxes stated above and probably more can’t compete with this lopsided deal.

    If they do pay all the taxes a private operator enjoys then the deal is on a level playing field. Nowhere did Mr. Bacon say this was the case.

  2. “Not only does endowment land earn income for state institutions, it creates jobs for private industry.”

    Ok, WHAT jobs??? Would our energetic Guardian leader consider asking them to itemise the kinds and numbers of jobs created by these Land Board operations, say, between 2007 and 2010(to make it easier and relevant to today)?

  3. Rod in SE Boise
    Nov 29, 2010, 12:07 pm

    Would Mr. Bacon provide us a complete list of the 14 beneficiaries?

  4. We keep talking about an advantage but no one has put up actual rental rates.

    Here are rates found via web or phone call for storage facilities in the area. If there was an option for non-climate controlled, that rate was used below. 10′x10′ was the most common size eventhough Affordable does not currently have any available.

    Storage Business Location 10′x10′ Monthly Rate
    Affordable Storage- Maple Grove $50
    Boise Self Storage- Orchard/Overland $100
    Idaho Self Storage- Fairvew $75
    Access Boat & RV- Amity $60
    Stor-It Self Storage- Maple Grove $54
    StoragePLUS Self Storage- Victory $69

    Average throwing out the high and low- $64.50

    Affordable is on the low end of rates but was probably that way before the state acquired it. Does the state have plans to raise rates?

    Rod- All are listed on the Idaho Department of Lands website. http://www.idl.idaho.gov/LandBoard/index_lb.html#bene

  5. When can we anticipate the Land Board’s entry into the fast food franchise business? Or maybe gas convenience stores? Could they possibly buy the right to re-open Ralphs Toys and Hobbies? I loved that place. What about Nordstroms? We need one of those in Boise. Come on, Land Board!!!

  6. Although it is felt not to encourage government to be in competition with private enterprise, I guess the answer is in the eye of the beholder. If I were an owner of a storage facility I would be incensed that our state was in competition with me and not playing on a level field, as they do not have a lot of the same costs associated with land ownership. As a private citizen taxpayer, on the surface it sounds like a good deal, but I can’t remember a governmental agency running a business such as this anywhere but into the ground…… (at tax payers’’ expense) If you’re interested in knowing the full equation of this purchase by the land board, follow the money backwards……

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