EDITOR NOTE–THE FOLLOWING POSTING IS BY FORMER COUNTY COMMISSIONER SHARON ULLMAN. THE GUARDIAN HAS READ THE CONTRACT AND IT LOOKS TO US THAT ULMAN HAS IT RIGHT ON THIS ONE. THE COUNTY WILL PAY TAXES THEY SHOULDN’T PAY AND THERE IS NO VOTER APPROVAL FOR WHAT IS OBVIOUSLY A LONG TERM DEBT.
Ada County has leased – with an option to purchase – the Smith Building at Sixth and Myrtle Streets in downtown Boise, from a company that does not even own it.
The idea of a “Justice Center” – a one-stop shop for victims of rape and domestic violence – is a worthwhile idea. The problem with the project is the way Ada County legal beagle Greg Bower and Commishes Judy Peavey-Derr, Fred Tilman and Rick Yzaguirre have set up the financiing for the facility.
Ada County will dump $600,000 cash into “remodeling” the dilapidated Smith Building. Senator Mike Crapo (R-Idaho) helped secure a $1 million HUD grant, also public tax dollars, that will apparently offset some of the County’s costs for this project.
In addition to the up front money, the County is also paying Oaas and Laney $374,000 a year to lease the property. Oaas and Laney, in turn, have their own lease with an option to purchase the building from its true owners, Mutual Investments Company. Oaas and Laney are expected to put an estimated $1 million into the facility to complete agreed-upon improvements.
If the County does not exercise its Option to Purchase but continues to lease the facility, the $374,000 a year will increase 10 percent after five years and each five-year period after that.
This is a “triple net lease” requiring Ada County to pay all costs affiliated with the property including agreed-upon lease payments, taxes, assessments, insurance, utilities, repairs and maintenance. Even though the County does not own the building, the County has all the disadvantages of ownership (bearing all the costs) as well as all the disadvantages of leasing (making rent payments).
If the County exercises its Option to Purchase the facility, which it must do on or before December 31, 2010, developers Oaas and Laney will choose an appraiser and the County will pay the full-appraised value.
If the County exercises its option to purchase on or after March 2, 2007, the County will receive five percent off the full-appraised value.
The County gets no credit for lease money or other expenses paid and little return (just five percent of the full-appraised value) on the $600,000 initial investment in the property.
Taxpayers get to pay that $600,000 twice: once up front to improve the facility, and once again, when the County pays the appraised price of the improved facility to complete the purchase.
Imagine buying a house and saying, “Look, I’ll pay you rent, put a big chunk of money into remodeling your house, and pay all costs of living in the house including utilities and repairs if something goes wrong. If I decide I want to buy your house, then YOU choose an appraiser to determine the value of the house once it has been all spiffed up with my money, and I will pay you whatever the appraiser says the house is worth. And oh yeah, if I wait 15 months while paying rent and all the other expenses before I decide to buy the house, you’ll give me a big five percent discount on the price.”
This Lease with Option to Purchase deal is one time the County commissioners should have had enough business savvy and common sense to Just Say No! It is not unlike the courthouse deal.
For more information, call Ullman at (208) 362-0843 or send e-mail to email@example.com
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