As financial shenanigans on the part of public agencies have come to light on projects ranging from university housing to urban renewal projects, it becomes increasingly clear they depend on “flying under the radar” of public scrutiny.
A report in the Saturday Daily Paper quotes BSU Prez Bob Kustra saying, Moody Investor Services, “Came along and blew up the plan.” THE PLAN is risky for investors and appears to be an end run around authority.
It involved a deal that would have allowed a developer to finance a private commercial rental building (student housing) on property owned by the citizens of the state of Idaho and lease the land from BSU for a period of up to 85 years. If any of that land is acquired through eminent domain and then leased to a private developer, look for some legal action with support from across the nation.
The deal would have been great for Boise and Ada taxpayers because it would have put a $41 million asset on the tax rolls, but in their quest to “keep the debt off the books,” BSU got a law passed during the recent legislative session to exempt these private lease deals from taxation. We figure it would otherwise have been a combined tax bill of $800,000 on the project.
The state plays by different rules than the city and county, and don’t have to seek voter approval for debt. They do have to get permission of the State Board of Education for bonding authority. We haven’t seen the agreement, but an 85 year lease is murky any way you cut it.
Moody’s made a good call signalling a potential problem with the scheme put forth by BSU. “Private-Public partnerships” usually mean that one party or the other can’t afford to do something in the traditional manner (legal) and they try to get around regulatory and voter authority by other means.
Boise City has done it with fire stations, the airport, and attempted to get around the authority of voters with a police station and airport parking garage. Courts have shut them down each time they were challenged.
Ada County has a courthouse financed as a private-public partnership and it has turned into a taxing-financing-ownership-liability-maintenance nightmare. There are more than 400 pages of lease and sub-lease agreements on the courthouse complex and no one REALLY understands it.
This boils down to financial philosophy. One school (pun intended) is pro-growth and seeks to “leverage” by introducing finance charges. We GROWTHOPHOBES favor a “pay-as-you-go”system which precludes debt unless it is approved by authority of voters or State Board of Education.
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