Land Dept. Deputy Director Cathy Opp talked with the GUARDIAN Wednesday following our post about the Department purchasing and operating a retail self storage facility at 450 S. Maple Grove in Boise. She said the goal of the endowment fund is to double the return on investment from $48 million to $100 million in the next 10 to 20 years. The fund operates on revenues from state owned land and currently gets no general fund money.
In general our story stirred up vastly opposing reactions, based on philosophical differences. First there are the state officials on the Land Board and the Dept. of Lands staff. They see their duty as a constitutional mandate to manage state lands and endowment funds (mostly for education) to get the biggest bang for the buck–including any type of enterprise they deem to be prudent and profitable.
Opp said the self storage sector is strong at the present time and they will be looking at more “opportunities.” She also said the State is looking at solar and geothermal alternative energy projects, both as land leases and actual power producers.
Then come people like Guv longshot candidate Jana Kemp who said, “It disgusts me and it must end!”
Boise School Board member Rory Jones called the state ownership “Troubling.” He noted revenues are declining as property values plummet and said, “Now the state is taking real property off the rolls which exacerbates our problems.”
Chamber of Commerce governmnt guy Ray Stark offered a cautious and non-commital, “It’s a new one for me.” He declined to speculate how his business membership would react.
Governor Butch Otter and Attorney General spokesmen were united in their reaction. Here is what the Guv’s office asked us to share. The Guv is chairman of the land board.
1. There was nothing secretive about this acquisition. It was done in an open Land Board meeting that was legally noticed and posted. The article suggests this was done “quietly” or “discreetly.” That is not accurate.
BG–It was all legal, in plain site at a public Land Board meeting. What better place to go unnoticed?
2. The State of Idaho does in fact own many other commercial properties and collects rent on them. We collect rent both on office space and we also collect rent on storage space. So collecting commercial rent on space is not unique.
BG–there are many land lords who question the propriety of the state owning and renting commercial space. Also businesses we contacted oppose the state operating a retail enterprise. All are powerless to change the practice.
3. You could also argue that the state of Idaho is in competition with private grazing, private timber, and private mining, but that is how this process was set up at Statehood to maximize the return on the state’s holdings for the benefit of Idaho’s school children.
BG–grazing leases on public land are a far cry from owning a herd of cattle or fleet of logging trucks.
4. As required by the Idaho Constitution, the endowments are a trust and must obtain the maximum long-term return to the beneficiaries (K-12 school children and the eight other beneficiaries). So the endowment has been in the money making business for more than 100 years.
5. The endowments will not undercut private operators. As required by the State Constitution, the endowments must maximize the long-term return. Therefore, the state must charge market rent. The state is not undercutting the private sector.
BG–Perhaps not undercut, but certainly take market share and compete.
6. If there is any benefit to the tax exempt status of the property, it is that the endowments will earn more profit (at the same lease price) than the private operator. But that doesn’t put the private operator at a competitive disadvantage.
BG–Our readers and businessmen disagree, saying taxes are a major expense.
7. While it is true that lands came off the tax rolls, the earnings go back into supporting schools and other governmental activities thereby offsetting the tax burden.
BG–In this case, Ada,Boise, Schools, and ACHD suffer 100% of the lost revenue while the “offset gain” is shared by the entire state.
8. Use of the Affordable Storage name reassures the existing customer base that services will remain the same and avoids the need for changing the billing system, etc. That is consistent and in keeping with the Department of Land’s efforts to reduce costs and maximize return.
BG–Good business move, but still sort of “discreet.”
9. Immediately after acquiring the property, the Department of Lands ordered signage which will be placed at the site to make it clear the endowments own the property. So again there is nothing secretive about this transaction. In fact if you look it up, you should be able to see that they discussed that in the board minutes.
BG–Planned sign is a bronze plaque like those on many buildings. We would like to see something on the big sign like, “Affordable Storage–owned by the State of Idaho.”
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