Four years after the GUARDIAN revealed the Idaho Land Board was operating a commercial storage business, a consultant has concluded the state should stay out of commercial investments.
“It’s the concentration issue, the lack of diversity,” explained consultant Janet Becker-Wold of Callan and Associates. “If something happens to that property, then your whole portfolio can suffer.”
The Land Board and its director, George Bacon, claimed the Idaho Constitution mandated such investments. We were previously informed by spokesmen at both the Governor’s office and Attorney General that commercial property was a sound place to invest endowment money which funds education in Idaho.
We have been critical of the state owning more than 20 commercial rental properties in downtown boise–all are off the tax rolls. One of those investments is Ten Barrel Brewing which was recently purchased by the Belgian beer company, Anheuser Busch. The majority of the Land Board’s commercial rental property is in Boise and the tax-free status deprives the city, county, schools, and Ada County Highway District of local tax revenues.
The new spin will be interesting in light of the strident past defense.
Continue reading to see how the Director defended the purchases four years ago.
Here is Bacon’s previous 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!
To insure more advertising-free Boise Guardian news, please consider financial support.