Things that make you go hmmmmm.

http://www.spokesman.com/blogs/boise/2014/oct/28/consultants-timber-land-good-investment-idahos-endowment-not-idaho-commercial-real-estate/

And your description of 10 Barrel is misleading.
The state owns the building- period.
Just like ANY building owner they have to have tenants. Sometimes the tenant pays for the improvements and sometimes the building owner puts it in the deal.

Leaning on “depriving local governments of tax revenue” you are ignoring the bucket loads of sales tax, beer & wine taxes, and state income taxes run through that location. The OREGON company of 10 Barrel is presumably paying barrel loads of corporate tax INTO the Idaho system. While Idaho is not paying county property taxes, the value of the adjacent properties does go up and they end up paying more. The alternative was an empty building or “temporary” retailer.

A million dollars of dirt sold and used to buy a million dollars of commercial building is simply trading one asset for another. Compare the two cash flows, and you reveal the winner. Unless you have the contracts, (there’s a request), it’s just speculating.

In your example, I would generally rather own a commercial business with a LONG-term tenant than rangeland, timberland or any other rural dirt.
I am sure the numbers, $, and the math works in the favor of the state. But the principle of it does not, IMO.

EDITOR NOTE–We will attempt to answer your questions.
–State manages only STATE lands. At statehood one, one square mile section per 36 square mile township of FEDERAL land was given to western states for school endowments. OVer the years the sections have been traded, sold, and combined–usually for ease of management.

–In the 1980s the legislature, with voter approval, passed a constitutional amendment which called for the Land Board to manage for “best long term return on investment.” At the time it was seen as investing in bonds and other instruments and not playing the stock market in short term risks.

–Recently the Board decided to get into “Business.” They sold the timber and grazing parcels to fund commercial rental property–all in Boise. The storage facility was the first attempt at OPERATING a business. Realities of rental property such as improvements, lack of tenants, management commissions, cut into the dream and increase the risk.

–Even though the funds are NOT tax money, the legislature has to appropriate the annual spending. That means $1 million spent on a brew pub shows up as a $1 million expense with only a (for example) $100,000 annual income. Not good business.

–So, the Board keeps two sets of books. They are fond of saying, “If we could amortize the $1 million over the 15 year life of the lease, we are rich. Our cost is only $66,000 a year and we bring in $100,000, hence a $34,000 ANNUAL profit. Problem is, the appropriation is only for a single year of CASH expense. The Board spends ENDOWMENT funds and there is no loan to repay. The lease payments take 10 years just to break even.
–In short, government is NOT a business and legal requirements like bids etc. make for a difficult analogy.

I can can go buy timberland and sell the rights to harvest the trees.
Isn’t the state competing with me in the timber industry?

My return on that land would be a lot better if I didn’t have to pay taxes on the timber sales.

Same for grazing land; mineral lands, etc. Really, it’s just a shell game.

EDITOR NOTE–The timber and grazing are both “renewable resources.” They have been PUBLIC land since statehood.
The practice of selling 640 acres or more for a 5,000 square foot brew pub that deprives local governments of
tax revenue while spending millions in tenant improvements is new.

I agree the state should not be owning commerical property. The explanation is not exactly a good reason however.

To the contrary.
By having some commercial property to go with desert, timber, and until recently lake front property, along with liquid investments it provides DIVERSITY.

To take away one of those choices eliminates, reduces the diversity.

Perhaps, the state could own commercial property in others states?

The Politicians, (the Gov) could help themselves in 2018 by promoting to the masses information about these public lands- starting now.