State Sells Tax-Exempt Businesses, Locals Regain $300,000 Annual Lost Revenues

At a public auction Friday the Idaho Land Board sold state-owned commercial real estate holdings in the Boise area valued at $17.3 million.
Apart from the ethical issue of competing with private enterprise in tax-exempt government own structures, The GUARDIAN was concerned about the loss of local tax revenues. At the current combined rate for schools, city, county, highways, etc. citizens were missing out on revenues of nearly $300,000 a year–in perpetuity!

The sale was the culmination of a campaign by a loose knit group known as the Tax Payers Accountability Committee–TAC. After the GUARDIAN broke the story back in 2010 that Idaho officials were running a private storage business, TAC formed with the goal of getting the state out of private business.

Officials–some still land board members–defended the practice, even going so far as claiming the Idaho Constitution “mandated” they invest in commercial real estate to get the highest return on endowment funds for education. They were either wrong then or are now violating the constitution. Doubtful if any of them will concede in either case.

Comments & Discussion

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  1. Aggrieved Party
    Dec 4, 2016, 12:31 pm

    The IDL’s efforts to buy a piece of the “private business profit pie” was ill advised and now wisely ending.
    BUT, one good look at the elements which conspired to convince the IDL to buy more than 50+ buildings and business is still a cautionary tale for all of us.
    The forces which motivated these purchases are still here and won’t be going away anytime soon, simply because the need to raise money to fund government is as old as the origins of why we all have last names.
    On the surface, the IDL’s actions seemed defensible, but in reality it was little more than gambling with the taxpayer’s funds.
    Sure…these businesses MIGHT produce a higher rate of return, but just as quickly they could become serious financial alligators as well.
    No entrepreneurial endeavor is EVER guaranteed to be successful.
    Going forward from here, any “closing up shop” claims of profitability of IDL businesses must be mitigated by the fact they paid no property taxes and enjoyed public funded labor to boot.
    FACT: The bookkeeping/reporting model of the Nampa’s Idaho Center has never included its’ 50+ million dollar capital improvement costs. Even with tax exempt status it has NEVER actually made a single dollar in profit in 20 years.
    The “hope springs eternal” mindset is not a plan for government. HOPE is never a plan but once again we as a nation bought into the “HOPE PLAN”, with the same worn out promises of prosperity (Only this time I fear we don’t have the middle class to send the bill too).
    Trickledown economics is once again being touted as the panacea for what financially ails the USA. How long does it take for a plan to work? If the past 36 years since Reaganomics are any indication, I don’t expect to see real progress in the next 4 years.
    My prediction is that the uber rich shall once again even get richer, with the ranks of the poor (under $12,000 per year income) swelling with former middle class Americans.
    I wonder if the newest iteration of “Let them eat cake” is “Let them eat frog legs”.
    Regardless it is good to see that “draining the swamp” is already showing promise that it contains edible critters. 

  2. It’s interesting to me that the fact that the properties will no longer be tax exempt was not mentioned in other media reports.

  3. It’snot quite that the “the Idaho Constitution “mandated” they invest in commercial real estate to get the highest return on endowment funds”

    Rather it is the they are mandated to get the highest return, period.

    Is that highest return in commercial real estate? Perhaps. If so they can invest in real estate trusts- pretty close.

    But then again, when the state owns ANY real estate as they do, are they not competing with you and me?
    They are certainly part of the supply & demand equation. – CWI land acquisition along the river is proof. A govt agency doesn’t have to go to a bank to show reasonableness- they only have to screw the taxpayers; thereby messing the equilibrium of S & D.

    More of the same…

  4. Rod in SE Boise
    Dec 5, 2016, 1:23 pm

    Were all the properties sold? Did some not get the minimum bid?

    Sold to whom? For how much?

  5. Clancy Anderson
    Dec 5, 2016, 3:14 pm

    No matter whether your are for or against the state owning commercial property, I say they did pretty good! The Idaho Business Review has a complete writeup but they netted $4.5 million over appraised values. The Affordable sold for almost twice what was paid for it 6 years ago, a 10% yearly return.

    Does your $300,000 factor in CCDC’s take?

    EDITOR NOTE–We are very glad they didn’t lose any money. Our issue is the loss of revenue because the property is all tax-exempt. We haven’t calculated the finances on just the tenant improvements alone for 10 Barrel Brewing. The $300K is based on a value of $17.3 million and a nominal rate for all agencies of about 1.7% in Boise. That comes out to $294K. CCDC central district expires in 2017. Nice to have it all back on the tax roles.

  6. Among others, they sold 10 Barrel, the Garrow Building next door, and the old bank on State St. near 9th.

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