Business

Gannon Seeks Taxes From Government Tenants

Boise Dem representative John Gannon has a bill co-sponsored by Repub Mike Moyle to charge taxes to to private entities using public real estate. He wants to amend the Idaho constitution to include: “any property belonging to the state, counties, towns, cities, villages, school districts … or public libraries” that’s leased to a private entity “shall be assessed and taxed as any other property.”

Clan McLean, including Mayor Lauren McLean oppose the idea claiming it could short circuit efforts to provide “affordable housing” with “public-private partnerships.”

Gannon’s amendment stems from the State leasing space to Hewlett-Packard at the state-owned campus in west Boise. Also, BSU is planning to purchase the mirrored building on Broadway for $22 million and lease 75% to private firms. Boise City owns a $23 million hangar at the airport, but leases it to SkyWest. ALL of those structures are government owned and are tax exempt.

Comments & Discussion

21 comments for “Gannon Seeks Taxes From Government Tenants”

  1. Georgianna Ainslie
    Feb 17, 2020, 11:00 am

    Interesting!

  2. ABOUT TIME!
    Fair share applies to all, not just those who know the back rooms! Now lets look at the amount of commercial property whose taxes have been frozen for 20 years by virtue of the CCDC Urban Renewal District “wave of the wand.” There is an ever-increasing disparity between residential and commercial property tax burdens. The Ada County property tax burden went from 60% residential and 40% commercial in 2011 to 72% residential and 28% commercial in 2019.

  3. This is one way to open discussion on a secret way to compete with private industry fairly. Nothing like untaxed real estate to lower the rents.
    Similar to credit unions never paying Idaho Sales Taxes or income taxes on profits. Yet, they can pay same interest return to members as for-profit banks.

  4. The state folks that were behind buying the HP site KNEW they would not have to pay taxes and so they could rent the property at attractive rates.

    PLUS – where does the rent money go? Into areas that are harder to track and to pay for pet projects that do not get any oversight.

  5. what a cryin' shame
    Feb 17, 2020, 1:52 pm

    I don’t think this will topple affordable housing. Homelessness is not a for profit operation and the HP’s and the folks in the hangar are taking out salary. I hope clan McLean will study it a bit harder. I think that Gannon is probably a good ally and advisor for her.

  6. Eamonn Harter
    Feb 17, 2020, 1:55 pm

    Good. Let’s make all businesses compete on a level playing field. While they’re at it they should also force “non-profit” hospitals to pay property taxes at the same rate as everyone else.

  7. "Freezing Taxes"
    Feb 17, 2020, 3:05 pm

    A bit more explanation on an URD “freezing taxes”. . . An Urban Renewal District does not freeze taxes in the sense that not one penny more is paid for 20 years. An URD simply freezes the amount of the assessed value that property tax is collected upon for each taxing district. The overall assessed value does increase and the taxes on a property in an URD will increase, its a matter of the difference in where those increased taxes go.

    I posted the following in a prior story:

    URDs do not create areas that do not pay taxes, rather, they create designated areas where any incremental increase in tax value is scrapped off the top and given to CCDC to spend as they please in the URD area it was collected from. Over a 20-25 year URD period, this can result in the incremental amount of tax being scrapped off for CCDC to use, being almost as much as original baseline amount of tax that is distributed to the various taxing districts.

    Here Is An Example Using Only Boise City Tax Levy For 2019:

    Approximation for a 0.890 acre parcel of land in downtown Boise in the designated Westside URD.

    $3476 – tax received by Boise on $610,000 base value (the value of the parcel at time URD was created in 2001).

    $2562 – tax received by CCDC/URD for $449,700 incremental increased value (this is the amount the parcel has increased in value since 2001).

    This Westside URD still has 7 years to go until “sunsetting” in 2026, and at the current pattern of escalating assessed property values, it is highly likely the CCDC/URD incremental tax amount will be equal to, or even surpass, the amount that Boise receives.

    This outcome is one of the contributing factors causing Boise, or the other taxing districts, to take the 3% budget increase each year, as they are receiving less and less tax each year due to it being redistributed to the CCDC, leaving the general public to subsidize growth.

    EDITOR NOTE–All true. The simple way to say it is, “The tax on all improvements and appreciation goes to CCDC.”

  8. Any Property
    Feb 17, 2020, 3:40 pm

    The land that the Hawks Stadium is on is public real estate (land owned by the Ada County taxpayers), but the Ada County Assessors website shows this private entity paying taxes on the facility/building, although they have significantly decreased over the past decade from a high of $26,514 in 2011 to $18,885 in 2019. I wonder how this differs? Because the building itself is not public property?

    Or how about The Cabin. A nonprofit private group that receives a $1.00 per year lease for publicly owned real estate – both the building and the land it sits on – with no property taxes to pay, or landscape maintenance costs (covered through the Parks Dept.). This is a deal that no other non-profits were given the opportunity to bid for, and still will not receive such a deal, as the City has allowed a long-term lease for this group. In the early years of the lease, The Cabin spent more than $300k on repair/upgrades to the building, so this could be considered equivalent to paying rent for a similar facility, although it equates to far less than market rate square footage rental prices, especially when factoring in its prime location.

    EDITOR NOTE–Non-profits are usually exempted from taxes.

  9. At least they are trying to “work across the aisle” to bring possible solutions to the table. They both deserve credit for that effort!

  10. Any Property
    Feb 17, 2020, 8:38 pm

    Oh Mr. Editor, I know non-profits are usually exempt from taxes to the IRS, but that is not the same as being exempt from paying property taxes if they do not own the land/facility that they conduct their business from. Maybe I can explain another way; If a non-profit rents/leases a facility from a non-governmental owner – Example: John Smith who owns a building – the non-profit does not get to have John waive the percentage of the rent/lease that covers the property tax for the facility. So The Cabin gets a big financial advantage over other non-profits who have to pay for a facility that does have property tax embedded in their monthly rent/lease.

    EDITOR NOTE–You are making it difficult for our readers. You are correct, but there are too many variables. Fact: If a private owner rents space to the US Post Office, he has to pay rent. The former MK Plaza was privately owned and paid taxes even though it housed the Idaho Tax Commission and other state agencies. Today the MK Plaza is owned by St. Luke’s and the Ada Commishes granted it Tax-exempt status. Let’s cut it off here please.

  11. Thank you John Gannon and Mike Moyle for bringing this legislation forth. Property taxes are very complicated and I appreciate the discussion this brings to the table. It is not just spending that drives up property taxes. Boise has lost a lot of tax revenue over the years to expansion- MK Plaza, HP Compass, growth of BSU. It does make a difference, especially when high value properties are involved.

  12. Sensible for many reasons.

  13. George Richard Williams
    Feb 18, 2020, 11:37 am

    I would like the Legislature remove all the tax exemptions for the ‘non profit’ hospitals and churches.

  14. I agree. The improvements to gov’t owned real property and leased to private parties should be taxed, percentages if mixed. It currently works for non-profits leasing space… doctor offices… and there is no sound reason for not taxing similar public property.

  15. sounds good.

    Technically it is a Resolution and proposes to put the issue on the ballot for citizen approval to make the amendment.
    Action costs $200-$300,000 tax dollars to put it on the ballot. And NO information for the additional tax revenues expected to generate?

    Define “private entity”.
    What if my nonprofit leases from the state and turns over use of the space to a “private entity” run by my child?
    —“Just following the law”.

    And we could go back to the original question:
    WHY is any government holding real estate to lease to any business?????
    Eliminate the problem instead of trying to cover the symptom— eliminate the exemptions, URDS, and little old ladies then counties will be flush with funds and citizen taxes will go down.

    Like the Editor Note above states: too many variables to be fair across the whole state and 44 different counties.

    I’ll vote NO.

    Better:
    Propose the amendment to allow EACH COUNTY to decide at the local level to eliminate the exemption for nonprofits with more than $x in assets, or revenue. Clearwater County might need the current arrangement. Ada County should dump the exemption for all NGOs (connected ones too) over a million in assets. And the Legislature should make that possible for the local decision to be made– just like a Local-Option.

    Or, Gannon & Moyle could do something easy, work within their parties, be like Utah, and be LEADERS with a bipartisan effort to “Add the Words”. 🙂

  16. This is the problem with elaborate tax arrangements. When you have all of these various owner/renter relationships with profit vs non-profits and the like, it’s very easy to begin seeing special tax holidays and periods of tax freezes or ceilings and sunsets. The whole notion of a “property tax” is antithetical to a free country, in my view. This tax makes owning property a “original sin” and therefore you are subject to a tithing by some King. You are a captured subject, a tax pawn.

    We need to dump this whole idea. Governments get bigger, because they can when they have a captured subject to tap, at any time.

    Porcupine….I noticed in that BoiseDev article…“If I have to appoint myself to that commission, I will,” McLean said. “If there’s a mayor on the board, it should be the current one. CCDC needs to align with the vision of a city.”

    I ask….just WHAT vision of this city is she talking about? Were Me or You consulted on this vision? You nailed it with the reference to old/new boss tag. We replaced Lenin with Trotsky.

  17. Rick Visser
    Feb 23, 2020, 2:11 pm

    Thank you Reps John Gannon, Steve Harris and Mike Moyle for sponsoring this legislation. This loophole needs to be closed, and Idaho should follow the lead of other states that have statutes and constitutional amendments that close this loophole. I am on board with these Representatives and have already offered my help and research to get it done.

  18. The example you give is ironic! BSU to consider the purchase of the mirrored building on Broadway to then lease 75% while BSU leases space from the CCDC for downtown classroom spaces? Make me wonder if smoking pot is allowed in the capital and other government offices? Oh those ELECTED PUBLIC SERVANTS.
    Maybe BSU should NOT be allowed to purchase the mirrored building.

  19. The comment above of “BSU should not be allowed to purchase the building” is loaded with some connotations here.

    “BE ALLOWED”? Interesting comment given the current political scene:

    -That a private owner could not sell to a particular, willing, and able buyer.
    -That a capable and legal entity would not “be allowed” to buy real property (or anything).
    WOW!

    And in the same space as this blog with constant comments of “tyrant Bieter”, anti-socialism, anti-communism—- “the idea” that government should interfere with the free-market. Wow!

    And this Guardian (modified) quote from 2010, since it matches recent Cuba commentary: “we note that Communist Cuba [and others], are known to operate state-owned businesses. Just can’t imagine such a thing in a place like Idaho”

    Welcome to Idaho!

    ////
    From the above resolution “property belonging to the state” that is being leased—-

    combined with
    “socialism aims to substitute private property in the means of production for social ownership or public property.” And, “Socialists generally favor social ownership” [a nonprofit organization is very much ‘social ownership’].

    Oh, this all must exist because the Idaho Legislature and our current politicians and their supporters actually DO interfere with the free-market ALL the TIME (when it fits their interests) despite the platform:
    “A competitive market, free of
    undue governmental ***competition,*** restriction, coercion, or ***interference,*** is critical to
    Idaho’s economic well-being.”

    /
    So is that just hypocrisy or selectively accepting socialism by the same people who say they are opposed to democratic socialism??

    “Alex, I’ll take, ‘Feel the Bern’ for a $1,000”

  20. what a cryin' shame
    Feb 29, 2020, 9:16 am

    That capable and legal entity is using tax dollars to purchase the building. That is why the decision of allowability comes in. If the space is not necessary and documented to be for student use/benefit, then BSU has no business owning it.

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