Land Board watchdog: ‘Our government is on its way to becoming Idaho’s largest real estate agent’


Gov. Butch Otter receivied a firsthand look at a natural gas well last week from representatives of Alta Mesa energy company.

“Every business owner and would-be business owner in Idaho needs to be made aware,” says a former state legislator. “Our government is on its way to becoming the largest real estate agent in the state.”

The warning comes from Bob Forrey, a former member of the Idaho House of Representatives in the mid-1980s. Forrey has assumed a “watchdog” role in recent years with respect to the Idaho Department of Lands (IDOL), and he’s especially concerned now.

“The Land Board has a plan in place,” Forrey recently told IdahoReporter.com. “They call it the Asset Management Plan, and it’s a plan for the board to buy up more commercial businesses.”

Indeed, the department does have such a plan, and it has been in place since December of 2011 (it can be viewed here).  However, Emily Callihan, spokesperson for IDOL, rejects the “plan to buy up commercial businesses” description.

“A better characterization would be to say that by approving the Asset Management Plan, the Land Board provided direction regarding the need to diversify the land assets,” Callihan told IdahoReporter.com.

According to her, this quest for a more diverse portfolio includes  the pursuit of “more leasing activities such as office-retail, commercial energy resources, commercial recreation, communication sites, industrial facilities, and many other types of leasing scenarios that fit under the ‘commercial real estate’ asset classification.”

But even before devising its Asset Management Plan, the Idaho Land Board has been criticized for investing in commercial property and thereby competing directly with private for-profit enterprise. Members of the board argue that the Idaho Constitution requires that public lands must be managed “in such manner as will secure the maximum long term financial return to the institution to which granted,” and this is said to imply a “fiduciary responsibility” for the board members.

But Forrey believes that the language in the Idaho Constitution regarding the management of public lands is being interpreted inappropriately. “It says ‘land.’ The constitutional language makes no reference to the government acquiring buildings or private businesses. It only makes reference to land, and even at that, the language references land that was acquired from the federal government at the time of statehood, and land that might be acquired from the federal government in the future.”

For this reason, Forrey is proposing that businesses that have been purchased by the Idaho Land Board be sold.

The former state representative is not alone in his concerns. When the Land Board acquired a commercial building in downtown Boise earlier this year and then leased the building to 10 Barrel Brewing Company, an Oregon company, Rep. Erik Simpson, R-Idaho Falls, told IdahoReporter.com that “we need to be very careful with what we deem to be within the so-called ‘fiduciary responsibilities’ of the state. There are good intentions involved with their (the Land Board’s) current approach, but if we’re not careful we can end up doing what President Obama has done with General Motors.”

State Rep. Grant Burgoyne, D-Boise, expressed similar concerns regarding the Land Board’s acquisition in 2010 of the Affordable Storage business in Boise. “The Land Board seems to have adopted a policy of injecting itself into the private sector,” Burgoyne told IdahoReporter.com in October of this year. “They have now come down to the point of trying to dictate to those in charge of the operations of the Affordable Storage business, even to the point of dictating who is and who is not employed there.”

But Forrey is also championing legislation that would require the Land Board to open up competitive auctions for state-owned land that is to be leased. He believes his approach is consistent with a recent decision at the Idaho Supreme Court, when in June of this year the court struck down a law that shielded state-owned cabins from competitive bidding.

“There is no limit to what this current Land Board will try to acquire and own, and they need to be reined-in,” Forrey says. “I once asked Secretary of State Ben Ysursa (a member of the Land Board) if he thought it would be appropriate for the Land Board to buy Albertsons. He told me ‘yes, if we had the money, I’d want the board to buy Albertsons.’  This is very destructive to our economy, and our private sector, and it needs to be stopped.”

When asked by IdahoReporter.com if there are any limits on the types of businesses that the Land Board would try to acquire, IDOL spokesperson Callihan replied that “the department is not in a position to state what types of commercial properties this board or a future Land Board would not consider acquiring.”

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Former state legislator and Land Board at odds over what constitutes "land" under the Idaho Constitution., Former state legislator and Land Board at odds over what constitutes "land" under the Idaho Constitution.
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http://www.idahoreporter.com/wp-content/uploads/2012/11/forest.jpg, http://www.idahoreporter.com/wp-content/uploads/2012/11/forest.jpg
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4 Comments

  1. Chucik Reitz

    State leaders in the Republican Party have put the Land Board on notice that we do not like their incursion into the real estate business and their direct competition with the private sector. Any State run endeavor that competes with private businesses loads the deck in the States favor and it is unfair and unneeded.
    I know that it is a trust to be handled by the State but there certainly better ways to accomplish the trusteeship.

  2. Dean Gentry

    I strongly agree with Mr.Bob Forrey as to the Land Board purchasing commercial
    businesses. They should all be sold as soon as practical. I do not agree with
    Mr. Forrey that state land leases should be put up for auction after a lessee
    has made real improvements on the leased property. This seems a bit like extortion and I firmly believe if it is done, time will prove the revenue to
    the endowment funds from these leases will decrease. Think about it, would
    you bid at auction for a lease on land and make a large cash outlay for permanent real improvements on that land knowing that property would be put up
    or auction at a later date?

    We are continually reminded of the Constitutional responsibility of the IDL to
    manage the state endowment lands to maximize earnings. Casual observation will
    indicate that often do not (it is near impossible for management to continually
    achieve such a mandate or goal). We hear of the IDL failures when someone disagrees with some actions of the IDL ie, the purchases of commercial buildings
    or the leases of the recreational lots at Payette Lake and Priest Lake. Please tell me of the penalties assessed the IDL or provision for such.

  3. Pingback: IDL critic praises agency for auctioning gas, oil leases » IdahoReporter.com is your source for uniquely watchdog and free-market oriented coverage of state government agencies, the Legislature and state elected officials.

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