Arrow-right Camera

Eye On Boise

Wed., Aug. 31, 2011, 2:49 p.m.

Lawmakers crafting revised endowment legislation

Associated Press reporter John Miller reports that Reps. Grant Burgoyne, D-Boise, and John VanderWoude, R-Nampa, are planning to work on revised legislation to limit the state Land Board's endowment land investments, out of concern over competition with the private sector. "There's clearly an area where we can legislate," Burgoyne told Miller after two days of hearings on the issue concluded Tuesday in the Legislature's Natural Resources Interim Committee. "I think House Bill 188 is going to have to be reworded," VanderWoude said. "But it's going to be something similar to that." That bill sought to place limits on the state Land Board's management of endowment lands, including requiring that “all business operations located on or using said land, shall be sold to private persons;” it didn't pass. Click below for Miller's full report.

Idaho lawmakers plan endowment limits after dustup
By JOHN MILLER,Associated Press

BOISE, Idaho (AP) — Idaho legislators who completed two days of hearings in Boise on Tuesday vowed to return later this year with proposed new limits on the state lands agency's effort to reshape its $3.6 billion endowment, a response to criticism it's gone into competition with the private sector.

Legislation they're working on could include restrictions on the kinds of property the Idaho Land Board can buy; provisions forcing Idaho to invest land-sale proceeds in stocks and bonds, not bank it for future land purchases; and compensating local governments for tax revenue they lose when the state adds new properties to endowment holdings.

"There's clearly an area where we can legislate," said Rep. Grant Burgoyne on Tuesday after the interim Natural Resources Committee meeting in the Idaho Capitol concluded about noon.

Idaho has 2.5 million acres of endowment land worth $2.3 billion, with another $1.3 billion in an endowment trust invested in stocks and bonds. The land was granted at the time of statehood in 1890 by the federal government, to help prop up important institutions.

For several years, the Department of Lands has been working to diversify holdings from rangeland, timber and cottage sites on Payette and Priest lakes that now make up 98 percent of properties. The aim is to boost annual revenue to more than $120 million, from about $80 million now.

But debate over just how to do it has been simmering since last year, when the Idaho Land Board — Gov. C.L. "Butch" Otter, Superintendent of Public Instruction Tom Luna, Attorney General Lawrence Wasden, Controller Donna Jones and Secretary of State Ben Ysursa — used $2.7 million banked from surplus endowment land sales to buy a storage business in Boise.

The business has been producing 8 percent annual returns, tops in the endowment portfolio, but its acquisition prompted protests from conservative groups that Idaho was muscling in on territory best left to private business owners.

The debate boils down to balancing government's proper role of with the Land Board's 111-year-old constitutional obligation to produce the highest long-term financial returns for nine endowment land beneficiaries, including schools, prisons, state mental hospitals and universities.

One piece of legislation, House Bill 188, was introduced during the 2011 session. But Wasden's office issued an opinion that it was unconstitutional, because of a provision to force Idaho to unload all endowment-owned business operations.

Now, Burgoyne, D-Boise, and Rep. John Vander Woude, a Meridian Republican, said changes they'll work on in coming weeks will help it pass muster with the 2012 Legislature — and the courts, if necessary.

"I think House Bill 188 is going to have to be reworded," Vander Woude said. "But it's going to be something similar to that."

During Monday's and Tuesday's sessions in the Capitol this week, the 16-member interim committee got an earful from all sides of the issue.

Property manager Skip Oppenheimer, whose company oversees 112,000 square feet of endowment-owned commercial and retail property in downtown Boise, said Idaho isn't trying to win tenants by offering cheap leases, as some critics of the Land Board have suggested. The agency charges roughly the same as the going rate of $15.50 per square foot, he said.

"The state is not taking advantage of the fact that they don't pay real estate tax to undercut the market," Oppenheimer said.

Commercial real-estate investor George Kirk of Hailey said the Department of Land's diversification push was "not only appropriate, I think it's imperative."

"That's prudent business thinking," Kirk said. "That's not interfering with the private sector."

But Rachel Gilbert, a former Idaho state senator and member of a group calling itself the Taxpayers Accountability Committee, said the endowment's expansionary moves are harbingers of a "dangerous philosophical shift toward socialism."

Meanwhile, Maurice Clements, another former Idaho GOP legislator and Gilbert ally, urged Idaho to unload all endowment holdings, as states like Nevada have done.

"I'm personally convinced that the government — local, city, state, federal — they have never been able to manage anything correctly," said Clements.

But divesting Idaho's endowment lands appears unlikely, as even some of the fiercest critics of the Land Board's Affordable Self Storage purchase like Sen. Monty Pearce concede these holdings have served Idaho well over the years, providing important institutions with a steady stream of revenue even in times of economic turmoil.

"It can be piddled away," said Pearce, R-New Plymouth. "We're in good shape right now. We just don't want state government competing with private enterprise. That's the fine line we have to work with."

Copyright 2011 The Associated Press.

You must be logged in to post comments. Please log in here or click the comment box below for options.

comments powered by Disqus
« Back to Eye On Boise
Betsy Z. Russell
Betsy Z. Russell joined The Spokesman-Review in 1991. She currently is a reporter in the Boise Bureau covering Idaho state government and politics, and other news from Idaho's state capital.

Follow Betsy online: