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Two Land Board members back away from storage investment, three others don’t

Two of the five members of the Idaho Land Board - Gov. Butch Otter and state schools Supt. Tom Luna - now say they erred last year when they voted to spend $2.7 million to buy a storage business whose revenue benefits Idaho public schools and other state institutions, the Associated Press is reporting; the Land Board voted unanimously on Aug. 17, 2010 to purchase the business. The move came in for criticism during this year's legislative session.

Click below to read a full report from AP reporter John Miller; you can read the Land Board's staff memo here on the proposed purchase, which all five Land Board members had before them when they took the vote. It includes this: "The purchase of Affordable Self Storage meets the purpose and objectives expressed in the board's Asset Management Plan and priorities for new assets in the following ways: Increases net cash flow $228,500-$260,700 annually to Public School Funds; Diversifies asset types to reduce risk; and Reduces single industry dependence (forestland)."

Otter, Luna reverse stance on storage business
By JOHN MILLER, Associated Press

BOISE, Idaho (AP) — Gov. C.L. "Butch" Otter and Superintendent of Public Instruction Tom Luna say they erred last year when they voted to spend $2.7 million to buy a storage business whose revenue benefits Idaho public schools and other state institutions.

As Idaho Land Board members, they voted in a unanimous decision to use proceeds from the previous sale of parcels from Idaho's endowment land portfolio to add Affordable Self-Storage in Boise to its investments.

The business is run by a private contractor, but storage industry officials and some conservatives cried foul, accusing Idaho of competing with the private sector. Nearly a year later, Otter and Luna say they now agree — and that their original vote in August was a mistake.

"Superintendent Luna does not support the state competing with the private sector in the storage business or any other kind of business," said Luna's spokeswoman, Melissa McGrath, adding that he's since become "disappointed in his vote and will work with the Land Board to explore selling Affordable Storage."

Through spokesman Jon Hanian, Otter said he shares that sentiment.

But the remaining three of the five Land Board members who oversee the endowment remain convinced their 2010 decision was appropriate, despite controversy.

Attorney General Lawrence Wasden, Secretary of State Ben Ysursa and Controller Donna Jones said separately they believe the endowment's purchase still makes business sense — and fulfills their responsibility to maximize earnings, a requirement dating to the drafting of the Idaho Constitution.

For instance, the storage business generated about $30,000 in annual taxes when it was private; it now generates $20,000 per month, an annual rate of return of nearly 9 percent, with the proceeds being distributed statewide.

Even if Otter and Luna are entertaining selling the business, the majority formed by Wasden, Ysursa and Jones said they'd only consider it if the alternative improved endowment returns, not to fulfill a philosophical goal of divesting the disputed holdings.

They point out that Idaho's endowment, which generates about $48 million annually to benefit schools, universities and colleges, prisons, and mental hospitals, holds many timberlands and commercial properties that also compete with private forestry companies and the owners of leasing property.

"Our number one responsibility, as trustees, we have a duty of undivided loyalty to the beneficiaries," Ysursa said Thursday, while conceding, "I'm sure we're going to hear more about this."

During the 2011 Legislature, Republicans unhappy with the Affordable Self-Storage deal unsuccessfully floated a bill to prevent Land Board members from making such purchases — and to force them to unload operating businesses on endowment land. Rep. John Vander Woude, R-Meridian, said Thursday he believes endowment-owned businesses enjoy an unfair advantage over private competitors.

"They don't pay property taxes, they don't pay for any of the services like fire and police, and yet they still get it all," he said. "My biggest fear is, they want to start trading off a lot of their forest ground and cottage sites, and put that into commercial."

The bill stalled, but the issue is far from dead: A 16-member interim legislative committee, co-chaired by Republican Sen. Monty Pearce of New Plymouth, will meet on the matter later this summer, likely in late August.

"We're going to look into the story, we're going to talk about it, we're going to listen and we're going to haul off and decide what to do from there," Pearce told The Associated Press, adding that education groups are due to participate.

Laurie Boeckel, a board member of Idaho's Children's Land Alliance Supporting Schools, a group that works to ensure endowment lands are managed properly, believes the simmering debate is being fueled by a lack of understanding about who owns the property.

This isn't state taxpayer-owned land, Boeckel said, it's "trust land" — part of the roughly 2.5 million acres that remain from Idaho's original 3.7 million acre grant from the federal government at the time of statehood in 1890 to be managed to support important institutions.

"To put it out there that this is the state competing with the private sector or that this has some philosophical ramification is a disservice to Idaho's children," Boeckel said, adding any ideologically fueled decision by the Idaho Legislature or Land Board to sell property — or neglect future high-performing commercial investment opportunities — would invite close constitutional scrutiny.

Copyright 2011 The Associated Press.

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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.

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