Idaho is buying Hewlett-Packard’s entire Boise campus on Chinden Boulevard.
The state’s Department of Administration has signed a non-binding letter of intent to start talks with HP on the deal, with an estimated purchase price of $110 million and an additional $16 million in costs for renovations, according to a news release from Gov. Butch Otter’s office.
The Idaho Legislature is considering a concurrent resolution to authorize the state to start negotiations on the purchase, the release said.
Keith Reynolds, deputy director of the Idaho Department of Administration, said the state would initially relocate the Tax Commission to the HP campus.
“Others will be evaluated based on lease expiration and the cost of renewing their existing lease,” he said.
Reynolds said the state wasn’t currently considering moving agencies housed on state-owned property but would consider all options.
George Iliff, owner of Colliers International commercial real estate firm in Boise, said the state would likely consolidate offices strewn around Boise into a single location.
“I have to think this is a smart thing for the state,” he said. “It just makes me worry about HP’s future in Boise.”
The State Tax Commission, Department of Finance and Department of Fish and Game are now housed in the Washington Plaza office complex on the east edge of Downtown Boise.
St. Luke’s Health System, which bought the complex in October, told the departments their lease would not be renewed, forcing the state to search for office space. The Department of Administration received 46 responses to its request for proposals for new space.
Iliff said he expects “most or all” government agencies will eventually migrate to the HP campus.
“Just as St. Luke’s is consolidating its administrative services for its 15,000-employee base, the state doing this for all of its agencies would create a lot of efficiencies,” Iliff said.
The state currently leases more than 800,000 square feet of office and warehouse space in Ada County at an annual cost of $12.2 million, the news release said. The HP property would give the state roughly twice as much space. The HP property includes eight buildings with about 1.3 million square feet of office space and 200,000 square feet of warehouse space, the release said.
Iliff said there’s enough demand for offices in Boise that the market could absorb the vacancies created by migrating agencies.
“If I’m a landlord with a state tenant in it, I’m going to be concerned,” he said. “But over a period of time, the market is strong enough that the space will be absorbed with non-state tenants.”
Under the proposed deal, HP would lease back more than half the complex’s office space for an initial seven-year term. The state would use 152,000 square feet of office space at first, growing to 366,000 square feet in 2020 as existing third-party leases on the campus expire.
“This provides the State of Idaho with a long-term solution to our Boise-area facility needs at a reasonable price,” House Speaker Scott Bedke said in the news release. “It’s a sound and responsible investment that will help us maintain our commitment to living within the people’s means.”
While the state would offer a seven-year lease to HP to rent space on the campus, Iliff said he’s wary that HP’s apparent willingness to sell may signal a change in their long-term plans.
“Plenty of people have tried to buy the excess land that HP has,” he said “People have tried to buy individual buildings. This is a pretty significant change in their property philosophy.”
Senate President Pro Tem Brent Hill said lease prices are rising in Boise, and it would cost twice as much to build new offices for state agencies.
It was not immediately known what a sale means for HP’s operations in Boise. HP did not immediately return a call requesting comment.
Rep. Janet Trujillo, R-Idaho Falls, disclosed the purchase during a House Revenue & Taxation Committee hearing earlier on Thursday.
“We are purchasing the Hewlett-Packard buildings,” Trujillo told the committee, according to The Spokesman Review of Spokane, which had a reporter at the hearing. “Hopefully I’m not letting the cat out of the bag on this.”
Trujillo’s comments came on a bill that would cut the budgeting capacity of cities, counties and other local taxing districts.
“We need to be able to remove that [the HP property] completely from the tax structure,” she said, to avoid increasing the tax burden on Ada County taxpayers when the buildings come off the tax rolls.
The Spokesman-Review also reported that there is talk in the statehouse of the Idaho Tax Commission relocating to HP’s campus.
Construction began in 1980 on the 92-acre HP campus at 11311 W. Chinden Boulevard. HP’s printing unit used the campus for manufacturing at first but eventually phased that out. In recent years HP consolidated personnel into fewer buildings and began renting out space to call centers and other businesses.
HP split in two in 2015, creating HP Inc., which sells printers, ink, toner and personal computers; and Hewlett-Packard Enterprise, which sells data storage, software and servers. Both companies have employees at the campus, though HP Inc. has the most.
The company has repeatedly declined to say how many workers it has in Boise, though the presplit company employed nearly 4,000 people here in 2014.