Printed on: September 26, 2013
No easy answers
An Idaho Falls property has reignited a philosophic debate that began three years ago when the State Land Board entered the storage business.
Earlier this year, the Land Board, which consists of Idaho's constitutional officers, approved a swap. A commercial property in Idaho Falls, valued at $6.1 million and owned by IW4 LLC, went to the state.
In return, the company received a McCall property estimated at that same $6.1 million. IW4 LLC then flipped the property to another buyer, the University of Idaho.
Strange doings, but understandable when you know the history.
In 2010, the Land Board decided to begin divesting itself of holdings on Payette and Priest lakes, valued between $200 million and $250 million. The Idaho Falls swap, from its perspective, made sense. The board ridded itself of a property generating $250,000 in annual income and replaced it with one bringing in $538,000 -- more money for Idaho's public schools.
A few months ago, however, a group called the Tax Accountability Committee (TAC) called the appraisal of the Idaho Falls property into question. It said the commercial building is worth $4.5 million. If that's the case, the middleman in this land swap, IW4 LLC, pocketed $1.6 million at the expense of our public schools.
Idaho's Department of Lands stands by its appraisal, conducted by Integra Reality Resources of Salt Lake City, and its process. The firm was one of three interviewed and has a national reputation. Also, local officials and legislators were notified of the potential swap before it took place. The department held an open house in Idaho Falls and the swap was approved by the Land Board and State Board of Education.
Clearly, the department did due diligence in this case. Just as clearly, however, the concerns broached by TAC and Reps. Grant Burgoyne, D-Boise, and John Vander Woude, R-Nampa, are legitimate. They want the Lands Department to conduct review appraisals to ensure the public is getting a good deal. That's difficult to argue.
The overriding issue Idahoans need to settle is the philosophy embraced by the Land Board of ensuring maximum returns on holdings even if that means competing with privately owned businesses.
More of these swaps are coming, including three potentially in Idaho Falls, buildings valued at a combined $20 million. Setting aside philosophic concerns, that's a good chunk of change coming off the tax rolls as those buildings pass from private to public ownership. That swap made eight months ago cost local governments approximately $40,000 annually. Swap out buildings worth $20 million and you're looking at tax losses into the hundreds of thousands of dollars.
There are no easy answers here, but, unquestionably, a need for additional discussion, public awareness and scrutiny.