BOISE — New legislation surfaced in the Legislature’s joint budget committee on Wednesday to spend nearly $2 million from the state general fund to buy back a bank building that the state sold to a private investor for $1,475,000 in December 2016.
The former Home Federal Bank building, which is kitty-corner across State Street from the state Capitol, was sold at auction by the Idaho Department of Lands and purchased by AGS Properties LLLP, a Boise partnership of several members of the Simplot family. For much of the past year, it served as Gov. Brad Little’s campaign headquarters as he ran for governor; he rented it from the Simplots.
“We’re looking toward the future and recognizing that there’s not a lot of property that’s within the Capitol Mall area,” said House Assistant Majority Leader Jason Monks, R-Nampa. “It’s just going to get more expensive.”
“They have marked it up, and there would be a profit there,” he noted. “Do I as a citizen of Idaho like spending more for a piece of property we owned two years ago? Of course not.” But Monks said there’s not “any impropriety” involved in the move.
“We look with hindsight, and we say that was maybe not the smartest thing that was done two or three years ago,” he said.
At the time, the state Land Board had decided that the state endowment should divest itself of commercial properties that it owned around the state Capitol and elsewhere, including a self-storage business, after drawing political criticism for competing with private-sector landlords. The endowment also is getting out of state-owned lakefront lots on which private owners have built lake cabins; the proceeds from selling off those properties are being reinvested into income-earning timber and agricultural land.
On Dec. 1, 2016, the state Lands Department auctioned off seven commercial properties for $17.3 million. They included the bank building, three properties on Bannock Street including the location of 10 Barrel Brewing, the Idaho Public Utilities Commission’s former office building on Washington Street near the Capitol; Affordable Storage; and a parking lot in Idaho Falls.
The state had the properties appraised, and the starting bid was set at the appraised price. In the case of the bank building, that amount was just $830,000. Amid competitive bidding, the selling price ended up considerably higher, at $1,475,000, which the state lauded at the time as a windfall for the endowment, whose earnings fund public schools and other state institutions.
Under the new legislation unveiled Wednesday, Idaho would spend $1,955,000 to buy back the same bank building property, through a supplemental appropriation from the current year’s general fund budget.
“It could be a parking lot,” Monks said. “It’s just valuable space there for a lot of different things.”
“The current Legislature feels that when any property comes up as available within the Capitol Mall area, we should look really hard at purchasing that,” he said.
Rep. Caroline Nilsson Troy, R-Genesee, told the Joint Finance-Appropriations Committee, “I will never forget Mr. J.R. Simplot telling me the one thing they don’t make more of is land. And I think the land that is close to the Capitol Mall is precious, and if we’re able to secure any of that land for future legislative use, I think that might be a wise expenditure of our funds.”
Monks said the property is being eyed for future governmental needs, not for use by the Legislature. “We know we’re going to need that space here in 10 to 20 years,” he said.
Troy’s motion was seconded by JFAC Co-Chair Sen. Steve Bair, R-Blackfoot, and it passed on an 18-2 vote. The two JFAC members who voted against the motion were Sen. Carl Crabtree, R-Grangeville, and Ray Mosman, who was filling in for Sen. Dan Johnson, R-Lewiston.
It came amid a long series of motions on a new budget bill to replace the earlier supplemental appropriation bill to spend $10.6 million to boot the state treasurer’s staff out of the Capitol and remodel space into new offices for House members. That bill, HB 289, was killed by one vote in the Senate on Monday.
The new version is split into three bills: The $1.955 million property acquisition; $529,000 to relocate “all or part” of the state treasurer’s staff from the Capitol’s first floor to the nearby Borah Building, where the treasurer already has some staff working; and $3.4 million for the first phase of a two-year phased project to remodel the Capitol to provide private offices for House members.
The other two spending bills cleared the joint committee on 15-5 votes; three Democrats, Sen. Janie Ward-Engelking, D-Boise, and Reps. Melissa Wintrow, D-Boise, and Sally Toone, D-Gooding, joined Mosman and Crabtree in opposing both those proposals.
That provides just half of the funding needed for remodeling to create private offices for House members, who now have just cubicle space in the Capitol; senators all already have private offices. It would require another appropriation request for $3.2 million the following year to finish the job.
House GOP leaders say legislation that gave the House control of the Capitol’s first floor as part of a deal in which, at then-Gov. Butch Otter’s urging, the renovation and expansion of the state Capitol was reduced in 2007 from two-story underground wings to single-story underground wings, authorizes the House to kick out the treasurer’s offices. The treasurer could still maintain a smaller ceremonial office in the Capitol adjacent to a historic vault on the Capitol’s first floor.
Both current state Treasurer Julie Ellsworth and former Treasurer Ron Crane have spoken out against the move.
The late billionaire J.R. Simplot, who built a fortune first from potatoes and then from microchips at Micron Technology, died in 2008.
The Simplot family company will make a $480,000 profit on the state deal.