State officials say they do not intend to seek an independent appraisal of the value of Hewlett-Packard’s Boise campus before spending $110 million to buy it.
Top administrators of the Department of Administration, which oversees state buildings, say no law requires them to seek an appraisal. They also say there is no other recent commercial-property sale in the Boise area to which the HP campus’ value could be fairly compared.
The lack of an independent appraisal caused a dispute in the Treasure Valley when the College of Western Idaho announced in April 2015 that it had bought a 10-acre former car lot at the corner of Main Street and Whitewater Park Boulevard for a Boise campus.
Some residents complained the $8.8 million purchase price was more than the property was worth. The price was more than twice the assessed value Ada County set for property taxes.
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The community college was not required to get an appraisal. But the college’s board said it erred in not getting one. So it commissioned one, which valued the property at $8.975 million, about $100,000 more than the college paid.
The incident prompted the Legislature to pass a law last year requiring community colleges to follow the same requirements as school districts do when buying property. That includes getting a appraisal.
No such law binds the state itself.
Gov. Butch Otter and legislative leaders announced March 16 that they had a nonbinding deal to buy the 197-acre HP campus at 11311 Chinden Boulevard for $110 million. They plan to spend $16 million more to fix it up. The state will lease back to HP space the company still needs and gradually ease out other, existing tenants in future years to make room for state agencies.
The law governing this type of bonded transaction states: “When a facility of the state of Idaho is authorized by concurrent resolution, and a maximum cost for the facility has been set by concurrent resolution, the administrator of the division of public works may enter into lease-purchase or other time-purchase agreements with the Idaho state building authority or other party for the facility.”
A concurrent resolution is a measure passed by both houses of the Legislature that does not require the governor’s signature and does not become a statute. The Division of Public Works is a unit of the Department of Administration. The state Building Authority finances construction of state buildings and will sell the bonds that raise the money for the HP purchase. Lease payments from tenants, including HP and state agencies, will pay off the bonds.
A resolution to buy the HP campus passed the House on Wednesday and headed to the Senate.
Keith Reynolds, deputy director of the Idaho Department of Administration, said an appraisal is not needed to estimate the campus’ fair market value.
“The closest there would be to a comparable facility would be the Washington Group Plaza that is currently under contract with St. Luke’s for $86.5 million,” Reynolds said. That amount is “significantly more per square foot than our proposed acquisition price for the HP complex.”
According to the Ada County Assessor’s Office, the 24-acre Washington Group Plaza has four buildings comprising 600,000 square feet. At $86.5 million, that works out to $144 per square foot.
The 197-acre HP campus has eight buildings comprising 1.5 million square feet. At $110 million, that is about $73 per square foot.
The Washington Group Plaza’s assessed value was $44 million at the time its Canadian owners agreed to sell it to St. Luke’s. HP’s assessed value is $97 million.
St. Luke’s purchase of Washington Group Plaza is the reason the state is buying HP. When the plaza’s owners let it be known that they wanted to sell, the state took interest. The site is on the edge of Downtown, about 1 mile from the Capitol as the crow flies. But St. Luke’s, which also rents space there, had secured a right of first refusal to buy it. It exercised that right last fall.
That left the state to find new homes for the Tax Commission and other agencies. Otter and Bob Geddes, director of the Department of Administration, examined their options and decided to make HP an offer. HP accepted.
If state inspections show the HP site has problems, the state can still walk away, Reynolds said.