The state purchase of the HP properties makes financial sense ... at first glance. Why spend $12 million a year on lease payments when 10 years of lease payments would pay for the HP site in total? As usual, however, the devil is in the details.
As a member and director of the Tax Accountability Committee, a citizens group, we spent several years working with the Legislature and the media to contest the Land Board practice of acquiring commercial properties with endowment funds meant for schools. Government-owned commercial properties were taken off the property tax rolls and operated in direct competition with private enterprise. Just within the past year the Land Board came to its senses and began selling off its accumulated commercial properties, finally giving up its unfair advantage over property owners and business owners in the private sector.
Now, however, the issue rises again. The HP properties, when purchased, will not be used in total by state agencies. A portion, perhaps a major portion, will be leased back and/or leased out to nonstate tenants. One hundred percent of the property, however, will be removed from the property tax rolls. County services will be available to all tenants, state and nonstate, free of charge. The millions of dollars removed from the tax rolls will have to be supplemented by the rest of us in Ada County. The state will, once again, have a landlord advantage over private enterprise: offering leases at current market for a windfall or undercutting the marketplace. Since the state is not required to pay property taxes, all tenants, public and private, will receive county services and benefits for free.
If the Legislature intends to approve this transaction — the House voted Wednesday to OK it — perhaps it can make a provision that would require any portion of the property under lease continue to be subject to property tax provisions. If/when the state “grows” into the rest of the complex, the property tax would be reduced accordingly. That, at least, would provide some semblance of fairness to everyone else owning property in Ada County. Alternately, the state might consider purchasing only that which it needs currently, with options to purchase additional buildings in the future.
Larry Rincover is managing partner of Negotiation Services LLC, a licensed Idaho real estate broker and director/member of the Tax Accountability Committee.