Developers seek ‘urgent’ high court order to save their deal to buy ITD’s Boise campus
A group of developers who say the state reneged on a deal to sell them a “prime” piece of real estate between State Street and the Boise River have turned to the Idaho Supreme Court, asking it to act urgently to restore the deal.
Both sides have presented arguments to the high court over the sale of the 44-acre Idaho Transportation Department campus, with the state saying the sale agreement was never signed and the developers are out of luck.
The state argues that it is not required to go through with the sale and no longer wants to classify the ITD campus as “surplus” property.
The developers allege that by using appropriations bills to block the sale, the Legislature violated the Idaho Constitution and century-old case law that prohibits the use of appropriations bills to alter other state laws.
The developers asked the Idaho Supreme Court to issue an extraordinary order, bypassing the usual trial courts, and to expedite the case. The developers contend speed is needed because the dispute could affect the budgets of the two state agencies involved with the sale in the fiscal year starting July 1, and because the Legislature made the cancellation of the sale effective immediately.
Did Legislature overstep on ITD sale?
The developers, Boise-based Hawkins Cos. and The Pacific Cos. and Utah-based FJ Management, had believed the $51.8 million sale of the state-owned property was virtually a done deal — until the Legislature stepped in.
The developers planned to build over 2,000 homes and about 150,000 square feet of commercial space after a 2022 flood damaged the campus at 3311 W. State St.
After several attempts, lawmakers opposed to the sale were finally successful in April when they squeezed through two budget bills that revoked the Department of Administration’s authority to sell the ITD campus.
While some operations remained on the campus, ITD was set to move to the former Hewlett-Packard Campus on Chinden Boulevard, which the state now owns, and had already spent millions of dollars on the relocation, according to the developers.
Lawmakers led by House Speaker Mike Moyle, R-Star, argued against the sale. They said it would deprive the state of needed property and that the state didn’t get enough money for it.
The developers said the agreed-upon price of $51.8 million was $13 million over the state’s own appraisal.
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Moyle also said the proposed development would bring more money into Boise’s urban renewal agency, the Capital City Development Corp., because the site falls within the agency’s newest district along State Street.
CCDC collects the increases in property tax revenue within its districts to fund more projects. It would keep collecting that revenue through 2042 when the district expires. No other taxing jurisdictions would share in the increased revenue until then.
Gov. Brad Little neither signed nor vetoed the two budget bills. The legislation “unfairly cancels an agreed-upon sales process, causing future reputational risk for the state of Idaho,” Little wrote in a letter to the Idaho House.
But by choosing to do neither, Little allowed the bills to become law.
Developers argue against ‘shadow’ amendments
The bills revoked the Department of Administration’s ability to sell the property and directed $32.5 million to ITD to repair the campus and move back in.
The developers’ petition, filed by Boise development lawyer Hethe Clark, argues that the two provisions should be voided as they are not strictly budget-related and go against established processes outlining the process for selling surplus state property.
“Of course, the Idaho Legislature is in the position of authorizing all appropriations and controls agency spending,” according to the petition. “This does not, however, mean that the Idaho Legislature may use an appropriations bill to perform a ‘shadow’ amendment of general law; instead all appropriations bills must be consistent with — and cannot amend — general law. This has been the law in Idaho for more than a century.”
They developers say the underlying law that specifies how to sell state-owned property should be honored.
The Department of Administration is stuck between two competing legal mandates that cannot co-exist, the developers say.
ITD campus ‘no longer surplus property’
In a brief filed Wednesday, the state replied that while state law outlines how to handle such property, it doesn’t require the state to sell it.
“(The statute) directed the Department of Administration to ‘commence’ sale procedures, and the department complied, but nothing in the text requires the department to complete a sale it does not want to complete,” according to the state’s brief from Attorney General Raúl Labrador’s solicitor general, Alan Hurst.
The developers and the Department of Administration negotiated the sale and exchanged several versions of the purchase-and-sale agreement, “but it is undisputed that they never reached an agreement,” according to the brief.
Part of the developers’ argument was that there is no way to “un-surplus” property once the process to sell it has begun. The state takes aim at this, saying that the law guides the process for the Department of Administration to start a sale but doesn’t force it to complete the sale.
“The Legislature passed a surplus statute, not a fire-sale statute,” according to the brief. “It did not mean to deny the state the flexibility assumed by every ordinary real estate seller.”
What’s next
Hurst urged the high court to reject the developers’ request for a writ, or order, prohibiting the appropriations bills’ provisions from taking effect. Rejection likely would leave the developers to sue the traditional way in district court, leading to a trial through a much lengthier process than the expedited writ would provide.
ITD and the Department of Administration asked Wednesday for a one-week time extension to submit their formal answers, which the high court on Thursday had yet to grant.
Moyle and the House of Representatives petitioned to be added to the lawsuit as interested parties to defend the constitutionality of the budget bills.
The court on May 1 told the developers that they would have one week to respond to the state’s brief. The court said it would set a date for oral arguments at its discretion.
This story was originally published May 17, 2024 at 4:00 AM.
